Latest news with #CIMBSecuritiesResearch
New Straits Times
29-07-2025
- Business
- New Straits Times
IJM set for strong FY26 on data centre push
KUALA LUMPUR: IJM Corporation Bhd is expected to post strong results in financial year 2026 (FY26), driven by its bids to build five data centres (DCs) for major global tech firms, CIMB Securities Research said. The company has already secured three DC contracts in Johor worth a combined RM845 million, bolstering its track record and positioning it well for future DC-related jobs in the Klang Valley. With one of the projects slated for delivery in August, CIMB said IJM is well-positioned to take on more DC contracts. "We have raised our FY26 to FY27 new job win forecasts for IJM by 22–33 per cent to RM6 billion per annum as the company focuses on delivering one or two major data centre (DC) bids worth RM1 to RM2 billion each" the research house said in a note. As at March 31, 2025, IJM's outstanding order book stood at a healthy RM6.6 billion, or 2.6 times its FY25 construction revenue. CIMB Securities has raised its FY26–FY27 new order book assumptions for IJM to RM6 billion annually, up 22 to 33 per cent, citing a more visible tender pipeline. "Yet, our projections are still at the lower end of IJM's RM6 to RM8 billion new contract win target for FY26, suggesting further upside to our earnings forecast. "Backed by a strong balance sheet with FY25 net gearing at 26 per cent, we maintain our 'Buy' rating on IJM with a higher target price of RM3.70, up from RM3.40," it added.
New Straits Times
29-07-2025
- Business
- New Straits Times
Bonus warrants to erode Berjaya Food book value, losses likely till FY27
KUALA LUMPUR: The full exercise of Berjaya Food Bhd's (BFood) bonus issue of up to 885.91 million warrants is expected to increase its issued share capital from 1.8 billion shares to about 2.7 billion shares, said CIMB Securities Research. The research house noted that the bonus issue, to be undertaken on the basis of one warrant for every two shares held, would significantly impact the company's book value per share. "This would reduce BFood's financial year 2026 (FY26) book value per share from our current 10.7 sen estimate to 7.1 sen excluding treasury shares or 6.7 sen including treasury shares," it said in a note. The bonus issue, which is subject to approval from Bursa Malaysia Securities Bhd, shareholders and any other relevant parties, is expected to be completed by end-2025. Moving forward, CIMB Securities expects BFood to remain loss-making over the next three years, from FY25 to FY27. Although there are early signs of recovery from the impact of boycotts linked to the Israel-Palestine conflict, the firm said weak consumer sentiment and rising operating costs are likely to continue weighing on the company's earnings recovery. "We maintain our earnings forecast and reiterate our 'Reduce' call on BFood, with our target price unchanged at 28 sen, pending further clarity on the proposed warrant exercise and the upcoming FY25 results release on Aug 28, 2025. "Our 'Reduce' call is premised on the weaker brand equity of Starbucks in Malaysia and intensifying competition within the local food and beverage sector, driven by the rapid expansion of homegrown brands, which could erode BFood's market share," it added.
New Straits Times
08-07-2025
- Business
- New Straits Times
Water tariff hike to boost construction sector, says CIMB
KUALA LUMPUR: Water-related infrastructure may bring additional opportunities for Malaysia's construction industry due to the potential water tariff revisions in the second half of 2025 (2H25), said CIMB Securities Research. The revised water tariff structures help ensure the financial sustainability of the water operators, with additional revenue streams being channelled to upgrade and refurbish water infrastructure systems such as water treatment plants (WTPs) and replacing old pipes. The firm is upbeat about a structural shift in water demand from special economic corridors and industrial zones, including the Johor-Singapore Special Economic Zone (JS-SEZ). "This is bolstered by the rising proliferation of data centre (DC) campuses and other upcoming industrial facilities in Johor," it said in a note. Downstream, CIMB Securities envisage spillover opportunities for contractors and pipe players if Suruhanjaya Perkhidmatan Air Negara's (SPAN) call for the DC industry to transition towards alternative water resources (e.g., treated effluent from sewage plants) is adopted. The firm said this entails the mapping out of waste treatment plants that can be connected with the new DCs. "Other water resource development projects that have been mooted to sustainably enhance raw water supply include the construction of off-river storage facilities or barges, rainwater harvesting, and using reclaimed water to power the DCs' cooling systems," it said. Meanwhile, CIMB Securities said it is equally optimistic about the potential implementation of alternative funding schemes involving the private sector. It believes this is an approach that could reduce the government's financial burden as it strives to facilitate substantial investments required by the country's Water Sector Transformation Plan 2040 (AIR 2040). "Through a competitive bidding process, private sector companies can play an active role alongside the government to resolve major water infrastructure issues plaguing the water sector, such as non-revenue water (NRW) loss," it said. Overall, CIMB Securities has maintained Gamuda Bhd as its preferred play for water-related infrastructure construction. The firm expects the Penang-Perak water transfer project to take off in 2026, providing RM4 billion worth of job prospects plus other potential opportunities such as renewable energy initiatives. "Having bagged the main contract to build Phase 1 of the Rasau Water Supply Scheme WTP, Gamuda is also gunning for similar types of work worth around RM300 million in Selangor," it added.
