In 4QFY23, KMLOONG’s FFB production climbed 23.1% YoY to 83,119 tonnes, bringing FY23 total FFB production to 286,987 tonnes (slightly exceeds our projection at 280,000 tonnes), while CPO production added 14.5% YoY to 90,139 tonnes. Meanwhile, CPO extraction rate stood at 21.0%; continues to outperform Malaysia’s average CPO extraction rate of 19.7% over the same period highlighting the group’s production efficiency.

Focus to remain in house brand segment. We anticipate the contribution from house brand segment will gradually increase in line with NOVA’s ongoing strategy focusing on the segment, spurred by (i) increase in number of distributors, (ii) higher contribution from current distributors, and (iii) expansion of product range. Meanwhile, for the OEM segment, we anticipate a flat growth.

Slow recovery of occupancy rate. With the overall occupancy rate of purpose-built office space in KL City improved slightly to record at 67.5% during 2H22 (1H22: 67.2%) (Knight Frank), the office rental market may begin to experience some stability moving into FY23. However, UOAR may see slow and gradual improvement in rental activities towards pre-pandemic level as market is likely to remain cautious amid challenging operating environments.

To play catchup in 2H23. While 1HFY23 figures are expected to remain soft (similar with 4QFY22), we believe that improvement in 2HFY23 will be backed by the (i) potentially higher contribution from IHS syringe infusion system and introduction of new medical products and devices progressively towards end of the year, (ii) resumption of delivery to Ambu A/S post-inventory adjustment and (iii) higher contribution from Stellantis for the supply of fuel tank (commencing February 2023) and wire harness (targeting to commence in 2Q23) for the Peugeot 5008, 3008 and 2008 models.

New launches in pipeline. OSK aims to rollout approximately RM1.33bn worth of gross development value (GDV) new launches in 2023 in Malaysia, subject to the market conditions. This comprises a healthy mixture from their existing 2 townships located at Sg. Petani, Kedah and Seremban, Negeri Sembilan as well as several highrise residential projects across Klang Valley and Penang. Elsewhere, Phase 2 of Melbourne Square comprising 614 units with c. AUD$600.0m in GDV is expected to launch in 2023.

FY22 core net profit climbed 20.0% YoY, mainly attributed from (i) the increase in revenue arising from higher number of surgeries conducted amid economy reopening, (ii) effective marketing effort from ongoing promotions via online platforms, and (iii) better control over operating costs by leveraging on the experience gained from multiple lockdowns since March 2020.

We note that the construction of new jetty at Sapangar Bay Oil Terminal was completed and its timely to cater for the higher demand for liquid bulk cargo. The move has improved efficiency as it will now accommodate 2 additional berths designed with capacity of 60,000 deadweight tonnage (DWT) to handle 2 vessels at the same time. Elsewhere, the expansion of the Sapangar Bay Container Port (SBCP) is on track and is expected to be completed in 1Q25.

As at FY22, OCK owns and manages over 5,300 telco sites across Vietnam, Myanmar, and Malaysia that will provide recurring income stream over the long term. We expect the group to register more than 5,500 telco sites in FY23f. As of end-FY22, tenancy ratio across each geographical segment remains stable with Malaysia (1.2x), Myanmar (1.4x) and Vietnam at (1.3x) that will generate long term sustainable income.