04/08/2025

BIZ & FINANCE MONDAY | AUG 4, 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

CPO futures set to trade with downward bias this week KUALA LUMPUR: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives is expected to trade with a downward bias this week due to the expectation of weak demand, a trader said. He said market sentiment will be influenced by seasonally higher output ahead of the key crop report. “We expect the commodity to trade between RM4,150 and RM4,320 per tonne,” palm oil trader David Ng told Bernama. Meanwhile, Interband Group of Companies senior palm oil trader Jim Teh sees the commodity’s price ranging between RM3,900 and RM4,000 per tonne next week. He said the price range represents a good bargain for physical buyers from China, India, Pakistan, the Middle East and EU countries. He noted that CPO futures have continued to outperform crude oil, which has fallen to around US$66 to US$67 per barrel. “Since 2007, palm oil has consistently demonstrated strong performance in the commodities market,” he said. Meanwhile, the government is pushing for zero tariffs for commodities such as cocoa, rubber and palm oil exports to the US following the announcement of new tariff rates, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said. The minister said if the US finds that it could not produce these products domestically, there is a good chance the products will be exempted from the 19% tariff. On a weekly basis, the August contract fell RM28 to RM4,193 per tonne, September 2025 dropped RM32 to RM4,226 per tonne, and October 2025 erased RM28 to RM4,245 per tonne. The November 2025 contract decreased RM20 to RM4,263 per tonne, December 2025 eased RM11 to RM4,279 per tonne, and January 2026 inched up RM1 to RM4,291 per tonne.

Ringgit expected to get boost from Fed rate cut optimism THE ringgit is expected to trade between 4.25 and 4.26 against the US dollar this week, following weaker-than-expected US non-farm payrolls (NFP) data for July, which may prompt the Federal Reserve to consider an interest rate cut at its September meeting. The NFP data for July fell short of expectations to just 73,000 jobs, significantly below the consensus estimates of 106,000. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the latest NFP data could boost sentiment for the ringgit, as it increases the expectations that the Fed may reduce the Federal Funds Rate in September. He also noted that NFP figures for the previous two months – May and June – were revised sharply lower, further reinforcing expectations of a potential rate cut. “Such views were very much aligned with the two dissenters during the last Federal Open Market Committee (FOMC) meeting, which favoured a quarter-point cut. “The outlook for Fed Fund Rate was the main consideration among the traders as the Fed was seen as indecisive on further monetary policy accommodation during the recent FOMC meeting,” he told Bernama. Meanwhile, Mohd Afzanizam said the US government’s recent decision to impose a reciprocal tariff of 19% on Malaysia, down from a previous rate of 25%, could help mitigate the impact. “This is a welcome move, and there may be room for further negotiations. An improved trade arrangement could prove positive for the ringgit over the medium term.” Furthermore, the economist believes that the recently announced 13th Malaysia Plan will support the ringgit in the medium to long term.

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.3485 2.8100 3.3430 3.1320 4.9650 2.5650 3.3470 5.7430 5.3760

4.2125 2.6970 3.2470 3.0490 4.8050 2.4700 3.2440 5.5600 5.1470 58.1200 62.7500 53.1600 4.7300 0.0247 2.7940 39.7100 1.4600 7.1100 114.4200 111.1900 22.3200 1.3600 41.6500 12.2700 113.4900 N/A

4.2025 2.6810 3.2390 3.0370 4.7850 2.4540 3.2360 5.5400 5.1320 58.1200 62.5500 52.9600 4.5300 0.0197 2.7840 39.5100 1.2600 6.9100 114.2200 110.9900 22.1200 1.1600 41.4500 11.8700 113.2900 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

119.7100 3.6280 60.6800 68.2000 55.9400 5.0400 0.0272 2.8870 15.6000 43.1600 1.5600 7.5500 120.5300 117.1200 24.7200 1.4800 45.7300 13.8400

