Latest news with #BIMBSecurities
The Star
6 days ago
- Business
- The Star
Water stocks to make a splash on tariff hike
PETALING JAYA: Water infrastructure-related stocks stand to gain from the government's revision of water tariff rates for nearly all of Peninsular Malaysia and Labuan, as higher revenue enables upgrades to ageing infrastructure. BIMB Securities said the long-overdue reform, which came into effect on Aug 1, may only be the first step. The national average domestic tariff of RM1.54 per cubic m across all bands still falls short of the average water treatment cost of RM1.89 per cubic m, based on the 2023 data from the Water Services Commission. 'While the latest revision helps narrow the deficit, full cost recovery is still elusive, suggesting room for further rationalisation ahead,' BIMB Securities said, noting that the change narrows the cost-recovery gap and re-establishes commercial viability for long-term infrastructure investments. It pointed out that Johor alone requires an estimated RM6.8bil in capital investment by 2030 to reduce non-revenue water (NRW), meet rising demand and ensure long-term supply resilience, according to the roadmap outlined by Ranhill SAJ Sdn Bhd, an 80%-owned subsidiary of Ranhill Utilities Bhd . The research house added that the upward revision reinforces the financial sustainability of the water sector by enhancing returns on regulated assets and improving cash-flow visibility for concessionaires such as Ranhill SAJ, Pengurusan Air Selangor Sdn Bhd and Perbadanan Bekalan Air Pulau Pinang Sdn Bhd. BIMB Securities has a 'buy' call on Gamuda Bhd , with a target price (TP) of RM6.05. Other stocks that stand to gain from the tariff revision include Engtex Group Bhd , Taliworks Corp Bhd and Hiap Teck Venture Bhd , given their involvement in treatment plant construction, NRW-reduction projects and pipeline upgrades. However, BIMB Securities does not cover the latter three companies. Meanwhile, RHB Research has maintained a 'buy' call on Ranhill, raising its TP to RM1.70 from RM1.37. Ranhill SAJ has also announced a new set of water tariffs effective Aug 1 for all types of users, including a new tariff category for data centres (DCs). The research house estimated that an additional 300MW in DC capacity will come online annually over the next six years. 'Our estimates indicate that DC water consumption is roughly 8% to 15% of the non-domestic water usage in the next three years,' it said. As a result, RHB Research has revised its earnings estimates upward for the financial years ending June 30, 2026 (FY26), and FY27 by 15.3% and 23.4%, respectively,. It also raised its water consumption growth assumption for Ranhill SAJ to 4% (from 3.5%) from FY30 onwards, citing strong demand from completed DCs and the Johor-Singapore Special Economic Zone.
The Sun
7 days ago
- Business
- The Sun
13th Malaysia Plan ambitious, needs strong execution and clear funding plans: Analysts
PETALING JAYA: The 13th Malaysia Plan (13MP) is ambitious and its goals can only be delivered with strong execution and clear funding plans, analysts say. Berjaya Mutual Bhd chief investment officer Datuk Dr Nazri Khan said the government's 4.5–5.5% gross domestic product (GDP) growth target is challenging but not impossible to achieve. 'Given the current situation, it's very challenging to hit 5.5%. But it is achievable – just more challenging,' he told SunBiz. He welcomed the focus on high-value, high-growth sectors such as artificial intelligence (AI), describing the move as a good way to break out of the middle-income trap. 'Targeting a fiscal deficit below 3% of GDP and keeping government debt under 60% – that's excellent. It will strengthen governance and fiscal reforms,' Nazri said. He added that regional development in Sabah and Sarawak, targeted subsidies such as the Rahmah Cash Aid and structural transformation efforts are all positive steps. However, execution remains the main hurdle. 'Bureaucracy is the problem. The ability to coordinate – that's a key challenge,' Nazri said, adding that investments in digitalisation and rural internet infrastructure will require a whole-of-government approach and strong monitoring. 