23/04/2025

BIZ & FINANCE WEDNESDAY | APR 23, 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 retreats on renewed concerns over global economy THE ringgit retreated versus the US dollar at the close yesterday due to renewed concerns over global economic uncertainties and mixed signals from the US monetary policy front, said an economist. At 6pm, the local currency dropped to 4.3835/3905 against the greenback, from Monday’s close of 4.3670/3735. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the ringgit saw some slight correction against the US dollar at RM4.3850 from the previous day’s closing. “The degree of uncertainties remained, but traders may have taken some positions as the dollar index (DXY) appears to have reached an attractive level,“ he told Bernama. Having said that, US President Donald Trump’s strong criticism of the US Federal Reserve (Fed) and its potential implications for the Fed’s independence in setting monetary policy remain key concerns, Mohd Afzanizam added. Back home, the ringgit traded mostly lower against a basket of major currencies. It fell against the Japanese yen to 3.1206/1260 from 3.1046/1095 at Monday’s close and declined against the British pound to 5.8590/8683 compared with 5.8513/8601 on Monday, but improved against the euro to 5.0362/0442 from 5.0408/0483 previously. The local note also slipped against Asean currencies. It decreased against the Singapore dollar to 3.3523/3579 from 3.3515/3570 at the close on Monday, slid against the Philippine peso to 7.73/7.75 from 7.71/7.73 on Monday, depreciated against the Thai baht to 13.1930/2212 from 13.1914/2170 and eased against the Indonesian rupiah at 259.9/260.5, compared with 259.8/260.3 previously.

HLIB: Local construction sector outlook remains bright for now KUALA LUMPUR: The Malaysian construction sector is largely insulated from the direct impact of Liberation Day, which brought tariffs to over 180 trading partners, with reciprocal rates ranging between 10% and 49% across Asean. Nevertheless, Hong Leong Investment Bank Bhd (HLIB) said the far-reaching nature of these measures, if prolonged, elevates potential second-order risks, which include a slowdown in trade related jobs and a potential pullback in data centre contracts. “The KL Construction Index has fallen by 4.3% since Liberation Day, exacerbating year-to-date performance. On the whole, we think that elevated risk premiums and negative wealth effects necessitate adjustment to our valuations. “In our view, the on/off nature of tariffs could result in deferment of investment decisions affecting the flow of industrial jobs,” it said in a note ysterday. HLIB said tender opportunities have been coming thick and fast this year, unimpeded by artificial intelligence, DeepSeek fears and global trade uncertainties. “We anticipate that data centre contracts could start trickling in from the second quarter (Q2’25) onwards, with awards for larger contract sizes of about RM2 billion per data centre possibly towards the second half, factoring in the evaluation period. “Encouragingly, several power infrastructure contracts have materialised this year. Tenaga’s electricity supply continues to expand with agreements signed totalling 5.9GW, or 26% up from 4.7GW in the previous quarter. The overall situation looks sunny at the moment, but HLIB has noted that there could be a pullback in data centre capital expenditure. – Bernama Affin Bank Bhd Neutral. Target price: RM2.45

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.4500 2.8680 3.4060 3.2120 5.1350 2.6750 3.4060 5.9640 5.5380

4.3130 2.7510 3.3040 3.1240 4.9710 2.5750 3.3040 5.7790 5.3010 3.4780 58.7900 64.6300 55.0200 4.9800 0.0248 3.0750 40.4300 1.5100 7.5100 117.0100 113.7900 22.2400 1.4000 43.7800 12.3900 116.1300 N/A

4.3030 2.7350 3.2960 3.1120 4.9510 2.5590 3.2960 5.7590 5.2860

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

122.5400 3.7380 61.4300 70.2800 57.9400 5.3100 0.0274 3.1760 14.7000 44.0000 1.6100 7.9800 123.2600 119.8600 24.6400 1.5200 48.1700 13.9900

115.9300 3.2780 64.4300 54.8200 4.7800 0.0198 3.0650 40.2300 1.3100 7.3100 116.8100 113.5900 22.0400 1.2000 43.5800 11.9900 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

