10/03/2025

BIZ & FINANCE MONDAY | MAR 10, 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 likely to remain defensive this week

Malaysian government bond yields trend lower

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

KUALA LUMPUR: The US-led tariff war continues to drive global market volatility, but strong domestic economic data – such as industrial production, unemployment rates and retail sales – could help offset its impact. Kenanga Investment Bank Bhd (Kenanga IB) said Malaysia’s macroeconomic stability remains a key factor in attracting investors, potentially easing foreign outflows. On the domestic bond market, Malaysian Government Securities (MGS) and Government Investment Issues (GII) yields trended lower last week, falling between 0.2 and 2.1 basis points (bps). The 10-year MGS fell by 1.3 bps to 3.775%, while the 10-year GII eased by 1.4 bps to 3.793%. Kenanga IB said the key drivers were solid domestic demand, stable PMI readings and optimism over the Malaysia-Arm Holdings deal anchored bond yields. The investment bank said that following the recent Monetary Policy Committee meeting, Bank Negara Malaysia kept the OPR at 3%, reinforcing policy stability. “Tighter scrutiny of large-scale project funding underscored fiscal discipline, boosting demand for Malaysian bonds and pushing yields lower,“ Kenanga IB noted. On the currency market, Kenanga IB said the ringgit gained 0.4% against the US dollar but weakened against other major currencies last week, mainly due to dollar weakness reflected in the fall of USD Index (DXY). “Initially pressured around 4.47/USD, it broke below support and has been trading around 4.43/USD in recent days.” The ringgit is expected to remain defensive within the 4.41–4.45/USD range this week.

THE ringgit is likely to remain defensive within the 4.41-4.45 range against the US dollar this week, underpinned by Bank Negara Malaysia’s recent policy status quo and Malaysia’s solid macro outlook. In a research note on Friday, Kenanga Investment Bank Bhd said a US non-farm payroll print near 100,000 could reinforce expectations of an additional Federal Reserve (Fed) rate cut, potentially weakening the US dollar and supporting the ringgit. “Markets are now focused on Europe, where effective fiscal stimulus could limit further European Central Bank (ECB) rate cuts, shifting the Fed-ECB monetary policy divergence outlook and strengthening the euro. “Retaliatory moves from Canada and Mexico, along with another tariff delay, may prolong uncertainty and keep the US dollar index (DXY) range-bound. US payrolls data on Friday and next week’s inflation report will be key market drivers.“. For the week just ended, the ringgit gained 0.4% against the US dollar but weakened against other major currencies, mainly due to a softer US dollar, reflected in the decline of the DXY. Initially, the ringgit was under pressure at around 4.47 per US dollar but broke below support and has been trading around 4.43 per US dollar in recent days. The local currency ended the week at 4.4110/4145 against the greenback, strengthening from 4.4600/4650 the previous week. However, the ringgit weakened against the British pound to 5.7070/7115 from 5.6174/6237, slipped versus the Japanese yen to 2.9909/9935 from 2.9682/9717 last week, and fell vis-a-vis the euro to 4.7903/7941 from 4.6362/6414 previously. The ringgit also depreciated against the Indonesian rupiah to 270.6/271.0 from 268.7/269.1. – Bernama Coraza Integrated Technology Bhd Buy. Target price: RM0.67

1 US Dollar

4.4920 2.8610 3.3700 3.1390 4.8540 2.5880 3.3700 5.7960 5.1250 3.7740 62.4000 66.7000 58.4000 5.2500 0.0285 3.0420 42.3900 1.6300 7.9400 124.5900 121.0600 25.6700 1.5600 45.6000 13.9100 123.7300 N/A

4.3570 2.7440 3.2710 3.0540 4.6960 2.4920 3.2710 5.6100 4.9070 3.5130 59.7400 61.3600 55.4800 4.9200 0.0258 2.9450 38.9600 1.5300 7.4800 118.2800 114.9300 23.1700 1.4400 41.4800 12.3300 117.2900 N/A

4.3470 2.7280 3.2630 3.0420 4.6760 2.4760 3.2630 5.5900 4.8920

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

117.0900

3.3130

N/A

61.1600 55.2800 4.7200 0.0208 2.9350 38.7600 1.3300 7.2800 118.0800 114.7300 22.9700 1.2400 41.2800 11.9300 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

