12/05/2025

BIZ & FINANCE MONDAY | MAY 12, 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 seen staying weaker on US-China trade optimism THE ringgit is expected to stay weaker in the near term, given the optimism that a trade deal between the United States and China, and perhaps the rest of the world, would be achieved within the 90-day pause period. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the US-China talks may have spurred interest in the greenback. “China’s trade data during April showed that exports to the US declined 21%, while China’s export growth to Asean and the European Union accelerated by 22.5% and 8.3%, respectively. “It seems that such a trend would continue if the tariff issues are not resolved,” he told Bernama. Mohd Afzanizam said this week’s focus will be on the US consumer price index and retail sales data for April. He said the market will also closely monitor Malaysia’s first quarter of 2025 (Q1’25) gross domestic product (GDP) data, set to be released on Friday. “I am looking at 4.5% for Malaysia’s Q1 2025 GDP, and I suppose the GDP is still going to be decent, with front-loading activities on international activities providing support, albeit momentarily. The second half of 2025 would be crucial as this will depend on the outcome of the trade negotiations,” he added. Mohd Afzanizam expects the ringgit to trade within a range of 4.30 to 4.33 to the US dollar this week. Last week, the ringgit ended weaker against the US dollar, closing at 4.2970/3005, from 4.2560/2600 the preceding week. It fell against the euro to 4.8320/8359 from 4.8297/8342 last week, weakened vis-a-vis the yen to 2.9565/9591 from 2.9437/9467, and depreciated against the pound to 5.7004/7050 from 5.6639/6692.

Gold futures on Bursa likely to trade lower this week KUALA LUMPUR: Gold futures on Bursa Malaysia Derivatives are expected to trade lower this week, as progress in the trade deal between the United States and China – anticipated by the end of the week – may boost demand for the US dollar and weigh on gold prices. “Gold remains locked into its inverse correlation with the dollar. If the US dollar pushes higher on the back of trade deal progress – whether with China or other Asean economies – gold could ease back toward US$3,300 per troy ounce,” SPI Asset Management managing partner Stephen Innes told Bernama. However, he noted that if the greenback weakens amid US-China trade tensions or policy uncertainty, gold could rebound toward US$3,350 per troy ounce, as the yellow metal resumes its role as a hedge against geopolitical risk. “The US-China trade talks this weekend in Switzerland will be pivotal. A constructive outcome – anything from tariff rollbacks to procurement signals – could paradoxically support the dollar, as risk flows favour US assets amid improving clarity. “On the flip side, if talks collapse or stall, expect sentiment to sour quickly, with safe-haven flows potentially lifting gold and reversing the dollar’s late-week bid,” he added. On a Friday-to-Friday basis, the spot month May 2025 contract rose to US$3,335.10 per troy ounce from US$3,274.10 in the previous week. Meanwhile, the June 2025, July 2025, August 2025, and October 2025 contracts all improved to US$3,348.10 per troy ounce from US$3,288.10. Trading volume grew to 455 lots from the 352 lots recorded in the preceding week, while open interest edged up to 42 contracts from 40 contracts.

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.3190 2.7930 3.3350 3.1170 4.8910 2.5750 3.3350 5.7460 5.2760 3.6260 60.1400 67.1900 56.2200 5.1800 0.0270 3.0060 42.8400 1.5600 7.9000 119.6300 116.2500 24.5100 1.4800 46.1500 118.8900 N/A

4.1780 2.6760 3.2310 3.0280 4.7240 2.4770 3.2310 5.5560 5.0450 3.3710 57.5100 61.7200 53.3300 4.8500 0.0244 2.9050 39.3400 1.4600 7.4300 113.5600 110.3600 22.1100 1.3600 41.9500 112.5300 N/A

