PETALING JAYA: It is reasonable for OSK Holdings Bhd
to spin off its cable business given the industry’s favourable dynamics and the strong valuations by domestic and global peers, says Hong Leong Investment Bank (HLIB) Research.
It noted that cable manufacturers typically trade at high-teens to mid-20s forward price-to-earnings ratio (PER), reflecting the sector’s robust earnings visibility during the current super cycle.
In contrast, the research house pointed out that OSK trades at only seven to eight times forward PER, with the cable division effectively “buried” inside a diversified conglomerate discount.
“Hence, from a valuation standpoint, listing the cable business could therefore be immediately value accretive, as the market would likely rerate the standalone cable entity closer to peer multiples, unlocking value that is currently not reflected in OSK’s share price,” it explained.
The research house pointed out that the group has established itself as one of the country’s largest cable producers, with earnings expected to match its peer subsidiaries.
HLIB Research indicated that this was following a 30% capacity uplift in the Melaka factory and the acquisition of Universal Cable’s Johor Baru facilities, which brought about its total capacity to 64,000km annually.
However, it noted that keeping the cable segment within the group would yield greater long-term value.
“By keeping the business within the group structure, OSK can efficiently channel capital to high-growth business segments, optimise financing costs and accelerate capacity expansion at a pace that maximises shareholder value,” the research house said.
Meanwhile, OSK is accelerating its expansion of private credit business in the region, particularly into Singapore and Australia.
“The segment is scaling regionally with the setup of its Singapore office and a new Australian fund that enables third-party capital raising,” HLIB Research pointed out.
OSK has secured an Australian licence to build a scalable, fee-based private credit business that could grow independently of the group’s balance sheet limits.
On its property segment, the research house noted that OSK’s year-to-date sales were trailing its sales target, mainly due to product saturation at Iringan Bayu and softer demand for the later phase of Shorea Park.
It said the group is strengthening its marketing team and recalibrating its product mix to improve sales momentum heading into FY26.
