19/05/2025

BIZ & FINANCE MONDAY | MAY 19, 2025

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Malaysian Paper

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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

Analyst: Ringgit likely to trade in 4.26-4.29 range this week THE ringgit’s outlook remains positive going into this week, with the Malaysian currency expected to hover in the 4.26-4.29 range against the US dollar, according to SPI Asset Management managing partner Stephen Innes. He said the potential for Federal Reserve (Fed) rate cuts and easing US yields could push the greenback lower. “Recent US data came in below expectations, raising hopes for an interest rate cut, which weighed on the greenback. The softer US Consumer Price Index and Producer Price Index figures have raised hopes that the Fed may cut interest rates sooner than expected. “Although the Fed has yet to confirm any changes, markets are already adjusting their expectations,” he told Bernama. Innes said Malaysia’s first-quarter gross domestic product growth of 4.4%, though slightly below forecast, was in line with government targets and did not significantly impact the local currency. “Market attention is now on forward risks, especially from the US, rather than past data,” he added. The ringgit ended the week marginally higher against the US dollar, closing at 4.2900/2980 on Friday from 4.2970/3005 a week earlier. The ringgit appreciated versus the euro to 4.8022/8112 at Friday’s close from 4.8320/8359 at the end of last week and gained vis-a-vis the Japanese yen to 2.9470/9527 from 2.9565/9591 previously. However, it eased against the British pound to 5.7018/7125 from 5.7004/7050 a week earlier. The ringgit firmed vis-a-vis the Singapore dollar to 3.3041/3105 on Friday from 3.3095/3124 a week before.

‘Malaysian economic resilience bolsters US investor confidence’ KUALA LUMPUR: Malaysia’s economic growth of 4.4% in the first quarter of 2025 (1Q 2025) is a positive indicator of resilience and broadly reflects the stable business environment experienced by members of the American Malaysian Chamber of Commerce (Amcham). In a statement to Bernama, Amcham CEO Datuk Siobhan Das said the US business community continues to view Malaysia as a strategic hub in the region, and this momentum reinforces a positive investment outlook. She highlighted that the strong bilateral ties between Malaysia and the US – built over more than five decades – remain vital, and the association anticipates continued US investment in Malaysia. “We also anticipate Malaysian corporate investment into the US to grow on the back of the strong gross domestic product (GDP) numbers,” she added. Das noted that while GDP performance is one of many yardsticks used by US multinationals, their investment outlook is largely influenced by the ease of day-to-day operations. “What drives operational and growth decisions for US multinationals is the day-to-day experience, ensuring their business activities are not hampered by administrative bureaucracy and outdated, frequently changing rules and regulations. “Although economic indicators remain relevant, long-term American investments also depend on Malaysia’s competitiveness within global value chains,” she said. On Friday, Bank Negara Malaysia announced that the Malaysian economy expanded by 4.4% in 1Q 2025, driven by sustained household spending supported by favourable labour market conditions and government policies. – Bernama

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.3320 2.7990 3.3500 3.1100 4.8710 2.5620 3.3500 5.7740 5.2350

4.1980 2.6840 3.2500 3.0250 4.7120 2.4660 3.2500 5.5900 5.0100 3.3970 58.1000 61.5600 53.4200 4.8500 0.0246 2.8970 39.3800 1.4700 7.4500 114.3700 111.1600 22.5000 1.3700 41.9600 12.1300 113.4100 N/A

4.1880 2.6680 3.2420 3.0130 4.6920 2.4500 3.2420 5.5700 4.9950

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

119.6800 3.6500 60.6900 66.9300 56.2500 5.1700 0.0272 2.9940 15.5000 42.8400 1.5600 7.9100 120.4700 117.0900 24.9200 1.4900 46.1000 13.6800

113.2100

3.1970

N/A

61.3600 53.2200 4.6500 0.0196 2.8870 39.1800 1.2700 7.2500 114.1700 110.9600 22.3000 1.1700 41.7600 11.7300 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

