Latest news with #HongLeongInvestmentBankBhd
New Straits Times
20 hours ago
- Business
- New Straits Times
HLIB: Malaysia's investment appeal intact despite tariff jitters, tax gap
KUALA LUMPUR: Global markets have stayed largely composed despite the threat of renewed US tariffs – a resilience that could embolden former US President Donald Trump to intensify his protectionist push next month, said Hong Leong Investment Bank Bhd (HLIB). While Malaysia currently faces a 25 per cent US tariff – above Indonesia's 19 per cent and Vietnam's 20 per cent – HLIB believes the gap is relatively minor and unlikely to trigger a major shift in foreign investment flows, describing the differential as "modest". "Even if tariffs remain elevated, policy tools like tax incentives can cushion the impact, in our view. We are not overly alarmed. "The differential of five to six per cent is modest and, in our opinion, unlikely to be material enough to meaningfully divert foreign investment," HLIB said in its latest market strategy note today. Additionally, HLIB also noted that Malaysia's higher corporate tax rate of 24 per cent, compared to Indonesia's 22 per cent and Vietnam's 20 per cent, has not historically hindered its attractiveness to foreign investors. "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," it added. While HLIB expects the third quarter (Q3) to remain noisy due to macroeconomic and policy uncertainties, it projects calmer conditions in Q4. "The FBM KLCI target is retained at 1,640, premised on a 14.5 times price-to-earnings ratio, which is below its five- to 10-year averages. "We continue to envision the second half of 2025 to be a quarter of contrasts, where Q3 is characterised to be turbulent before entering into calmer skies in Q4. Thus, we see any sharp drop as an opportunity to buy on weakness, especially high beta stocks. "Top picks include CIMB Group Holdings Bhd, Sunway Bhd, Gamuda Bhd, 99 Speed Mart Retail Holdings Bhd, AMMB Holdings Bhd, IOI Properties Group Bhd, Dialog Group Bhd, and SmartRent Inc," it said. On domestic strategy, HLIB expects the upcoming 13th Malaysia Plan to align with ongoing Madani initiatives while allocating RM440 billion in development expenditure. "That said, the development expenditure will be anchored by fiscal prudence to ensure adherence to the government's fiscal deficit target of 3.5 per cent gross domestic product between 2025 and 2027. "Overall, we anticipate the 13MP to adopt a globalist approach, particularly given the significant overlap with Trump's presidency through 2028. "Also, we expect a continuation of the whole-of-nation Madani ethos, with the 13MP reinforcing flagship policy anchors like the National Energy Transition Roadmap, New Industrial Master Plan 2030, and National Semiconductor Strategy," the firm added.
New Straits Times
20 hours ago
- Business
- New Straits Times
HLIB sees profit boost ahead for Affin Bank
KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) estimates Affin Bank Bhd will see a notable improvement in profitability, driven by a strategic shift in its funding mix, a strong loan pipeline, and enhanced operational efficiencies. In a note today, the firm maintained its "Buy" call on the bank with an unchanged target price of RM3.00, implying a 0.60 times financial year 2026 (FY26) price-to-book value. "While sector-wide asset yields have gradually declined, Affin's primary challenge and significant opportunity lie in managing its cost of deposits. "We believe multiple levers are now in place to support net interest margin (NIM), including the statutory reserve requirement by Bank Negara Malaysia, partially offering the impact of the 25 basis points Overnight Policy Rate cut. "The bank also slashed its fixed deposit promotional rates by 35 to 50 basis points, more than its peers. This steeper reduction suggests a deliberate strategy, likely driven by the anticipation of cheaper funding sources," the firm said. HLIB also noted that the inflow of low-cost current account and savings account (CASA) funds, especially from Sarawak government-linked companies and upcoming civil servant payroll accounts, has positioned Affin to reduce its reliance on expensive funding. "Affin has been actively refreshing its digital offerings, including its recently launched AffinAlwaysX app for retail and revamped AFFINMax mobile app for businesses, both of which should enhance product and CASA stickiness," it added. HLIB said that despite peers' cautious stance, the market may be underpricing the bank's return on equity inflection point. "In the second quarter of 2025, Affin's net interest income is expected to hold steady, supported by a strong loan base and a stable sequential NIM. "The bank's loan pipeline remains strong at RM9 billion, while proactive cost-of-funds optimisation efforts are likely to offset asset yield pressure," it said. Meanwhile, with the 10-year Malaysian Government Securities yields currently still trading below 3.5 per cent, HLIB sees there is significant room for Affin to capitalise on favourable trades. "Given stable asset quality, we expect the improved recovery momentum should keep net credit cost in the single digits for FY25. "Overall, HLIB sees upside potential in Affin's risk-reward profile, particularly given the strategic backing from the Sarawak government. "Further upside largely hinges on tangible benefits emerging from the Sarawak government's strategic involvement," it added.
