Above average ESG score of 54/100

We review OPTIMAX’s ESG matters post the release of its FY23 Annual and Corporate Governance Reports. Our ESG score for OPTIMAX is revised to 54 (out of 100) vs. 52 previously, above average. We see more tangible disclosures on its Environmental (“E”) and Social (“S”) parameters. Where we think OPTIMAX can improve further is its GHG emission disclosures, governance matters, and commitments to net zero/carbon neutrality/ sustainability targets. BUY with a MYR0.87 DCF-TP (ke: 10.5%; LTG: 3%).

Headway towards more comprehensive reporting

In FY23, OPTIMAX expanded its “E” disclosures on electricity, energy, and water consumption, with a regionalized data collection approach to drive targeted and efficient conservation efforts. On environmental matters, OPTIMAX will set up (i) dedicated committees to oversee the development and implementation of sustainable frameworks and processes across its operations, (ii) targets and strategies to improve water and energy performances, and (iii) parameters to capture data on GHG emissions and waste management.

Good social risk management

OPTIMAX’s social risks were fairly mitigated in FY23 as it records (i) zero human rights complains and LTIR, (ii) zero data and customer privacy breaches, (iii) 100% spending on local suppliers, and (iv) zero cases of corruption/bribery across all assessed operations (70% of total ops in Malaysia & Cambodia). On governance matters, the Group recorded higher Board/CEO remuneration-to-earnings ratio, but remains within acceptable range against its peers.

Targets need to materialize

Significant progress was made in terms of OPTIMAX’s ESG disclosures and achievements, yet we still think more needs to be done to materialize mid/long-term targets and commitments esp. on its carbon footprint.

Source: Maybank Research - 17 Oct 2024