KUALA LUMPUR: Maybank Investment Bank (IB) raised its financial year 2023 (FY23)-FY24 earnings estimates for UMW Holdings Bhd (UMWH) by 14 per cent to reflect higher earnings from all divisions.
The bank-backed research firm also raised the dividend payout ratio to 40 per cent on the basis of improved financials.
UMWH's net profit of RM105.95 million in the fourth quarter (Q4) of 2022 took its FY22 core net profit to RM421 million.
The company declared a dividend per share of 11.2 sen in Q4 2022, twice that of Maybank IB's estimates.
"While FY22 core net profit was within our expectations, the final dividend per share of 11.2 sen was a positive surprise, at two times our estimates," the firm said in a note.
Maybank IB noted that demand for the company remained strong after discontinuing the sales and service tax (SST) holidays in July 2022, underpinned by new model launches.
The waiting periods for its Alza and Bezza models are eight months and six months, respectively.
"Meanwhile, while Toyota is conservatively aiming for a lower target (90,000 units; down 11 per cent YoY) in FY23, we do not rule out it matching its FY22 sales (101,000 units).
"Its order backlog (50,000 units) covers 56 per cent of its estimate.
"Concurrently, its manufacturing and engineering (M&E) and equipment operations will continue to show growth post-pandemic, driven by higher orders (fan cases) for its aerospace ops and equipment," it said.
The research firm also saw ample room for a higher dividend payout, for the divestment of UMW's non-core assets (Serendah land) is underway, with shareholders likely to be rewarded.
Maybank IB gave a 'Buy' call on the stock with a higher target price of RM5.30.