MR D.I.Y. Group (M) Bhd Buy. Target price: RM1.87

Mega First Corporation Bhd Outperform. Target price: RM5.80

March 7, 2025: RM1.37

March 7, 2025: RM0.515

March 7, 2025: RM4.11

Source: PublicInvest Research

Source: Bloomberg

Source: Bloomberg

MR DIY embarked on a “buy local, support local” campaign titled “Bersama Satu Beli Lokal 2024” in 4Q24, by collaborating with 13 local brands to offer products in the beauty and wellness (eg cosmetics, skincare, and haircare), lifestyle (eg scented candles and perfumes), and fashion (eg hijab, batik, and accessories) categories. The encouraging reception to this campaign has prompted it to continue with the initiative by launching the “Lokal Berseri-Seri” campaign, which started this month. The latest campaign features more brands and product store-keeping units (SKUs) – ie c.260 SKUs this round vs c.130 SKUs in the last campaign – offered in over 50 of its selected stores. Thanks to the campaigns, MRDIY is able to expand its total addressable markets by better appealing to female and Gen-Z consumers via the offerings of the abovementioned products. This will serve as a timely refresh to its product line-up and potential driver of a higher average basket size as it looks to arrest the lacklustre SSSG trend in the last two years. A social media marketing approach (engaging influencers or key opinion leaders) has been adopted to promote the campaigns – hence, the minimal investment commitments. In addition, most of the local partners will continue to work on their respective brand-building, having already established brand equity and followings – primarily via online channels. Rising wages should translate to higher disposable income for lower-income earners, which have a higher marginal propensity to spend. Consequently, discretionary spending should pick up and benefit MRDIY, considering its large network of stores. Management is also guiding for higher GPMs of 46-48% (FY24: 46.7%), supported by growing scale, easing freight costs, and favourable FX rates. BUY with RM1.87 TP. – RHB Research, March 7

CORAZA reported a 4Q24 revenue of MYR35.7m (+126.6% YoY) and core profit of MYR3.4m (4Q23: -MYR3.2m). Management noted that the 4Q24 GPM of 23.7% (-1.8ppts QoQ) was slightly impacted by provisions for slow-moving inventory. Excluding this, GPM would be around 25%. The company’s expansion efforts are timely to capture the recovery in global semiconductor demand, with Gartner forecasting global semiconductor revenue to grow by 14% in 2025, driven by the end of the inventory correction cycle. Its new P5 plant, which began operations in 4Q24, adds 87k sq ft of production space while enhancing its ability to fabricate complex frames and structures and add value to clients. Meanwhile, the new P3 facility, located adjacent to its existing site and slated for completion by July, will add 83k sq ft of production space and house advanced equipment, with operations expected to commence in 4Q25. Coraza’s investments in its expanded production space and precision equipment have boosted its new product introductions (NPI) and customer project transfers, primarily from semiconductor customers – with additional contributions from the life sciences and instrumentation segments. To capitalise on this momentum and move up the value chain, management will continue investing to offer more complex products, implement cost control measures, and enhance quality assurance systems. With demand recovery and rising NPI activity, we forecast revenue to grow at a robust FY24-27F CAGR of 22.4%. We forecast an FY25F effective tax rate (ETR) of 24%, assuming a profitable year. The firm’s net profit could be lifted by a lower ETR, given the MYR3.2m in net deferred tax assets on its FY24 balance sheet. BUY with RM0.67 TP. – RHB Research, March 7

LED by the sustainable 325MW-Don Sahong Hydropower earnings, the renewable energy segment is likely to remain the key earnings driver for the group this year in anticipation of muted growth in resources and packaging segments. The Don Sahong Hydropower plant is currently running at 202MW or an Energy Availability Factor of 62% amid the dry season. The major overhaul of the first turbine, which costs about USD2.5m (RM11m), is expected to be back in operation next month after 3.5 months. Under the new concession agreement, we see improved renewable earnings, led by the net saving of USD3.4m (RM15.3m) from the royalty payment following the upfront payment over the water rights, ii) lower annual amortisation charges of concession assets (RM1.6m), and iii) increased electricity sale volume (+5.5% YoY) following the commissioning of the 5th turbine. The 50%-owned oleochemical business under Edenor, is expected to turn around this year as the plant has stabilised following the rectification. Assuming it can break even this year, it could potentially contribute an additional RM65m to MFCB’s bottomline. Meanwhile, MFCB’s 30% stake in the switchgear business under Apex Power is expected to contribute at least RM6m to the group. The jointly owned ISKL campus building, which has reopened recently, is expected to breakeven this year following a major refurbishment. The food security segment is also set to see significant improvement, led by a turnaround in the coconut plantation in Cambodia and durian farm in Johor. Under the best-case scenario, all these non-core businesses could potentially generate additional earnings contribution of RM78m to the group this year. OUTPERFORM with RM5.80 TP. – PublicInvest Research, March 7