18/03/2025

BIZ & FINANCE TUESDAY | MAR 18, 2025

FOLLOW

ON INSTAGRAM

20

Malaysian Paper

@thesundaily @t

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 ends easier against dollar as Fed meeting looms THE ringgit closed easier yesterday as traders and investors remain guarded ahead of the two-day US Federal Open Market Committee (FOMC) meeting which will begin tomorrow, said an analyst. At 6pm, the ringgit decreased to 4.4450/4490 against the greenback from last Friday’s close of 4.4410/4455. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said weaker economic data points in the US, heightened uncertainties over geopolitics in Europe and the Middle East, along with China’s commitment to boost consumption have resulted in markets on a defensive mode. “The US dollar-ringgit started the day on a strong note of RM4.4342 during the morning session but gradually depreciated towards RM4.4473 in the afternoon session. “It appears that ringgit is flirting at around its immediate resistant level,” he told Bernama. Meanwhile, the ringgit traded lower against a basket of major currencies. It declined against the euro to 4.8455/8499 from 4.8194/8243 at last Friday’s close, fell against the British pound to 5.7576/7628 from 5.7404/7463, and was lower against the Japanese yen to 2.9896/9925 from 2.9809/9842 on Friday. The local note was mixed against Asean currencies. It eased against the Singapore dollar to 3.3351/3383 from 3.3241/3277 at the previous close and weakened against the Thai baht to 13.2213/2391 from 13.1820/2020. The ringgit, however, edged up against the Indonesian rupiah to 270.9/271.2 from 271.6/272.0 and was marginally lower versus the Philippine peso at 7.76/7.77 from 7.75/7.77.

Analyst views TNB as safe bet amid volatile markets KUALA LUMPUR: An analyst has viewed Tenaga Nasional Bhd (TNB) as a relative safe haven given its earnings resilience and undemanding valuation, amid the prevailing market volatility. In a note yesterday, Maybank Investment Bank Bhd said the electricity giant’s medium-term earnings are anchored by a fixed return on a growing domestic-centric regulated asset base, with potential upside risk from contingent capital expenditure (capex) deployment and recovering generation contribution. It said TNB’s earnings are anchored by a sizable (more than 70%) and resilient regulated earnings base, while the Regulatory Period 4 (RP4) base tariff has reflected a three-year base capital expenditure of RM26.6 billion (up 29% from RP3) on a 7.3% regulated return. “Meanwhile, the contingent capex of RM16.3 billion (also on a 7.3% return and likely backloaded) is not included in the base tariff (and not in our forecasts), with the recovery mechanism still being finalised. “By our estimate, fully deploying the contingent capex could lift our financial year 2027 estimate net profit by circa 8%,” it added. Maybank Investment noted that the generation’s contribution to TNB’s consolidated earnings is not immediately apparent as reported GenCo (generation company) earnings are distorted by fuel margins. “We expect generation contribution to recover in the coming years with Manjung 4 now operational after its extended outage in 2024. “Coal prices are trending down, which, along with the rebasing of reference coal prices in RP4, should imply lower imbalance cost pass through surcharges, and this should help alleviate public pressure on net bill changes when the revised tariff schedule takes effect in the second half of 2025,” it said. – Bernama CCK Consolidated Holdings Bhd Outperform. Target price: RM1.55

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.5040 2.8690 3.3780 3.1300 4.9070 2.6040 3.3780 5.8350 5.1280

4.3710 2.7540 3.2800 3.0470 4.7500 2.5080 3.2800 5.6520 4.9130 3.5250 60.1400 62.0600 55.6700 4.9500 0.0258 2.9380 40.0000 1.5300 7.5300 118.6100 115.2800 23.1800 1.4400 41.7800 12.4100 117.6700 N/A

4.3610 2.7380 3.2720 3.0350 4.7300 2.4920 3.2720 5.6320 4.8980 3.3250 60.1400 61.8600 55.4700 4.7500 0.0208 2.9280 39.8000 1.3300 7.3300 118.4100 115.0800 22.9800 1.2400 41.5800 12.0100 117.4700 N/A

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

124.0700 3.7840 62.7700 67.4300 58.5700 5.2700 0.0285 3.0340 14.7000 43.4800 1.6400 7.9900 124.9500 121.4300 25.6600 1.5600 45.8800 13.9900

