29/05/2025

BIZ & FINANCE THURSDAY | MAY 29, 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

Microsoft shows support with launch of Bina AI Malaysia KUALA LUMPUR: Microsoft unveiled the Bina AI Malaysia, an initiative to support the country’s next phase of artificial intelligence (AI) transformation. Microsoft Malaysia managing director Laurence Si said the initiative is a renewed commitment to Malaysia’s resilient, inclusive and sustainable AI economy, and represents more than just providing infrastructure and tech tools. “It is our commitment to work side by side with the government, industry partners and community to scale AI adoptions, drive innovation and develop future-ready talents. “A key initiative from Bina AI Malaysia is the Microsoft National AI Innovation Centre aimed at advancing Malaysia’s national AI goals, driving innovations, enabling partnerships and solving local challenges with AI,” he said at the Microsoft AI Tour yesterday. Si said the technology company was also collaborating with Ernst & Young Malaysia, Malaysia’s National AI Office and Petronas Leadership Centre for this initiative. Microsoft said in a statement that Bina AI Malaysia reflects the company’s commitment to nation-building by not only providing infrastructure and trusted technological solutions, but also in partnering with stakeholders across industries to drive AI adoption and developing AI-ready talent. Meanwhile, Si added that under the AI for Malaysia Future (AIForMYFuture) initiative launched in December last year, Microsoft has successfully skilled 400,000 people to date, spanning civil servants, the underserved communities and professionals across industries. “We aim to skill 800,000 people by end-2025 to drive this transformation.” – Bernama

Improved risk appetite helps ringgit rebound against dollar THE ringgit rebounded to close higher against the US dollar yesterday, supported by improved risk appetite for the local note despite prevailing global uncertainties. At 6pm, the local note rose to 4.2215/2275 versus the US dollar from Tuesday’s close of 4.2345/2430. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the greenback is looking weaker at the moment despite stronger US economic data and the recent tariff related trade policy shifts. “Concurrently, foreign investor confidence in Malaysia has been gradually improving, underpinned by a pragmatic fiscal consolidation strategy that supports a cautiously optimistic outlook. “The government remains prudent in advancing fiscal reforms, targeting a reduction in the budget deficit to approximately 3% of GDP and maintaining the statutory debt limit at 65% of GDP over the medium term,” he told Bernama. At the close, the ringgit traded higher against a basket of major currencies. It rose against the Japanese yen to 2.9271/9315 from Tuesday’s close of 2.9425/9486, gained vis-à-vis the euro to 4.7838/7906 from 4.8053/8150 on Tuesday and appreciated against the British pound to 5.7028/7109 from 5.7352/7467 previously. The local note also traded higher against its Asean peers. It strengthened against the Singapore dollar to 3.2776/2825 from 3.2894/2963 on Tuesday and inched up against the Thai baht to 2.9355/9614 from 12.9365/9676 on Tuesday. The ringgit edged higher vis-à-vis the Philippine peso to 7.60/7.62 from 7.62/7.64 on Tuesday’s close and rose versus the Indonesian rupiah to 259.0/259.5 from 259.9/260.6 previously.

Exchange Rates

FOREIGN CURRENCY

SELLING TT/OD

BUYING TT

BUYING OD

1 US Dollar

4.3140 2.7890 3.3420 3.1160 4.8860 2.5670 3.3420 5.8260 5.2440

4.1810 2.6770 3.2460 3.0320 4.7290 2.4720 3.2460 5.6420 5.0210

4.1710 2.6610 3.2380 3.0200 4.7090 2.4560 3.2380 5.6220 5.0060

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

118.7500 3.6040 60.2900 67.1700 55.5800 5.1400 0.0274 2.9910 15.5000 43.5300 1.5500 7.8700 119.6300 116.2200 24.8800 1.4800 46.1700 13.7800

