22/05/2025

BIZ & FINANCE THURSDAY | MAY 22, 2025

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Malaysian Paper

/thesundaily /

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 rises against dollar on concerns over US fiscal health THE ringgit ended higher yesterday as concerns over the fiscal health of the US continued to weigh on the greenback. At 6pm, the local note rose to 4.2685/2735 versus the US dollar from Tuesday’s close of 4.2950/3010. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the recent sovereign downgrade by Moody’s Ratings on the credit rating of the US has weighed on the greenback. “Other emerging market currencies are also gaining against the greenback. It remains to be seen whether such a trend can be maintained,” he told Bernama. SPI Asset Management managing partner Stephen Innes said the ringgit yesterday tracked a broadly weaker US dollar as capital rotation into Asia gained traction and speculation swirled ahead of the G7 summit in Canada. At the close, the ringgit traded mostly higher against a basket of major currencies. It appreciated versus the Japanese yen to 2.9642/9679 from Tuesday’s 2.9727/9773, increased against the British pound to 5.7241/7308 from 5.7428/7509, but was slightly lower vis-à-vis the euro to 4.8379/8436 from Tuesday’s 4.8340/8408. The local note traded mostly higher against its Asean peers. It went up vis-à-vis the Philippine peso to 7.67/7.68 from 7.72/7.73 on Tuesday, improved against the Singapore dollar to 3.3071/3115 from 3.3153/3202, and advanced against the Indonesian rupiah to 260.2/260.7 from 261.6/262.1 previously. However, the ringgit declined against the Thai baht to 13.0121/0353 from Tuesday’s 12.9856/13.0116.

UPNM, MHS Aviation intend to boost drone development LANGKAWI: Universiti Pertahanan Nasional Malaysia (UPNM) yesterday signed a Letter of Intent (LoI) with MHS Aviation Bhd, a wholly owned subsidiary of Boustead Holdings Bhd, to drive the development of unmanned aircraft technology in Malaysia. This collaboration is part of the long-term efforts of both parties in strengthening the research, innovation and training ecosystem in the field of Unmanned Aircraft Systems (UAS), a critical domain for the survival of national defence and the competitiveness of the country’s high-tech industry. UPNM in a statement said that the LoI seals the joint commitment between academia and industry in strengthening the country’s UAS technology capabilities through the development of academic modules and specialised field training related to UAS. “The commitment also includes joint research and knowledge sharing in a strategic, high-impact manner, aimed at enhancing the competencies of UPNM students and officers through industrial training, simulation-based learning, and technical workshops,” it said. UPNM Vice-Chancellor Lt Gen Datuk Arman Rumaizi Ahmad said the collaboration will strengthen the competitiveness of researchers and students and position UPNM as a hub of excellence in defence technology, in line with the strategic thrust of UPNM30. Meanwhile, MHS Aviation Bhd CEO Mohd Fakhrul Arifin Adinan hoped that the collaboration can develop the country’s UAS capabilities from the grassroots by simultaneously forming human expertise and technological development. – Bernama

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.3450 2.8090 3.3540 3.1190 4.9090 2.5870 3.3540 5.8280 5.2910

4.2110 2.6960 3.2560 3.0350 4.7500 2.4920 3.2560 5.6430 5.0660

4.2010 2.6800 3.2480 3.0230 4.7300 2.4760 3.2480 5.6230 5.0510

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

119.6100 3.6420 60.5600 67.4600 56.0600 5.1600 0.0274 3.0140 15.5000 43.5300 1.5700 7.9200 120.4500 117.0700 25.1000 1.4800 46.5100 13.8100

