27/01/2025

BIZ & FINANCE MONDAY | JAN 27, 2025

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

Ringgit seen trading cautiously ahead of US FOMC meeting THE ringgit is expected to trade cautiously against the greenback this week, ahead of the US Federal Open Market Committee (FOMC) meeting, and to remain within the RM4.37 to RM4.38 range, an economist said. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid added that consensus anticipates no change in the Fed Funds Rate. He noted that markets will also closely monitor the US personal consumption expenditures data for December 2024. “My sense is that there could be a breather, as indications from US President Donald Trump suggest a less hawkish stance for now. The fact that he favours interest rate cuts would ease tensions between the White House and the Fed, making the central bank’s task more manageable.” “On that note, we foresee the ringgit staying in the range of RM4.37 to RM4.38 (against the US dollar this week),”he told Bernama. The ringgit rose to its highest level in almost three months against the US dollar on Friday, after Trump adopted a softer tone on China tariffs and signalled a preference for lower interest rates. On a Friday-to-Friday basis, the ringgit appreciated to 4.3750/3800 from 4.5040/5085 a week ago. The local currency gained against the British pound, reaching 5.4373/4435 from 5.4953/5008 at the end of the previous week. It increased against the Japanese yen to 2.8115/8149 from 2.8918/8949, and strengthened against the euro to 4.5911/5964 from 4.6382/6429. The ringgit rose against the Thai baht to 13.0015/0241 from 13.0664/0856 at the previous Friday’s close and edged up against the Singapore dollar to 3.2482/2522 from 3.2948/2983. Malaysian Resources Corp Bhd Buy. Target price: RM0.86

Rubber market set for modest gain this week

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

KUALA LUMPUR: Rubber market prices and demand are expected to remain volatile, with a slight upward trend forecast for this week, driven by unpredictable weather in southern Thailand, according to industry expert Denis Low. Low pointed out that the Thai Meteorological Department (TMD) has predicted a new cold wave, accompanied by strong winds, while the northeast monsoon continues to bring heavy rain to the southern region. “The incessant rainfall in the rubber-producing regions is further hampering production and pushing prices higher. Hence, there could be supply shortages in the coming weeks,“ he told Bernama. He also highlighted that the recent inauguration of US President Donald Trump has led to a sharp rise in oil prices, which could have a ripple effect on other commodities, depending on his policies. Meanwhile, the Malaysian Rubber Glove Manufacturers Association said the rubber market is likely to experience slower trading activity this week due to the Chinese New Year holidays. The association stated that the market maintained its upward trend last week despite mixed signals from regional rubber futures markets. “This upward movement is primarily supported by ongoing concerns over tight supply. Wet weather conditions in Thailand, along with heavy rains and potential flooding in key rubber producing countries, could further disrupt production and tighten supply this week,“ it added. On a Friday-to-Friday basis, the Malaysian Rubber Board’s reference price for Standard Malaysian Rubber 20 (SMR 20) rose by 6.5 sen to 891 sen per kilogramme, while latex in bulk increased by 10.5 sen to 681 sen per kilogramme. – Bernama

1 US Dollar

4.5090 2.8490 3.3240 3.1330 4.7040 2.5680 3.3240 5.5790 5.0050

4.3740 2.7330 3.2260 3.0480 4.5510 2.4730 3.2260 5.3990 4.7910 3.5270 59.6400 59.4600 55.5900 4.9800 0.0259 2.7990 37.7500 1.5400 7.3500 118.6900 115.3700 22.8000 1.4300 38.5000 12.3000 117.7500 N/A

4.3640 2.7170 3.2180 3.0360 4.5310 2.4570 3.2180 5.3790 4.7760

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

124.1900 3.7600 62.2800 64.6300 58.5100 5.3000 0.0287 2.8930 14.8000 41.0700 1.6500 7.8000 125.0300 121.5300 25.2500 1.5500 42.2800 13.8700

117.5500

3.3270

N/A

59.2600 55.3900 4.7800 0.0209 2.7890 37.5500 1.3400 7.1500 118.4900 115.1700 22.6000 1.2300 38.3000 11.9000 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