Eco World Development Group Bhd Neutral. Target price: RM1.90

Construction Overweight

April 22, 2025: RM1.74

April 22, 2025: RM2.70

Source: PublicInvest Research

Source: Bloomberg

ECO World Development (ECW) has formalised its MoU for the collaboration with SD Guthrie Bhd and Negeri Sembilan’s state investment arm NS Corporation announced late last year with the signing of the deal last Friday. The tripartite collaboration is to develop a 1,166-acre industrial park in Bukit Pelanduk, Negeri Sembilan, that will have an estimated GDV of RM2.95 billion. We understand that the said development will be named Eco Business Park VII, and accordingly a company will be established whereby ECW will hold 55%, while SD Guthrie Land Ventures Sdn Bhd, a wholly subsidiary of SD Guthrie will hold a 30% stake. The remaining 15% will be held by NS Corp. The land cost (RM572.8 million) is fair in our view, at about 19.4% of total GDV. This deal marks the group’s maiden foray into the Negeri Sembilan’s industrial park market. Industrial development is of the key revenue pillars of ECW, with RM6.7 billion cumulative sales achieved from FY14 to Feb 28. To date, more than 1,400 local and international industrialists operate across ECW’s Eco Business Parks. In the first 4 months of FY25 alone, the group recorded almost RM1 billion sales propelled by 2 industrial land deals signed with global technology leaders in February 2025 – (i) 138.532 acres in Eco Business Park I to Microsoft Payments (Malaysia) Sdn Bhd and (ii) 58.187 acres in EcoBusiness Park V to Pearl Computing Malaysia Sdn Bhd. As such, we believe the group’s track record in the execution of industrial parks speak for itself and we are positive that demand for its industrial offerings would continue to be healthy. NEUTRAL with RM1.90 TP. – PublicInvest Research, April 22

Source: Company data, RHB

WE believe that Affin’s target growth segments (including Sarawak) provide it with some defense against a potential macroeconomic slowdown, but its non-II could take a hit due to adverse market sentiment. Affin’s long-term growth prospects are encouraging, although its near-term earnings growth might be impacted, due partly to the high base of FY24. In our view, the main risk for Affin is on NIM, as the group is one of the sector players with the highest sensitivity to potential OPR cuts. Our analysis indicates that a 10bps decline in NIM results in a 16% cut to our FY25F PATMI, i.e. comparable to its peer range of 4-13%. Loan growth, however, should remain fairly resilient, as Affin’s target segments (retail, enterprise, and Sarawak) should be fairly insulated from a potential trade and manufacturing slowdown. Elsewhere, fee-based non-II could weaken amid slower investment banking deals, but this could be mitigated by enhanced opportunities for customer flows (eg FX hedging) and trading activities. Asset quality is not an immediate concern at this juncture, as the group is still sitting on RM300 million in overlays. Affin’s share price should be fairly well-supported by the Sarawak growth theme and M&A news flow. As such, we do not expect its P/BV to de-rate down to the Covid-19-era low of 0.29x. However, if valuations deteriorate to the more recent trough of 0.36x (mid-2023 post Silicon Valley Bank incident), there could be a 31% downside to the current level. NEUTRAL with new RM2.45 TP. – RHB Research, April 22

WE believe contractors will remain well occupied with their jobs (together with new ones) from a mix of incoming industrial, residential, and infrastructure works (be it rail, road, and/or water). In our recent report, we highlighted the possibility of US data centre (DC) developers mitigating costs in light of prevailing tariffs – combined with the proposed US Artificial Intelligence Diffusion (USAID) rules (which may be a yardstick for their expansion plans in countries like Malaysia) – benefitting local contractors. Microsoft is strategically pacing its DC plans – the group continues investing in 18 countries where it announced investments between Oct 2023 and Mar 2025, which includes Malaysia (announced in May 2024) . Additionally, Google has restated its commitment to spend US$75 billion on building DC capacity. Domestically, Johor alone has 822MW of planned DC capacity, according to Cushman & Wakefield, which translates to potential job values of between RM16 billion and RM20 billion. Despite US President Donald Trump hinting at potential new tariffs for semiconductors, the tariff imposed on Malaysia prior to the 90-day pause is lower than most Asean countries except the Philippines and Singapore. As such, Malaysia could attract corporations from Asean (and potentially other Asian countries) to set up manufacturing bases here, consequently providing job opportunities for the likes of IJM Corp and Sunway Construction. Recall: The overhang in industrial properties has been declining from 2021 to 2024. The Elevated Autonomous Rapid Transit or EART (estimated at RM6-7 billion) is undergoing a request for proposal (June deadline). – RHB Research, April 22