21/03/2025

FRIDAY | MAR 21, 2025

20

BIZ & FINANCE

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

WTEC inks underwriting deal with Alliance Islamic for IPO KUALA LUMPUR: Manufacturer and trader of foam and non foam products WTEC Group Bhd has signed an underwriting agreement with Alliance Islamic Bank Bhd as part of its upcoming initial public offering (IPO) on the ACE Market of Bursa Malaysia. WTEC’s IPO includes the public issuance of 90.2 million new shares, making up 18.8% of its total shares after listing. Additionally, 43.2 million existing shares, or 9% of the total, will be offered for sale. Of the 90.2 million new shares, 24 million will be offered to the Malaysian public through balloting. Another 9.6 million will be allocated to eligible directors, employees, and contributors to the company’s success under the pink form allocation. The remaining 56.6 million shares will be privately placed with bumiputera investors approved by the Ministry of Investment, Trade and Industry (Miti). Of the 43.2 million shares for sale through private placement, 39.8 million will go to selected investors, while 3.4 million will be allocated to bumiputera investors approved by Miti. Under the underwriting agreement, Alliance Islamic Bank will guarantee 33.6 million new shares allocated to the Malaysian public and pink form allocation. WTEC manufactures and trades foam and non-foam products, serving a diverse range of industries including automotive, electrical and electronics, construction, medical and personal protective equipment, and others. Beyond Malaysia, the group also exports to other foreign countries including but not limited to Vietnam, Australia, Thailand, and other international markets.

Ringgit ends higher against dollar on dovish Fed signal THE ringgit ended higher against the US dollar yesterday as the US Federal Reserve (Fed) maintained its benchmark interest rate but signalled that the rate-cutting narrative remained on track. The local note gained 0.33% to RM4.4215/4270 from Wednesday’s close of 4.4330/4400. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the Fed remains unfazed about the interest rate outlook despite navigating heightened policy uncertainties, particularly concerning the impact of import tariffs. “The Fed’s latest macroeconomic projections reaffirm their outlook of two rate cuts in 2025, 2026, and 2027, consistent with December’s forecast. This reinforces greater clarity on monetary policy direction, with no deviation from the planned course,” he told Bernama. Additionally, Mohd Afzanizam said the Fed’s decision to reduce the monthly redemption cap on US Treasury bonds to US$5 billion from US$25 billion signals an intent to ease rates soon, as the move ensures ample liquidity in the financial system. The ringgit traded mostly higher against a basket of major currencies. It bounced versus the euro to 4.7973/8033 from 4.8324/8400 at Wednesday’s close, improved against the British pound to 5.7276/7347 from 5.7496/7587 but eased vis-a-vis the Japanese yen to 2.9728/9767 from 2.9595/9643. The local note also strengthened against Asean currencies. It edged up against the Singapore dollar to 3.3117/3164 from 3.3251/3306 at the close on Wednesday, advanced versus the Thai baht to 13.1163/1388 from 13.1778/2056 and gained vis-a-vis the Philippine peso to 7.72/7.74 from 7.74/7.75 previously.

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.4930 2.8650 3.3770 3.1330 4.9090 2.6200 3.3770 5.8520 5.1620 3.7740 62.5500 67.4500 58.4300 5.2900 0.0281 3.0310 43.7200 1.6300 7.9700 124.6000 121.1000 25.7500 1.5600 45.9200 13.9800 123.7600 N/A

4.3580 2.7490 3.2780 3.0480 4.7490 2.5220 3.2780 5.6650 4.9410 3.5140 59.9000 62.0600 55.5200 4.9700 0.0255 2.9340 40.1600 1.5300 7.5100 118.2900 114.9600 23.2400 1.4300 41.7800 12.3900 117.3200 N/A

4.3480 2.7330 3.2700 3.0360 4.7290 2.5060 3.2700 5.6450 4.9260

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

117.1200 3.3140 61.8600 55.3200 4.7700 0.0205 2.9240 39.9600 1.3300 7.3100 118.0900 114.7600 23.0400 1.2300 41.5800 11.9900 N/A 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