Duopharma Biotech Bhd Buy. Target price: RM1.50

99 Speed Mart Bhd Buy. Target price: RM2.45

LBS Bina Bhd Buy. Target price: RM0.72

May 16, 2025: RM1.29

May 16, 2025: RM0.505

May 16, 2025: RM2.18

Source: Bloomberg, RHB Research

Source: Bloomberg, RHB Research

Source: Bloomberg, RHB Research

99 Speed Mart Retail’s 1Q25 results are in line, thanks to robust topline growth and effective cost control. Opportunities in the underserved regions should continue to support its outlet network expansion and expand 99SMART’s scale, thereby fuelling a 3-year earnings CAGR of 9% ahead. We also like the company’s domestic centric and resilient earnings profile, which will appeal to investors amidst the uncertainties brought about by the US tariff policy. Core net profit of MYR143m (+8% YoY) accounted for 24% and 25% of our and consensus full-year forecasts. Post results, we make no changes to our earnings forecasts but raise our ESG score to 3 from 2.9, to take into account the efforts it has made to start tracking emissions comprehensively. Consequently, our DCF derived TP rises to MYR2.45, which implies 35x FY25F P/E and is at a premium to the consumer retail peer average. This premium is justified by 99SMART’s staples-based product mix, superior ROE, and sustainable growth prospects. YoY, 1Q25 revenue rose 8% to MYR2.6bn underpinned by new store openings (+246 to 2833 outlets). Meanwhile, 1Q25 GPM expanded 0.4ppt to 12% on higher promotional discounts and target incentives as a result of solid sales performance. 1Q25 opex rose 13% YoY, outpacing topline growth - mainly due to increased wage expenses following the implementation of a higher minimum wage. Correspondingly, 1Q25 net profit grew 8% to MYR143m. QoQ, 1Q25 revenue was 1% higher on continuous outlet expansion and festive season demand, but 1Q25 core net profit was 13% higher - chiefly driven by a 1.2ppt GPM expansion. This could be due to more aggressive promotional initiatives in 4Q24 and an improved product mix in 1Q25. Stay BUY, new TP of RM2.45. – RHB Research, May 16

DUOPHARMA Biotech booked a 1Q25 core profit of MYR30.5m, accounting for 37% and 34% of our and Street’s estimate. Results were above expectations due to a notable surge in insulin supply and improvements in public sector sales. Moving forward, DBB’s growth should be underpinned by the Government’s higher budget allocations for the Health Ministry (MOH) and sustained consumer demand for pharmaceutical products. 1Q25 core profit grew 71% YoY, primarily driven by robust sales to the public sector on the awarding of the Approved Products Purchase List or APPL contract (with extended numbers of stock-keeping units or SKUs) and a notable surge in human insulin supply, as the industry-wide shortage gradually resolved. GPM contracted 3ppts YoY - likely on the higher contribution of local sales, which command a relatively lower margin vis-Ã -vis the private sector. Nevertheless, the normalisation of DBB’s key raw material - active pharmaceutical ingredient price (API) - led to a net margin expansion of 2.3ppts YoY to 11.6%. DBB’s existing contract for the supply and distribution of human insulin was set for renewal at end April. We gather that management is at the contract negotiation stage with MoH. There has been concern over the entry of a new competitor participating in the tender. While such developments remain fluid, we believe the entry of a new player aligns with MoH’s ambition to diversify its procurement processes. Should the ministry decide to split the contract equally between DBB and its competitor, we expect a potential earnings impact of 5% - based on our latest FY25F-26F earnings on the basis of a 10% net margins assumption. Maintain BUY, higher RM1.50 TP. – RHB Research, May 16

LBS Bina announced that it has entered into a MoU with Oriental Holdings for a proposed JV to develop parcels of land spanning 561 acres in Klebang, Malacca. This development would expand the group’s portfolio into the strong industrial space, and the considerable size would support the group’s long-term earnings. The proposed JV is aimed at developing the land into a mixed-use development comprising industrial and commercial properties in four phases across 15 years, with an estimated GDV of MYR7bn. Oriental Holdings, as the landowner, will be entitled to 17% of the GDV or a minimum land value of MYR50 per sq ft. The MoU will be in effect for a period of three months. The development land is located in the coastal area of Klebang, Malacca, with close proximity to the city centre and Tanjung Bruas Port. The land also falls within the Straits of Melaka Waterfront Economic Zone. In line with the strategic blueprint, the focus for the site will be to build an industrial hub comprising logistics and warehouse, manufacturing zones, and commercial components. The development land is in close proximity to LBS’ 735-acre reclamation land in Tanjung Bruas, which is designed to be developed into an industrial and maritime hub. The Reclamation and Development Agreement was signed with the Malacca state government in 2021, but has since yielded minimal progress. Nevertheless, in the long-term, we think the two projects could provide significant advantages to the group in terms of scalability and infrastructure alignment. The MoU is but a first step for this future industrial development, with each phase of development to comprise of its own JV agreement, and billings may take a few years to kick in. Maintain BUY and RM0.72 TP. – RHB Research, May 16