'We always want to cut debt, but our execution and oversight have been weak,' he said, warning that the global environment adds to the difficulty. Nazri also flagged concerns about heavy reliance on domestic demand amid a disrupted labour market, global commodity shocks and geopolitical tensions. He said the 13MP's privatisation mechanisms are not clearly explained and hoped Malaysia Madani will not become purely rhetorical. 'The RM430 billion development budget is great, but it's unclear how it will be funded. There are still many subsidies, so how exactly will the deficit be reduced?' He also stressed the need for more job creation to prevent the rakyat from being left behind and called for stricter project management, especially for infrastructure efforts in poorer regions. BIMB Securities chief economist Imran Nurginias Ibrahim described the 13MP as a forward-looking roadmap centred on digitalisation, inclusivity and economic competitiveness. He said the targeted 4.5–5.5% GDP growth is consistent with Malaysia's potential and supports both recovery and reform, adding that 'RM430 billion in development spending and the aim to bring the fiscal deficit below 3% by 2030 show a strong intent to balance growth with sustainability'. Imran Nurginias welcomed the focus on digital transformation, AI and data infrastructure, along with social equity and education-employment alignment under the Madani Framework. However, he cautioned that targets such as tripling household income or increasing wage share of GDP are ambitious and would require productivity reforms and private sector buy-in. 'The absence of concrete tax reform measures creates uncertainty over how these plans will be sustainably funded.' Imran Nurginias warned of diluted focus, noting the 600 initiatives and 120 strategies listed, and urged the government to establish clear priorities and delivery mechanisms. 'Critical issues such as ageing population policy, long-term healthcare and institutional governance remain underdeveloped,' he said. Ultimately, he added, the 13MP's success hinges not on the number of strategies outlined but on bold, disciplined implementation supported by strong interagency coordination. Independent analyst Jason Loh commended the Madani government's strategic use of deficit spending to drive growth, noting that only RM61 billion or less than 10% of the RM611 billion allocation comes from the private sector, mostly through public-private partnerships. 'This reinforces the need for the government to rely on its own fiscal power to engineer economic growth,' he said. Loh said private sector dependency on public spending helps offset rising costs from tax expansions, tariff hikes and subsidy rationalisation, especially for SMEs. Loh added that high private and household debt – now at 84.3% of GDP – could limit consumption, and further strain the economy if Bank Negara Malaysia raises the Overnight Policy Rate (OPR) to manage debt levels. Given these conditions, he said, there should be no rush to reduce the fiscal deficit to 3% of GDP, noting that the current 4.8% target can be deferred if necessary. The recent OPR cut to 2.75% may help ease the government's debt servicing burden, and Malaysia's bond market remains relatively stable due to the Employees Provident Fund's role as a statutory purchaser, he said. Loh praised the government's balance between public and private spending, especially its prioritisation of education and technical and vocational education and training (TVET), which is allocated RM133 billion under the plan. 'Deficit spending should build the economy's productive capacity – human capital included. TVET is crucial to unlocking potential idle capacity over the long term,' he said. Loh also called for political culture reform to complement institutional changes. 'Political culture is the software, and institutional reform is the hardware. Without both, changes won't stick,' he said. Loh said Malaysia must avoid the 'First World infrastructure, Third World mentality' trap and emulate Singapore's model of high standards in both execution and mindset. He added that the 13MP should have included green bonds to modernise fiscal policy and support sustainable growth. To that end, Loh proposed a Green Investment Bank under Bank Negara Malaysia to issue and trade green bonds, supporting a debt-driven sustainability market alongside Bursa Malaysia's Voluntary Carbon Market.
