03/10/2025

BIZ & FINANCE FRIDAY | OCT 3, 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

Stronger property sales in H2’25 expected: Kenanga KUALA LUMPUR: Malaysia’s property sector is expected to see stronger sales in the second half of 2025 (H2’25), offsetting the first half’s weaker performance, according to Kenanga Research. In a note, the research house said more project launches are slated in the coming months, providing the momentum needed to balance the sector’s sputtering start to the year. “We anticipate the generally higher year-on-year sales targets to have a lower land sale composition as most developers have rationalised their land banks or completed strategic land disposals, particularly for data centre opportunities,” it said. Kenanga said it is reassessing the sector with a fresh perspective, favouring developers with less exposure to the affordable segment. “Multiple measures were introduced to be supportive of consumption, including the recent Budi Madani RON95 initiative the Overnight Policy Rate cut to 2.75%, in addition to our expectation of more government support for lower-income groups in the upcoming Budget 2026. “While such policies aim to sustain day-to-day spending power, they reflect a lower capacity for large-ticket discretionary purchases such as homes, particularly among lower-income households.” Kenanga Research said this view is substantiated as banks reduce lending for lower-end mortgages, and is reflected in the slightly weaker industry home mortgage approval rates. “We, therefore, shift our preference towards developers with a smaller share of affordable housing units, as they are better positioned for earnings sustainability and resilience amid policy or market risks that disproportionately affect lower-income buyers,” it said.

Ringgit higher against US dollar for fourth consecutive day THE ringgit continued to close higher against the US dollar on Thursday, as the US government shutdown which started yesterday has taken a toll on the greenback, an analyst said. At 6pm, the local note inched up to 4.2040/2090 versus the US dollar compared with Wednesday’s close of 4.2045/2095. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid told Bernama the US government shutdown will restrict government services, including the release of its statistical data, resulting in further uncertainty on the country’s current economic condition. “The key question is how quickly the impasse between Republicans and Democrats over spending programmes and concessions can be resolved. “In the meantime, the shutdown is dollar-negative.” At the close, the ringgit was lower against a basket of major currencies. It declined versus the euro to 4.9410/9468 from 4.9327/9386 at Wednesday’s close, slipped vis-a-vis the British pound to 5.6741/6809 from 5.6605/6672 yesterday, and weakened against the Japanese yen to 2.8669/8705 from 2.8561/8597 previously. The local note was traded mostly lower or flat against Asean currencies. It appreciated versus the Thai baht to 12.9829/13.0040 from 12.9929/13.0128 at yesterday’s close. However, the ringgit eased vis-a-vis the Singapore dollar to 3.2665/2707 from 3.2623/2665 on Wednesday, fell against the Indonesian rupiah to 253.2/253.6 from 252.7/253.1 yesterday and was flat versus the Philippine peso at 7.23/7.25 compared with 7.23/7.24 previously.

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.2750 2.8370 3.3140 3.0600 5.0120 2.4950 3.3140 5.7580 5.3930

4.1290 2.7230 3.2110 2.9750 4.8510 2.4030 3.2110 5.5760 5.1620

4.1190 2.7070 3.2030 2.9630 4.8310 2.3870 3.2030 5.5560 5.1470

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

117.5100

111.4100

111.2100 3.1310 63.1300 52.4400 4.3900 0.0191 2.7960 40.4400 1.2300 6.8200 112.1300 108.9700 23.0000 1.1300 42.5600 11.7900 N/A N/A

3.5780

3.3310

N/A

N/A

68.8300 55.4000 4.8900 0.0266 2.9110 15.1000 44.1800 1.5400 7.4500 118.3300 115.0000 25.6900 1.4500 46.9500 13.7400

63.3300 52.6400 4.5900 0.0241 2.8060 40.6400 1.4300 7.0200 112.3300 109.1700 23.2000 1.3300 42.7600 12.1900 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

