08/07/2025

BIZ & FINANCE TUESDAY | JULY 8, 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

Global economy to slow down in second half of 2025: CGS KUALA LUMPUR: The global economy is expected to face a slowdown in the second half of 2025 as tariffs imposed on the US trading partners have impacted all economic actors, according to CGS International Securities Malaysia Sdn Bhd (CGS MY). In a research note, CGS MY stated that while China was hit the hardest, other US allies, including Canada, Mexico and the European Union (EU), also suffered negative impacts. “Positively, the US producers who baulked at the possibility of another trade war have frontloaded their purchases and piled up inventory in anticipation of rainy days, benefiting global trade, especially export-oriented Asean economies, which saw shipments and trade surpluses growing rapidly. “That said, we think the front-loaded support is at its tail end as tariffs start to kick in and the US producers may have started looking inwards, dampening global demand,” it said. Meanwhile, CGS MY said the Asean-4 nations – Indonesia, Malaysia, Singapore and Thailand – would likely lose some key growth momentum without the support from the US frontloading. The investment company has cut Indonesia’s 2025 gross domestic product (GDP) forecast to 4.8% from 5%, while maintaining Singapore’s GDP growth at 1.6%. “We forecast Thailand’s GDP growth of 2% in 2025, amidst dull sentiment on consumption, ongoing political turmoil, weak international arrivals, as well as risks from (US) reciprocal tariffs.” Driven by the loss of the US market, CGS MY said China may flood its products elsewhere, pricing out Asean producers. “We suspect agreements will be inked in efforts to reduce US-Asean trade imbalance, which implies some supply chain restructuring ahead,” it said. – Bernama

Ringgit lower against US dollar, higher vs other major currencies THE ringgit closed weaker against the US dollar yesterday but traded better against major currencies, as traders and investors are observing the US tariff situation, an analyst said. At 6pm, the local note depreciated to 4.2310/2400 against the greenback from last Friday’s close of 4.2180/2260. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid stated that the latest remark by US President Donald Trump on an additional 10% tariff for countries aligning themselves with BRICS has taken centre stage. “This goes to show that the tariff fear seems to make a comeback as the 90-day pause period is coming to an end this week,” Mohd Afzanizam told Bernama. “The US Dollar Index (DXY) gained 0.03% to 97.208 points (at time of writing). “It seems to be risk-off mode at the moment.” At the close, the ringgit traded higher against a basket of major currencies. It rose against the euro to 4.9647/9752 from 4.9675/9770 on Friday, appreciated against the Japanese yen to 2.9091/9155 from 2.9225/9282, and slightly advanced versus the British pound to 5.7563/7685 from 5.7601/7710 previously. The local note traded mostly higher against its Asean counterparts. It improved vis-à-vis the Singapore dollar to 3.3096/3172 from 3.3114/3182 on Friday, and marginally higher against the Philippine peso to 7.46/7.48 from 7.47/7.49 previously. It strengthened against the Thai baht to 12.9837/13.0173 from 13.0302/0609, and was flat against the Indonesian rupiah to 260.5/261.2 from 260.6/261.2 on Friday. Sunway Construction Group Bhd Buy. Target price: RM6.72

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.2920 2.8190 3.3640 3.1470 5.0590 2.6010 3.3640 5.8580 5.4410

4.1580 2.7030 3.2650 3.0620 4.8950 2.5040 3.2650 5.6740 5.2090 3.3350 57.7100 63.9500 52.4700 4.7900 0.0248 2.8810 40.2000 1.4400 7.2500 112.9500 109.7600 22.8000 1.3500 42.1400 12.2400 112.0200 N/A

4.1480 2.6870 3.2570 3.0500 4.8750 2.4880 3.2570 5.6540 5.1940

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

118.1600 3.5560 60.2500 69.5000 55.2200 5.1000 0.0274 2.9760 15.9000 43.7000 1.5400 7.7000 118.9800 115.6200 25.2500 1.4700 46.2800 13.8000

