Latest news with #CIMBSecurities
New Straits Times
a day ago
- Business
- New Straits Times
SD Guthrie responds to Indonesian forest permit concerns
KUALA LUMPUR: SD Guthrie Bhd says less than three per cent of its 180,000 hectares of planted oil palm area in Indonesia is currently under review by the Indonesian government. Addressing concerns over reports suggesting that some of its Indonesian subsidiaries may be operating in forest-designated areas without permits, group managing director Datuk Mohamad Helmy Othman Basha said the matter is not unique to SD Guthrie. Similar overlaps have affected both Malaysian and Indonesian plantation companies operating in the country, he added. CIMB Securities recently highlighted growing regulatory risks for Malaysian plantation companies operating in Indonesia. This followed the Indonesian government's move to seize land lacking proper forestry permits or in violation of land-use laws. SD Guthrie's Indonesian subsidiaries were listed in an official decree, with 3,045 hectares under scrutiny, 1,874 hectares currently under the legalisation process and 1,171 hectares reportedly rejected. "For context, our total planted area in Indonesia is about 180,000 hectares. Less than three per cent of this has been flagged by the authorities as overlapping with forest zones," Helmy said at a press briefing here today. "However, we have our own data that disputes this, and discussions with the Indonesian government are ongoing," he added. Helmy said SD Guthrie continues to manage operations in the affected areas and is in active discussions with the Indonesian government to resolve the land classification concerns Group chief operating officer Mohd Haris Mohd Arsyad said the issue is not about illegal clearing or expansion, but rather differing interpretations of land use boundaries. "There's the Perhutanan (forestry) map, and then there's the map from the ministry that gives us our licenses. Much of this happened before we acquired the land," he said. The land in question was acquired from the Indonesian government in 2001 during a post-financial crisis asset restructuring. Helmy likened the acquisition to Malaysia's Danaharta model, saying that it was conducted with representations and warranties from the government. Chief financial officer Renaka Ramachandran clarified that SD Guthrie should not be associated with deforestation, as the plantations were already established prior to the acquisition. "We never planted the land ourselves. We bought ready-made plantations, and the agreement came with assurances from the government. Accusations of deforestation should not arise," she said. The executives reiterated that SD Guthrie holds valid land titles and has complied with relevant processes. They acknowledged that resolving the matter will require time and continued engagement with authorities. "We're confident this will be resolved, but it's a complex issue that requires ongoing dialogue with the government," said Haris.
BusinessToday
4 days ago
- Business
- BusinessToday
RHB's Earnings Forecast Trimmed Despite New Insurance Deals
CIMB Investment Bank Bhd (CIMB Securities) has maintained its BUY call on RHB Bank Bhd but trimmed its earnings forecasts and lowered its target price to RM7.35 from RM7.50, citing recalibration of assumptions following recent developments, including the landmark 20-year bancassurance and bancatakaful agreements signed with Tokio Marine Life Insurance Malaysia and Syarikat Takaful Malaysia Keluarga. The renewed exclusive partnerships, announced on 1 August, will see RHB receiving an access fee of up to RM1.615 billion, the largest of its kind in Malaysia for such a tenure. This amount will be amortised over 20 years, with the agreements designed to enhance the bank's non-interest income through stable recurring contributions from insurance and takaful products distributed via its branch and digital channels. CIMB Securities estimates that these agreements will generate an annual fee income of around RM140 million to RM145 million from 2026 onwards, potentially lifting return on equity by 0.3 percentage points in that year. CIMB Securities noted that the agreements align with RHB's PROGRESS27 strategy, which focuses on scaling fee-based income, deepening digital capabilities and improving customer experience. The introduction of the 'ONE Unified Banca Collective' operating model is expected to streamline collaboration between RHB and its long-standing partners, enabling seamless product integration and consistent service standards. Despite this positive structural development, the research house revised its 2025–2027 earnings forecasts down by 5%–7%, citing expectations of narrower net interest margins of 1.79%–1.81% compared to previous assumptions of 2.0%–2.1%, given the impact of the recent 25-basis-point rate cut and asset-liability mismatch. Credit cost assumptions were also fine-tuned to reflect a more cautious macro outlook, while non-interest income estimates were adjusted to include the incremental contribution from the renewed banca agreements.
