06/06/2025

FRIDAY | JUNE 6, 2025

20

BIZ & FINANCE

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 ends higher as dollar weakens, investors go ‘risk-on’ THE ringgit closed higher against the US dollar yesterday, supported by a weaker greenback following downbeat United States economic data, as investors shifted into risk-on mode. At 6pm, the local note stood at 4.2245/2295 against the greenback, strengthening from Wednesday’s close of 4.2435/2490. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said traders and investors were weighing the prospects of an economic slowdown and the risk of higher inflation stemming from recent tariff shocks. “This has led to a policy dilemma among Federal Open Market Committee (FOMC) members, and hence the scope for interest rate cuts is rather limited,“ he told Bernama, adding that the next key data point would be the Non-farm Payroll (NFP) report due today. Consensus estimates expect May’s NFP to reach 130,000, down from 177,000 in April, while the unemployment rate is forecast to hold steady at 4.2%. At the close, the ringgit traded mostly higher against a basket of major currencies. It slipped against the Japanese yen to 2.9495/9531 from Wednesday’s 2.9444/9486 but strengthened versus the euro to 4.8235/8292 from 4.8300/8362 and appreciated against the British pound to 5.7301/7369 from 5.7427/7502. The local currency also traded higher against most of its Asean peers. It appreciated versus the Singapore dollar to 3.2881/2922 from 3.2906/2951, advanced against the Indonesian rupiah to 259.3/259.8 from 260.4/260.8, and edged higher against the Philippine peso to 7.59/7.61 from 7.60/7.62.

M’sia to remain key spot for oil and gas investments: BMI KUALA LUMPUR: Malaysia is expected to remain a key area for investments in the oil and gas sector, particularly in upstream activities, decarbonisation and energy transition projects, according to BMI Country Risk and Industry Research (BMI). In a statement, the Fitch Solutions Group company anticipated that the upstream sector in Asia would remain robust, driving capital expenditure growth for exploration and production activities. “Despite a lower oil and gas price environment, the majority of capital spending will continue to focus on upstream exploration and production,” it said. According to BMI, Petronas Carigali Sdn Bhd is expected to maintain a stable capital expenditure of around RM50 billion for 2025, given the investment requirements for several greenfield and brownfield projects through 2025-2027. In the upstream segment, it noted that Petronas plans to ramp up the drilling of development wells, raising the number of wells from 56 in 2024 to 73 wells in 2025. “In 2024, Petronas signed 14 production sharing contracts (PSCs) with local and foreign companies and held equity stakes in certain PSCs,” it said. BMI opined that capital requirements for overseas projects are expected to rise since the company has secured new oil and gas blocks for exploration in Suriname in 2024. “Petronas signed agreements for upstream assets in Angola, Indonesia, Brazil, the UAE and Oman,” it added. In August 2024, Petronas, Abu Dhabi National Oil Company and and UK-based Storegga agreed to study building carbon capture and storage projects in the Penyu Basin, Peninsular Malaysia. – Bernama

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.2965 2.8080 3.3400 3.1360 4.9120 2.6030 3.3400 5.8280 5.2870 3.5860 60.1600 67.5100 55.3100 5.0800 0.0273 3.0130 43.6300 1.5500 7.8300 119.1100 115.7100 24.9800 1.4700 46.2800 13.7900 118.2800 N/A

4.1605 2.6930 3.2400 3.0510 4.7510 2.5050 3.2400 5.6410 5.0580 3.3380 57.5800 62.0900 52.5300 4.7700 0.0247 2.9150 40.1000 1.4500 7.3600 113.0700 109.8400 22.5500 1.3500 42.1200 12.2200 112.0800 N/A

4.1505 2.6770 3.2320 3.0390 4.7310 2.4890 3.2320 5.6210 5.0430

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

111.8800

3.1380

N/A

61.8900 52.3300 4.5700 0.0197 2.9050 39.9000 1.2500 7.1600 112.8700 109.6400 22.3500 1.1500 41.9200 11.8200 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

