Apex Securities Initiates Coverage on Central Global Berhad with a Target Price of RM1.00

Apex Securities has initiated coverage on Central Global Berhad (CGB), recommending a BUY rating with a target price (TP) of RM1.00, reflecting a potential upside of 16.3% from the current price of RM0.86. This valuation is underpinned by CGB’s robust market position, strategic growth initiatives, and promising prospects in both manufacturing and construction sectors.

CGB commands approximately 80% of the Malaysian high-temperature masking tape market, positioning itself as the largest industrial tape manufacturer locally. The company’s annual production capacity of 30.0 million m² is expected to double to 60.0 million m² by 2026 following the completion of a new, more efficient manufacturing facility. This move is set to drive a turnaround in its manufacturing and trading segment, further capitalising on increasing demand domestically and internationally.

Since acquiring a majority stake in RYRT International Sdn Bhd, CGB has solidified its position in the construction sector. With an orderbook of RM729.49 million, including significant contributions from the Pan Borneo Highway project, the construction arm is poised to contribute over 80% of the group’s profit before tax (PBT) in FY25 and FY26. Apex Securities projects an annual orderbook replenishment of RM600 million, backed by a tender book exceeding RM5.59 billion.

While recent financial performance was impacted by underperformance in manufacturing, the construction segment has remained a steady contributor. CGB is projected to achieve a core net profit of RM9.9 million in FY25 and grow significantly to RM36.2 million by FY27. Furthermore, the company has secured a three-star ESG rating, highlighting its commitment to sustainability and sound governance.

– Market dominance in high-temperature masking tapes.

– A turnaround strategy for its manufacturing and trading segment through capacity and efficiency upgrades.

– Growing construction revenues, anchored by major infrastructure projects.

– A well-diversified and replenishing orderbook that supports long-term revenue visibility.

With these strengths, Apex Securities believes CGB is well-positioned for sustainable growth in both the manufacturing and construction sectors. Investors can expect steady earnings growth and a progressive improvement in profitability as the company executes its strategic plans.