The Star
12-06-2025
- Business
- The Star
Potential for T7 Global to grow its earnings
PETALING JAYA: T7 Global Bhd has a strong potential to grow its earnings particularly from its maintenance, construction and modification (MCM) services, according to BIMB Securities Research. In a report, the research house said between its MCM services and well decommissioning activities, setbacks from T7 Global's baggage handling system contract delays due to logistical constraint should be addressed. It added it was optimistic about the group remaining an emerging player in the offshore maintenance and well decommissioning space. 'From the second quarter of 2025 (2Q25), the company will be focusing on executing its order book worth RM4.4bil. 'The bulk of the order book comes from the MCM and hook-up and commissioning services contracts that it secured from new clients in Peninsular Malaysia including Jadestone Energy Plc, IPC Malaysia and Petrofac (M-PM304) Ltd,' the research house pointed out. T7 Global has also secured a 53-well plug and abandonment (P&A) contract from Petroliam Nasional Bhd which is expected to be completed by 2027 or 2028. 'The Enya rig that is dedicated for P&A work has completed nine wells in Sabah and subsequently been mobilised for works in Peninsular Malaysia,' BIMB Securities said. On the group's earnings, the research house noted that for the first quarter ended March 31, 2025, revenue increased to RM138.8mil compared with RM132.5mil in the same quarter a year ago. T7 Global's earnings rose to RM7.04mil compared with RM4.61mil a year ago on the back of revenue contribution from TSeven Shirley mobile offshore production unit (mopu) which commenced operations in Nong Yao field (Thailand) in 3Q24, and higher demand for specialist products. BIMB Securities said earnings grew despite a large jump in finance cost which more than doubled to RM17.6mil. 'Given the rising finance cost, we cut our FY25 to FY27 earnings estimate by 25% to 31%. 'However, our earnings estimate implies an earnings growth of an 11% compounded annual growth rate over FY24 to FY27,' it said. The group's borrowings, as of 1Q25, stood at RM1.4bil, while its net gearing ratio had risen to the peak of 3.3 times in 3Q24 mainly due to purchase of jack-up rig Enya and financing for two mopu projects namely T7 Elise and Shirley. It should be noted that T7 Global planned to reduce this to two times by the end of 2026. The research house said it maintained a 'buy' call on T7 Global with a target price of 46 sen, implying a 7.1 times FY25 price-to-earnings-ratio. At the time of writing, T7 Global's share price was 22.5 sen.
The Star
09-06-2025
- Automotive
- The Star
Potential EV price war
PETALING JAYA: Amid global overcapacity, a 'full-blown' price war could be unleashed in the local electric vehicle (EV) space, warns an analyst. In Malaysia, locally assembled EVs – or also known as completely knocked down (CKD) vehicles – enjoy tax breaks until end-2027. These include exemptions from import, excise, and sales taxes to promote local assembly. Imported EVs – or completely built-up (CBU) units – have also been tax-free, but only until Dec 31, 2025. After that, they are set to face full duties again, making them more expensive – although calls to extend the exemptions have grown louder to drive EV adoption. Additionally, to protect local players, the government had set a minimum price of RM100,000 for imported EVs, also until end-2025. And with Geely Holding Group chairman Li Shufu warning of 'serious overcapacity' in the global automotive industry, Malaysia could feel the ripple effects, especially as EV makers, particularly those in China, offload excess production to new markets. On these fronts, BIMB Securities analyst Sabariah Akhair said the expiry of the RM100,000 price floor presents a 'strategic fork in the road', with two distinct outcomes depending on future government decisions. 'If policymakers remove the RM100,000 franchise approved permit policy price floor and extend CBU EV tax exemptions beyond 2025, we expect a full-blown EV price war,' she said. She said this scenario could pave the way for a surge of cheap Chinese EVs like the BYD Seagull and Wuling Mini EV priced as low as RM18,000 to RM45,000. Sabariah cautioned that traditional players, especially those without local assembly (CKD) scale or cost control, may delay investments or cut output. 'While consumers would benefit in the short term, the local EV industry risks being hollowed out, impacting jobs, localisation and long-term industrial growth,' she said. On the other hand, Sabariah said if the government allows the CBU tax exemptions to expire as scheduled while removing the RM100,000 price floor, the outcome could be more 'orderly'. 'We expect a more orderly and sustainable EV market. 'Prices of imported EVs would gradually return to previous levels, avoiding a destructive price war and supporting Malaysia's localisation goals.' Overall, she believes EV adoption may grow at a steadier pace of between 3.5% and 4% of total vehicle sales – or total industry volume (TIV) – in 2025, but this approach supports long-term industry development. 'Still, success depends on clear policies, robust charging infrastructure and affordable financing to support broader adoption.' To note, the Malaysian Automotive Association (MAA) reported that EVs accounted for 2.9% of TIV in the first quarter of 2025, up from 1.8% in 2024. An industry observer closely tied to EV distribution said the end of the import duty and excise tax exemptions on imported EVs at year-end will push prices up next year, making new imports less viable and potentially leading to a drop in EV sales volume. 