Construction Overweight

KPJ Healthcare Bhd Buy. Target price: RM3.24

Allianz Malaysia Bhd Neutral. Target price: RM19.60

June 5, 2025: RM19.48

June 5, 2025: RM2.78

Source: Maybank Investment Bank

Source: Bloomberg

Source: Bloomberg

DESPITE a heavier overlap of festivities and holidays (CNY & Ramadhan), Q1’25 came in broadly in-line with revenue/EBITDA/net profit growth of +7%/+7%/+12% YoY. Largely driven by improved case-mix (ARIP: +10% YoY) and healthy BOR of 63%, this indicates continued structural strength and reinforces Q1’25 seasonal drag’s transitory nature. In-line with historical trends, we expect stronger earnings momentum in 2H’25 on the back of pent-up demand, ramp-up of newer hospitals, and growing case complexity. Note that 4 out of 5 of KPJ’s hospitals under gestation are EBITDA-positive (excl. KPJ Kuala S’gor), except for KPJ Miri. We are positive on KPJ’s uncapped revenue and earnings potential near-to-mid-term as DRG roll-out takes the backseat for now. During the recent analyst briefing, management has also reaffirmed that KPJ remains on all major insurance panels, alleviating concerns over volume attrition amid government’s 10% cap on medical insurance premium hikes. We continue to see significant upside potential from medical tourism, as KPJ Healthcare recorded Q1’25 medical tourism revenue of RM56 million, contributing 6% of total revenue and representing an 11% year-on-year increase. There are several risk factors to our earnings estimate, target price and rating for KPJ. These include weaker-than-expected recovery in patient volume, the inability to pass on cost escalation to customers, prolonged gestation period of new hospitals, shortage of medical professionals and staff, rising competition from other private hospital operators, and unfavourable pricing regulation restructurings. BUY with RM3.24 TP. – Maybank Investment Bank, June 5

OVERALL, the construction sector delivered Q1’25 results that were above expectations, with key sectoral heavyweights recording higher-than-expected progress billings – mainly for DC works. Out of the nine companies under our coverage that reported results, three outperformed forecasts, one was in line, and five fell below expectations. Data centre (DC) prospects remain bright. The overhang on the DC theme in Malaysia has eased for now post the scrapping of the US Artificial Intelligence Diffusion (USAID) regulations, but we acknowledge risks on any potential graphic processing unit caps coming from any replacement rules based on bilateral negotiations. Tenaga Nasional has signed five electricity supply agreements or ESAs for DC projects in Malaysia with a combined maximum electricity demand of 666MW in Q1’25 alone. Assuming a conservative power usage effectiveness ratio of 1.4, the maximum electricity demand of 666MW by DCs should translate to around 476MW of DC capacity, which could be worth RM9.5 billion in construction value (based on a RM20 million cost/MW benchmark). Plenty of non-DC projects ahead. The final alignment for the elevated Automated Rapid Transit or ART system (estimated cost: RM6-7 billion) in Johor is expected to be announced in August, while the Public-Private Partnership Unit of the Government has initiated a request-for-proposal process for this project. The Johor state government has also submitted a list of 18 proposed projects to the Highway Network Development Plan, which should be prioritised for approval. – RHB Research, June 5

ALLIANZ Malaysia’s Q1’25 results briefing detailed welcome updates, particularly on Allianz Life (ALIM) and developments on the medical inflation front. While ALIM has embarked on initiatives to defend its market share and underwriting margins, we view Bank Negara Malaysia’s (BNM) interim measures as carrying potential downside risk to ALLZ’s dividends. Allianz General (AGIC) commands 30% market share in the domestic EV insurance space. Management commented that the claims experience for EVs in Malaysia is currently lower than the global average (likely due to the more nascent stage of EV adoption in the country), but AGIC is learning from its parent group’s experience in the West to enhance its technical underwriting capabilities. Elsewhere, management observed that demand for data centre (DC)-related insurance has been strong since end-2024, and the company is keen to grow in that segment (partly in support of national development aspirations), especially if such opportunities fall within its risk appetite. ALIM has begun offering customers policies embedded with co payment or deductible features in a bid to contain medical claims inflation. The company is also actively negotiating with its panel of hospitals and clinics to lower overall medical costs, eg by considering the necessity of certain treatments and reviewing procurement procedures. These measures, in our view, should help to cushion against adverse margin movements from the central bank’s cap on medical insurance repricing. Separately, management reaffirmed its dividend payout policy of 30% (including preference share dividends, FY24: 44%), though it did not provide guidance for FY25 dividends. NEUTRAL with RM19.60 TP. – RHB Research, June 5