Latest news with #HongLeongInvestmentBank
The Star
6 hours ago
- Business
- The Star
Healthy outlook seen for healthcare industry
PETALING JAYA: Analysts are positive on the Malaysian healthcare sector, driven by its resilient long-term structural growth drivers, positioning it as a compelling defensive play amid ongoing macroeconomic uncertainty. Hong Leong Investment Bank (HLIB) Research has maintained its 'overweight' stance on the healthcare sector for 2025, with a clear preference for the hospital segment. 'Also, we see further upside from a domestic-focused thematic play from an initial public offering-led re-rating, driven by the anticipated listings of Sunway Healthcare Group, expected in late-2025 or early-2026,' it said. The research house has kept its 'buy' rating on IHH Healthcare Bhd , with a higher sum-of-parts-derived target price of RM9.15 from RM9.06. 'The marginal upward revision reflects the latest market capitalisations of its India-listed Fortis Healthcare and Singapore-listed Parkway Life Real Estate Investment Trust, which have seen slight valuation uplifts. HLIB Research has also upgraded KPJ Healthcare Bhd to a 'buy' from 'hold' with an unchanged target price of RM2.96, driven by the recent share price weakness that has improved its risk-reward profile. It has, however, maintained its 'hold' rating on UMediC Group Bhd , but lowered its target price to 31.5 sen from 40 sen. This is based on a reduced target price over an earnings multiple of 15 times applied to its 2026 earnings per share estimate of 2.1 sen. 'The downward adjustment in valuation multiple reflects waning investor interest, following three consecutive quarters of earnings underperformance, and a muted outlook in the fourth quarter of 2025. 'Until earnings visibility improves, we expect sentiment to remain subdued,' it explained. Meanwhile, MBSB Research, which has maintained a positive outlook on the healthcare sector, said the pharmaceutical market is fundamentally driven by robust demographic trends, which naturally increases the demand for healthcare services and medicines. 'The growing prevalence of non-communicable diseases such as cancer, diabetes and cardiovascular conditions, which require long-term medication and fuel sustained pharmaceutical consumption, is expected to continue to support all levels of the healthcare sector. 'Hence, we believe the growth in the pharmaceutical market will continue to grow in tandem with the expansion of investments in healthcare infrastructure (assets, accessibility and affordability),' it added. It pointed out that while direct pharmaceutical exports from Malaysia to the United States might face immediate headwinds from tariffs, the broader impact on the healthcare sub-sector could come from indirect effects on global pharmaceutical supply chains and procurement costs. 'This would affect the affordability and availability of medicines within Malaysia for all citizens and healthcare providers. 'The Malaysian government and industry players are already responding by prioritising supply chain diversification and exploring domestic production enhancements to mitigate these risks,' the research house said. It believes a multi-pronged approach involving government action, industry adaptation and consumer awareness will be crucial. HLIB Research, meanwhile, viewed the government's recent decision to implement the diagnosis-related group payment system, specifically for the upcoming 'basic health insurance and takaful products'. It said the targeted approach helps to improve accessibility for those priced out of existing insurance/takaful plans, while preserving the commercial viability of the private healthcare sector.
The Star
21 hours ago
- Business
- The Star
Data centres continue to be key growth driver
HLIB Research said it foresees a DC award cycle in the second half. PETALING JAYA: The construction sector appears to be on a growth trajectory and share prices are catching up, according to Hong Leong Investment Bank (HLIB) Research. The key drivers of the growth story came from data centres (DCs) and public sector related jobs such as roads, railways and water, said the research house. 'The robust figure in the first half of the year reinforces the growth path for contracts in 2025, extending the order book expansion trajectory. 'In our view, with the sizeable data centre tenders set for awards in the second half, there is potential to match decade high flows last achieved in 2016,' it said. 'Domestic contract awards in the second quarter of the year came in at RM11.2bil, bringing the total sum in the first half to RM27.5bil, increasing by 33%. 'This is the fifth consecutive quarter of double digit contract value awarded,' HLIB Research added, noting that order books are poised to expand. The research house noted this being the fifth consecutive quarter of double digit contract value awarded which had expanded in the billions. 'In our view, with sizeable DC tenders set for awards in the second half, there is potential to match decade high flows last achieved in 2016,' it said. 'We are foreseeing a DC award cycle in the second half, to be driven by multiple award decisions for DC tenders placed in the first half of this year – this includes multiple multi-billion ringgit tenders for one US based hyperscaler,' it added. In the DC segment, HLIB Research noted that bigger projects are better for companies such as Gamuda Bhd , Sunway Construction Group Bhd and IJM Corp Bhd , given their competitive advantages such as balance sheet strength, track record and integrated structure. 'While news of potential artificial intelligence chip curb is concerning, in our view, Malaysian contractors are reliant on US and or Western-based hyperscaler names for sizeable DC jobs, thus mitigating uncertainties to a certain extent, in our view. 'DCs aside, the second half could see more action coming from the New Pantai Expressway extension, Penang Light Rail Transit (subcontracts and systems package) while sizeable road projects in Sabah and Sarawak may materialise,' it said. 'As for the commercial segment (including residential projects sitting on commercial plots), lack of clarity on sales and services tax treatment could weigh on the pipeline in the third quarter of the year,' HLIB Research added. The research house had an 'overweight' rating with its top pick being Gamuda – a 'buy' with a target price of RM5.70. It said contractors in the sector could broadly add to their order book from the DC segment as well as from infrastructure projects, while valuations at current levels provide room for upside.