'But with the removal of the RM100,000 floor price, more new models will find their way to Malaysia,' he added. He believes that internal combustion engine (ICE) vehicles remain relevant, and this is where traditional players will continue to hold ground. 'EV adoption may take time due to limited charging infrastructure and range anxiety among consumers. Range-extended EVs (REVs), which help overcome range anxiety, may be more relevant in the near term. However, no tax incentives are currently offered for REVs, even though they are selling very well in China right now,' he said. 'Time will tell whether ICE cars from China will overtake traditional players. In terms of driving performance, they are still lacking.' Meanwhile, BIMB's Sabariah said incumbent distributors – or the traditional players – such as Bermaz Auto Bhd (BAuto) and Sime Darby Bhd are 'fundamentally equipped to sustain their market presence despite escalating competition from Chinese EV entrants'. 'Both companies have demonstrated strategic foresight by expanding their EV portfolios, thereby aligning with shifting consumer preferences and regulatory tailwinds supporting EV adoption,' she noted. However, she expects some near-term market share erosion, particularly in the B and C-segment passenger space where Chinese brands are most aggressive. 'While the landscape is undoubtedly becoming more fragmented, we believe both Sime and BAuto have laid solid groundwork for long-term resilience.' On local marques, Sabariah said both Proton and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) remain structurally well-positioned to defend their market share amid growing competition from Chinese EV brands. Proton, in particular, she said has made a notable entrance into the EV space with the launch of the 7, which has quickly gained traction – topping EV registrations in early 2025. 'Backed by its strategic alliance with Geely and the ongoing development of the Automotive High-Tech Valley (AHTV) in Tanjung Malim, Proton is laying the groundwork for a vertically integrated EV ecosystem,' she noted. 'We see long-term upside in localised production, which could significantly lower production costs and provide pricing flexibility to compete against value-driven CBU imports from China.' Perodua, on the other hand, is expected to unveil its first EV – targeted below the RM100,000 price point – by end-2025, 'directly addressing the mass-market segment'. 'Unlike other rebadged models, Perodua's EV is reportedly developed from the ground up, reinforcing consumer trust in its engineering and brand identity. Moreover, the anticipated adoption of a Battery-as-a-Service (BaaS) model – where batteries are leased rather than owned – may ease affordability concerns and further differentiate Perodua from lower-trust Chinese offerings,' she added. 'In our view, both national carmakers benefit from strong brand equity, entrenched dealership networks, and long-standing government policy support. While we acknowledge the near-term pricing pressure from an influx of CBU EVs, the local players' focus on CKD localisation, cost optimisation, and mass-market appeal should enable them to weather the storm and maintain relevance in a more competitive landscape.' Meanwhile, the industry observer noted that tax exemptions for imported EVs will eventually require China EV manufacturers to start their CKD projects. 'From 2026 onwards, Chinese EV makers will need to set up CKD projects in Malaysia to maintain tax incentives. But due to volume constraints, this may not be viable for many of them,' he said. 'I understand that Perodua is developing its EV below RM100,000, so it may not be affected by the influx of Chinese EVs. If Proton can do the same through its partnership with Geely, it will be in a stronger position compared to those Chinese carmakers without CKD operations in Malaysia,' the observer added.
Malaysia Sun
05-06-2025
- Business
- Malaysia Sun
Global uncertainties cast shadow over Malaysia's glove industry, say analysts
KUALA LUMPUR, June 5 (Xinhua) -- Analysts on Thursday foresaw muted orders and continued margin pressure for Malaysian glove makers amid onging global uncertainties. BIMB Securities said in a note that it foresees muted order volumes persisting for Malaysian glove makers in the upcoming quarters, with a recovery in demand expected to resume in the second half of 2025. Despite the anticipated pickup, the research house believes customers are likely to adopt a "wait-and-see" approach in placing orders due to ongoing uncertainty surrounding the U.S. tariff environment. It also noted that Malaysia's loss of market share among non-U.S. customers further pressures the operating performance of local glove manufacturers. "Overall, the rubber glove industry continues to face oversupply and there is still a lack of catalysts for strong growth in the near term," it said. Apex Securities also said in a note that it believes the near-term outlook remains challenging for Malaysian glove companies with significant exposure to U.S. markets, due to ongoing tariff uncertainties. While the global rubber glove market is gradually recovering, with growth anticipated through 2025, the research house noted that glove players in Malaysia continue to face headwinds from soft U.S. demand, continued oversupply in non-U.S. markets, and rising domestic operating costs. "Amid these uncertainties, most U.S. clients are adopting a cautious 'wait-and-see' approach," it said. It anticipated flattish quarter-on-quarter earnings for Malaysian glover players in the upcoming quarter, reflecting ongoing global uncertainties and sluggish U.S. market demand.
