31/03/2025

BIZ & FINANCE MONDAY | MAR 31, 2025

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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 edges lower against dollar ahead of US PCE data THE ringgit ended marginally lower against the US dollar last Friday, ahead of the US personal consumption expenditures (PCE) price index data for February. At 6pm, the local note edged down to 4.4330/4355 against the greenback from Thursday’s close of 4.4300/4340. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said that the currency markets were mixed ahead of the US PCE inflation report, with the ringgit exhibiting a range-bound trade. “The USD/MYR moved within a range of RM4.4268 to RM4.4340. Meanwhile, the USD/IDR appreciates to 16,558 rupiah per US dollar possibly due to intervention by the Bank of Indonesia,” he told Bernama. The ringgit was traded lower against a basket of major currencies. It depreciated against the euro to 4.7761/7788 from 4.7720/7763 at Thursday’s close, weakened against the Japanese yen to 2.9438/9456 from 2.9351/9380, and decreased against the British pound to 5.7407/7440 from 5.7236/7287. The local note was mixed against Asean currencies. It appreciated against the Singapore dollar to 3.3040/3061 from 3.3060/3094 at the previous close, strengthened against the Thai baht to 13.0390/0533 from 13.0678/0854 but slid against the Indonesian rupiah to 267.7/267.9 from 267.4/267.8. However, the ringgit was flat against the Philippine peso at 7.72/7.73.

Local bond yields likely to rise ahead of reciprocal tariffs KUALA LUMPUR: The Malaysian Government Securities (MGS) and Government Investment Issues (GII) yields showed mixed movements last week, fluctuating between -0.5 and 3.8 basis points (bps). Kenanga Investment Bank Bhd noted that the 10-year MGS rose by 3 bps to 3.772%, while the 10-year GII edged up by 2.3 bps to 3.77%. The research firm said key drivers are due to the local yields climbing amid weak domestic demand and rising tensions ahead of next week’s reciprocal tariffs. However, foreign inflows of over RM3 billion into the bond market helped temper the rise, partly supported by BNM’s optimistic growth projection and a resilient leading index. Further, Kenanga said the MGS yields may trend higher in line with US Treasury (UST) movements as the upcoming reciprocal tariff could spark retaliatory measures and heighten global market volatility. “With the imminent Hari Raya holiday limiting domestic data releases, fresh catalysts remain scarce. “Yet, a stronger-than-expected PMI print could underpin local yields by reinforcing confidence in Malaysia’s economic outlook,“ Kenanga said in a report. Abroad, Kenanga said the UST yields surged last week, increasing between 2.6 and 16.5 bps. The 10-year UST jumped by 12.3 bps to 4.36%, while the 2-year UST edged up by 2.6 bps to 3.99%. The climb in the 10-year UST yield was driven by Trump’s announcement of a more targeted tariff approach, which spurred a market shift towards riskier assets.

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.4975 2.8460 3.3540 3.1380 4.8590 2.5870 3.3540 5.8290 5.1320

4.3625 2.7320 3.2560 3.0540 4.7020 2.4910 3.2560 5.6430 4.9130 3.5180 59.6700 61.4300 55.5300 5.0100 0.0254 2.8840 40.4800 1.5300 7.4900 118.4100 115.0700 23.0700 1.4300 42.2300 12.2900 117.4400 N/A

4.3525 2.7160 3.2480 3.0420 4.6820 2.4750 3.2480 5.6230 4.8980

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

123.8700 3.7780 62.3200 66.7600 58.4500 5.3300 0.0281 2.9790 14.6000 44.0200 1.6300 7.9500 124.7300 121.2200 25.5500 1.5600 46.3800 13.8600

117.2400 3.3180 61.2300 55.3300 4.8100 0.0204 2.8740 40.2800 1.3300 7.2900 118.2100 114.8700 22.8700 1.2300 42.0300 11.8900 N/A 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