4.1680 2.6600 3.2230 3.0160 4.7040 2.4610 3.2230 5.5360 5.0300

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

112.3300

3.1710

N/A

61.5200 53.1300 4.6500 0.0194 2.8950 39.1400 1.2600 7.2300 113.3600 110.1600 21.9100 N/A

100 Qatar Riyal 100 Saudi Riyal

100 South Africa Rand 100 Sri Lanka Rupee 100 Swedish Krona

1.1600 41.75

Source: Malayan Banking Bhd/Bernama

Pentamaster Corp Bhd Buy. Target price: RM4.17

Pavilion REIT Buy. Target price: RM1.77

Kerjaya Prospek Bhd Buy. Target price: RM2.67

May 9, 2025: RM2.05

May 9, 2025: RM1.47

May 9, 2025: RM2.71

Source: Bloomberg, RHB Research

Source: Bloomberg, RHB Research

Source: Bloomberg, RHB Research

1Q25 core net profit of MYR9.4m (-42.2% QoQ, -45.2% YoY) missed expectations, as macro uncertainties prompted customers to delay investment and procurement decisions. Still, long-term prospects remain supported by rising demand for high-performance semiconductors, artificial intelligence-enabling hardware and software, and electrification in automotive applications, which should drive adoption of Pentamaster Corp’s automated test equipment (ATE) and factory automation solutions (FAS). 1Q25 core net profit of MYR9.4m (-42.2% QoQ, -45.2% YoY) came in below our and Street’s expectations, making up 11% of estimates. Group revenue declined 22.9% YoY to MYR131.6m (+0.7% QoQ), weighed down by a sharp contraction for Pentamaster’s FAS division, which was impacted by lower project deliveries in the medical segment. This was mainly due to timing differences in project delivery schedules and slower order conversion cycles from medical customers. On a brighter note, the ATE segment saw a strong rebound, where revenue surged 157.4% QoQ (+31.6% YoY) to MYR95.8m, driven by higher project deliveries to the automotive, semiconductor, and electro-optical sectors. Pentamaster’s net margins declined in tandem with lower revenue and were further pressured by higher R&D expenses related to its medical business. Underpinned by the US trade tensions, the group faced a slower than-expected replenishment of its orderbook, which may dampen the momentum of order conversions in the near term. Orderbook slipped to MYR350m (-12.5% QoQ), with a breakdown of 41% medical, 23% automotive, 12% semiconductor, 10% electro-optical, and 14% consumer and industrial products. Despite near-term challenges, it remains positive on the long-term outlook. Keep BUY and RM4.17 TP. – RHB Research, May 9

KERJAYA Prospek announced its sixth job win for FY25 worth MYR162m, awarded by Majestic Gen for main building works for the Gen Rise project in Johor Bahru - a 47-storey transit-oriented service development (with 732 units) located near the Bukit Chagar Rapid Transit System (RTS) station and the customs, immigration, and quarantine complex. The contract will commence on Aug 1. KPG is no stranger to Johor as the group has previously clinched six jobs worth MYR1.3bn in the state. The last job it secured in Johor was a residential development project awarded by Teguh Harian Build Tech worth MYR258m in Oct 2021. Gen Rise’s proximity to the Bukit Chagar RTS station could boost KPG’s visibility amongst other developers planning launches within the area. Data from the National Property Information Centre show that the number of overhang units in Johor has been easing for four consecutive years, in anticipation of the completion of the Johor Bahru-Singapore RTS Link project by Dec 2026. Post new job win, KPG’s construction orderbook stands at MYR4.6bn (2.6x cover ratio), while total new contracts secured amount to MYR870.3m vs our FY25 job replenishment target of MYR1.6bn. KPG has tenders worth MYR2-3bn, including a data centre (DC) it is bidding for on its own. KPG is also looking at MYR2-3bn worth of tenders related to industrials (DCs, factories, warehouses) that would be entered via a JV with Samsung C&T. We gather that there are more dredging and reclamation works up for grabs for phase 2B and 2C of Andaman Island in Penang. Between 2026 and 2030, Eastern & Oriental aims to develop MYR3.8bn worth of GDV of properties, which could lead to MYR1.5bn worth of jobs being available for construction players like KPG. Keep BUY and RM2.67 TP. – RHB Research, May 9

PAVILION REIT’S 1Q25 earnings came in line with expectations, with YoY growth mainly driven by higher contributions from Pavilion Bukit Jalil (PBJ) while property expenses remained intact overall leading to higher NPI margins. We remain positive on the REIT based on its attractive dividend yield and stable earnings outlook. 1Q25 core profit of MYR90.4m (+12% QoQ, +9% YoY) was in line with expectations at 24% of our and Street’s estimates. As it is a seasonally stronger quarter, QoQ revenue increased 4% from higher turnover rent, and NPI grew 6% supported by lower provision of doubtful debts. YoY, revenue grew 4% mainly contributed by higher occupancy rates for PBJ and income generated from the exhibition centre. NPI margins remained stable at 62.6%, and the DPU for the quarter amounted to 2.68 sen (4Q24: 2.43 sen, 1Q24: 2.48 sen). Pavilion KL - contributing 60% of the REIT’s revenue - recorded a 5% growth in revenue QoQ but a slight 2% dip YoY from lower turnover rent from a high base last year, while Elite Pavilion remained strong with a 17% revenue growth YoY. Similarly, PBJ recorded 17% higher revenue YoY, resulting in a much improved NPI margin of 61% for the mall (4Q24: 57%, 1Q24: 52%). Intermark Mall’s revenue grew 9% YoY, but with a lower NPI (-11% YoY) from higher expenses while Da Men mall remained loss-making for the quarter, but will turn to black once its new master lease commences in 4Q25. With high occupancy rates across its key properties, we expect Pavilion REIT to record a mid-single digit rental reversion. The REIT’s acquisition of two hotels - Banyan Tree and Pavilion Hotel - is expected to be completed in 1H25 for MYR480m, providing a strong yield of 7% beginning 2H25. Maintain BUY with RM1.77 TP. – RHB Research, May 9