112.6200 3.3570 57.7600 61.8200 52.8200

112.4200 3.1570 57.7600 61.6200 52.6200

4.8200 0.0248 2.8960

4.6200 0.0198 2.8860

N/A

N/A

40.0600 1.4500 7.4200 113.5700 110.3300 22.4800 1.3600 42.0400 12.2100

39.8600 1.2500 7.2200 113.3700 110.1300 22.2800 1.1600 41.8400 11.8100

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

Sentral REIT Buy. Target price: RM0.93

Tenaga Nasional Bhd Buy. Target price: RM15.50

IOI Corporation Bhd Buy. Target price: RM4.60

May 28, 2025: RM14.12

May 28, 2025: RM0.755

May 28, 2025: RM3.64

Source: Bloomberg

Source: Bloomberg

Source: Bloomberg

AT 23% and 22% of our and Street’s FY25 estimates, Q1'25 core earnings of RM1 billion (+13% YoY) were within expectations. Note that our numbers have imputed Malaysian Financial Reporting Standards (MRFS) 16 changes (Q1'25: -RM159 million, Q1’24: - RM159 million). Q1'25 core profit fell 8% on higher tax expenses and depreciation charges. YoY, Q1'25 core earnings improved by 13% YoY on a better domestic generation business, which was driven by better operational performance, lower negative fuel margins, and lower opex. Electricity demand fell 1.2% YoY, mainly due to weaker industrial (-5.5%; lower demand from iron & steel and utility electrical industries) and domestic (-4%) segments. This was partially cushioned by the stronger commercial segment (+5.1% YoY), which was driven by data centre, business services, and accommodation services. TNB’s current renewable energy (RE) capacity rose slightly QoQ to 4.5GW (22% of total capacity). We believe the base capex would have factored in average demand growth of 4-5% while contingent capex could be a reflection of additional demand growth of 3%. That said, there is still no clarity on the implementation of contingent capex and its respective conditions. TNB is confident that 60-70% of the proposed contingent capex will eventually be spent within Regulatory Period 4 (RP4). Utilisation of this capex will largely depend on certain triggers, such as how aggressively the Malaysian Government rolls out its solar programmes, particularly large-scale solar 6 (LSS6) and beyond. Demand growth – especially from DCs – will also influence whether certain contingent capex thresholds are triggered. BUY with RM15.50 TP. – RHB Research, May 28

SENTRAL REIT announced the proposed acquisition of the retail component of Arcoris Plaza from UEM Sunrise for a purchase consideration of RM70 million. This marks the first retail acquisition under the REIT’s new strategy to diversify its asset mix, reducing the proportion of office assets in its portfolio. Its gearing ratio will increase to 46%, but this could be pared down via the potential disposal of non-core office assets. The total purchase consideration of RM70 million is equal to the independent valuation by Nawawi Tie Leung Property Consultants. The acquisition will be fully funded via borrowings, and is expected to be completed in Q4’25. The proposed acquisition is for 38 stratified retail units and 1,432 car park bays as part of the Arcoris Plaza development. The total NLA makes up 53,244 sq ft, and is currently fully occupied with a diverse mix of tenants such as those in the F&B, supermarket, health & beauty, and edutainment sectors. Most of the tenancies also include a considerable portion of turnover rental structure, which would provide Sentral REIT with additional income during periods of positive sales performance. We think the location of the property in the centre of Mont Kiara – a mature neighbourhood with a large expatriate population – will keep the mall attractive as it serves the office population and surrounding residential developments. The property is also just 500m away from the REIT’s existing retail asset in Plaza Mont Kiara. The expected 7% yield from the acquisition is considered reasonable for the REIT. BUY with RM0.93 TP. – RHB Research, May 28

9M’25 core earnings are within our and Street forecasts, at 72-73% of FY25 projections, with core net profit rising 15% YoY (-24% QoQ) in Q3’25, bringing 9M’25 core net profit up by 11% YoY. FFB output slipped 25% QoQ in Q3’25 (-5% YoY), bringing 9M'25 FFB growth to -3% YoY. In 10M’25, weather conditions improved, with FFB output dipping by 0.3% YoY – slightly below our and management’s original guidance of 1-2% growth for FY25. IOI has lifted its FFB output guidance to 3% for FY25, as it expects Q4’25 output to recover significantly QoQ. We make no changes to our forecasts of 1.3% for FY25 and 2-3% for FY26-27. IOI recorded a CPO ASP of RM4,377/tonne (+16% YoY) in 9M'25, while palm kernel (PK) prices shot up by a larger 53% YoY. IOI expects CPO prices to range between RM3,700-4,000/tonne for the rest of FY25. It has sold about 70% of its output two months forward. We make no change to our FY25 CPO price assumption of RM4,100/tonne. Unit cost in 9M25 was flattish YoY at RM2,012/tonne (including PK credit). We understand fertiliser application is on track, with fertiliser costs expected to decrease by 10-12% YoY in FY25, based on its purchased requirements for the year. Management expects the unit cost for FY25 to remain at RM2,000-2,100/tonne, due to higher PK credit as well as lower fertiliser costs. This is in line with our forecasts. Downstream margins should be stable in Q4’25. IOI’s Q3’25 downstream EBIT margin widened to 2.4% from 0.2% in Q2’25, as refinery margins rose due to the higher Malaysian export levy which led to lower feedstock costs. BUY with RM4.60 TP. – RHB Research, May 28