The Sun
4 days ago
- Business
- The Sun
Water tariff revision boosts investment but private funding still needed
KUALA LUMPUR: Malaysia's water sector still requires alternative funding schemes involving the private sector to reduce the federal government's financial burden despite the ongoing review of water tariffs in selected states. CIMB Securities Sdn Bhd said the move is crucial to support the country's water demand, which is growing at an average rate of two per cent to six per cent per annum. It said there is also the urgent need to upgrade and rehabilitate aged water assets, including 98 out of the existing 350 water treatment plants (WTP) operating above their capacities and another 120 WTPs that are bogged down by operational issues. 'Thus, the latest revision in water tariffs provides more room for the water operators to upgrade water infrastructure, accelerate the replacement of ageing pipes, and reduce non-revenue water (NRW),' CIMB said. The research house also said that the latest water tariff adjustments mark another important step towards enhancing the quality of water services under Malaysia's Water Sector Transformation Plan 2040 (AIR 2040). 'Simultaneously, the tariff adjustments also helped negate a sharp rise in electricity costs and other water-related operating expenses for water treatment plant operators,' it said in a research note. It noted that the federal government has already provided a total of RM17.7 billion in funding assistance as part of the water industry restructuring between the 10 states and Putrajaya. The federal-backed Pengurusan Aset Air Bhd (PAAB), a Minister of Finance Inc's wholly owned company, remains the main funding conduit for Malaysia's water infrastructure projects, it said. However, CIMB stressed that PAAB has only replaced eight per cent of the 35,061 kilometres (km) of pipes under its ownership at a cost of RM2.1 billion since the initiative started in 2010. Furthermore, PAAB only controls about 26 per cent of water pipelines in the country, totalling 138,587 km, and 31 per cent of water infrastructure across Malaysia (excluding East Malaysia). 'To map out a holistic NRW programme, PAAB needs significant investments to meet the target of reducing the average NRW level in Peninsular Malaysia and Labuan to 28 per cent by 2030 (2023: 37.1 per cent),' it added. For exposure to water-related plays, CIMB Securities reiterated its view that licensed water operators under Suruhanjaya Perkhidmatan Air Negara would be the immediate beneficiaries of the water tariff revisions. 'Apart from Ranhill Utilities Bhd, PBA Holdings Bhd -- which owns Perbadanan Bekalan Air Pulau Pinang -- is the only other licensed water operator in the country that is listed on Bursa Malaysia. 'Pending further updates on the private sector's role in Malaysia's water sector transformation, we maintain Gamuda as our preferred play for water-related infrastructure construction,' it added. CIMB Securities said Gamuda is in a strong position to secure construction work worth RM4 billion from the Ulu Padas and Northern Perak water supply schemes -- works for the latter scheme will be carried out on a privatisation basis (minimum period: 40 years). For bulk water transfer, Engtex Group is one of only two domestic producers of large-diameter mild steel concrete-lined pipes, while for flood mitigation, Gamuda, IJM Corp and MRCB are strong in environmental-related projects. - Bernama
New Straits Times
4 days ago
- Business
- New Straits Times
YTL Power surges ahead on Wessex Water tariff upside, data centre growth
KUALA LUMPUR: YTL Power International Bhd is charging ahead with renewed momentum, powered by robust earnings from its UK-based Wessex Water and rapid expansion in its data centre operations, even as some segments face near-term headwinds, according to CIMB Securities. Effective April 1, 2025 (FY25), Wessex Water implemented a 21 per cent year-on-year (YoY) hike in metered charges – well above the research firm's earlier assumption of a 13 per cent increase. The steeper tariff has prompted the research house to lift its FY25–FY27 core net profit (CNP) forecasts for Wessex Water by 38 per cent to 52 per cent. CIMB Securities now expects YTL Power's water and sewerage segment to deliver a strong earnings rebound, with CNP projected at RM242 million in FY25, surging to RM533 million in FY26 (+120 per cent YoY), and RM571 million in FY27 (+7 per cent YoY). Meanwhile, YTL Power's data centre operations are emerging as a robust growth pillar. Following a reassessment of operating expenditures, CIMB Securities revised its earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin estimate for the co-location (co-lo) data centre segment from 50 per cent to 70 per cent, citing improved cost visibility and scalability. With an existing capacity of 188 megawatts (MW) fully leased, CIMB Securities expects YTL Power to kick-start new phases of development, incorporating an additional 160 MW to come online progressively in FY27–FY28. As a result, co-lo data centre CNP is