25/03/2025

BIZ & FINANCE TUESDAY | MAR 25, 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 as traders stay cautious ahead of tariff rates THE ringgit ended lower against the US dollar yesterday as concerns over reciprocal tariff rates, which are expected to take effect on April 2, prompted traders and investors to adopt a more cautious stance. The local note dipped against the US dollar to 4.4325/4370 from last Friday’s close of 4.4180/4220. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid, citing Bank Negara Malaysia’s (BNM) Annual Report 2024 released yesterday, said that the main macroeconomic targets for 2025 remain unchanged. He projects that the GDP stays at 4.5% to 5.5% and the inflation rate at 2% to 3.5%. “This suggests that economic assessment has not deviated materially despite the challenging outlook due to tariff measures by the US new administration,” the economist told Bernama. Mohd Afzanizam also said that the overnight policy rate could stay at 3% and the interest rate differential with the US rate should narrow further. Meanwhile, the ringgit was traded lower against a basket of major currencies. It depreciated against the euro to 4.8039/8088 from 4.7843/7886 at last Friday’s close, appreciated against the British pound to 5.7441/7499 from 5.7151/7203 and eased against the Japanese yen to 2.9631/9663 from 2.9574/9602. The local note was mostly lower against Asean currencies. It edged down against the Singapore dollar to 3.3148/3184 from 3.3081/3114 at the previous close, narrowed against the Philippine peso to 7.73/7.74 from 7.70/7.71, and weakened against the Thai baht to 13.0849/1043 from 13.0436/0608.

Malaysia’s third investment upcycle begun mid-2023: BNM KUALA LUMPUR : Malaysia’s third and current investment upcycle started in mid-2023, driven by a confluence of cyclical and structural factors, according to Bank Negara Malaysia (BNM). The central bank, in its Economic and Monetary Review 2024 released yesterday, said catalytic projects and focus areas under the New Industrial Master Plan 2030 (NIMP 2030), the National Energy Transition Roadmap (NETR) and various positive efforts towards improving the investment ecosystem helped create further impetus for investment growth. “Policy stability was also an important factor underpinning investor confidence in embarking on more capital expenditure,” it said. According to BNM, the current upcycle saw a notable increase in the services sector’s share of total investment, driven mainly by the modern services cluster, encompassing finance, insurance, real estate, and business services, as well as transportation and storage, and information and communication subsectors. While the share of manufacturing investment was broadly sustained, a positive development was the increase in the share of electrical and electronics (E&E), optical products, and transport equipment subsectors, it said. “On the other hand, the share of investment in the mining sector declined quite substantially,“ it added. The central bank also opined that a significant development is the larger role of the private sector in driving investments in the third upcycle. BNM noted that public investments in the current upcycle focus on connectivity projects, like highways and 5G, and renewable energy, driven by public corporations. – Bernama

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.4850 2.8360 3.3580 3.1250 4.8660 2.5870 3.3580 5.8060 5.1120 3.7680 62.2800 66.8600 58.3100 5.3000 0.0281 3.0010 43.7500 1.6300 7.9400 124.3900 120.8900 25.5300 1.5500 45.7400 13.8200 123.5300 N/A

4.3510 2.7220 3.2600 3.0420 4.7090 2.4910 3.2600 5.6230 4.8970 3.5090 59.6500 61.5300 55.4100 4.9800 0.0255 2.9050 40.2300 1.5300 7.4800 118.0900 114.7600 23.0600 1.4300 41.6500 12.2600 117.1200 N/A

4.3410 2.7060 3.2520 3.0300 4.6890 2.4750 3.2520 5.6030 4.8820

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

116.9200

3.3090

N/A

61.3300 55.2100 4.7800 0.0205 2.8950 40.0300 1.3300 7.2800 117.8900 114.5600 22.8600 1.2300 41.4500 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

