09/03/2026

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MONDAY | MAR 9, 2026

Malaysian timber exporters feel pinch of sales tax

Middle East tensions lift

Wellcall Holdings recommended a first interim dividend of 1.6 sen per share for Q1 FY26, compared to 2.0 sen per share in Q1 FY25. This represents a dividend payout ratio of about 117%. “We cut our FY26/FY27 PAT forecasts by 13.8%/14.2% after revising down our sales growth assumptions amid the still-subdued global demand. We also rolled forward our valuation base to FY27’s earnings. “We downgrade our recommendation on Wellcall Holdings to Neutral from Buy with a lower target price of RM1.36. “This is based on an unchanged target price-to-earnings ratio of 16.0x, which is pegged to our rolled-over FY27 EPS. “Nevertheless, we continue to like Wellcall Holdings for its steady replacement-driven demand, additional capacity and efficiency gains from the new mandrel line, and consistent dividend payouts, translating into appealing dividend yields of around 5.2%– 5.3% for FY26/FY27,“ Berjaya Research said. Key downside risks include prolonged global demand softness, delaying volume recovery and volatility in raw material prices and exchange rates. outlook for CPO futures, rubber KUALA LUMPUR: Crude palm oil (CPO) futures on Bursa Malaysia Derivatives are expected to trade positively this week, supported by stronger crude oil prices amid the US-Iran conflict, a trader said. Iceberg X Sdn Bhd proprietary trader David Ng said the ongoing geopolitical conflict in the Middle East has lifted crude oil prices, which in turn are supporting palm oil prices. Indications of weaker production are also expected to underpin the market, he said. “We expect prices to range between RM4,200 and RM4,450 per tonne (this week),” he told Bernama. Last week, on a Friday-to-Friday basis, the March 2026 contract rose RM261 to RM4,250 per tonne. The physical CPO price for March South increased by RM110 to RM4,160 a tonne. Meanwhile, the Malaysian rubber market is expected to trend higher this week, supported by tightening supply conditions and rising concerns over the ongoing conflict in the Middle East. The Malaysian Rubber Glove Manu facturers Association said tighter supply conditions, coupled with higher crude oil prices, could support rubber prices. It told Bernama the outlook is also supported by China’s latest economic growth plans, which target gross domestic product growth of 4.5-5%, backed by planned fiscal stimulus. Industry expert Denis Low said rubber prices are expected to hover within a tight range, with a slight down ward bias. Last week, on a Friday-to-Friday basis, the Malaysian Rubber Board’s reference price for Standard Malaysian Rubber 20 dropped 9.5 sen to 782.50 sen per kg, while latex in bulk surged 34 sen to 648 sen per kg.

o Levy adds to cost pressure on traders – especially those without manufacturing facilities – and creates cascading effect across supply chain, says association vice-president

Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

The strong ringgit has narrowed exporters’ margins, while instability in parts of the Middle East has contributed to higher freight costs, insurance premiums and shipping uncer tainties. “The ringgit strengthened too fast. It is good to see a stronger currency, but when it moves too quickly, exporters struggle to adjust their pricing, which can lead to reduced competitiveness in international markets,” Chew said. Despite the challenges, he said, there are signs of cautious optimism in 2026, supported by steady demand and growing interest in higher value timber products. “There is still confidence in the market. People are buying, and traders still want to do business.” Demand is gradually shifting towards value added and sustainably sourced timber products, particularly those with clear traceability and certification, Chew noted. Most Malaysian exporters supplying the EU market are already prepared to comply with the European Union Deforestation Regulation, he added. Looking ahead, TEAM expects gradual stabilisation in 2026, supported by demand for certified and traceable timber products and continued improvements in operational efficiency. “The Malaysian timber and timber products sector remains resilient. However, local policies should be reviewed to ensure the industry remains competitive, particularly in relation to international market trends and sustainability standards that affect timber exports,” Chew said.

supply chain, and exporters end up carrying part of that burden,” he said. TEAM has raised the issue with government agencies, including the Royal Malaysian Customs Department and the Ministry of Finance, requesting a review of the SST on sawn timber. However, the tax remains in place. Chew said the timing is challenging for the sector, which has already experienced several difficult years. Timber exports have softened in recent years, amid weaker