3. 3790 3.1790

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

Technology Overweight

Unisem (M) Bhd Buy. Target price: RM2.93

Construction Overweight

AUG 1, 2025: RM2.37

Source: PublicInvest Research

Source: Bloomberg, RHB Research

Source: Bank Negara, Finance Ministry, RHB Research

THE 13th Malaysia Plan (13MP) was tabled in Parliament with RM430bn (annual average of RM86bn) worth of gross development expenditure (DE) targeted for the 2026-2030 period vs the RM415bn (annual average of gross DE budgeted for the 12th Malaysia Plan or 12MP (2021-2025). Therefore, we believe the 13MP DE should continue to facilitate infrastructure growth in the country. The total RM430bn gross DE is earmarked for the economic sector, including infrastructure, info-structure, public transport, flood mitigation, affordable housing, and capacity-building projects, amongst others. Specific projects highlighted under the 13MP include the Sarawak-Sabah Link Road, Pan Borneo Highway, the Central Spine Road from Bentong (Pahang) to Kuala Krai (Kelantan), Trans Borneo Highway (formerly known as Pan Borneo Phase Two of the Sarawak-Sabah Link Road), widening of the PLUS highway for the Senai Utara-Machap stretch, Light Rail Transit 3, and Penang LRT. Public-private partnership (PPP) projects continue to be implemented via the Public-Private Partnership Master Plan 2030 (PIKAS 2030), with the Government projecting RM61bn worth of private sector funding under the 13MP. PIKAS 2030 has outlined a list under the “Strategic Thrust 3: Expanding PPP models to diversify projects” of the plan, which includes (among others) the West Ipoh Span Expressway, Putrajaya-Bangi Expressway, Ipoh Sentral Transit Oriented Development, and East Coast Expressway Phase 3. Key downside risks to our sector call are unexpected slowdowns in job rollouts, labour shortages, and scale downs of data centre investments into Malaysia. Maintain OVERWEIGHT. Top Picks are Gamuda, Sunway Construction and Binastra. – RHB Research, Aug 1

UNDER the 13th Malaysia Plan (2026-2030), the government has outlined a clear vision to become an inclusive and sustainable AI-driven economy by 2030. The strategy shifts the narrative from “Made in Malaysia”to“Made by Malaysia,“ with plans to integrate AI across key sectors such as manufacturing, agriculture, healthcare, education, finance, security, housing, and public services. A cornerstone of the plan is to nearly double the export value of electrical and electronic products to RM1tln by 2030, supported by the implementation of the High-Value High-Tech Semiconductor Industry Flagship Project. As part of the National Semiconductor Strategy, the government has allocated RM2bn-half of which will go toward the ARM deal to expedite chip design development, while the remaining half will serve as matching grants for local R&D initiatives. Under the strategic plan, the government aims to secure at least RM500bn in domestic and foreign investments as well as the training and upskilling of 60,000 high skilled engineers to support the semiconductor industry. The US government has released a new list of country tariff with a lower tariff rate of 19% for Malaysia. The 19% tariff rate for Malaysia is even lower than Taiwan’s 20%. It is a relief for the local Malaysian technology firms. Potential beneficiaries of the lower tariff rate include Electronics Manufacturing Services providers such as SKP Resources and VS Industry, as well as Inari Amertron and Greatech, which have notable exposure to the US market. Once the tariff issue is resolved, we believe capex spending in the technology space is likely to pick up again. We are Overweight on the technology sector. – PublicInvest Research, Aug 1

DESPITE posting a record-high revenue in 2Q25, Unisem’s core earnings came in below expectations, impacted by elevated pre-operating costs and loss-making Malaysian operations. Management remains confident of sustained demand into 3Q25, with flattish-to-higher QoQ loadings driven primarily by its Chengdu plant. We continue to like the stock for its semiconductor exposure, and anticipate earnings to rebound once the Malaysian plant utilisation improves and cost structures normalise - unlocking operating leverage. 1H25 revenue rose 18.4% YoY to RM898.8m, exceeding expectations. However, core net profit of RM7.3m (-72.7% YoY) was weak, achieving just 6.6% and 9.6% of our and consensus full-year forecasts. EBITDA was flattish YoY, with margins down to 15.8% from 18.7% due to pre-operating expenses for Gopeng plant and more than RM20m losses at the Malaysian operations (including Unisem-Advanpack Technologies, compounded by a higher-than expected effective tax rate). Chengdu now contributes 65% of group revenue. 2Q25 revenue hits record high, but costs drag profitability. USD-denominated revenue grew for a fifth consecutive quarter, up 15.1% QoQ to a record US$110.6m - driven by broad-based strength in Chengdu operations (except communications). However, core earnings contracted 30.5% QoQ and 79% YoY to RM3m due to the loss-making Malaysian segment, elevated Gopeng start-up costs, rising headcount, and increased depreciation charges. Total headcount rose to 7,181 (from 6,814 in 1Q25) to support volume ramp-up. 2Q25 capex reached another record at RM185.6m, primarily for Chengdu Phase 3 expansion. Stay BUY and RM2.93 TP. – RHB Research, Aug 1