04/03/2025

BIZ & FINANCE TUESDAY | MAR 4, 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 falls against dollar, market in high alert mode THE ringgit closed lower against the US dollar yesterday as the forex market tiptoes into the week on high alert, stuck in a “wait and see” mode, as traders hedge their bets ahead of Donald Trump’s tariff D-Day today, said an analyst. Last week, the US president said his proposed 25% tariff on Mexican and Canadian goods will take effect on March 4, along with an extra 10% duty on Chinese imports. At 6pm, the ringgit fell to 4.4640/4680 against 4.4600/4650 at Friday’s close. SPI Asset Management managing partner Stephen Innes noted a sense of optimism in the air following comments made by US Commerce Secretary Howard Lutnick over the weekend. Lutnick referred to Trump’s approach to Mexico and Canada as “fluid”, sparking positive sentiment. Meanwhile, the ringgit was traded lower against major currencies. It fell against the British pound to 5.6394/6444 against 5.6174/6237 last Friday, declined against the euro to 4.6586/6628 from 4.6362/6414 and was slightly weaker against the Japanese yen at 2.9683/9711 from 2.9682/9717. The local currency was traded easier against Asean currencies. It depreciated against the Singapore dollar to 3.3130/3163 from 3.3069/3108 and slipped against the Thai baht to 13.0576/0762 from 13.0455/0670. The ringgit went down against the Indonesian rupiah to 270.8/271.2 from 268.7/269.1 and weakened against the Philippine peso to 7.71/7.72 from 7.69/7.70. – Bernama

Sime Darby Property has confidence in data centres KUALA LUMPUR: Sime Darby Property Bhd (SDP) remains confident in its data centre business despite concerns over US semiconductor tariffs and artificial intelligence (AI) chip export restrictions, citing exemptions for US companies operating in Malaysia. Group managing director and CEO Datuk Seri Azmir Merican said the company’s data centre projects are backed by US hyperscale operators, including Google, which qualify for exemptions under US regulations. “We are dealing with a US hyperscale company. Based on our communication with Google, we do not foresee any issues. The projects remain on track, and we are committed to pursuing more data centre-related developments if the economics are right,” he said in an online media briefing on the group’s financial year 2024 (FY24) yesterday. Azmir said SDP has earmarked a long-term lease value of RM7.6 billion from its data centre projects over the next two decades, reinforcing its ambition to establish a steady recurring income stream. He said the company expects the first data centre to begin contributing to earnings in 2026, with a second facility set to follow in 2027. While no capital expenditure details were disclosed, he reiterated that SDP remains focused on securing long-term, sustainable returns from the growing digital infrastructure sector. For FY24 ended Dec 31, 2024, the company’s net profit rose 23.1% to RM502.2 million, up from RM407.91 million in FY23, while revenue increased to RM4.25 billion from RM3.44 billion in the preceding year, with all segments reporting growth. – Bernama

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.5250 2.8310 3.3530 3.1310 4.7180 2.5470 3.3530 5.7110 5.0500

4.3920 2.7180 3.2570 3.0470 4.5670 2.4540 3.2570 5.5320 4.8390 3.5410 59.9200 59.6900 55.9000 4.9400 0.0256 2.9150 38.0400 1.5400 7.4600 119.1900 115.8300 22.7500 1.4500 39.6300 12.2600 118.2300 N/A

4.3820 2.7020 3.2490 3.0350 4.5470 2.4380 3.2490 5.5120 4.8240

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

124.6500 3.8020 62.5500 64.8500 58.8000 5.2600 0.0282 3.0100 14.8000 41.3700 1.6500 7.9200 125.5600 122.0200 25.1900 1.5700 43.5100 13.8200

118.0300

3.3410

N/A

59.4900 55.7000 4.7400 0.0206 2.9050 37.8400 1.3400 7.2600 118.9900 115.6300 22.5500 1.2500 39.4300 11.8600 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