Axis REIT Buy. Target price: RM2.08

IGB REIT Neutral. Target price: RM2.19

Jan 24, 2025: RM0.51

Jan 24, 2025: RM2.17

Jan 24, 2025: RM1.76

Source: Bloomberg, RHB Research

Source: Bloomberg, RHB Research

Source: Bloomberg, RHB Research

AXIS REIT’s FY24 results were in line with expectations, with double-digit earnings growth driven by the commencement of new leases following a record year in acquisitions. We continue to like the REIT as a proxy to the stable industrial property segment. It should see another year of strong earnings growth in FY25 from the full-year contributions of its completed acquisitions as well as redeveloped property, Axis Mega Distribution Centre 2 (AMDC2). Results in line. 4Q24 core profit of MYR42.4m (+3% QoQ, flat YoY) brought FY24 earnings to MYR163m (+11% YoY). This was in line with estimates at 100% of our and Street’s forecasts. QoQ revenue grew by 9% mainly due to the contribution of newly acquired properties, new tenancies from AMDC2, and positive rental reversions, while non-property expenses grew 13% due to additional borrowing costs incurred for the acquisitions. FY24 revenue grew 12%, driven by the full-year contribution from Bukit Raja Distribution Centre 2 (completed in Aug 2023), positive rental reversions, and the completion of seven new acquisitions worth MYR719m. NPI margins grew slightly to 86.4% (FY23: 85.8%) as operating costs remained in check. The REIT recorded a DPU of 9.27 sen, a 7% increase YoY (FY23: 8.65 sen). Considering the bulk of acquisitions were completed in 2H24 (MYR645m), we expect the earnings growth momentum to continue in FY25 from the full-year earnings contribution. There is also room for more acquisitions following its private placement at end-Oct 2024, as the REIT’s gearing ratio has fallen back to 33%. This provides the REIT with an estimated MYR1.7bn in debt headroom before it reaches the 50% gearing limit. Maintain BUY and DDM-derived RM2.08 TP (20% upside), 6% yield. – RHB Research, Jan 24

MALAYSIAN Resources Corp signed a Memorandum of Agreement (MOA) with Ipoh Sentral SB to formalise the collaboration to develop a transit-oriented development (TOD) called Ipoh Sentral. We view the latest development to be positive – adding up to MRC’s portfolio in TOD projects such as KL Sentral, PJ Sentral and Penang Sentral. Ipoh Sentral entails the development of land (c.67 acres) situated near the Ipoh railway station over a phased period of 20 years with planning to begin in 2025. The GDV of Ipoh Sentral is expected to be MYR6.3bn with the first phase (2.6ha) involving improvements to landscaping and recreational elements, while preserving the heritage and cultural elements and the second phase (24.7ha) encompasses serviced apartments, offices, commercial spaces and hotels. We are of the view that the Ipoh Sentral project may enhance Ipoh’s connectivity as it is located within a 6km range from key access points namely Sultan Azlan Shah Airport, the North-South Expressway northern route, Medan KIDD bus terminal and the Keretapi Tanah Melayu Ipoh station. Major developers like Sunway could also indirectly benefit as it has earmarked an additional MYR4bn to expand its 1350-acre Sunway City Ipoh township in Tambun. Ipoh Sentral could be a plus point for foreign/local investors looking to expand in Perak or Ipoh in particular. Industrial parks such as the planned Silver Valley Technology Park (roughly a 40 minute drive from central Ipoh) may benefit from this proximity with Ipoh Sentral by attracting talent from other states. Keep BUY and RM0.86 TP, 65% upside and 2% yield. – RHB Research, Jan 24

IGB REIT’s FY24 results were broadly in line with expectations, with a moderate YoY increase in earnings from a high base. For FY25, management is maintaining a mid-single digit rental reversion guidance. 4Q24 core profit of MYR85.5m (-8% QoQ, and YoY) brought FY24 earnings to MYR369.7m (+2%), which is broadly in line with estimates - at 96% of our and Street forecasts. 4Q24 revenue was flat YoY, partly due to the high base in 4Q23, but NPI dropped by 6% YoY as the REIT recorded higher maintenance and reimbursement (employee bonuses) costs in the quarter. Interest expense remained flat as 100% of the REIT’s borrowings are on a fixed rate. YTD revenue grew by 4% YoY with positive rental reversions, but NPI margins were slightly lower at 73% (FY23: 74%) due to the aforementioned cost increases. The REIT recorded a DPU of 10.7 sen for FY24 (FY23: 10.47 sen). Mid Valley Megamall (MVM) and The Gardens Mall (TGM) remained fully occupied. Gross monthly rental income for MVM grew to MYR18.10psf (FY23: MYR16.28psf), but TGM had a lower gross monthly rental income of MYR14.94psf (FY23: MYR15.59psf) due to lower turnover rent compared to a high base in FY23. While IGB REIT completed the major reconfiguration exercise in MVM in Aug 2024, we should only see the full-quarter impact of this asset enhancement initiative (AEI) in 1Q25, with major tenants only opening their doors in mid-Dec 2024 and early Jan 2025. So far, the REIT does not have any significant AEIs planned, but it will continue to be proactive in refreshing its offerings to maintain the mall’s competitiveness. Maintain NEUTRAL, new DDM-derived RM2.19 TP from RM2.12, 5% FY25F yield. – RHB Research, Jan 24