Market outlook Positioning for resilient 4Q25

Banks Overweight

Sports Toto Bhd Buy. Target price: RM1.60

Oct 2, 2025: RM1.40

Source: Bloomberg, TA Research

Source: Bank Negara, TA Research

Source: Bloomberg, RHB Research

ALTHOUGH still down 1.9% year-to-date, the FBMKLCI has rebounded from its April low of 1,386.63 to 1,611.88 by the end of September, with initial uncertainty and the eventual finalisation of U.S. trade policies being the main drivers of volatility. The benchmark index is expected to trend higher in 4Q25, supported by Malaysia’s resilient fundamentals, improving corporate earnings, stable politics that ensure policy clarity and sustainability, and renewed foreign buying interest amid a U.S. monetary easing bias following the September interest rate cut and dovish guidance. Budget 2026, to be tabled on Oct 10, can generate excitement as the government pursues growth measures and structural reforms to drive the domestic economy next year. Furthermore, with expectations that President Donald Trump will conclude his tariff and trade restriction measures by year end and shift focus toward reviving the economy ahead of the 2026 U.S. Congress elections, investors may anticipate a calmer global trade environment in 2026, prompting strategic positioning in 4Q25. We maintain our end-2025 FBMKLCI target of 1,660, based on 14.5x CY26 earnings. Note that our bottom-up 12-month target for the 30 index constituents is 1,790, compared with the consensus target of 1,770, which is derived from Bloomberg data. With 4Q historically being the most predictable quarter – a 70.8% probability of QoQ gains and the highest average return of 4.4% – the FBMKLCI’s potential to outperform remains strong. We continue to promote the following three key themes: 1) Undervalued Blue Chips (HLBANK, PBBANK and TENAGA), 2) Domestic Construction and Property (GAMUDA, SIMEPROP and SKYWLD), 3) Defensive Plays (F&N and KIPREIT) and 4) High-Growth Small Caps (EXSIMHB and PGF). – TA Research, Oct 2

TOTAL loans expanded by 5.4% YoY (+0.3% MoM) in August 2025. By segment, consumer loans rose 5.6% YoY (+0.5% MoM). Business loans grew at a stronger pace of 5.1% YoY (+0.1% MoM), vs 4.8% in July 2025. YTD loans grew by 2.9% (Aug 2024: +3.0% YTD), underpinned by a 3.6% (Aug 2024: +3.9% YTD) and 1.9% (Aug 2024: +1.7% YTD) increase in consumer and business loans, respectively. Looking ahead, we continue to expect loan momentum to pick up slightly in the 2H25. Consumer loans, which accounts for around 58% of total system loans, should see a lift from improved household sentiment, supported by a resilient labour market, an accommodative interest rate backdrop, and fiscal support measures. Meanwhile, business and SME loan growth is expected to gradually accelerate. Business loans grew 5.1% YoY in August, rising slightly from 4.8% in July. By purpose, working capital loans rose by a healthier pace of 4.8% YoY. By sector, loan contractions persisted in several segments led by Education, Health & Others (-12.5%), followed by Agriculture, Forestry & Fishing (-8.5%), Mining & Quarrying (-2.2%), and Construction (-6.0%). Nevertheless, momentum remained strong across most other sectors. In descending order, loan growth was led by Electricity, Gas, Steam & Air Conditioning Supply (29.7% YoY), Information & Communication (18.9% YoY), Finance, Insurance, & Business Activities (13.9% YoY), Water Supply, Sewerage & Waste (9.7% YoY), Accommodation & Food Services (7.3% YoY), Transportation & Storage (5.4% YoY), Manufacturing (3.2% YoY) and Wholesale and Retail Trade (2.4% YoY). Capital market activities remained healthy in August 2025, with net funds raised by the private sector through new shares and debt securities issuance amounting to RM96.1bn. We maintain OVERWEIGHT on the sector. – TA Research, Oct 2

WE upgrade our call on Sports Toto as the recent share price weakness has lifted potential upside beyond our threshold. While our outlook remains intact, with no material changes to earnings forecasts or key assumptions, the current valuation provides a more attractive risk-reward profile. At the current level of RM1.40, we see downside as limited, underpinned by resilient cash flow generation and sustainable dividend yield. FY25 core net profit of RM237m (+7.5% YoY) met expectations, at 99% and 96.2% of our and consensus full-year forecasts. SPTOTO’s earnings growth was primarily driven by stronger gaming PBT (+13.1% YoY), which in turn was underpinned by a lower prize payout ratio of 58.8% (FY24: 60%). This was partly offset by weaker PBT contributions from UK subsidiary HR Owen (-25.2% YoY) due to elevated operating expenses stemming from brand positioning initiatives. A fourth interim DPS of 2 sen was declared (ex-date: 1 Oct), bringing YTD DPS to 8 sen - in line with expectations. We expect gaming sales to improve in the coming quarter, spurred by the RM78m accumulated Supreme Toto 6/58 pool (won on Aug 20). Meanwhile, HR Owen sales should also see a modest lift with the September car plate campaign in the UK. Nonetheless, distributorship margins are likely to remain under pressure due to persistently high operating costs and depreciation from recent land acquisitions in the UK. These acquisitions, to be funded via internal funds, are anticipated to reduce lease payments over time. SPTOTO is now trading at 8x P/E, or about -1SD from its 5-year mean. Given the improved sales outlook coupled with the defensive earnings nature and attractive yield, we believe the stock should re rate closer to its historical average. Upgrade to BUY, with RM1.60 TP. – RHB Research, Oct 2