26/05/2025

BIZ & FINANCE MONDAY | MAY 26, 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

Velesto secures drilling contract for jack-up rig in Indonesia KUALA LUMPUR: Velesto Energy Bhd, has secured a new drilling contract from PC Ketapang II Ltd , PC North Madura II Ltd , and Petronas North Ketapang Sdn Bhd (collectively referred as client) for its NAGA 8 jack-up rig in Indonesia. The contract which is set to commence in July 2025, spans a firm period of four years covering 12 firm wells and three optional wells. It is expected to support Velesto’s rig utilisation and earnings visibility from 2025 to 2028. A Suspension Period is scheduled from February to July 2026, during which Velesto retains the right to market NAGA 8 for other opportunities. Operations are anticipated to resume in July 2026, with any changes to the suspension timeline to be communicated by the client. Velesto persident Megat Zariman Abdul Rahim said: “This contract award reflects our ongoing efforts to expand Velesto’s footprint in Southeast Asia. As the second contract secured in the region, it solidifies our commitment to this strategic growth. We thank the client for their trust and the opportunity to contribute meaningfully to this partnership. “Our focus remains on building a healthy portfolio of contracts that strengthen the outlook and create long-term value for our stakeholders.” The award strengthens Velesto’s position as a key player in Southeast Asia’s oil and gas sector, aligning with the group’s long term strategy to broaden its regional presence while maintaining high operational standards. NAGA 8 is a premium independent-leg cantilever jack-up drilling rig with drilling depth capability of 30,000 feet and has a rated operating water depth of 400 feet.

Ringgit set to stay firm with upside bias against greenback THE ringgit is expected to stay firm with an upside bias against the greenback this week, ahead of the release of US central bank meeting minutes and the American personal consumption expenditures inflation report. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid reckons that the prevailing upward trend of the ringgit will continue due to continued concerns over the US fiscal position. “The USD/MYR has breached its immediate support level of RM4.2624, and the next (resistance) level (for the ringgit) is located at RM4.0947. Perhaps the ringgit would continue to strengthen on the back of a weak US dollar outlook,” he told Bernama. SPI Asset Management managing partner Stephen Innes expects the ringgit to trade with a modest tailwind, reflecting broader US dollar softness and renewed interest in emerging Asia foreign exchange. “The Asean Summit in Kuala Lumpur might not be a game changer on its own, but it could influence sentiment depending on how the policy optics unfold. These gatherings seldom provide immediate market-moving headlines, but investors will be attentive to nuances – especially anything suggesting tighter Asean integration, moves towards dedollarisation, or alignment with US trade objectives.” Additionally, a supportive tone could reinforce Malaysia’s positioning in regional supply chains and digital trade corridors, which, in turn, could enhance confidence in the ringgit. “Announcements around cross-border digital payment infrastructure, logistics hubs, or energy transition financing could lift foreign direct investment sentiment and inject short-term bullishness into the ringgit.” – Bernama

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.3360 2.7960 3.3530 3.1250 4.9010 2.5670 3.3530 5.8290 5.2700 3.6320 60.5600 67.3500 55.9400 5.1200 0.0275 3.0180 43.6800 1.5600 7.8900 120.2300 116.8100 24.9700 1.4900 46.4200 13.7900 119.3600 N/A

4.2020 2.6820 3.2570 3.0410 4.7430 2.4730 3.2570 5.6440 5.0470

4.1920 2.6660 3.2490 3.0290 4.7230 2.4570 3.2490 5.6240 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

113.1800 3.3820 58.0000 61.9700 53.1600

112.9800 3.1820 61.7700 52.9600 4.6100 0.0199 2.9110 39.9700 1.2700 7.2200 113.9400 110.6900 22.3500 1.1700 42.0700 11.8300 N/A N/A