113.4200 3.3920 58.0000 62.0800 53.2700

113.2200 3.1920 58.0000 61.8800 53.0700

4.8500 0.0248 2.9180

4.6500 0.0198 2.9080

N/A

N/A

40.0300 1.4700 7.4700 114.3400 111.1400 22.6700 1.3700 42.3500 12.2500

39.8300 1.2700 7.2700 114.1400 110.9400 22.4700 1.1700 42.1500 11.8500

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

KKB Engineering Bhd Buy. Target price: RM1.83

TSH Resources Bhd Neutral. Target price: RM1.15

AEON Co (M) Bhd Buy. Target price: RM1.75

May 21, 2025: RM1.12

May 21, 2025: RM1.46

May 21, 2025: RM1.49

Source: Bloomberg

Source: Bloomberg

Source: Bloomberg

Q1'25 core profit plunged by 21% QoQ but jumped 148% YoY to RM53.6 million, accounting for 38% and 40% of our and Street full-year forecasts. We deem this to be in line, as we believe earnings will contract in Q2’25, as spot CPO prices have subsided (QTD: -18%). Q1'25 FFB output decreased 5% QoQ (+1% YoY), led by its Indonesia unit (-4% QoQ, +0.4% YoY) due to heavy rainfall during the quarter. This was offset by an improvement in its plantations in Sabah (-11% QoQ, +6% YoY). Over 4M’25, weather conditions have improved, with FFB output growth increasing to 3% YoY – in line with our initial assumption of 4% growth for FY25. TSH is keeping its target of 8% FFB growth in 2025, as it expects a larger pick-up in production numbers in 2H’25. As such, we lift FY25 FFB growth to 6% from 4%, but maintain our FY26-27 growth estimates at 4-5%. CPO ASP was flattish QoQ but rose 17% YoY in Q1'25, while that of PK rose by a larger 10% QoQ (+66% YoY) – to RM4,193/tonne and RM3,203/tonne. Note: TSH does not engage in any forward sales as it believes CPO prices to be supported by the implementation of the B40 mandate in 2025. Estimated unit cost decreased 4% YoY in Q1'25, as TSH was unable to meet its fertiliser application target during the quarter due to heavy rainfall. While it is expecting to post higher unit cost in the coming quarters on the back of more aggressive manuring activities, TSH maintains its FY25 unit cost guidance of 0-5% lower YoY, driven by higher output. NEUTRAL with RM1.15 TP. – RHB Research, May 21

AS at end Q4'24, KKB’s outstanding orderbook stood at RM226 million, and the group has yet to announce any new jobs YTD FY25. Its tenderbook was at RM254 million as of end Q4'24, with outcomes likely to be known within 1H’25. We think KKB’s tenderbook may have increased since end-Q4'24, as we understand that it was in the process of submitting bids for RM500 million worth of jobs (estimated success rate of 30-40%) with outcomes to be known in 2H’25 (progress and recognition to only pick up in FY26). Aside from oil and gas related jobs, Sarawak’s plan to invest RM6 billion in a rural water supply project by 2030, and target to replace 2,740km of pipelines bode well for KKB. The group won >RM100 million worth of jobs under the Sarawak Water Supply Grid Programme between 2019 and 2020. Other notable projects in Sarawak include the Borneo Convention Centre Kuching II, with KKB having supplied, fabricated, and installed mild steel structural works for the first convention centre in 2007. We lower FY25-27F earnings by 14%, 11% and 1% as we impute a more conservative job win target for FY25 (RM350 million from RM500 million previously) while maintaining FY26’s and FY27’s RM600 million and RM500 million contract replenishment assumptions. Key rerating catalysts: Faster-than-expected wins from the oil and gas fabrication space, as the last time KKB secured such a project was in Nov 2023. Upcoming water supply schemes in Sabah, which could be secured by Gamuda, would also serve as a potential job opportunity for KKB. BUY with RM1.83 TP. – RHB Research, May 21

Q1'25 net profit of RM68.1 million (+18.4% YoY) accounted for 42% and 40% of our and consensus full-year forecasts. We deem the results to be within expectations, as we anticipate softer quarters ahead due to the earlier timing of Aidil Fitri (2025: March 31 vs 2024: April 9), which pulled forward festive-driven spending into Q1'25. YoY, Q1'25 revenue rose 6.6%, driven by stronger performance in the retailing (+6.1%) and property management (+9.4%) segments, supported by favourable festive timing. Q1'25 EBIT margin expanded by 0.7ppts YoY to 10.7%, benefiting from higher sales and resulting in operating leverage. QoQ, Q1'25 revenue and net profit increased by 16.3% and 18.4%, respectively, due to the same seasonal factors. We expect near-term sales softness due to seasonal factors, with festive spending largely frontloaded into Q1. Looking beyond the immediate term, AEON is well-positioned to execute its expansion plans (KL MidTown and AEON Seremban 2) supported by healthy gearing (8.7%) and a lower Kuala Lumpur Interbank Offered Rate environment amid global rate cuts. Its organic growth outlook remains intact, underpinned by strong occupancy and high single digit rental reversions, driven by ongoing refurbishment efforts that continue to attract popular tenants. Meanwhile, the retail segment should benefit from resilient consumer spending, supported by rising wages and increased cash assistance to lower income households. It is also expanding its private brand portfolio (currently accounting for 17% of sales) offering margin uplift and improving customer retention through exclusive offerings. BUY with RM1.75 TP. – RHB Research, May 21