KUALA LUMPUR: Domestic tax policies are adding to cost pressures for timber exporters, particularly traders who operate without manufacturing facilities. Timber Exporters Association of Malaysia (TEAM) vice president Leonard Chew ( pic ) said the 5% sales tax on sawn timber raises costs for exporters and affects Malaysia’s competi tiveness in global markets. “Manufacturers effectively pay nothing. As traders, we do

construction activity in some markets, cautious inventory management by buyers and tighter pricing conditions. Chew said, “2023, 2024 and 2025 were also poor years. The industry has been under pressure for some time.” Malaysia’s timber exporters are also facing intensifying competition in key markets. Furniture exports to the United States – a major destination – are seeing stronger competition from countries such as China and Vietnam following recent tariff adjustments. “Furniture is definitely facing more competition, especially with the current tariff structure. That puts additional pressure on Malaysian exporters,” Chew said. At the same time, external factors such as currency movements and geopolitical tensions have added to uncertainties.

conditions are expected to remain chal lenging for Wellcall Holdings Bhd, as persistent inflationary pressures and cautious market sentiment continue to moderate replenish-ment orders, while a stronger ringgit may also weigh on translated export revenue. Berjaya Research Sdn Bhd said the group’s strong market positioning and commitment to high-quality as well as competitively priced products should help it retain and potentially regain market share. The research firm said although the recent uptick in synthetic rubber prices could exert some pressure on margins, Wellcall Holdings’ disciplined cost management, prudent procurement and inventory control should help mitigate these effects. Meanwhile, the company’s Plant 3 mandrel line expansion is progressing through testing and customisation, and it remains on track for commissioning in 2026. Once fully operational, the additional capacity and enhanced efficiency could potentially provide meaning ful upside if market conditions turn favourable. Berjaya Research said Wellcall Holdings not have that privilege – we have to pay a 5% levy on sawn timber simply to move the same product,” he told SunBiz . Malaysia’s Sales and Service Tax (SST), reintroduced in 2018 to replace the Goods and Services Tax, imposes a 5% to 10% levy on various goods, including sawn timber. Manufacturers can benefit from exemptions or claim relief under mechanisms such as Schedule C, but traders are generally required to pay the tax on sales without full input credits. Chew said the tax creates a cascading effect across the timber supply chain, which includes activities such as logging, sawmilling, kiln drying, treatment, packaging and logistics. Without a full input-credit system, taxes paid on certain services and inputs can become embedded in the final cost of timber products. “As a result, costs accumulate along the

Wellcall Holdings lowered to ‘neutral’ on softer demand outlook PETALING JAYA: Near-term demand

last year, primarily due to persistently sluggish demand for low-and-medium-pressure industrial rubber hoses across most export and domestic markets but partially cushioned by stronger sales to the US/Canada region (+13.9%). In tandem with the lower revenue, PAT fell 48.7% to RM6.8 million from RM13.3 million, weighed down by a weaker gross profit margin of

kicked off FY26 amid ongoing softness in global demand for industrial rubber hoses. “However, we remain posi tive about the group’s longer term prospects, underpinned by stable replacement demand and its strong market posi tioning. Following our earnings revision to reflect the muted demand environment, we believe the recent share price performance has largely priced in its near-term earnings outlook,“ the research firm said.

35.1% compared to 37% in Q1 FY25 and an unrealised foreign exchange loss of RM1.1 million compared to a RM2.7 million gain previously. The group’s core PAT stood at RM7.9 million, down 25.8% from RM10.6 million. Quarter-on-quarter, Wellcall Holdings’ revenue edged up 1.6% from the preceding quarter, supported by improved sales to the US/Canada and Australia/New Zealand markets. However, PAT dropped 51.8% sequentially due to softer gross margins and adverse foreign exchange movements.

On earnings, Berjaya Research said Wellcall Holdings’ Q1 FY26 revenue was broadly in line with the research firm’s expectations, making up 22.7% of its full-year forecast. “However, core profit after tax (PAT), excluding foreign exchange movements, fell short of expectations at just 16.7% of our FY26 estimate, mainly attributed to weaker-than expected gross profit margins,“ it said. The research firm said Wellcall Holdings’ revenue declined 9.3% to RM44.2 million in Q1 FY26, from RM48.7 million in the same quarter