Cahya Mata Sarawak Bhd Buy. Target price: RM1.66

Farm Fresh Bhd Buy. Target price: RM2.05

Bumi Armada Bhd Buy. Target price: RM0.78

March 3, 2025: RM1.67

March 3, 2025: RM0.585

March 3, 2025: RM1.07

Source: Maybank Investment Bank

Source: Maybank Investment Bank

Source: Maybank Investment Bank

FFB’S Q3’25 core net profit of RM28 million (+37% YoY, +8% QoQ) brought 9M’25 core net profit to RM79 million (+112% YoY), at 76%/70% of our/consensus full-year earnings estimates. Q3’25 revenue eased -1% QoQ as stronger Malaysia sales (+1% QoQ) led by its HORECA, commercial UHT and new product sales categories were offset by weaker Australia contribution (-24% QoQ) from lower external sales to the Middle East. Consequently, EBIT contracted -2% QoQ in Q3’25 given lower group gross profit margin (-0.8ppts QoQ) where lower-margin product mix resulted in lower margins in both Malaysia and Australia operations (Malaysia GP margin: -0.6ppts QoQ; Australia GP margin: -6.6ppts QoQ). As at end-Dec 2024, the chilled milk and ambient/UHT milk categories accounted for 37% and 31% of group sales respectively, while the HORECA channel remains its top sales channel at 24% of group sales. Management assured that its whole milk powder requirement (WMP) is well stocked up for the remainder of CY25 – within a cost range of US$3,500/MT to US$3,700/MT, we suspect. This should arrest investors’ worries on significant cost increases in FY26 amid rising WMP ASP trend. Although FFB’s Bandar Enstek facility’s commissioning date has been pushed back to Jan 2026, it is adding an additional ice cream line to its Taiping plant (expected production by early-April 2025) to partially fill in the supply gap for its CPG ice cream products. The group’s outlook remains steady with resilient liquid milk demand supplemented by added sales contribution from new products (i.e. CPG ice creams, Choco Malt, Farm Fresh Grow). BUY with RM2.05 TP. – Maybank Investment Bank, March 3

CMS cement volume sales, we estimate, was down 5% YoY in FY24, impacted by a prolonged rainy season esp. in 1H. Nonetheless, lower clinker cost and operational efficiencies had lifted margins, leading to a small PBT expansion (+2% YoY) in FY24. The weather condition has since improved, supporting our 5% demand growth assumption for FY25E amid a catch-up in construction activities in Sarawak. Plant commissioning is now targeted for Q4’25, on expectation that the upcoming arbitration proceeding with SESCO (in May 2025) would see a resolution and thus a reinstatement of electricity supply. The phosphate op posted a loss before tax of RM77 million in FY24 (excluding RM9 million unrealised FX loss and RM11 million write-down of inventories to NRV) due to costs incurred to prepare the plant for commercialisation despite the ongoing dispute with SESCO. On Jan 1, two new independent, non-executive directors joined CMS’Board, bringing the total number of independent directors to 7, or 70% of its Board. Earlier in April 2024, a Board Sustainability Committee was formed. We thus look forward to more positive measures to raise CMS’ ESG profile, including tangible mid/long term sustainability targets, and carbon neutrality/net zero commitments. As at end-Dec 2024, CMS’ consolidated cash balance has grown to RM648 million (end-FY23: RM618 million), while its borrowings have shrunk to RM213 million (end-FY23: RM320 million). At RM435 million in net cash (end-FY23: RM298 million), this is one-third (or 38%) of CMS’ current market capitalisation of RM1.07 billion. BUY with RM1.66 TP. – Maybank Investment Bank, March 3

BArmada reported headline losses of -RM84m in Q4’24. This was mainly due to a non-cash impairment of RM325 million on its Kraken FPSO. With Kraken’s firm charter period ending in March 2025, the contract renewal will see charter rates decline by 70% during its extension period (vs. its firm period). The difference between Kraken’s discounted NPV and its net book carrying value given the steep decline in projected charter rates post contract renewal resulted in an impairment. For prudent reasons, BArmada’s auditors applied the lower value of these amounts. BArmada’s Q4’24 core net profit of RM213 million (-6% YoY, - 17% QoQ) brought FY24 core earnings to a record high of RM979 million (+48% YoY). FY24 core earnings are within our expectations but slightly above consensus at 100%/105% of FY24 forecasts respectively. BArmada declared a 1sen DPS for FY24 (first time since FY15); a positive surprise. We are positive on BArmada’s financial improvement over the past few quarters as the group continues its deleveraging efforts. Its net debt decreased over 19 consecutive quarters to RM2.3 billion as at end-Q4’24 (from RM8.7 billion as at end-Q1’20). We expect BArmada’s balance sheet strength to sustain with its strong OCFs and this should help in: i) reducing its finance costs over the mid-term; and ii) making some financial room for potential job wins/other ventures in the future. There are several risk factors that may impact our earnings estimates, target price and rating for Bumi Armada. Key risks include: (i) any unplanned shutdown for its floating assets; and (ii) a termination of any of its FPSO/FSU’s leasing contracts. BUY with RM0.78 TP. – Maybank Investment Bank, March 3