23/05/2025

FRIDAY | MAY 23, 2025

FOLLOW

ON TWITTER Malaysian Paper

20

BIZ & FINANCE

@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 slips against greenback on stronger US Dollar Index THE ringgit ended lower against the US dollar yesterday due to a stronger US Dollar Index (DXY) after the Moody’s Ratings downgrade. At 6pm, the local note eased to 4.2705/2765 versus the US dollar from Wednesday’s close of 4.2685/2735. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the ringgit maintained its positive trend in the morning session when the USD/MYR touched as low as RM4.2455 before weakening by the end of the day. “The DXY has been lingering below 100 points as fear over fiscal burden has resulted in traders and investors shunning the US dollar. “The recent rating downgrade by Moody’s Ratings has compounded the effect as the new US administration is pushing for a tax cut bill that could worsen the US government debt level,” he told Bernama. At the close, the ringgit traded mostly higher against a basket of major currencies. It inched up against the British pound to 5.7212/7292 from 5.7241/7308, and appreciated vis-à-vis the euro to 4.8218/8286 from yesterday’s 4.8379/8436, but fell versus the Japanese yen to 2.9768/9812 from Wednesday’s 2.9642/9679. The local note traded mixed against its Asean peers. It improved against the Singapore dollar to 3.3061/3110 from 3.3071/3115, and strengthened against the Thai baht to 13.0000/0254 from Wednesday’s 13.0121/0353. However, the ringgit went down vis-à-vis the Philippine peso to 7.68/7.69 from 7.67/7.68 on Wednesday and slipped against the Indonesian rupiah to 261.5/262.0 from 260.2/260.7 previously.

DNEX inks HoA with Shanghai firm for cross-border trade KUALA LUMPUR: Dagang NeXchange Bhd’s (DNeX) wholly owned subsidiary Dagang Net Technologies Sdn Bhd (DNT) has entered into a heads of agreement (HoA) with Shanghai E&P International Inc to provide cross-border trade facilitation solutions. In a filing with Bursa Malaysia yesterday, DNeX said the HoA is with the intent to collaborate on exploring the provision of cross-border trade facilitation solutions and exchange connecting enterprises in Malaysia with their counterparts in China. “The HoA shall become effective on the date of the HoA and shall, unless sooner terminated in accordance with the HoA, continue for a period of one year as the parties may extend the term by mutual agreement made in writing,” it said. DNeX said the vision behind the HoA is on cross-border visualisation of sea freight logistics movements and the carbon footprint impact between Malaysia’s and China’s ports. “Through the HoA, we envision the cooperation and connectivity for cross-border clearance facilitation to Shanghai and other regional e-ports in China, as well as trade documents exchange to facilitate clearance and utilisation in both trade and non-trade processes,” it said. DNeX also said the entry into the HoA forms a basis of commitment by the parties for the collaboration and exploration of cross-border trade facilitation solutions by creating a mutual understanding of the strategy and business needs. This will enable a broader understanding of the benefits and opportunities of working with each other and how the parties can leverage each other’s expertise. – Bernama

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.3190 2.7940 3.3470 3.1110 4.8990 2.5720 3.3470 5.8020 5.2700

4.1850 2.6820 3.2510 3.0270 4.7400 2.4780 3.2510 5.6180 5.0470 3.3680 57.7800 61.9400 52.9500 4.8100 0.0247 2.9170 40.0500 1.4600 7.4100 113.6800 110.4600 22.4800 1.3600 42.3700 12.2300 112.7300 N/A

4.1750 2.6660 3.2430 3.0150 4.7200 2.4620 3.2430 5.5980 5.0320

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

118.8800 3.6170 60.3300 67.3100 55.7200 5.1300 0.0272 3.0140 15.5000 43.5500 1.5600 7.8700 119.7400 116.3600 24.8900 1.4800 46.5400 13.8100

112.5300

3.1680

N/A

61.7400 52.7500 4.6100 0.0197 2.9070 39.8500 1.2600 7.2100 113.4800 110.2600 22.2800 1.1600 42.1700 11.8300 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

