19/09/2024

BIZ & FINANCE THURSDAY | SEP 19, 2024 20 MARKETS/FROM THE BROKERS

SUNBIZ presents extracts of a selection of commentaries and research reports received from stockbrokers on counters that could be of interest to investors.

DISCLAIMER: The information is extracted from stockbrokers’ commentaries and research reports and do not represent the views or opinions of Sun Media Corporation Sdn Bhd. It is not a solicitation, recommendation or an offer to buy or sell the equities featured. Sun Media Corporation shall not be liable or responsible for any consequences resulting from usage of the information.

[ Compiled by SunBiz Team

DKSH and Simplot expand partnership in Malaysia PETLING JAYA: DKSH Business Unit Consumer Goods, a partner for companies seeking to grow their consumer goods business in Asia and beyond, has partnered with Simplot Malaysia Sdn Bhd, a company operating in the food & beverages industry, to elevate the range of frozen fries products manufactured by Simplot India in the Malaysian market, offering consumers an expanded selection of superior potato snack options. Under the agreement, DKSH Malaysia will deliver comprehensive market expansion services including marketing and sales, distribution and logistics, as well as credit and collection across various channels such as hotels, restaurants, cafés, and other food service outlets. DKSH will distribute Simplot’s range of frozen fries products from India, crafted to delight both culinary connoisseurs and food service experts alike. Simplot Malaysia Sdn Bhd country manager KK Saw said that DKSH is the right partner for them to help establish, promote, and grow their products effectively in the Malaysia market. By partnering with DKSH, he added it will open up a wider market for their products, making them more accessible and closer to the consumers they wish to reach. “We are confident in DKSH’s strong regional footprint, extensive distribution network, and experienced sales force to further strengthen our brand’s commercial presence and continued growth in this market,” said Saw. DKSH Malaysia fast moving consumer goods vice-president Daniel Schwalb said: “We eagerly anticipate combining our expertise and resources to elevate Simplot’s products across Malaysian food services channels.”

Ringgit achieves highest close against dollar since early 2023 THE ringgit remained on a uptrend against the US dollar , moving to its highest finish since Feb 2, 2023 at the close of trading yesterday. At 6pm, the local note rose to 4.2410/2460 versus the greenback from Tuesday’s close of 4.2535/2645. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the market observers are anticipating a 50 basis point (bps) cut in the Fed Fund Rate. “This effectively will narrow the gap between the FFR and the Overnight Policy Rate (OPR) which currently stood at 2.5% (5.5% minus 3%). “This would make ringgit-denominated assets look attractive from the foreign investors’ point of view,” he told Bernama. Mohd Afzanizam also said the prevailing ringgit-US dollar rate is nearing the immediate support level of 4.2128. Meanwhile, the ringgit also traded higher against a basket of major currencies. It strengthened against the British pound to 5.6091/6158 from Tuesday’s close of 5.6240/6385, surged vis-a-vis the Japanese yen to 2.9940/9977 from 3.0244/0324 and appreciated versus the euro to 4.7236/7292 from 4.7375/7498 previously. At the same time, the local note traded firmer against Asean currencies. It rose against the Singapore dollar to 3.2792/2833 from 3.2891/2979 at Tuesday’s close and gained against the Thai baht to 12.7472/7680 from 12.7725/8105 on Wednesday. It ticked up against the Philippine peso to 7.61/7.62 from 7.64/7.66 and traded upwards versus the Indonesian rupiah to 276.5/277.0 from 277.3/278.2 on Tuesday.

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD BUYING TT

BUYING OD

1 US Dollar

4.3340 2.9480 3.3420 3.1830 4.8240 2.6960 3.3420 5.7110 5.1540 3.7000 61.4800 66.2800 56.1800 5.2600 0.0292 3.0590 41.9200 1.5800 7.9000 120.0700 116.6200 25.5300 1.4700 43.8800 13.5400 119.3200 N/A

4.1960 2.8260 3.2430 3.0950 4.6640 2.5940 3.2430 5.5260 4.9320 3.4420 58.8200 60.9300 53.3300 4.9300 0.0264 2.9590 38.5100 1.4800 7.4400 113.9800 110.7100 23.0400 1.3500 39.9200 12.0000 113.0200 N/A

4.1860 2.8100 3.2350 3.0830 4.6440 2.5780 3.2350 5.5060 4.9170

1 Australian Dollar 1 Brunei Dollar 1 Canadian Dollar 1 New Zealand Dollar 1 Singapore Dollar 1 Sterling Pound 1 Swiss Franc 100 UAE Dirham 100 Bangladesh Taka 100 Chinese Renminbi 100 Danish Krone 100 Hongkong Dollar 100 Indian Rupee 100 Indonesian Rupiah 100 Japanese Yen 100 New Taiwan Dollar 100 Norwegian Krone 100 Pakistan Rupee 100 Philippine Peso 1 Euro