Consumer Products Neutral

Axiata Group Bhd Buy. Target price: RM3.20

Healthcare Facilities & Services Overweight

March 20, 2025: RM1.79

Source: Bloomberg

Source: Company data, RHB

Source: Statista

AXIATA Group hosted a conference call this week ahead of its EGM for shareholders (March 24) to vote on the XL and Smartfren (FREN IJ, NR) merger. The EGM for XL and FREN shareholders is on March 25. Recap: Post the merger, Axiata and Sinarmas Group will have joint control of MergedCo (renamed XL Smart Telecom or XLS) with equal 34.8% stakes. The merger is on track for a mid 2025 completion, with approvals in principal given by Indonesia’s Communications Ministry and Financial Services Authority. XLS will be led by ex-Robi Axiata CEO Rajeev Sethi. While the merger rationale and strategic intent are well acknowledged (i.e. scale benefits, market price repair, and financial resilience), we think market concerns will likely hinge on the risks from XL’s earnings deconsolidation (from majority control to associate) at group level. On proforma earnings (assuming the merger had been in effect in 2024), Axiata’s reported PATAMI is set to see a 34% decline to RM627 million from RM947 million. This assumes the deconsolidation of XL’s FY24 PATAMI (RM355 million), interest savings of RM82 million (proceeds from the share equalisation used to repay group debt), intercompany elimination with Linknet (RM105 million), and associate contributions from XLS (RM55 million). Assuming FREN’s FY24 LATAMI of IDR1.29tn (-RM374 million) is kept (erring on the conservative) for FY25-26 and using our current FY25-26 core earnings for XL, we estimate Axiata’s FY25 26 core earnings will be lowered by 9-14% (pre-synergies and integration costs), all else being equal. We make no changes to our forecasts pending merger completion and fresh management guidance. BUY with RM3.20 TP. – RHB Research, March 20

4Q24 – a seasonally stronger quarter. Most companies recorded higher QoQ sales, lifted by favourable seasonal factors towards the year-end and aided by the earlier timing of the Lunar New Year in 2025. On a YoY basis, most domestic-driven businesses registered positive topline growth, reflecting resilient consumer spending on the back of healthy economic growth and employment markets. That said, consumer sentiment remained subdued as elevated costs of living continued to limit discretionary spending, thereby pressuring inflation-weary consumers to downtrade and be selective on spending. That explains the relatively weaker earnings of the consumer discretionary companies vs the consumer staples players. In 2025, wage hikes in the public and private sectors would be positive for the consumer sector, as these would boost disposable income and consumer sentiment. This may be playing out, as most companies we talked to are seeing a positive momentum in their numbers QTD. On top of that, robust economic growth and job markets should continue to underpin the sector’s health, with lower-income groups to be supported by cash assistance and various subsidies from the government. On the flip side, the inflationary impact arising from the petrol subsidy rationalisation is still unclear at this juncture – we await more clarity on the mechanism. We like MRDIY, as it is a major proxy to capture the increase in consumer spending, as beneficiaries of the abovementioned sector tailwinds fall well within its customer base. We also like Farm Fresh – for its topline growth, driven by new product launches and expansion, with margins supported by lower input costs and favorable FX rates. – RHB Research, March 20

DATUK Dr Kuljit Singh shared his view that the Association Private Hospitals of Malaysia (APHM) continues to fully support the implementation of the diagnostic-related group (DRG) system in Malaysia provided the mechanism is carefully designed and able to demonstrate an improving patient outcome. We learnt that DRG is only implemented in public healthcare (not mandatory for private healthcare) in countries already practicing it. APHM is of the view that the proposed DRG mechanism in Malaysia should be implemented in such a manner where private hospitals are reimbursed based on DRG rates when public hospitals decant patients to the private sector. The insurance and takaful operators (ITOs) are seeking various measures to streamline cost following Bank Negara Malaysia’s (BNM) latest ruling to cap the premium hike until end 2026 amid the higher usage of treatment in private hospitals as well as high medical cost inflation. Despite the ITOs considering to delist private hospitals from the guarantee letter facility, APHM firmly opposes such a move as this could undermine a patient’s right to access quality healthcare. In response, APHM yesterday proposed measures to address rising healthcare cost which include co-payment, NHIS, non-claim bonus, as well as exemption of sales and service tax or SST on group insurance for employees. The proposal to implement the National Health Insurance Scheme remains up in the air after several changes of government administration. APHM sees several challenges i.e. long waiting time at public hospitals, rate of contributions from income earners, as well as service quality. – RHB Research, March 20