Public Bank Bhd Neutral. Target price: RM4.75

SP Setia Bhd Buy. Target price: RM1.72

Malaysian Pacific Industries Bhd Buy. Target price: RM29.70

May 22, 2025: RM4.30

May 22, 2025: RM1.20

May 22, 2025: RM18.00

Source: Bloomberg

Source: Bloomberg

Source: Bloomberg

Q1’25 results review. The decline in revenue was primarily due to lower turnover from land sales (-65% QoQ, -84% YoY). SP Setia also chalked a more moderate decline in property development revenue (-20% QoQ, -33% YoY) following the handover of completed projects in Australia and Vietnam in 2024. Costs remained in check, so EBIT margin was stable QoQ at 31% (Q4’24: 33%, Q1’24: 19%). Interest expense continued to decline as the group is still paring down its borrowings (Q1’25 gearing: 37%, Q1’24 gearing: 49%), with management guiding for this figure to fall below RM8 billion (March 2025: RM8.4 billion) by end-2025. A land sales gain of RM52 million made up 37% of total PBT. Slow sales in Q1’25. New property sales totalled just RM718 million compared to its FY25 sales target of RM4.8 billion, mostly derived from its township and industrial projects rather than land sales. Land monetisation of RM134 million was driven by a non-core land sale in Alam Damai, making up 19% of total sales. Most of its sales (40%) were derived from the central region of West Malaysia, followed by the international segment (32%) – largely from Atlas Melbourne – and the southern region of West Malaysia (26%). Despite only RM61 million in project GDV launched in Q1’25 (out of its RM5.1 billion target), management remains confident of meeting its sales target as the momentum is anticipated to pick up in the coming quarters. Beyond its core residential projects in central and southern West Malaysia, more contributions are expected from industrial developments in FY25, with RM650 million in unrecognised sales from Setia Alaman and potential JV plans for the Tanjung Kupang industrial park under review. BUY with RM1.72 TP. – RHB Research, May 22

Q1’25 PATMI rose 6% YoY (-3% QoQ) to RM1.7 billion, trailing slightly behind our and consensus forecasts at 23% of FY25F PATMI. Both non-II and associates contributions were behind estimates. Its reported Q1’25 ROE of 12.4% (FY24: 13.2%) trailed management’s 13% target, while group and bank CET-1 ratios were at 14% and 12%, down 20bps YoY and QoQ. Operating income (+7% YoY, -1% QoQ) kicked off the year decently, thanks to loan growth and stronger non-II (+19% YoY, -3% QoQ) with the maiden full quarter’s contribution from LPI Capital and higher FX and dividend income aiding growth. Overheads grew by a slower 5% YoY (+4% QoQ) – so CIR improved to 35% from 35.4% in Q1’24 (Q4’24: 33.1%). Credit cost was also lower YoY at 4bps (Q1’24: 6bps; Q4’24: - 4bps), all of which contributed to the YoY PATMI growth. QoQ, however, PATMI dropped by 3% as, despite the absence of the RM474 million goodwill impairment, most of the other line items trended negatively on a sequential basis. Annualised loan growth got off to a good start at +5.6% but deposit growth was at a slower 3.5% (annualised) in a bid to manage NIM (-2bps YoY and QoQ). As such, LDR rose to 97.6% from 97% at end-2024. GIL ticked up 3% QoQ (-9% YoY) on a Hong Kong corporate account from the property sector. However, given adequate collateral, no major provision was required but LLC eased to 160%, from 166% in Q4’24. PBK wrote back RM30 million in overlays during the quarter, leaving the stock of management overlay at RM1.2 billion. NEUTRAL with RM4.75 TP. – RHB Research, May 22

NEWS of Wolfspeed’s plan to file for Chapter 11 “reorganisation bankruptcy” crippled Malaysian Pacific Industries’ shares by 10% this week. WOLF has been impacted by sluggish demand, tariff induced uncertainties, and a significant capital expenditure burden for its fab, all compounded by declining ASPs for SiC wafers. Notably, it intends to file for Chapter 11 in restructuring rather than Chapter 7 liquidation, having rejected several out-of-court debt restructuring proposals. WOLF could still potentially secure US$750 million in funding under the US CHIPS and Science Act, contingent on its restructuring plan. While risks to suppliers exist, we believe WOLF’s restructuring aims to preserve and reorganise its business rather than to exit it. WOLF is a leader in SiC technology and power solutions with a large market share, and is leading the transition roadmap to 8-inch wafers. These technologies are vital to applications in EVs, artificial intelligence or AI, data centres, and more. This is due to superior thermal conductivity, lower resistance, faster switching speeds, and efficient power management. The impact on MPI would be negative if the customer fails to continue operations, leading to potential receivables risks. However, this is not our base case. Filing for Chapter 11 should enable WOLF to restructure and continue its business activities. MPI’s revenue exposure to this customer is estimated at 10%. We see no immediate disruption to MPI’s business. While failed restructuring poses a future revenue risk, our base case assumes operations will continue as usual, given the importance of silicon carbide (SiC) and power solutions in semiconductors. BUY with RM29.70 TP. – RHB Research, May 22