112.8200

3.2420

N/A

60.7300 53.1300 4.7300 0.0214 2.9490 38.3100 1.2800 7.2400 113.7800 110.5100 22.8400 1.1500 39.7200 11.6000 N/A

100 Qatar Riyal 100 Saudi Riyal

100 South Africa Rand 100 Sri Lanka Rupee 100 Swedish Krona

100 Thai Baht

Source: Malayan Banking Bhd/Bernama

Glove OVERWEIGHT

Telecommunication OVERWEIGHT

Sunway Real Estate Investment Trust BUY. TARGET PRICE: RM1.98

Sept 18, 2024: RM1.65

Source: Kenanga Research

Source: Kenanga Research, MyCERT

Source: TA Research, Bloomberg

NASCENT signs pointing towards a stronger-than-expected demand recovery. Indications are pointing to a strong demand recovery moving into Q4’24 and CY25 that will exceed our previous assumptions, underpinned by inventory rebuilding from distributors. Specifically, there has been uptick in orders over the past two quarters. The rise in demand comes as the inventories of major distributors across all regions have returned to normal levels. Faster-than-expected industry consolidation. Oversupply is less acute than we had previously forecast, in turn potentially achieving equilibrium faster than expected, by 2026. The oversupply situation will gradually improve following signs of players culling production capacity via decommissioning of selective plants and exit of new entrants. From our recent channel checks, we believe the market is witnessing a faster than-expected industry transitioning into a rationalisation and consolidation phase from massive industry over-capacity. Indications are pointing towards a faster-than-expected improvement in supply-demand equilibrium as players take the opportunity to shut down older plants or productions lines that are no longer efficient and speed up the industry consolidation. We understand that global supply is currently standing at 500-530 billion pieces compared to our earlier forecast of 600 billion pieces. US revised up tariffs further, with a brought-forward timeline, making Malaysian glove makers prime beneficiary. The United States Trade Representative (USTR) has just unveiled tariff increases on Chinese imports which includes a higher tariff of 50% (instead of the previously announced in May CY24 imposition of 25% effective CY26) and 100% on China’s rubber medical and surgical gloves’ exports into the US beginning CY25 and CY26, respectively. – Kenanga Research, Sept 18

DATA protection has long been a core ESG priority for telcos, but the introduction of Cybersecurity Act 2024 (CBSA), effective August this year, was a watershed moment as it addresses long standing gaps in industry best practices. Following a meeting with Cybersecurity Malaysia (CSM), an agency under the Ministry of Communications and Multimedia Malaysia, we concur that while a grace period may ease the transition for telcos, the wheels of self-regulation is now set in motion. Despite commendable efforts by telcos to-date, much room exists for greater accountability and transparency. As the 2010 Personal Data Protection Act (PDPA) did not explicitly address cybersecurity, telcos have largely adopted measures voluntarily. This is guided by ESG principles and the UN’s sustainable development goals focused on data protection and service continuity. Therefore, the CBSA ushers in a significant shift as compliance is now mandatory. CBSA is just the first step, as potential future regulations (eg. Cybersecurity Resilience Act, or amendments to the PDPA Act) may further enhance cybersecurity compliance and standards. We would welcome these developments, as they could help future proof telcos by counteracting rising cybersecurity threats amid emerging technologies (5G, Generative AI, IoT, cloud). According to CSM, hackers typically sell stolen personal information on the dark web to scammers, fraudsters, phishers or smishers. Newer information typically commands higher prices, while older data is less valuable. Given that fraudsters operate discretely in underground environments that are challenging for authorities to detect and prosecute, it is vital for telco companies to protect their customer databases from cyber breaches. – Kenanga Research, Sept 18

SUNWAY REIT’S Transcend 2027 roadmap sets an ambitious target to grow its assets to RM14-15 billion by 2027. The strategy centres on optimising its portfolio, driving asset enhancement initiatives (AEIs), and selectively expanding into new asset classes, particularly in the services and industrial sectors. In a recent discussion with Sunway REIT’s management, it was revealed that the REIT is making a pivotal shift in this roadmap. Initially, they aimed to allocate 20 30% of the portfolio to services and industrial assets, and 10-20% to foreign properties. However, due to evolving market conditions — particularly the compressed yields in the industrial sector — the REIT is adopting a more flexible approach. This adjustment enables Sunway REIT to focus on yield accretive retail opportunities while staying open to acquisitions in other sectors without rigid targets. We believe this more adaptable strategy strengthens the REIT’s agility, empowering it to leverage its core competencies for sustained long-term growth. By focusing on high-performing retail assets, Sunway REIT is better positioned to compete and build a resilient portfolio in the challenging market landscape. As part of this strategic recalibration, Sunway REIT is concentrating on developing a diversified retail portfolio that will bolster income resilience by FY27. The portfolio is segmented into four categories: Super-Regional Malls, Regional Malls, Neighbourhood Malls, and Big-Box Retail. Super-regional malls, such as Sunway Pyramid, attract a mix of local and international visitors, while regional malls like Sunway Carnival serve growing areas like Penang. Neighbourhood malls and big-box retail cater to the daily needs of nearby residential communities. Maintain BUY with an unchanged TP of RM1.98. – TA Research, Sept 18