15/05/2025

BIZ & FINANCE THURSDAY | MAY 15, 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 firmer against dollar as US inflation, Treasury yields ease THE ringgit closed firmer against the American dollar yesterday, supported by improved risk sentiment following a lower-than expected US inflation reading and easing US Treasury yields. At 6pm, the local note appreciated to 4.2840/2910 versus the greenback compared to Tuesday’s close of 4.3185/3250. SPI Asset Management managing partner Stephen Innes said the Malaysian ringgit strengthened yesterday after US yields eased following a softer-than-expected April inflation report, giving room for Asian currencies, including the ringgit, to recover. “While long-term US interest rates remain elevated, markets are starting to reassess the inflation outlook, as the expected price pressures from recent tariff announcements have yet to materialise. US President Donald Trump’s new import tariffs were expected to trigger a near-term price spike, but April’s inflation data showed no notable increases in the categories likely to be affected,” he told Bernama. At the close, the ringgit traded lower against a basket of major currencies. It declined against the Japanese yen to 2.9373/9425 from 2.9181/9227, fell against the euro to 4.8204/8282 from 4.7961/8033 and dropped against the British pound to 5.7191/7285 from 5.7056/7142 previously. The local note was traded higher against its Asean peers. It climbed versus the Singapore dollar to 3.3045/3104 from 3.3084/3137 on Tuesday, rose against the Indonesian rupiah to 258.6/259.2 from 259.7/260.2 and surged against the Thai baht to 12.8920/9208 from 12.9958/13.0240. It advanced against the Philippine peso to 7.66/7.68 from 7.74/7.76.

MCE inks MoUs to support Chery’s localisation plans

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

KUALA LUMPUR: MCE Holdings Bhd through its wholly owned subsidiary Multi-Code Electronics Industries Bhd has signed two MoUs with Cheling Smart Mobility Technology (Wuhu) Co Ltd and Wuhu Atech Automotive Electronics Co Ltd to support the localisation of Chery Malaysia’s production. The Malaysian Investment Development Authority headquarters hosted the signing of the MoUs during Chery Premier Supply Chain Synergy Day. The partnerships will see the parties working together on several key areas including the local production of automotive parts and components, the transfer of technology and technical know-how, and ensuring compliance with Chery’s rigorous quality standards. The parties are also committed to developing local talent through training and upskilling initiatives and may explore joint investments in tooling or facilities to support production needs. MCE Group managing director Dr Goh Kar Chun said these MoUs reflect the company’s strong track record in design and manufacturing, and the company’s commitment to supporting automakers in their localisation journey. “With deep local insights and proven capabilities, we are well placed to help global players establish and grow their presence in Malaysia while contributing to a more resilient and competitive supply chain,” he said. MCE is a leading original equipment manufacturer engaged in the engineering, design and manufacturing of automotive electronics and mechatronic parts for the Malaysian and regional markets.

1 US Dollar

4.3740 2.8490 3.3580 3.1340 4.8990 2.6090 3.3580 5.8270 5.2500

4.2380 2.7330 3.2580 3.0480 4.7380 2.5110 3.2580 5.6390 5.0240 3.4190 58.4500 61.9200 53.8000 4.9100 0.0248 2.8790 39.8400 1.4800 7.5000 115.1100 111.8600 22.3400 1.3800 42.2300 12.1500 114.1300 N/A

4.2280 2.7170 3.2500 3.0360 4.7180 2.4950 3.2500 5.6190 5.0090 3.2190 58.4500 61.7200 53.6000 4.7100 0.0198 2.8690 39.6400 1.2800 7.3000 114.9100 111.6600 22.1400 1.1800 42.0300 11.7500 113.9300 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

120.4200 3.6730 61.0600 67.3200 56.6500 5.2300 0.0274 2.9770 15.5000 43.3200 1.5800 7.9700 121.2500 117.8300 24.7500 1.5000 46.4000 13.7100