111.8200 3.1350 57.7100 63.7500 52.2700

4.5900 0.0198 2.8710

N/A

40.0000 1.2400 7.0500 112.7500 109.5600 22.6000 1.1500 41.9400 11.8400

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

MN Holdings Bhd Buy. Target price: RM1.69

Heineken Malaysia Bhd Buy. Target price: RM31

July 7, 2025: RM5.88

July 7, 2025: RM1.40

July 7, 2025: RM25.44

Source: Maybank IBG Research

Source: Maybank IBG Research

Source: Maybank IBG Research

HEIM’S price hike announcement appears to be driven by continued increases in input costs and its focus to defend group margins. Beer consumption demand typically enjoys a certain degree of price stickiness but with added inflationary pressures keeping consumer spending soft in 2H25, the period of recovery for HEIM’s sales volume may be extended. Based on our channel checks, HEIM will be raising product prices in a range of +2% to +8% across the bulk of its product portfolio, effective 1 Aug 2025 for on-trade, and 1 Sep 2025 for off-trade channels. The group last raised prices in 1 Apr 2024 by c.5% to 8%. HEIM cited persistent pressure from input costs as a reason for the price revision. Given that the Malaysian beer market is dominated by a duopoly, we believe that CAB is likely to follow suit with price increases by a similar quantum. Historically, industry price adjustments have led to weaker sales volume in the following 2 to 3 months. We believe that consumer spending may be subdued in 2H25 with rising inflationary pressures. Hence, we lower our FY25E/FY26E/FY27E earnings estimates by -6% p.a. upon adjusting for lower FY25E volume growth assumptions to -5% YoY (vs. +3% YoY previously) and adjusting for the price increase. Although HEIM’s sales volume growth may slow, its price hikes will aid in defending group margins. We also expect front-loading activities to occur in 3Q25 before the price hikes take effect. Maintain BUY with a lower TP of RM31. – Maybank IBG Research, July 7

WE expect a negative knee jerk reaction following news on the United States planning to restrict shipment of AI chips to Malaysia. We leave our earnings estimates unchanged as we believe it premature to pass judgement. However, we highlight two possible scenarios:- i) worst case fair value of RM2.16 if annual job wins fall to RM1.6b; and ii) share price falling to as low as RM3.36 on PER derating to trough levels. The new of possible restrictions on shipments of AI chips that power data centres (DC) to Malaysia suggests that the construction of DCs may decelerate and affect contractors such as SCGB. As at 31 May 2025, DCs account for 51% of its RM7.9b outstanding orderbook. From FY20-FY24A, SCGB won an average of RM1.6b of non-DC jobs p.a.. Its YTD job wins of RM3.5b comprised 54% DCs and 46% non-DCs. Assuming SCGB does not win any more DC jobs from 2H25E but only wins RM1.6b of non-DC jobs p.a., our FY25E/FY26E/FY27E EPS could reduce by 5%/43%/67%. Ascribing 19x PER to FY27E EPS, by when the lower job wins would have largely played out, a situational ‘worst case’ fair value works out to be RM2.16. We postulate that if FY26E PER valuations derate to 19x (12M forward PER mean), 14x (-1 SD to 12M forward PER mean) and 12x (trough 12 forward PER mean in the last 5 years), SCGB’s share price could fall to RM5.32, RM3.92 and RM3.36 respectively. However, the same article stated that the planned restriction could change and include exemptions. Thus, we think it premature to cut our earnings estimates. Our current TP of RM6.72 and BUY rating is premised on annual job wins of RM7 billion. – Maybank IBG Research, July 7

MN Holdings (MNH) secured a RM29.3m EPCC contract from TNB for substation works in Johor, lifting its order book to RM1.17b. The latest award reaffirms MNH as a potential beneficiary of the country’s utility upgrades. The group is also actively exploring opportunities in LSS projects, Battery Energy Storage System (BESS), water and waste-water projects. These should help alleviate concerns over potential US AI-chip export ban, though we believe the impact to MNH is limited. MNH has secured a RM29.3m EPCC contract from TNB for the installation of two new 132kV transformer bays at PMU 132/33kV Tanjung Langsat Industrial Estate in Johor. The scope includes the supply, installation, testing, and commissioning of power transformers, switchgear, and related civil works. The contract, which commenced on 3 Jul 2025, will run for 540 days. The EBIT margin is estimated at around 9%, translating to a total EBIT contribution of approximately RM2.6m over the contract duration. This contract makes up about 6% of our RM500m FY6/26E order replenishment target. MNH’s outstanding order book stands at RM1.17b, equivalent to 4.5x its FY24A revenue. While concerns have emerged over potential impact of the US AI chip export ban on Malaysia, the risk to MNH is minimal, in our view. Its data centre outstanding order book is largely supported by Chinese clients, who are not significantly impacted by the restriction. In addition, many of these clients operate cloud workloads that are CPU-based and not dependent on GPU-as-a-service models, which fall outside the scope of the ban. Reiterate BUY with a RM1.69 TP. – Maybank IBG Research, July 7