Focus Malaysia
2 days ago
- Business
- Focus Malaysia
Core inflation holds firm at 1.8% in June amid mixed sectoral trends
HEADLINE inflation moderated slightly to +1.1% year-on-year (YoY) in Jun, coming in marginally below median consensus estimate of +1.2%. On a month-on-month (MoM) basis, inflation was unchanged at +0.1%, as a steeper decline in information & communication costs, coupled with a moderation in housing, utilities & other fuels, helped offset upward pressures from food & beverages (+0.2%), transport (+0.2%) and personal care (+0.4%). 'On a YoY basis, the disinflation was attributed to a sharper contraction in information & communication costs (-5.4% YoY), alongside softer inflation across transport (+0.3% YoY), restaurant & hotels (+2.8% YoY) and recreation services & culture (+0.8% YoY),' said Hong Leong Investment Bank. Meanwhile, food & beverages (+2.1% YoY), housing, utilities & other fuels (+1.7% YoY) and insurance & financial services (+1.5% YoY) continued to grow at a steady pace. The transport index eased to +0.3% YoY following slower price growth in public transport services (+0.3% YoY) and the operation of personal transport equipment (+0.3% YoY). However, on a MoM basis, the transport index rebounded by +0.2% amid stronger MoM inflation in the operation of personal transport equipment and public transport services. Food inflation remained unchanged at +2.1% YoY. 'Food at home' saw a price contraction of -0.4% YoY on the back of larger declines in vegetables (-7.2% YoY) and meat prices (-1.1% YoY), while prices of cereal products fell at a steady pace (-0.3% YoY) and prices of milk, dairy & eggs saw a smaller drop (-1.8% YoY). Conversely, 'food away from home' registered a further pickup in inflation (+4.7% YoY). Globally, food prices rose at a faster pace of +5.8% YoY, led by a larger price gain in meat. Despite broad disinflationary trends, services inflation inched higher to +2.0% YoY, supported by higher inflation in personal care (+4.2% YoY). Meanwhile, insurance & financial services inflation was stable (+1.5% YoY). Core inflation (DOSM) held steady at +1.8% YoY. Higher inflation in food & beverages (+3.8% YoY), transport (+2.3% YoY) and personal care (+4.2% YoY) was offset by a deeper contraction in information & communication services (-5.4% YoY), along with the easing in inflation of furnishings & household equipment (+0.1% YoY) and restaurants & hotels (+2.8% YoY). Headline and core CPI remained broadly stable in Jun, while producer prices saw a deeper contraction (-3.6% YoY) due to lower commodity prices and stronger ringgit. Price pressures from global commodities, particularly crude oil, are expected to remain subdued, amid persistent signs of oversupply in the market. With limited direct impact on CPI from fiscal reforms such as the SST and electricity tariff adjustments for households, we maintain our 2025 CPI forecast at +2.0% with assumption of RON95 adjustment sometime in 2H25. —July 23, 2025 Main image: Global Business Outlook
Malaysia Sun
3 days ago
- Automotive
- Malaysia Sun
Analysts foresee policy shifts to fuel EV market competition in Malaysia
KUALA LUMPUR, July 22 (Xinhua) -- Analysts have foreseen intensified competition for electric vehicles (EVs) in Malaysia amid policy changes in the country. Research house BIMB said in a note on Monday that Malaysia's EV market is approaching a key policy turning point, with the government expected to end completely built-up (CBU) import tax exemptions and the Approved Permit (AP) regime by year-end. "This decision will likely shape the direction of the market -- either accelerating liberalization and inviting more aggressive price competition or maintaining a controlled environment that protects local players," said the research house. BIMB noted that the policy outcome will not only affect the pace of EV adoption and pricing dynamics, but also influence the competitiveness of local original equipment manufacturers (OEMs), ongoing completely knocked down (CKD) investment strategies, and the overall outlook for the automotive sector. Hong Leong Investment Bank also highlighted in its note on Tuesday that it expects continued stiff competition for the 100,000 ringgit (23,624 U.S. dollars) to 200,000 ringgit price segment in Malaysia due to normalizing of consumer demand and aggressive new launches and sales campaigns. However, it foresees the EV segment in Malaysia continuing to gain momentum with a 4.6 percent market share in the first half. It also noted that the new customized incentive mechanism (NCM) is expected to materialize by the fourth quarter of 2025, in place of the current industrial linkage program (ILP). The NCM is being structured to encourage OEMs to expand localization activities at the local vendor level and thereby increase the ability of local suppliers to produce higher-value components. Further incentives are also being considered for EVs, in order to promote the development of this new technology in the local automotive