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

Ranhill Utilities Bhd Buy. Target price: RM1.37

Technology Overweight

March 17, 2025: RM1.23

March 17, 2025: RM1.22

Source: PublicInvest Research

Source: Bloomberg

Source: Bloomberg

FOLLOWING our recent visit to CCK’s operations in Kuching, we remain upbeat on the group’s future growth prospects. We see strong growth potential from CCK’s Indonesia food processing operations and the minimum wage hike to drive consumer consumption, which should help boost CCK’s retail operations. CCK reported a headline net profit of RM75 million (-11.6% YoY), mainly dragged by a one-off RM10 million withholding tax in relation to the sale of the 40% PT Adilmart stake to Creador and lower government subsidy received. Note that CCK’s net profit in Q4’23 was boosted by a RM16 million subsidy from the government. Therefore, after adjusting for non-core items, CCK’s FY24 core net profit grew by 3% YoY to RM85 million. CCK is the largest fresh mart operator in East Malaysia, with a total of 77 touch points which includes 68 fresh mart, 6 wholesale, 3 supermarkets. The group’s retail stores are characterised by modernised stores strategically located to serve diverse consumer segments, offering an enhanced shopping experience, particularly in terms of cleanliness, when compared to traditional local wet markets. Additionally, CCK’s fully integrated supply chain ensures a stable poultry supply to its retail network, effectively mitigating the impact of volatile poultry prices. Moving forward, CCK plans to open more new stores in Sabah (2-3 stores a year). CCK is in the midst of constructing a new production plant in Boyolali, Central Jawa which is projected to triple its current production capacity to 60k MT/annum. The strategic location of this new plant, closer to key raw material sources, is expected to generate significant cost savings for the group. OUTPERFORM with RM1.55 TP. – PublicInvest Research, March 17

ACCORDING to an article titled “Government May Raise Water Tariffs By 30% In Selangor, KL & Putrajaya Starting July This Year”, water tariffs nationwide are in plans to be raised, starting with the three aforementioned areas (negotiations in progress). The National Water Services Commission (SPAN) has instructed water operators to obtain written approval from state governments by March 31 before implementing the new tariff-setting mechanism. In Feb 2024, Ranhill Utilities’ subsidiary Ranhill SAJ’s water tariffs in Johor for domestic users rose between 5% and 31% for residential bands 1-3. Tariff revisions for non-domestic users, meanwhile, came into effect in Jan 2023 to a tune ranging between 8% and 13%. Prior to these tariff changes, the last revision took place in 2015 and hence, possibility of subsequent hikes cannot be ruled out, including in Johor to ensure water infrastructure assets are well maintained. Additionally, the article mentioned that data centres (DCs) will likely be charged under a special category at RM5.50 per cu m instead of the standard industrial water tariff subject to the Ministry of Energy Transition and Water Transformation’s (PETRA) approval. For Ranhill SAJ’s case, perhaps any specialised tariff for DCs should not exceed what is imposed in Singapore, in our view. On further scrutiny, we found that Singapore’s non-domestic industrial water prices are set at S$1.75 (including waterborne tax of S$1.09) effective April 2025 which equates to RM5.83 – higher than the aforementioned special water tariff category of RM5.50 for DCs. We maintain earnings estimates but lower RAHH’s water segment discount rate to 6% from 7.5% due to favorable regulatory conditions and potential higher water tariffs, especially for DCs. BUY with new RM1.37 TP. – RHB Research, March 17

Q4’24 results for the technology sector were mostly below expectations, with four of the nine companies under our coverage missing estimates – mainly dragged by margin compression despite overall revenue growth and higher loadings. We expect earnings to grow in 2025 on stronger demand, with potential upside in the immediate term on some urgent order deliveries stemming from impending tariffs to be imposed by the US. The sector’s aggregate core PATAMI contracted by 15.8% YoY in CY24 and by 21.1% YoY in Q4’24. Loss of economies of scale, ASP erosion, pre-opening expenses and a higher cost base were among the culprits for the lower-than-expected margins. Three companies – Coraza Integrated Technology (Coraza), NexG, and CTOS Digital (CTOS) booked higher earnings YoY, thanks to stronger revenue. Post results reviews, we cut our aggregated forward earnings forecast for the sector by 12.9%, mainly dragged by Inari Amertron, Unisem (M), Malaysian Pacific Industries (MPI) and CTOS. We expect earnings to surge by 37.2% YoY in CY25, as we anticipate a stronger year from a recovery in the semiconductor space. The Bursa Malaysia Technology Index (KLTEC) tumbled to a 4 year low, after taking a huge dive over the past months due to: i) weaker-than-expected company results, ii) the potential imposition of tariffs or sanctions from the US, and iii) the overall risk-off sentiment in the market. However, we continue to observe a stronger YoY revenue growth trend in Q4’24, on a gradual recovery that we believe will gain pace moving further into FY25. Despite the uncertainties instigated by the US-China trade war, the tone of technology players’ management teams indicates stronger orders ahead. – RHB Research, March 17