MYMBN processes and exports EBN products to the PRC (c.98%) and we believe its expansion plans of (i) expanding its processing facility, (ii) venture into China for the RCEBN products, (iii) the export of RUCEBN products in Vietnam could materialise in the next 2 years, which will be earnings accretive. We project the core earnings to grow by 17-19% to RM5.9-6.9m for FY23-24f underpinned by recovery in China demand. MYMBN is valued by ascribing a P/E of 15x pegged to 1.8 sen FY24f EPS, leading to a fair value of RM0.27.

DC Healthcare principally engages in the provision of non-invasive and minimally invasive procedures. To-date, the group operates 13 aesthetic medical clinics across major cities in the central and southern region of Peninsular Malaysia. Collectively, the 13 aesthetic medical clinics under the brand names of “Dr Chong Clinic”, “Klinik Dr Chong”, and “Klinik Dr Chong Premium” that are manned by collectively 10 LCP Certified Aesthetic Physicians, 29 resident medical doctors, 21 clinic managers, 65 clinic consultants and 11 clinic assistants.

Although CPO prices hovered largely below our assumption of RM4,000/MT in 2023, we reckon that downside will be cushioned by the onset of the periodic dry weather phenomenon (El Nino) that threaten production. According to the Environment Minister Nik Nazmi Nik Ahmad, this phenomenon may extend into April 2024. Still, we expect upsides to be capped as demand may remain sluggish, owing to the worsening of global economic outlook, persistently high inflation and elevated interest rates environment.

We reckon that the construction segment may continue to see lackluster performance, owing to the absence of relatively large scale replenishment construction projects in the recent years. While the construction sector revival is very much anticipated post state elections and the tabling of Budget 2024 in Malaysia, the elevated building material prices and higher labour cost may keep margins in check.

Slow recovery in occupancy towards pre-pandemic level. Portfolio occupancy rate stood at 80.7% as at 1Q23. We expect a slow and gradual recovery in the portfolio occupancy rate towards the pre-pandemic level (91.5% in FY19) amidst widening supply-demand gap of office space as more organisations continued to re-evaluate their workplace strategies even after WHO has declared that Covid-19 has ended.

Improved margins. SCOMNET chalked in net margins at 18.8% in 1QFY23 vs. 16.3% recorded in 4QFY22. The said improvement came due to better sales of higher profit margin products that mitigated the higher operational expenses from the rising minimum wages and higher electricity tariff (that is expected to result in c.RM800,000 of additional expenses in each quarter). We reckon that margins to stay hit c.20% level in coming quarters, owing to the stronger orders in higher margins products. Meanwhile, SCOMNET continues to operate in a healthy balance sheet with cash position of RM171.1m together with zero borrowings as well as positive net operating cash flow.

Orderbook update. With the incorporation of the newly secured contract, orderbook replenishment for financial year-to-date (YTD) now stands at RM266.7m, which slightly exceeded our expectations of RM200.0m for FY23f. We note that YTD wins already surpassed FY22 wins at c. RM155.6m. The successful completion of the previous Cambodia project will be a testament for ECONBHD to cement their position in Cambodia over the long run.

The poultry segment saw higher revenue (+4.1% YoY) arising from higher ASP and sales volume of DOC and eggs in Malaysia, as well as favourable sales volume of dressed chickens in Philippines. Nevertheless, EBITDA declined 83.0% YoY for the segment due to margin compression stemming from elevated feed costs coupled with lower ASP of DOC in Indonesia.