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

Plantations Neutral

Southern Score Builders Bhd Not Rated

Pentamaster Corp Bhd Buy. Target price: RM3.72

May 14, 2025: RM0.46

May 14, 2025: RM2.89

Source: PublicInvest Research

Source: Bloomberg

Source: Maybank Investment Bank

PALM oil inventory saw the steepest jump since Aug 2023 as production recorded double-digit growth despite exports registering better growth on a MoM basis. In the near term, we expect to see a continuous uptrend in inventory level albeit at a slower growth rate. On a positive note, the wide palm oil’s discount to rival soybean oil may help attract strong buying interest from price-sensitive markets like India and Pakistan. Meanwhile, the stock-to-usage ratio expanded from 8.9% to 10.7%. Palm oil exports grew 9.6% MoM to 1.1m mt, boosted by a surge in demand from China (+54.2%), India (+25.4%) and the US (+33.4%), partially offset by weaker demand from the EU (-21.1%) and the Middle East (-10.6%). CPO production jumped 22.9% MoM to 1.7m mt, closing at the highest level in 6 months. The steep increase was mainly boosted by higher production from Peninsular Malaysia (+30.8%) and East Malaysia (+13%) as yields recovered from floods that affected harvesting activities in Johor and East Malaysia. Following a plunge in crude oil price, palm oil-gasoline gap has widened to US$280/mt, making it not commercially viable to use biodiesel. In Indonesia, despite the switch to B40 biodiesel mandate starting from March 2025, we think the consumption could be slow, as the government has recently proposed to increase its imports of crude oil and liquefied petroleum gas from the US as part of its tariff negotiations. This may curb Indonesia’s biodiesel use and boost palm oil exports. Despite mixed Q1’25 output, we expect strong results from most plantation companies, driven by higher CPO and PK prices and lower production costs. – PublicInvest Research, May 14

PENTAMASTER Corp remains cautious on its FY25 outlook despite an expected recovery in the factory automation solutions (FAS) segment after a soft Q1’25, primarily due to timing differences in project deliveries. Equitable split between FAS and automated test equipment (ATE) segments as PENT anticipates revenue from the FAS division to materialise more meaningfully in Q2/2H’25, supported by existing orders on hand – particularly from its major customer – which should sustain revenue until end-FY25 or early-FY26. The medical segment is projected to account for 30% of FY25 revenue. The group is also pursuing new orders from its major customer to upgrade existing production lines for upcoming products, while securing repeat orders from other medical manufacturing customers as part of its strategy to broaden its customer base and reduce reliance on its main client. The semiconductor segment is driven by demand for its legacy products and is expected to make up 12-15% of FY25 revenue. While the group is making strides in AI and advanced packaging, substantial contribution from these areas is only anticipated in FY26. The electro optical sector is projected to maintain steady momentum, contributing 15% of FY25 revenue, supported by sustained demand for its flagship test sensors, though no significant growth is expected. Remaining revenue will come from the consumer and industrial products segment, which has shown recovery. With resumption of capex spending from existing customers and an expanded customer base, this segment is expected to contribute 12-15% in FY25 (FY24: 6%), provided that deliveries remain on track. BUY with RM3.72 TP. – RHB Research, May 14

WITH a 51% stake in SJEE Engineering, which has 8 data centre projects to its name, Southern Score is poised to undertake higher value construction works such as of hospitals, data centres and pharmaceutical factories, with the ability to package both construction and M&E capabilities. Listed on the ACE market, the group has proposed a transfer to the Main Board of Bursa Malaysia Securities. The stock is Shariah-compliant. With over 14 years of providing construction management services, what differentiates Southern Score from most of its construction peers is that it takes on projects both as a turnkey contractor and main contractor, with the former offering higher margins. Its operating profit and net profit margins of 31% and 23% in 1H’25 compare against the peer average of 7.5% and 4.8%. Its outstanding orderbook was RM1.3 billion end-2024, with a tender book of RM500 million and another RM500 million under direct negotiation. The acquisition of a 51% stake in SJEE Engineering in Jan 2025 pushes the group up the value-added scale towards higher margin M&E jobs. SJEE offers electrical engineering services and its focus has shifted in recent years towards data centres. Todate it has completed 6 data centre jobs, is working on its 7th, and was recently awarded its 8th data centre job (RM51 million) by Gamuda Engineering. It is currently tendering for RM450 million worth of data centre works. If Southern Score recognizes construction revenue over 3 years and SJEE recognizes its RM150 million orderbook, total revenue/net profit in FYE6/26E could be RM482 million/RM71 million respectively. – Maybank Investment Bank, May 14