Latest news with #BIMBResearch
The Star
13 hours ago
- Business
- The Star
Trade turmoil weighs on earnings of tech sector
BIMB Research said it was maintaining a 'neutral' call on the technology sector. PETALING JAYA: The technology sector has had a rough start to the year, according to BIMB Research. The research house said earnings for the first quarter of this year (1Q25) were disappointing across all the manufacturing companies under its coverage. BIMB Research added that outsourced semiconductor assembly and test (Osat) companies bore the brunt of cautionary strategies. The research house said Unisem (M) Bhd saw the steepest decline in profit after tax and minority interests, with a drop of 60% year-on-year (y-o-y), while Malaysian Pacific Industries Bhd (MPI) and Inari Amertron Bhd saw earnings contractions of 15% and 18% y-o-y, respectively. 'The weakness was primarily attributed to softer demand and persistent client conservatism in restocking amid ongoing tariff uncertainty,' BIMB Research said, adding it was cautious on the near-term outlook, particularly for Osat companies. It said despite the Semiconductor Industry Association reporting a rise in global semiconductor sales of 18.8% y-o-y in 1Q25, it was mainly driven by the growing demand for AI-related chips. 'Given that local tech players have limited direct exposure to this high-growth segment, it makes them more vulnerable to cyclical volatility in consumer electronics and industrial applications, which are showing signs of a slowdown. 'Rising geopolitical tensions – especially the renewed threat of US tariffs on non-US made chips – are likely to weigh on investor sentiment,' the research house said. However, companies like Dagang Nexchange Bhd managed to recover upward trajectory at a pre-tax profit level on the back of ongoing margin improvements and better product mix at Silterra Malaysia Sdn Bhd. 'Information technology services on the other hand, remained resilient, with MyEG Services Bhd and NexG Bhd posting core profit after tax and minority interest growth of 24% and 19% y-o-y, respectively, underpinned by the accelerating digital transformation and steady demand for their services,' the research house said. BIMB Research said it was maintaining a 'neutral' call on the technology sector, emphasising the divergence between the defensive growth seen in services and the cyclical challenges facing Osat companies. 'We've maintained selective 'buy' recommendations primarily on services, like MyEG at a target price of RM1.54 and NexG at 45 sen. There is a 'buy' on weakness for MPI at RM22.58, 'hold' for Inari at RM2.23, and 'sell' on Unisem at RM1.60. We also maintain our 'buy' call on Dnex at 52 sen for now, pending further review.'
The Star
3 days ago
- Business
- The Star
Kawan Food's revenue forecast to remain stable
PETALING JAYA: BIMB Research expects Kawan Food Bhd 's revenue to remain stable over the long-term with growth likely to be driven by strong demand for convenient, high-quality frozen food, particularly in key international markets. This will be supported by ongoing product innovation and improved distribution efforts, the research house said in a note to clients. Meanwhile, the group will continue to focus on strengthening its supply-chain resilience and broadening its product offerings. Despite short-term external headwinds, demand remains healthy, as reflected in the group's steady revenue from Malaysia and key export markets, the research house said. However, BIMB Research added that Kawan Food remains cautious given ongoing global volatility from geopolitical tensions and currency fluctuations. On the group's results for the first quarter of this year (1Q25) , the research house said Kawan Food's earnings came below its expectations, with core profit after tax and minority interest of RM4.3mil, which accounts for only 11% of the full-year forecast. Revenue declined by 12.6% year-on-year to RM70.5mil, primarily due to softer demand from export markets with Europe down 25.2% and North America down 52.8%. As a result BIMB Research cut Kawan Food's FY25 and FY26 earnings assumption by 13% and 8% to RM34.4il and RM41.3mil, respectively, to account lower revenue from the export market. It maintained a 'buy' call on the stock with a lower target price of RM1.70 from RM2 earlier.