ecosystem. Meanwhile, Kenanga Research in a note on Tuesday expects more favorable incentives from the Malaysian government, which has set a national target for EVs and hybrid vehicles of 20 percent of total industry volume (TIV) by 2030 and 38 percent by 2040. Kenanga opined that Malaysia's new vehicle sales will be supported by new battery EVs (BEVs) that enjoy sales and service tax (SST) exemptions and other EV facilities incentives up until 2025 for CBUs and 2027 for CKDs. While the exemption of import and excise duties for CBU EVs has partly driven EV adoption, RHB Investment Bank opined that it is unlikely to get extended beyond end-2025, as it thinks the government's focus will now be on attracting OEMs to manufacture and assemble their EVs locally, as CKD EVs will continue to enjoy a tax holiday until end-2027. According to the research house, an extension of the tax holiday for CBU EVs would be counter-productive for incentivizing OEMs to establish local production facilities. "While we expect EV numbers to continue picking up in the coming months, growth in market share is likely to remain moderate due to structural headwinds -- high pricing and limited availability of charging infrastructure. As such, EVs are unlikely to influence overall TIV in the near term," it said in its note on Tuesday.
Focus Malaysia
3 days ago
- Business
- Focus Malaysia
Malaysia's competitive edge intact amid modest US tariff gap
DESPITE renewed tariff threats, global markets have remained calm, suggesting complacency around risk of Trump acting on his protectionist plans in August. This may inadvertently embolden him and his confidence to take action could stem from several recent 'wins' such as the USD100 bil in tariffs collected with minimal economic drag, resilient US equities, along with his role in Israel-Iran tension. 'Currently, Malaysia's 25% US tariff rate is higher vs Indonesia (19%) and Vietnam (20%) has raised concerns, but the gap is modest and we believe is unlikely to deter foreign investments meaningfully,' said Hong Leong Investment Bank. Even if tariffs remain elevated, policy tools like tax incentives can cushion the impact, in our view. On a similar vein, Malaysia's high corporate tax rate of 24% vs Indonesia/Vietnam's 22%/20% has not historically hindered investments, backed by a strong manufacturing base and supply chain. We see these structural strengths will continue to make Malaysia an attractive destination under the global supply chain diversification or '+N' strategy. In any case, we remain optimistic Malaysia can still negotiate for a lower tariff rate. Locally, there is growing concern that Malaysia may be unable to secure a more favourable US tariff rate relative to regional peers, potentially undermining our national competitiveness. Although this risk warrants monitoring, we are not overly alarmed. The differential of 5-6ppt is modest and, in our opinion, unlikely to be material enough to meaningfully divert foreign investment away from our country. Earlier, the narrative of Malaysia benefiting from tariff arbitrage held stronger weight due to a significantly wider gap of 8-22ppt during April's Liberation Day episode. In contrast, the current disparity is far narrower. Even if Malaysia ends up with a relatively higher tariff rate, we believe it can be mitigated via strategic policy tools, including targeted tax incentives and capital allowances. On a similar vein, while Malaysia's corporate tax rate stands at a higher 24% vs Indonesia/Vietnam's 22%/20%, it has not historically undermined our competitiveness in luring foreign investments. This is thanks to our mature and integrated manufacturing ecosystem, supported by a well-developed local supply chain. Thus, we believe these structural strengths will continue to make Malaysia an attractive destination under the global supply chain diversification or '+N' strategy. Moreover, it is worth noting that any prospective tariff action by Trump would only affect Malaysia's exports to the US. Like many other nations, the government is actively working to diversify our export base and trade partners to mitigate potential shocks. In any case, we remain optimistic that Malaysia could still negotiate a more palatable tariff rate (<20%), especially seeing both Indonesia and Vietnam had successfully secured steep reductions (13-26ppt) despite their respective ties to BRICS and China. The upcoming 13th Malaysia Plan (13MP), which runs from 2026-30, is slated for tabling in Parliament at end-July. We see a higher Development Expenditure (DE) allocation of RM440 bil, in line with the RM90 bil/year pace from 2023-25 and continuing the upward trajectory seen in past plans. That said, the DE will be anchored by fiscal prudence to ensure adherence to the government's fiscal deficit target of 3.5% GDP between 2025-27. Overall, we anticipate the 13MP to adopt a globalist approach, particularly given the significant overlap with Trump's presidency through 2028. —July 22, 2025 Main image: LITE