Gamuda Bhd Buy. Target price: RM5.83

V.S.Industry Bhd Buy. Target price: RM1.23

Binastra Corporation Bhd Buy. Target price: RM2.21

March 24, 2025: RM0.83

March 24, 2025: RM1.83

March 24, 2025: RM3.92

Source: Bloomberg

Source: Bloomberg

Source: Bloomberg

VS Industry’s 1H’25 results disappointed on lower-than-expected volumes from key customers. That said, we believe the volumes may have bottomed out and the investment thesis of market share gain to capture more orders from Customer X via Philippines expansion is unaltered. This will be key to propel the explosive FY26F earnings growth, hence we deem the current below-mean valuation as attractive. YoY, 1H’25 revenue inched down by 1% to RM2 billion, with reduced orders from a US-based customer and in Indonesia operations (both on inventory adjustments) more than offset the sales recovery of Customer X. Together with unfavourable FX adjustments booked in Q1’25, 1H’25 net profit fell 26% to RM46 million. QoQ, Q2’25 revenue dipped 18% on softer seasonality (Q1 and Q4 seasonally the stronger quarters) and the abovementioned inventory adjustments. Consequently, the affected production lines incurred operational losses on negative operating leverage, hence the 50% QoQ decline in core net profit to RM15 million with Q2’25 net margin slipping to 1.7%. Most of the key customers are taking a cautious wait-and-see approach with their order demand due to the uncertainties brought about by the US tariff policies. That said, volumes may have bottomed out in Q2’25 and should gradually pick up going forward on better clarity on tariffs, improving seasonality, and commencement of new production lines in 2H’25. Beyond the immediate term, VSI’s growth will be driven by gaining market share from Customer X’s orders through its Philippines expansion and the resumed opportunity to make floorcare products in Malaysia. BUY with RM1.23 TP. – RHB Research, March 24

WITH an estimated unbilled orderbook of RM32 billion as of end CY24, and assuming a monthly orderbook burn rate of RM1 billion per month, GAM needs RM20-25 billion worth of new wins in CY25 to hit its outstanding orderbook target of RM40-45 billion by end CY25. Taking into account the RM5 billion Segment 1 Penang Light Rail Transit (LRT) package secured in January, we think GAM’s targets are attainable. Potential near-term wins for CY25 include the water supply scheme for the Ulu Padas Hydroelectric Dam in Sabah (RM3 billion), Phase 2 (estimated at 100-120MW) of Pearl Computing Malaysia’s DC in Elmina (projected at RM2 billion), Suburban Rail Loop East line wide package (GAM’s share : RM9 billion), and the Sydney Metro West stations package (at least A$1 billion). There is also the early contractor involvement (ECI) works for the Oven Mountain Pumped Hydro project, which may be converted into a formal contract (GAM’s share estimated at A$1 billion). These exclude the potential construction of data centres in Negeri Sembilan on a 389 acre land. Water projects are the icing on the cake. The Sungai Perak Bukit Merah Dam raw water distribution project is in final planning stages, and could boost GAM’s orderbook by RM4 billion once rolled out. Other water projects up for grabs include the Sungai Rasau Water Supply Scheme Stage 2 (expected at RM2 billion) and Air Selangor’s plan to build two new water treatment plants (Labohan Dagang Phase 2 and Langat 2 Phase 2) by 2030 as GAM is currently involved in Stage 1 of the Sungai Rasau Water Supply Scheme via a package worth RM2 billion. BUY with RM5.83 TP. – RHB Research, March 24

BNASTRA has secured RM220 million worth of sewage treatment plants (STP) projects in CY24 – one from Green Earth at Sri Hartamas (worth RM155 million) and another one by F3 Development in Taman Bukit Cheras (worth RM68 million). We gathered that the STP site redevelopment project in Taman Bukit Cheras is rolling out smoothly, as BNASTRA has awarded a job to Salcon as a subcontractor via a RM11 million package. BNASTRA recently bagged a RM250 million data centre (DC) job in Cyberjaya from MYT DC3 for AIMS Group. Prior to this, Gamuda had been a contractor for AIMS Group (cumulative contract value of RM500m million spread across three jobs) and perhaps is putting more focus on larger DC jobs related to MNCs in the pipeline, in our view. All in, BNASTRA has secured RM1.2 billion in DC contracts. We believe the DC space in Klang Valley (particularly Cyberjaya and Bukit Jalil) remains vibrant, with total live supply forecasted to reach 232MW in CY27 vs 88MW in CY24, per Keppel DC REIT. BNASTRA’s key clients such as EXSIM Development and Maxim Global are expanding into Johor Bahru, with upcoming projects (located in the vicinity of the Bukit Chagar Rapid Transit System (RTS) station) potentially having a GDV of more than RM5 billion – translating into contracts worth at least RM2.5 billion that BNASTRA can eye for. We envisage some of these projects to be rolled out during FY26. Johor itself has been seeing a steadily increasing trend of residential units launched from CY21 to CY24, according to the National Property Information Centre. BUY with RM2.21 TP. – RHB Research, March 24