4.8100 0.0249 2.9210

N/A

40.1700 1.4700 7.4200 114.1400 110.8900 22.5500 1.3700 42.2700 12.2300

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

Sunway Bhd Buy. Target price: RM5.79

UEM Sunrise Bhd Buy. Target price: RM1.28

Malayan Cement Bhd Buy. Target price: RM6.71

May 23, 2025: RM4.95

May 23, 2025: RM0.735

May 23, 2025: RM4.70

Source: Bloomberg, RHB Research

Source: Bloomberg, RHB Research

Source: Bloomberg, RHB Research

SUNWAY’S 1Q25 results missed expectations, but this is in line with its historical trend whereby 1H is typically weaker. 1Q25 property sales of MYR554.7m is on track to hit the MYR3.6bn target by year end. The healthcare division, however, saw a slight blip in earnings due to the start-up losses arising from the two newly opened hospitals (Damansara and Ipoh). Overall, we remain positive on Sunway’s earnings outlook due to the recent new development projects and construction contracts secured by the group. The sequential drop in revenue for most business divisions, except for construction, is generally in line with the historical trend. The construction segment continued to see accelerating work progress in data centre jobs. PBT for the healthcare segment fell 6% YoY, mainly attributed to the initial start-up losses incurred by Sunway Medical Centre (SMC) Damansara and SMC Ipoh, which commenced operations in Dec 2024 and April 2025. As at May 2025, total licensed beds stood at 1,647, and in the pipeline, Sunway will continue to expand its SMC Seberang Jaya (Phase 2b and 3 total 152 beds by 2027) and construction for SMC Iskandar should start in 2026-2027. The company also recently signed an agreement with Putrajaya Holdings to jointly develop a 325-bed hospital in Putrajaya. 1Q25 property sales reached MYR554.7m vs MYR1.16bn in 4Q24. 51% of the sales were contributed from the Klang Valley, 36% from Singapore, 10% from Johor, 2% from the northern region and 1% from China. About MYR358m worth of projects were launched as at May 2025, including Sunway Gardens in Tianjin and Sunway Flora in Bukit Jalil. We make no changes to our earnings forecasts, as earnings in 2H are typically stronger. Maintain BUY and RM5.79 TP. – RHB Research, May 23

3QFY25 (June) earnings were ahead of expectations, with Malayan Cement recording stronger-than-expected margins from improved operational efficiencies and lower production costs. While cement demand has slowed down, this was offset by higher ASPs and volume from the ready-mixed concrete segment. We continue to like LMC for its improved profitability and as a proxy to the growing construction sector, given that it is the country’s largest cement producer. 3QFY25 core profit of MYR183m (+15% QoQ, +27% YoY) led to a 9MFY25 core earnings of MYR487m (+35% YoY). This was ahead of expectations, at 86-93% of our and Street’s estimates. 3QFY25 revenue declined 5% QoQ (-0.3 % YoY) to MYR1.1bn, primarily on lower demand in the cement segment. However, net margins grew to 16.7% (2QFY25: 13.9%, 3QFY24: 13.1%) from improved operational efficiencies and lower interest expenses. In 9MFY25, the cement and clinkers segment (69% of revenue) recorded a 9% decline in revenue from lower volume, but the segment’s operating profit grew by 20% YoY. This reflects the improved operational efficiencies and lower coal costs. A stronger growth was recorded in the aggregates and concrete segment, with revenue growing 28% YoY, leading to a MYR110m operating profit. The latter now makes up 13% of the group’s operating profit when compared to just 4% in 9MFY24. Management shared that the higher demand for ready-mixed concrete was mostly for data centres and industrial buildings. With stable ASPs and easing coal prices, alongside its improved operational efficiencies, we think LMC will be able to maintain its strong margins moving forward. Maintain BUY and RM6.71 TP. – RHB Research, May 23

UEM Sunrise’s 1Q25 earnings are below estimates, but we expect earnings to pick up in the quarters ahead - driven by more new launches, as well as the disposal of land and non-core assets. Despite slower billings and launches, 1Q25 sales totalled MYR370.6m, ie on track to hit management’s target of MYR1.05bn by the year-end. It has also begun infrastructure works for its industrial component at Gerbang Nusajaya, and should be able to start marketing its industrial park products after the final gazettement expected in early 2026. The QoQ decline in revenue and earnings were in line with the historical trend, due to shorter working months and minimal launches during the quarter, as well as a lower share of contributions from JVs and associates. Unsold completed inventory continued to fall to MYR89.3m, from MYR97.9m in 4Q24. The company’s net gearing remained relatively unchanged, at 0.41x (vs 0.40x in the previous quarter). 1Q25 sales momentum remained strong. 1Q25 property sales amounted to MYR370.6m (central region: MYR201.2m, southern region: MYR169.4m) vs MYR489.1m in 4Q24. As expected, sales flowed through from 2H24, as a total of MYR904m worth of projects were launched during the period - so no new launches took place in 1Q25. The take-up rates for Aspira Hills and DiReka Square are now at 85% and 53%, and should continue to rise as both projects are fully booked. Meanwhile, sales for its Klang Valley projects improved marginally. The Minh, The Connaught One and Residensi ZIG are now 84%-, 58%- and 40%-sold, from 76%, 52% and 37% in 4Q24. Stay BUY and RM1.28 TP. – RHB Research, May 23