16/06/2025

BIZ & FINANCE MONDAY | JUNE 16, 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

MGS, GII yields likely to be range-bound, spotlight on Fed KUALA LUMPUR: Malaysian Government Securities (MGS) and Government Investment Issues (GII) yields trended higher last week, up by 0.7 to 6.6 basis points (bps) across the curve. The 10-year MGS climbed 3.1 bps to 3.549%, while the 10-year GII rose 2.4 bps, to 3.556%. Kenanga Investment Bank Bhd said the yields edged higher after the World Bank cut Malaysia’s 2025 growth forecast to 3.9% and global growth to 2.3%. The research firm noted that Fitch also downgraded its global sovereign outlook to “deteriorating”. Softer IPI data added to the cautious sentiment. “Still, a strong labour report and improved trade outlook, supported by easing US-China tensions, tempered further yield increases,“ Kenanga said in a report. The firm said yields are likely to remain range-bound ahead of the Fed policy meeting. Markets do not expect a rate change but will closely watch the Fed’s tone for policy cues. “A breakdown in US-China trade negotiations or renewed Israel-Iran tensions could lift yields. “On the flip side, strong domestic retail sales data or improving trade figures could offer support. Continued fiscal reform progress may also help anchor long-term yields,” Kenanga said. Abroad, Kenanga said the United States Treasuries (UST) yields drifted lower last week, down 1.2 to 3.9 bps across the curve. The 10-year UST yield fell 3.1 bps to 4.359%, while the 2-year fell by 1.2 bps to 3.908%. The research firm said the softer inflation prints and solid demand at the 10-year auction drove yields lower.

Ringgit to trade sideways as investors stay cautious

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

THE ringgit is expected to trade within a narrow range this week, as investors remain cautious amid ongoing global inflation concerns, said an analyst. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid noted that the local currency is likely to fluctuate between 4.22 and 4.24 against the US dollar. He said market attention will be on the Federal Open Market Committee meeting tomorrow and Wednesday. “The focus would be on the quarterly forecast by the Federal Reserve’s (Fed) staff, particularly the outlook for the Fed Funds Rate for the remainder of the year,” he told Bernama. Mohd Afzanizam said besides the Fed, several central banks are set to meet this week, including the Bank of England, Bank of Japan, the People’s Bank of China. Central banks in Asean, such as Bank of Indonesia and Bangko Sentral ng Pilipinas, will also hold meetings during this period. He opined that global interest rates are trending downwards as growth prospects have become more challenging due to tariff shocks. Meanwhile, he said, Israel’s strikes on Iran’s nuclear facilities resulted in a sharp rise in Brent crude prices to a high of US$78.22 per barrel before prices retreated towards US$73.56 per barrel. The US Dollar Index gained 0.31% to 98.228 points. “Hence, geopolitics has taken centre stage on Friday, and it has benefitted the US dollar at the moment,” Mohd Afzanizam said. Reports suggested that a direct military conflict between Israel and Iran could lead to a significant appreciation of the US dollar. The Fed’s response to these dynamics, particularly regarding interest rates, will be crucial in shaping the US dollar’s trajectory in the near term.

1 US Dollar

4.2970 2.7980 3.3510 3.1490 4.9710 2.5950 3.3510 5.8380 5.3570

4.1610 2.6840 3.2510 3.0630 4.8070 2.4990 3.2510 5.6510 5.1250 3.3380 57.6900 62.8300 52.5100 4.7800 0.0248 2.9120 40.6900 1.4500 7.3600 113.0500 109.8400 22.4500 1.3600 42.5400 12.2800 112.1000 N/A

4.1510 2.6680 3.2430 3.0510 4.7870 2.4830 3.2430 5.6310 5.1100

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

118.3000 3.5870 60.2700 68.3100 55.2900 5.1000 0.0274 3.0100 15.6000 44.3100 1.5500 7.8200 119.0900 115.7000 24.8800 1.4700 46.7600 13.8600

111.9000 3.1380 62.6300 52.3100 4.5800 0.0198 2.9020 40.4900 1.2500 7.1600 112.8500 109.6400 22.2500 1.1600 42.3400 11.8800 N/A 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