forecast to rise from RM115 million in FY26 to RM431 million by FY29. Excluding this expansion, CIMB Securities's fair value estimate for YTL Power stands at RM4.08. The research firm had earlier revised its overall FY25–FY27 group-level CNP forecasts lower by 7 per cent to 17 per cent, reflecting a more cautious view on Power Seraya and AI data centre contributions, partially offset by improved earnings from Wessex Water and the co-lo data centre segment. CIMB Securties expects group CNP to decline 17 per cent YoY in FY25 before rebounding by 9 per cent in FY26 and inching up 1 per cent in FY27. Despite the downward revisions, CIMB Securities has raised its sum-of-parts-based target price for YTL Power, driven by a 72 sen increase in co-lo data centre fair value, a 12 sen uplift from Wessex Water, and an 11 sen boost from lower risk-free rate assumptions. However, the outlook for Power Seraya remains subdued. CIMB Securities slashed its FY25–FY27 CNP forecasts for the Singapore-based unit by 16 to 31 per cent, reflecting lower-than-expected pool and retail electricity prices for the first nine months of FY25, as well as the earlier expiry of favourable fuel supply contracts. Seraya's CNP is now expected to fall by 32 per cent in FY25, 12 per cent in FY26, and 15 per cent in FY27. Although near-term EBITDA/MWh assumptions have been revised down, CIMB maintains a long-term benchmark of S$60/MWh, resulting in a 14 per cent cut to Seraya's fair value, or 28 sen. Overall, CIMB Securities remains constructive on YTL Power's long-term trajectory, underpinned by Wessex Water's strong regulated earnings and the scaling potential of its data centre ventures.
New Straits Times
4 days ago
- Business
- New Straits Times
Water tariff hike to boost infrastructure, offset rising costs
KUALA LUMPUR: The recent water tariff revision offers water operators greater flexibility to improve infrastructure, speed up the replacement of old pipes, and address non-revenue water (NRW) issues. CIMB Securities said the tariff adjustments also helped offset significant increases in electricity costs and other operational expenses faced by water treatment plant (WTP) operators. "For instance, the Negeri Sembilan government has seen the monthly water pumping expenses, especially for commercial and industrial sectors in the state, rising by RM700,000 since July 2024," it said in a note. The research house noted that several states have already detailed their plans for utilising the additional revenue from the revised water tariff structure. It added that the Penang Water Supply Corporation (PBAPP) anticipates generating an additional RM20 million in revenue in the second half of 2026 from the new tariffs, which it plans to reinvest in enhancing Penang's water supply infrastructure. "The projects in the pipeline include the construction of the Mengkuang Park Water Treatment Plant, the new Sg. Kerian WTP, and the construction of a new treated water pipeline from the Macallum area to Bukit Dumbar," it said. CIMB Securities said there is an urgent need to upgrade and rehabilitate ageing water infrastructure, noting that 98 out of 350 WTP nationwide are operating beyond their intended capacity, while another 120 WTP are grappling with operational issues. The firm emphasised that addressing these challenges is vital to securing the long-term sustainability of the country's water services. It also stated that the recent water tariff adjustments mark a significant step forward in enhancing water service quality under Malaysia's Water Sector Transformation Plan 2040 (AIR 2040). "This is crucial to support the country's water demand, which is growing at an average rate of 2 to 6 per cent per annum," it said. CIMB Securities noted that while water tariff increases are a step forward, the sector still needs alternative financing models involving private sector participation. This would help ease the federal government's financial burden in supporting the significant investments needed under the AIR 2040 plan. "For exposure to water-related plays, we reiterate our view that licensed water operators under Suruhanjaya Perkhidmatan Air Negara (SPAN) would be the immediate beneficiaries of the water tariff revisions. "Apart from Ranhill Utilities Bhd, PBA Holdings Bhd is the only other licensed water operator in the country that is listed on Bursa Malaysia. "Pending further updates on the private sector's role in Malaysia's water sector transformation, we maintain Gamuda Bhd as our preferred play for water-related infrastructure construction," it added. The firm said Gamuda is well-placed to win construction contracts valued at RM4 billion under the Ulu Padas and Northern Perak water supply projects. It noted that the Northern Perak scheme will be implemented through a privatisation model with a minimum concession period of 40 years. "As the main WTP contractor for Phase 1 of the Rasau Water Supply Scheme worth nearly RM2 billion, we also expect Gamuda to be in the running for more jobs under the second phase," CIMB Securities said.
