Latest news with #HLIB)Research
The Star
a day ago
- Business
- The Star
Data centres to boost construction jobs in 2H25
PETALING JAYA: The second half of 2025 (2H25) will see more job flows coming the way of construction companies, driven by key structural themes such as the expansion of data centres (DCs) and the ongoing development of the Johor-Singapore Special Economic Zone, which is gaining traction. Hong Leong Investment Bank (HLIB) Research said the DC award cycle in 2H25 follows multiple award decisions for DC tenders made in 1H25, including five multibillion ringgit tenders for one US-based hyperscaler. 'For the DC segment, we take a 'big is better'' view, anticipating further inroads to be made by sector's big-three players (namely Gamuda Bhd , Sunway Construction Group Bhd and IJM Corp Bhd ), riding on competitive advantages such as balance sheet strength, track record and the ability to leverage their integrated structures, including access to building material supply chains and bundled offerings in power and water infrastructure,' HLIB Research said in a report. While concerns have arisen from reports of potential artificial intelligence (AI) chip export curbs on Malaysia, these remain unconfirmed and lack actionable details. HLIB Research added that Malaysian contractors' reliance on US and Western hyperscalers for large DC projects somewhat mitigates these uncertainties, with exemptions possible – this remains their base case. Year-to-date contracts awarded have totalled RM28.9bil, marking a 39.5% year-on-year (y-o-y) growth. 'In 1H25, total DC-related contracts awarded came in at RM3.3bil (31% y-o-y fall), a slower pace when compared to the frenetic pace achieved in 1H24,' it said. Beyond DC projects, HLIB Research said 2H25 could see subcontract and system package awards for the Penang light rail transit, as well as progress on major Sabah and Sarawak road projects such as the Sabah–Sarawak Link Road. As for the commercial segment, including residential projects built on commercial land, HLIB Research said uncertainty over the sales and service tax (SST) treatment could weigh on activity in the third quarter of 2025. Developers may delay project launches until there is clarity on how SST will be applied to such developments. HLIB Research said the recent removal of the SST exemption for the construction sector, from 0% to 6%, should be manageable overall as most contracts allow for cost adjustments. 'We retain our 'overweight' sector call, anticipating sustained contract flows in 2H25 anchored by DCs, infrastructure rollout and still buoyant private sector sentiment. In our view, contractors broadly can still add to order books from the DC segment as well as infrastructure projects.' HLIB Research said forward sector valuations remains palatable, trading at price-to-earning and price-to-book multiples of 19.1 times and 1.3 times, respectively.
The Star
6 days ago
- Business
- The Star
Analysts turn cautious on tech in 2H
PETALING JAYA: As macroeconomic headwinds intensify heading into the second half of 2025 (2H25), analysts are adopting a more cautious stance on the technology sector, citing downside risks to earnings revisions. Hong Leong Investment Bank (HLIB) Research, which is maintaining its Neutral rating on the tech sector, points to three major headwinds underpinning this outlook. Firstly, visibility on end-demand remains limited due to unresolved US tariff policies and the earlier boost from demand pull-ins is expected to fade as channel inventories become fully stocked. Earlier this week U.S. President Donald Trump announced a 25% tariff on Malaysian exports to the US. Secondly, Malaysian companies are facing rising cost pressures, including higher electricity tariffs and the mandatory 2% Employees Provident Fund contribution for foreign workers, which appear difficult to fully pass through in the current environment, says HLIB Research . Thirdly, the research firm said foreign exchange (forex) headwinds will pose a challenge to earnings of tech companies as the ringgit has appreciated roughly 5% year=to-date against the US dollar. "Against these backdrop, we see limited scope for a positive inflection in the near term; sentiment is likely to remain subdued until earnings expectations are reset and the outcome of US tariff policy becomes clearer, HLIB Research said in a report yesterday. Explaining its cautious stance on the sector, the research firm said earnings revisions remain skewed to the downside. While early reads suggest that the second quarter 2025 (2Q25) earnings may demonstrate relative resilience, the outlook for 3Q and 4Q of 2025 remains opaque with heightened risks. It noted that the Bursa Malaysia Technology Index was down by 21.4% in 1H25, significantly underperforming the broader KLCI, which declined 6.7%. On stock picks, the research firm continues to favour domestic-focused names, such as ITMax System Bhd and SMRT Holdings Bhd driven by their resilient recurring revenue base and structural growth story. Within the tech hardware space, it prefers companies with exposure to foundries or frontend equipment makers like Frontken Corp Bhd , UWC Bhd and Sam Engineering & Equipment (M) Bhd. Meanwhile, global semiconductor sales for May 2025 reached US$59.0bil, marking the 19th consecutive month of year-on-year sales growth. This came on the back of sustained demand for AI and high-performance computing applications, TA Research said citing data from the Semiconductor Industry Association. (SEMI). However, media reports indicate that the administration of U.S. President Donald Trump plans to restrict shipments of AI chips to Malaysia and Thailand as part of efforts to curb suspected semiconductor smuggling into China. At this stage, the proposed rule remains in draft form and is still subject to change. "This move is not entirely unexpected, as Trump has previously expressed his intention to implement his own version of an AI diffusion policy. For Malaysia's technology sector, we do not expect a significant immediate impact, given the local semiconductor industry's currently limited direct exposure to AI chips. :However, we are more concerned about the potential long term implications, as such restrictions could hinder the country's ambition to move up the value chain," said TA Research. In view of the prevailing uncertainties related to U.S. trade policy, TA Research also maintains a Neutral stance on the sector. "Should the U.S. implement sector-specific tariffs on semiconductors, it could materially impact end-market demand and corporate earnings. On the other hand, we believe the Malaysian government will remain steadfast in executing the National Semiconductor Strategy, with the goal of elevating the country's position within the global semiconductor value chain," TA Research added.
The Star
21-05-2025
- Automotive
- The Star
Domestic vehicle sales forecast to moderate this year
MIDF Research expects the May TIV to improve month-on-month. PETALING JAYA: The automotive sector is expected to grow moderately this year, with analysts having mixed views on the outlook for the total industry volume (TIV), as the market adjusts from a record-breaking year in 2024. In a report on the sector, Hong Leong Investment Bank (HLIB) Research said it estimates 2025's TIV to moderate to 750,000 units, representing an 8.2% year-on-year decline from the 816,700 units recorded in 2024. This is slightly below the Malaysian Automotive Association's target of 780,000 units. It attributed the lower forecast to declining order backlogs and a slowdown in new order intakes in the coming months. Echoing HLIB Research's view, MIDF Research noted that newer Chinese electric vehicle (EV) players, namely, BYD and Chery, bucked the trend with stronger registered growth. Looking ahead, MIDF Research expects the May TIV to improve month-on-month, supported by festive demand and a longer working month. It maintained a 'neutral' call on the sector, but downgraded MBM Resources Bhd to 'neutral' from a 'buy.' BIMB Securities, however, maintained a more optimistic stance, expecting TIV to remain robust, underpinned by a steady pipeline of new model launches, particularly in the EV and hybrid segments. It also highlighted potential upside from Perodua's upcoming locally developed EV, due for release by end-2025.