Bermaz Auto Bhd Neutral. Target price: RM0.86

Telecommunications Neutral

TIME dotCom Bhd Hold. Target price: RM5.10

June 13, 2025: RM5.22

June 13, 2025: RM0.825

Source: Company data, RHB Research

Source: Bloomberg, RHB Research

Source: Maybank IBG Research

BERMAZ Auto’s FY25 (Apr) earnings met our forecasts but missed Street’s expectations. Looking ahead, fierce competition within the non-national segment will continue to pressure the company’s volumes. However, BAUTO remains fairly valued considering it is trading at 7.4x P/E, in line with the peer average. BAUTO’s 4QFY25’s core profit of MYR21m (-16% QoQ, -77% YoY) brought FY25 core earnings to MYR157m (-56% YoY), making up 100% and 94% of our and Street’s full-year estimates. It announced a 4QFY25 DPS of 1.5 sen, bringing FY25 DPS to 16.75 sen - above our 15.75 sen forecast. 4QFY25 revenue fell 44% YoY, dragged by lower sales in Malaysia (-45% YoY) and the Philippines (-34% YoY). Operating profit, however, fell by a larger 68% YoY, no thanks to less favourable product mix during the period - bringing its margin to 6.7% (4QFY24: 11.8%). As a result, core net profit dropped 77% YoY, bringing FY25 earnings to MYR156.7m (-55.6% YoY). Moving ahead, we believe the ongoing intense competition in the non-national segment will continue to loom the market, given no clear signs of recovery. Management also shared its pessimism that FY26 will be another challenging year due to inflationary pressures, geopolitical uncertainties, as well as continuous influx of Chinese marques. Hence, we think BAUTO’s group sales volumes will continue to be impacted in FY26, resulting in lower Mazda volumes in Malaysia, offset by full-year contribution from Xpeng models, KIA Sportage, and additional contribution from its newly-added marque Deepal. Keep NEUTRAL with a new RM0.86 TP. We believe investors should hold their positions on this counter due to its attractive 11% FY26 yield. – RHB Research, June 13

COMPETITIVE pressures and retail fibre APRU compression were key standouts in the March quarter, with cost excellence holding up margins. Axiata’s results were a miss, while MNOs chalked numbers that were broadly in line. We still prefer the fixed line plays (over mobile), due to structural catalysts and resilient earnings. Malaysia (MY) telcos saw 1% returns YTD, outperforming the FBM KLCI by some 7%. Axiata was the worst performer (-18% YTD), being most pre-disposed to overseas earnings while Time dotCom (TDC) posted the largest gains (+17%) as investors sought refuge in resilient domestic-centric names following the US retaliatory tariffs. Relative to Asean-4 peers, MY telcos were ahead of their Indonesia counterparts (-5% YTD) but lagged behind Singapore (+10%) and Thailand (+6%) where dividend yields were higher. Key standouts for the March quarter were: i) Weaker-than expected industry mobile revenues (-1.7% YoY or -2.4% QoQ for the Big-2 MNOs), and ii) FBB ARPU compression. Mobile service revenue momentum was tepid, even after accounting for revenue seasonality (shorter quarter), in our view, with industry prepaid ARPU at new lows. Retail FBB sub adds contracted further, alluding to saturation in key market centres. Notably, FBB ARPUs of TM, Maxis, and CDB fell 4-10% QoQ (-2 to -9% YoY) with tactical promotions and heavy rebates. The positive outlier was TDC whose FBB revenue continued to outperform peers, supported by progressive expansion of its fibre footprint (c.1.9m premises) and good inroads made into single-dwelling units - a TM stronghold. Broadly, telcos remained steadfast on cost excellence, which is a narrative that will continue in the current environment. Still NEUTRAL on the sector. Top Picks are Telekom Malaysia, CelcomDigi and Axiata Group. – RHB Research, June 13

TDC’S inaugural Investor Day saw management discuss business out look and aspirations amid an overall backdrop of tapering growth. We see a lack of strong re-rating catalysts in the near-term. Nevertheless, dividend payout could remain elevated, and the implied dividend yield (c.5%) should provide downside support to share price in our view. Management warns of tapering growth being the new reality as the fibre broadband segment nears saturation. Nevertheless, fibre players benefit from high barriers to entry (capex intensive) and low obsolesce risks and are thus still able to generate healthy returns. As growth transitions into stability, management will focus strongly on long-term returns & asset yields, while aiming to deliver above-market revenue growth. Longer term, management aspires TDC to become a tech infrastructure investment company that adopts a portfolio management approach to its assets. TDC publicly disclosed its retail fibre broadband metrics for the first time. At end-2024, TDC had 479k retail subscribers generating ARPU of MYR115/month. Retail ARPU has remained largely stable over the past four years, in line with our assumptions. Given TDC’s current low premisescoverage (c.20%), management sees TDC’s addressable market growing faster relative to larger peers with every incremental network rollout. With network expansion being beneficial for subscriber growth in all core segments, management will continue to prioritise the expansion of its fibre footprint. Prevailing forays into rooftop solar and EV charging are unlikely to be capex-intensive for now. Maintain HOLD with an unchanged DCF-based TP of RM5.10. – Maybank IBG Research, June 13