17/07/2025

BIZ & FINANCE THURSDAY | JULY 17, 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

Rubber products sector outlook still bleak: RHB IB KUALA LUMPUR: RHB Investment Bank Bhd (RHB IB) expects the rubber products sector to remain bleak due to an unfavourable operating environment driven by a longer-than-expected period of inventory consolidation. In a research note yesterday, the bank said competition remains intense in non-US markets, largely due to the hostile pricing strategy adopted by Chinese manufacturers. “Persistent challenges in cost pass-through, coupled with a rising operating cost environment and a weaker US dollar, are expected to weigh on glove makers’ profitability moving forward. “Other downside risks include the deteriorating US-China relationship, rising glove average selling prices (ASPs), faster-than expected capacity expansion, and lower-than-expected raw material prices,” it said. Meanwhile, the bank also anticipates that the commissioning of new plants in Indonesia and Vietnam could pose a threat to Malaysia’s rubber product exports to the US by as early as November 2025. According to the Department of Statistics Malaysia, the country’s glove exports recorded month-on-month declines of 22% and 6% in April and May. This suggests that customer restocking activities remain sluggish, as the industry continues to experience a longer-than expected gestation period following the front-loading seen in the fourth quarter of 2024. The continued weakness of the US dollar against the ringgit has further eroded glove makers’ profitability, with the greenback depreciating by 3% quarter-on-quarter and 5.4% year-to-date as of June. – Bernama

Ringgit dips against dollar, gains against other currencies THE ringgit slipped 0.01% against the US dollar at the close yesterday, as the local note continued trading on the defensive, which offered some technical comfort for the ringgit. At 6pm, the local note was traded at 4.2400/2490 from 4.2395/2440 at Wednesday’s close. SPI Asset Management managing partner Stephen Innes said the ringgit is under pressure mainly because of concerns that the US Federal Reserve (Fed) might keep interest rates higher for longer, as markets reassess the inflation outlook. He added that the US dollar has strengthened recently as investors are becoming less certain that the Fed will cut rates in September. Innes also said that the dollar’s recent bid reflected a subtle but growing shift in sentiment, which markets are slowly walking back their conviction that the Fed will cut the interest rate in September. At the close, the ringgit was traded higher against a basket of major currencies. It strengthened against the British pound to 5.6786/6907 from Tuesday’s close of 5.7047/7107, improved against the Japanese yen to 2.8508/8569 compared with 2.8702/8734, and was up versus the euro at 4.9248/9352 versus 4.9539/9591. The local note also trended higher against Asean currencies. It traded higher vis-a-vis the Singapore dollar at 3.2999/3071 from 3.3095/3133 on Tuesday, inched up against the Indonesian rupiah to 260.3/260.9 from 260.6/261.0, and strengthened versus the Philippine peso to 7.43/7.45 from 7.47/7.49. It also gained against the Thai baht to 13.0301/0630 from 13.0784/0988. – Bernama

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.3155 2.8320 3.3570 3.1420 5.0160 2.5800 3.3570 5.7870 5.4180

4.1815 2.7180 3.2580 3.0570 4.8540 2.4840 3.2580 5.6030 5.1890 3.3740 57.9400 63.3900 52.7600 4.7900 0.0248 2.8100 39.7600 1.4500 7.2500 113.5800 110.3700 22.5900 1.3500 41.7100 12.2900 112.6400 N/A

4.1715 2.7020 3.2500 3.0450 4.8340 2.4680 3.2500 5.5830 5.1740 3.1740 57.9400 63.1900 52.5600 4.5900 0.0198 2.8000 39.5600 1.2500 7.0500 113.3800 110.1700 22.3900 1.1500 41.5100 11.8900 112.4400 N/A

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

118.8100 3.6230 60.4900 68.8900 55.5300 5.1000 0.0274 2.9040 15.8000 43.2300 1.5400 7.6900 119.6500 116.2600 25.0100 1.4700 45.7900 13.8600