New Straits Times
11-06-2025
- Business
- New Straits Times
CIMB: India's duty cut, low stocks seen boosting Malaysian palm oil exports
KUALA LUMPUR: India's recent decision to reduce import duties for palm oil, coupled with low edible oil stocks in the country, is likely to boost Malaysian palm oil exports in May. CIMB Securities Research said the recent correction in the crude palm oil (CPO) price has improved palm price competitiveness against soybean oil. "Palm oil currently trades at a discount of US$128 per tonne against soybean oil. "This, coupled with India's recent decision to halve the import duties on palm oil to 10 per cent with effect from 30 May, will lower the effective duty on palm oil to 16.5 per cent," it said in a note. The firm said this competitive pricing, combined with current low domestic stocks in India, is expected to lead to increased Indian palm oil purchases. Separately, CIMB Securities said the Indonesian government raised the export levy on crude palm oil to 10 per cent, effective from May 17, to raise revenue to fund its biodiesel programme and subsidise replanting. "Following the change, we expect Indonesian palm oil exports to resume in favour of refined palm products. "We project CPO prices to remain within the RM3,700–4,100 per tonne range in June, given rising exports. "Our average CPO price forecast of RM4,200 per tonne for 2025 remains unchanged," it said. Meanwhile, CIMB Securities said Malaysian palm oil stocks are expected to rise one per cent month on month (MoM) to 2 million tonnes in June 2025. The firm said Malaysian palm oil stocks rose seven per cent MoM to 1.99 million tonnes in May 2025, below its estimates but in line with consensus estimates. "The CPO production is projected to be flat owing to fewer working days, while palm oil exports are expected to increase by eight per cent MoM to 1.5 million tonnes," it said. Overall, CIMB Securities has maintained its Neutral rating on the sector, as it expects CPO prices to remain range-bound. "Our preferred pick is IOI Corp Bhd given its lower exposure to Indonesian regulatory risks, its relatively attractive valuations and the positive impact of a stronger ringgit on its US dollar debt obligations. "For investors seeking dividend yield and exposure to smaller-cap palm oil players, our preferred pick is Hap Seng Plantations Bhd owing to its undervalued assets," it added.
New Straits Times
03-06-2025
- Business
- New Straits Times
Tariff uncertainty casts shadow over Ann Joo outlook
KUALA LUMPUR: Ann Joo Resources Bhd's performance is expected to remain subdued in the second quarter of 2025 as tariff uncertainties continue to pressure the group's domestic and export sales, said CIMB Securities Research. According to the firm, the local steel industry is monitoring any indirect impact from a potential diversion of Chinese steel products. However, it noted that China exported only 40,000 tonnes of long-steel products such as rebar and billets to the United States in 2024, accounting for less than 0.1 per cent of its total steel exports. As of May 29, local rebar prices had declined to RM2,422 per tonne from about RM2,800 per tonne in November 2024, but remained 32 per cent above Chinese rebar prices, which stood at RM1,830 per tonne. Even so, the firm expects China's planned production cuts to provide support to global steel markets if implemented in the second half of the year. "On the demand side, Ann Joo's order flow visibility could improve alongside the gradual rollout of major infrastructure initiatives in Malaysia and another S$35 billion to S$39 billion worth of big-ticket awards in Singapore," it said. Meanwhile, CIMB Securities said Ann Joo's first-quarter results fell short of expectations, with core losses of RM109 million as revenue declined 18 per cent year-on-year. It attributed the weaker performance to lower selling prices and sales tonnage, amid renewed concerns over reciprocal tariffs imposed by the US administration, which have dampened sentiment in international steel markets. "We now project Ann Joo to post financial year 2025 (FY25) core losses of RM178 million and we have cut our FY25 to FY26 core profit estimates by 4-8 per cent to between RM64 million and RM87 million. "Following the earnings downgrade, we lower our target price for Ann Joo to 83 sen from RM1.02," it said, while maintaining a "Buy" call on the stock.