The Star
23-05-2025
- Business
- The Star
Hibiscus Petroleum sees stronger cashflows, eyes growth despite UK levy impact
BIMB Research revised its 2025, 2026 and 2027 earnings forecasts for Hibiscus to RM331mil, RM515mil and RM430mil, respectively. PETALING JAYA: Hibiscus Petroleum Bhd posted a net loss of RM115.97mil or loss of 15.4 sen a share for its third quarter ended March 31, of the financial year 2025 (3QFY25), due to a one-off, non-cash deferred tax liability charge of RM167.3mil related to the UK's Energy Profits Levy (EPL). Barring that, the upstream oil company made a pretax profit of RM128.3mil on revenue of RM572.8mil for the period earned an average realised oil and condensate price of US$78.2 a barrel. In a release, Hibiscus noted that excluding the levy, it would have posted a net profit of RM51.3mil for the quarter. "The charge (EPL) is expected to be fully reversed to the Group's statement of profit or loss during the window for which the EPL regime applies, i.e. up to March 31, 2030," it stated. For the nine months, Hibiscus' operating cashflows amounted to RM1.5bil, a 144% on-year increase compared to the same period in FY24. Hibiscus added it sold a total of 2.1 million barrels of oil equivalent (MMboe) of oil, condensate and gas, and achieved an average production of 26,956 boe/day in 3Q25. "The Group is well-positioned to sell 9.1 MMboe of oil, condensate and gas for FY25, exceeding FY24's volumes by 17%," it stated. A fourth interim single-tier dividend of 1sen per ordinary share was declared on, resulting in declared total dividends of 8sen per ordinary share to date for FY25. "We have made significant progress towards our longer term growth strategy in April 2025. The 20-year PM3 CAA (commercial arrangement area) PSC (production sharing contract) extension unlocks 26 MMboe of 2P reserves and 2C resources, significantly enhancing the value of our asset base. We look forward to monetising this potential as part of the broader PM3 CAA hub strategy, alongside the PKNB Cluster," managing director, Dr Kenneth Pereira, said. Hibiscus added as of May 22, 2025, a total of 67.6 million shares have been purchased as part of its share buy-back programme, at an average price of RM1.99 per share. Of these, 36.6 million shares were cancelled in November 2024, while the remainder are retained as treasury shares.
The Star
13-05-2025
- Business
- The Star
Govt's fiscal path remains on track
KUALA LUMPUR: Malaysia's fiscal path this year remains on track, but timely execution of targeted fuel-subsidy reforms will be critical to offset short-term revenue shortfalls caused by delays in tax measures, BIMB Research says. In a report, the research house noted that while the government's fiscal strategy continues to emphasise economic growth, fiscal responsibility and social welfare, delays in the expansion of the sales and service tax (SST) and the rollout of phase three of e-invoicing are expected to result in 'a minor headwind to ongoing fiscal consolidation efforts'. 'Together, these postponements could result in a total revenue shortfall of about RM2.5bil, equivalent to roughly 0.1% to 0.15% of gross domestic product (GDP),' it said. Although this gap is modest, BIMB warned that 'it may put upward pressure on the fiscal deficit, particularly if not offset by other measures or expenditure controls'. The SST expansion, which was expected to begin on May 1, has been delayed to June 1, while the third phase of the e-invoicing rollout – initially set for July – is now being pushed to next January. The research house said the expanded SST was expected to raise RM5bil annually, while the full e-invoicing rollout could generate between RM3bil and RM4bil in additional tax revenue once fully adopted. It said the revised SST would apply to more non-essential goods, including imported premium goods like salmon and avocados, and extend to more commercial services, with 5% for food and beverages, 8% for logistics, and 10% for other services. The research firm said the third phase of e-invoicing, which targets medium-sized businesses, is seen as crucial, as it captures a broad swath of small and medium enterprises, where compliance gaps are most prevalent. It said the SST expansion, which was expected to generate about RM700mil a month in additional revenue, would now contribute a month later than planned, resulting in a RM700mil shortfall. Meanwhile, the research house estimated the deferment of e-invoicing for medium-sized businesses could cost the government an estimated RM1.8bil in tax revenue in the second half of the year (2H25). However, BIMB Research highlighted that the government still has fiscal space if it proceeds with rationalising the subsidy for RON95 petrol, which 'remains a high-impact policy lever'. 'If implemented in 2H25, even a partial rationalisation could yield savings in the range of RM4bil to RM6bil for the year, depending on global oil prices and the targeted coverage,' it said. It added that such savings could more than offset the RM2.5bil shortfall from the delayed SST and e-invoicing, while creating room for development spending or social support. 'Moreover, it would signal strong policy commitment to structural reforms, enhancing Malaysia's fiscal credibility and investor confidence amid heightened global economic uncertainty,' the research house said. It added that Malaysia's fiscal outlook remains stable, supported by sustained growth in tax collection, new revenue measures such as the capital gains tax and digital tax, and the government's commitment to fiscal discipline. 'The slight delay in implementing the expanded SST and third phase of e-invoicing is not expected to significantly derail Malaysia's economic growth trajectory. 'Momentum continues to be underpinned by a recovery in private consumption and strengthening export performance.' It also noted that the government's projected fiscal deficit of 3.8% of GDP for this year could widen slightly due to the delays, but could return to 3.85% with subsidy reforms in place. Meanwhile, the research house expects the country's debt-to-GDP ratio to stabilise around 62% to 63%, below the 65% statutory ceiling. 'Overall, Malaysia's fiscal outlook for this year remains stable. Continued focus on policy execution and the careful sequencing of fiscal initiatives will be key to ensuring both economic resilience and fiscal sustainability in the medium term,' BIMB Research said.
