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New Straits Times
3 days ago
- Business
- New Straits Times
Banking sector seen trading sideways amid tariff incertainty: CIMB Securities
KUALA LUMPUR: The banking sector is likely to trade sideways in the near term as investors await greater clarity on tariff developments, said CIMB Securities Sdn Bhd. The firm has maintained its "Neutral" stance on the sector but kept its "Buy" calls on Alliance Bank Malaysia Bhd (ABMB), Public Bank Bhd (PBB), and RHB Bank Bhd, citing appealing dividend yields at current valuations. "Key upside risks include lower credit costs, stronger net interest margins, and potential bond gains from non-interest income. "Conversely, downside risks include a higher-than-expected cost of funds, liquidity outflows, and deterioration in asset quality," it said in a note. According to CIMB Securities, loan applications grew 10.1 per cent year-on-year (YoY) in April 2025, from 4.4 per cent YoY in March. Approved loans expanded 8.8 per cent YoY in April compared with 9.6 per cent YoY in March. "Leading loan indicators were driven mainly by the corporate segment, specifically the purchase of fixed assets (other than land and buildings), construction, and working capital segments. "There may be an element of front-loading in the numbers, as Malaysia's export growth accelerated markedly to 16.4 per cent YoY in April, driven by the 90-day pause in tariffs," it added. Meanwhile, CIMB Securities noted that loan growth slipped marginally to 5.1 per cent YoY in April, compared with 5.2 per cent YoY in March. This was supported by the auto, residential, and non-residential mortgage segments. Deposit growth rose to 3.8 per cent YoY in April from 3.0 per cent YoY in March owing to stronger current account and savings account (CASA) deposit growth of 4.5 per cent YoY in April. Business deposit growth was higher at 3.1 per cent in April after a flattish 0.7 per cent YoY rate in March but remains lower than the 6–9 per cent YoY growth recorded in 1H24. The loan-to-deposit ratio eased slightly to 87.4 per cent in April from 87.6 per cent in March. Furthermore, gross impaired loans increased 0.7 per cent or RM216.4 million, month-on-month (MoM) in April, mainly driven by the household segments. The gross impaired loans ratio was stable at 1.43 per cent in April compared to 1.42 per cent in March, while loan loss coverage remained high at 91.0 per cent in April from 91.2 per cent in March.
New Straits Times
28-05-2025
- Business
- New Straits Times
CIMB Securities upgrades Hap Seng Plantations to 'Buy' on solid fundamentals
KUALA LUMPUR: CIMB Securities Sdn Bhd has upgraded Hap Seng Plantations Holdings Bhd to a 'Buy' call from 'Hold' with an unchanged target price of RM2.02 per share, citing attractive valuations following a recent share price correction. The firm said the stock's valuation has become compelling, with an enterprise value (EV) of RM25,000 per hectare for its planted estates, which is below the estimated replanting cost of RM30,000 per hectare. CIMB Securities projects weaker sequential earnings due to a lower average crude palm oil (CPO) price of RM4,319 per tonne in April 2025, compared to an average of RM4,723 per tonne in the first quarter of financial year 2025 (1QFY25). However, it noted that the downside is expected to be partly offset by higher fresh fruit bunch (FFB) output. Hap Seng recorded FFB production of 51,387 tonnes in April, representing an 8.8 per cent increase month-on-month and a 12.5 per cent rise year-on-year (YoY). "We believe the stock has re-rating potential, supported by its undervalued estates, a solid net cash position of RM585 million or 73 sen per share as of March 31, 2025, and projected dividend yields of 4.6 per cent to 5.5 per cent for FY25 to FY27, based on a 60 per cent payout ratio," the firm said in a note. CIMB Securities has re-evaluated its stance on Hap Seng Plantations following the release of the company's first quarter earnings. The company reported a core net profit of RM39 million for 1QFY25, representing a 60.5 per cent YoY increase but a 35.5 per cent quarter-on-quarter decline. "The results were broadly in line with our and consensus expectations, accounting for 29 per cent of our and 25 per cent of consensus full-year estimates. "The main disappointment was the 11 per cent YoY and 27 per cent QoQ drop in FFB output, attributed to wet weather across Hap Seng's estates, falling short of the FY25 target of 9.0 per cent FFB output growth," it added.
New Straits Times
02-05-2025
- Business
- New Straits Times
BNM likely to cut OPR by 25 bps on July 9, by-passing MPC May meeting
KUALA LUMPUR: CIMB Securities Sdn Bhd anticipates Bank Negara Malaysia (BNM) to cut the Overnight Policy Rate (OPR) by 25 basis points (bps) to 2.75 per cent on July 9, 2025, by-passing the Monetary Policy Committee (MPC) meeting in May. It said in a note today that the move would serve to allow the central bank to assess more incoming data, particularly related to external trade following the Liberation Day tariffs, including the first quarter of 2025 gross domestic product (GDP) announcement on May 16, April's external trade (May 20) and May's external trade (June 20) data. "Trade negotiations with the United States (US) are still ongoing. As the implications for Malaysia from de-escalation versus reciprocal tariffs are wide, reservation of judgment is warranted. The July MPC meeting will also mark the end of the US' 90-day tariff pause," it said. The bank also expects a more dovish tone and the MPC will explicitly acknowledge the downside risks that will weigh on the economy. It noted that a recent statement by BNM Governor Datuk Seri Abdul Rasheed Ghaffour highlighted downside risks stemming from the current trade environment, suggesting that the official GDP growth forecast of 4.5–5.5 per cent may be revised downward. "BNM currently projects gross exports to grow by 5.2 per cent in 2025, down from 5.7 per cent in 2024. As of March, year-to-date export growth averaged 4.4 per cent. However, recent indicators, including the latest manufacturing purchasing managers' index (PMI), are showing further signs of weakness." It said the delay in the sales and service tax (SST) expansion and the planned rationalisation of RON95 fuel subsidies, which will affect a portion of the population, are also expected to limit upward pressure on prices.