Integrated Oil & Gas Neutral

Cypark Resources Bhd Outperform. Target price: RM0.85

Supermax Corporation Bhd Neutral. Target price: RM0.72

March 28, 2025: RM0.73

March 28, 2025: RM0.715

Source: Bloomberg

Source: Company data, RHB

Source: PublicInvest Research

ON Q-o-Q basis, WTE segment recorded RM10.7 million Loss Before Tax (LBT), widening from RM8.4 million LBT in Q2’25. The plant, which had been inactive due to unscheduled downtime since April 2024, resumed operations on Nov 23, 2024. However, limited operational days and elevated costs linked to repair and stabilisation efforts weighed heavily on its performance for the quarter. Potential lumpy revenue in Q4'25 amid tipping fee revision: The revised tipping fee is estimated to be approximately three times the current rate of RM33/tonne, closely aligning with the proposed rate of RM96/tonne for the upcoming WTE facility in Sungai Udang. With the revised fee effective from April 2023, Cypark is expected to recognise a one-time revenue boost of RM40 million, representing two years of accumulated differentials. As a result, we anticipate the Q4'25 performance to achieve at least breakeven or register minimal losses. LSS2 Danau Tok Uban (DTU) successfully achieved COD on Jan 31, 2025 and has transitioned into operations and maintenance (O&M) phase, contributing to stable revenue streams. Furthermore, the WTE plant is expected to operate at optimal levels following its resumption with upgraded, more efficient equipment. With all setbacks effectively addressed, Cypark is now poised to redirect its capital commitments towards growth initiatives, including securing new projects such as the EPCC 500MW Hydro Hybrid Floating Solar and the MyBeST (BESS for Peninsular Malaysia). We cut our FY25F earnings estimates to RM104.6 million net losses as we expect Cypark would achieve breakeven in Q4'25 on the back of lumpy revenue and better performance from WTE. OUTPERFORM with RM0.85 TP. – PublicInvest Research, March 28

SUPERMAX commissioned half capacity of Phase 1 at its Texas plant amounting to 2.4 billion capacity in Jan 2025. Do note that its US plant entails four manufacturing buildings (B2A, B2B, B2C, B2D) with each building equipped to manufacture c.4.8bn pieces. The total manufacturing capacity is 19.2 billion. The remaining half of Phase 1 (B2A) is expected to be commissioned by Q4’25. Meanwhile, Phase 2 (B2B) of the manufacturing plant is expected to be installed within the next two years subject to market conditions. Q1’25 could be the worst quarter in 2025. Recall that Malaysian glove makers collectively guided for sequential weakness in Q1’25 sales volume. This coincided with the threat of losing EU market share (as China is currently turning to non-US markets) expected to drag Malaysian players’ profitability. Despite various headwinds, we believe Malaysian players will remain profitable due to ongoing efforts in employee rightsizing and the easing of raw material costs (starting in March), which should enable glove companies to post stronger results in Q2’25 after the inventory-destocking cycle. According to our channel checks, client enquiry for the month of May has been gradually picking up. Despite not being realised into actual sales, we take comfort in the fact that the inventory adjustment period will soon be behind us (most likely June) as the period of excessive orders by US customers in 2024 only lasted for six months based on our analysis. The like-for-like inventory adjustment which took place from 2H’22 until 1H’24 (19 months) was a result of excessive buying from Q2’20 until Q1’22 (30 months) due to the Covid-19 pandemic. NEUTRAL with RM0.72 TP. – RHB Research, March 28

WE maintain our Brent crude oil price forecasts for 2025 and 2026 at US$75/bbl. Opec expects 2025 global oil demand to grow by 1.4mbpd YoY (2024: 1.5mbpd), taking total demand to 105.2mbpd next year – premised on a global GDP growth forecast of 3.1% YoY. We estimate the oil market will narrow its theoretical deficit from 1.4mbpd in 2024 to 0.7mbpd in 2025. This is mainly due to a moderation in demand growth and higher supply from both Opec and non-Opec producers. Opec+ will start to increase its production gradually from April. If Opec+ were to continue its ramp-up programme without any changes, the oil market could see a surplus of 0.6mbpd in 2026. We keep our 2026 oil price unchanged at US$75/bbl as we believe Opec+ may put on hold to its production hike plan in 2026 to avoid a surplus condition. Israel’s Gaza strikes escalate regional tensions while the US’ “maximum pressure” on Iran and Venezuelan through oil tariffs potentially remove a portion of global oil supply. Overly aggressive sanctions may not be aligned with Trump’s intention to bring down energy prices. The Malaysian oil & gas sector is now NEUTRAL following the resuming of our coverage of Petronas Chemicals. We see prolonged uncertainties from the domestic industry and macroeconomic front. The switching of Petronas’ financial reporting to every half yearly, rightsizing initiatives, and ongoing discussions with Petroliam Sarawak (Petros) continue to cast uncertainties over the sector as capex spending targets remain unclear. The overall operating environment could be more challenging, but we advocate selective stock selection with FPSO and maintenance-related players as our preferred choices amidst attractive valuations. – RHB Research, March 28