DRB-Hicom Bhd soared to its highest level this year after the conglomerate controlled by tycoon Syed Mokhtar Albukhary posted strong second quarter earnings.
It shares rose as much as 17% or 13.5 sen to 93.5 sen, its highest level since mid-February.
It closed at 92 sen or 15% higher, valuing the group at RM1.78 billion. It is still down nearly 18% year to date.
A total of 23.75 million shares changed hands, a six-fold jump from its average daily volume of 3.83 million shares.
DRB-Hicom’s turnaround comes on the back of a RM58.1 million net profit for its second quarter ended June 30 (Q2 FY2025) from a net loss of RM17.1 million a year ago. This was the group’s second consecutive quarter of profits.
Revenue for the quarter rose 7.9% to RM4.1 billion from RM3.8 billion a year ago while first half FY2025 revenue was up 2.5% to RM8.3 billion.
The rebound was mainly driven by stronger performance of its banking division and improvements across the automotive, postal, property and services sectors.
Its top revenue contributor – the automotive business – saw revenue rise 11% or RM279.5 million to RM2.8 billion in Q2.
Banking revenue grew 6.1% to RM556.6 million, thanks to higher financing and investment income, and lower impairment losses due to better customer recoveries.
The property segment grew more than threefold to RM94.3 million, supported by concession-based projects and property development.
Meeting expectations
Its first half earnings met analysts’ expectations, with the RM75.8 million net profit making up 62% of consensus’ full-year estimates.
Nevertheless, research houses remain cautious on its outlook given headwinds at its key automotive segment that includes national carmaker Proton, and the assembly of Mercedes, Suzuki and Isuzu vehicles.
“The non-national passenger vehicle segment faces significant headwinds due to reduced consumer confidence and higher vehicle costs driven by fuel subsidy rationalisation and inflationary pressures,” Public Investment Bank said in a note, retaining its “neutral” call on the stock.
It said the growing presence of Chinese car brands is expected to heighten competition, pressuring profitability and stifling earnings growth.
Chinese brands have been capturing market share in Malaysia with a mix of electric vehicles (EVs) and vehicles with internal combustion engines packed with advanced features, selling at huge discounts.
Kenanga Investment Bank said DRB-Hicom has not been able to capitalise on Proton’s position as Malaysia’s second largest automotive company while its banking unit (Bank Muamalat) could see lower profits despite recent recovery.
The research house, which kept its “underperform” call, said Pos Malaysia Bhd would remain in the red with uncertain outlook and be a drag on the group.
Syed Mohktar has a 55.9% stake in DRB-Hicom via his vehicle Etika Strategi Sdn Bhd as of March 28, 2025, according to its 2024 annual report.
