KUALA LUMPUR: OSK Holdings Bhd's financial years 2022 (FY22) to FY24 core earnings are expected to grow at a compounded annual growth rate (CAGR) of 10.2 per cent, said Hong Leong Investment Bank Bhd (HLIB).
HLIB expects OSK's earnings for FY22, FY23 and FY24 to be at RM379.9 million, RM422.9 million and RM461.2 million respectively.
"The growth will be anchored by strong property launch pipelines, stable loan growth in capital financing, capacity expansion and robust growth in industries as well as net interest margin (NIM) expansion in RHB," it said.
HLIB said OSK's 10.22 per cent stake in RHB had a market value of RM2.47 billion, which exceeded its market capitalisation (128.3 per cent).
The firm said the shareholding provided OSK with recurring dividend income and allowed it to secure loans (through share pledge) to expand its capital financing business.
"We believe the significant discount to its RHB stake is unjustified, especially given that its other core segments are currently profitable and doing well, suggesting a gross mispricing of the company," it said.
HLIB has initiated coverage on OSK under the Bursa RISE program with a "buy" rating and target price of RM1.42.
"Over the years, through steady and measured steps, the company has successfully transformed its business from an investment banking firm to a well-diversified conglomerate.
"We believe that OSK, with its resilient business model headed by a capable management team, should be able to sail through the different economic cycles," it added.