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

Plantations Neutral

Bursa Malaysia Bhd Buy. Target price: RM8.80

Telekom Malaysia Bhd Buy. Target price: RM8.05

JULY 16, 2025: RM7.90

JULY 16, 2025: RM6.68

Source: Bloomberg

Source: PublicInvest Research

Source: Maybank Investment Bank

WE left a recent management meeting with positive views, underpinned by TM’s long-term structural growth prospects across both Unifi and TM Global. While ARPU declined 5.2% YoY to RM127 in Q1’25, management highlighted encouraging early traction from its quad-play convergence strategy (broadband, mobile, telephony, and TV). With convergence package adoption still below 50%, there remains significant potential for ARPU uplift. Despite trailing Maxis and CelcomDigi in net adds over recent quarters, TM still benefits from wholesale monetisation, limiting the downside to its fibre earnings base. Its extensive fibre coverage of over 80%, along with continued leasing by peers, underscores TM’s structural advantage in an increasingly competitive market. TM is progressing with the expansion of its Klang Valley (KVDC) and Iskandar Puteri (IPDC) data centres, adding 10MW each by end 25, doubling total domestic capacity to 40MW. Construction at both sites is already over 60% complete. Concurrently, TM, via a 51:49 joint venture with Singtel, is developing a 64MW AI-ready data centre (Phase 1) in Iskandar Puteri, which remains on track for completion by 2H26. While the new facility’s near-term earnings contribution will likely be minimal, we expect it to drive double-digit revenue growth for the data centre segment over the longer term. TM’s growth remains strong, led by 5G rollout, fibre expansion, and fixed broadband leadership. Key downside risks to our call include regulatory changes, slower-than-expected demand for DC interconnectivity, and intensified competition in fibre broadband. BUY with RM8.05 TP. – Phillip Capital Research, July 16

LAST week, a total of 394,547ha of plantation land—spread across Central Kalimantan, Riau, and North and South Sumatra and controlled by 232 companies—was confiscated and handed over to Agrinas, a state-owned company established in early 2025 under the administration of President Prabowo Subianto. The operations were jointly led by the Ministry of Environment and Forestry, Ministry of Defense and Attorney-General’s Office. The task force is aiming to take over a total of 3 million ha of illegally-run plantations in forest area by August. With this addition, the total plantation area under the Agrinas Group now stands at 833,000ha, making the company as one of the largest plantation companies in the world. Based on our checks, several local companies have surrendered plantation land to the Indonesian authorities, ranging from 1,000ha to 6,000ha, some of which are in unproductive condition. We understand that the earnings impact for these companies is relatively muted. However, in our view, this may pose a long-term ESG risk. Given the recent land seizures, we do not rule out the possibility that some plantation companies may exit or scale down their operations in Indonesia over the longer term, due to rising regulatory risks. Investment in replanting activities is also expected to be more cautious, as it may compromise the companies’ interests. We are also concerned that the military-led enforcement in plantation could exacerbate the declining trend in Indonesian palm production as we are doubtful over the state’s ability to manage these plantations effectively. – PublicInvest Research, July 16

WE hosted Bursa recently at our “Invest Asean-Malaysia 2025 – Corporate Day”. Bursa’s new CEO, Datuk Fad’l Mohamed, shared his focus for the next 12-18 months – to execute on the initiatives in Bursa’s “Strategic Roadmap 2024-2026”, as his team starts to plan for beyond 2026. The new CEO also shared his plans to strengthen several key focus areas – to bring in attractive listings; lift market vibrancy & liquidity; enhance customers’ experience & cross-selling; explore new tech-based opportunities to raise non trading revenue; and improve Bursa Carbon Exchange’s (BCX) liquidity & develop the domestic carbon market ecosystem. We review Bursa’s ESG matters post the release of its FY24 Sustainability & Corporate Governance Reports. Our ESG score for Bursa is updated to 86 (out of 100) vs. 68 in our last review, which rank it the highest in our coverage. Positively, we see efforts to bring down its carbon emissions (-19% YoY); and in lowering energy consumption, waste generated and water usage. Also, Bursa continued to procure RECs to offset Scope 2 emissions. A key development was the start of continuous trading of RECs and carbon credits on BCX, supporting Malaysia’s transition to a low-carbon economy. Bursa’s “Strategic Roadmap 2024-2026” aims to position Bursa as a “Multi-Asset Exchange” – from a traditional capital market, amid a fast-evolving global backdrop. The roadmap comprises 3 core strategies – product & service expansion, ecosystem development, CX centricity, and is supported by 5 strategic pillars. BUY with RM8.80 TP. – Maybank Investment Bank, July 16