The Star
7 days ago
- Business
- The Star
Bursa Malaysia easier at midday as cautious sentiments abound
KUALA LUMPUR: Bursa Malaysia ended the morning trading session lower on Wednesday, trading below the 1,520 level as investors remain cautious ahead of the looming United States (US) tariff negotiation deadline. At 12.30 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) fell 7.90 points, or 0.52 per cent, to 1,517.50 from Tuesday's close of 1,525.40. The benchmark index opened 1.63 points lower at 1,523.77, and subsequently moved between 1,516.89 and 1,526.29 during the session. The broader market was negative with decliners outnumbering gainers 558 to 289, while 434 counters were unchanged, 1,164 untraded and eight suspended. Turnover stood at 1.98 billion units worth RM1.04 billion. In a research note today, Hong Leong Investment Bank Bhd (HLIB) said the FBM KLCI's near-term sentiment is expected to remain cautious ahead of the Aug 1 deadline for the US-Malaysia tariff negotiation decisions and potential clarity on US export controls on artificial intelligence (AI) chip shipments. "On the domestic front, the upcoming August results season may weigh on sentiment, as looming policy headwinds, including fuel and electricity subsidy rationalisations, port tariff hikes and Sales and Service Tax expansions would dampen consumer demand and cloud earnings visibility,' it said. Among the heavyweights, Maybank fell six sen to RM9.59, Public Bank slipped four sen to RM4.22, CIMB was seven sen lower at RM6.56 and IHH Healthcare erased three sen to RM6.55, while Tenaga Nasional was flat at RM13.90. As for the most active stocks, NexG gained one sen to 48.5 sen, Zetrix AI added 1.5 sen to 94.5 sen and Tanco reduced half-a-sen to 90 sen, while Green Ocean Corporation and TWL were flat at 12.5 sen and 2.5 sen, respectively. On the index board, the FBM Emas Index reduced 56.50 points to 11,419.58, the FBMT 100 Index edged down 56.57 points to 11,181.04, and the FBM Emas Shariah Index trimmed 28.82 points to 11,454.36. The FBM 70 Index declined 76.82 points to 16,611.58, while the FBM ACE Index went up 9.42 points to 4,597.04. Sector-wise, the Financial Services Index sank 168.82 points to 17,333.83, the Industrial Products and Services Index eased 0.46 of a point to 152.93, the Energy Index ticked down 0.79 of a point to 738.13, and the Plantation Index narrowed 23.24 points to 7,395.18. - Bernama
Barnama
15-07-2025
- Business
- Barnama
Bursa Malaysia Lower At Midday As Investors Assess US Tariff Impact
WORLD KUALA LUMPUR, July 15 (Bernama) -- Bursa Malaysia continued its negative tone at midday as investors assessed the impact of United States (US) tariffs on key trading partners amid mixed regional market performance. At 12.30 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) fell 4.25 points, or 0.28 per cent, to 1,533.26 from Monday's close of 1,537.51. The benchmark index opened 1.45 points lower at 1,536.06, and subsequently moved between 1,532.41 and 1,538.56 during the session. The broader market was negative with decliners outnumbering gainers 464 to 367, while 477 counters were unchanged, 1,121 untraded and eight suspended. Turnover stood at 1.86 billion units worth RM1.04 billion. In a research note today, Hong Leong Investment Bank Bhd (HLIB) anticipates the FBM KLCI to remain in consolidation phase as investors weigh the broader implications of the United States' (US) renewed tariff rhetoric, targeting key trading partners. It said the benchmark index was further pressured by a confluence of external and domestic overhangs, namely uncertainty surrounding the US-Malaysia tariff negotiations, with a potentially prolonged process to reduce the 25 per cent import duties ahead of the Aug 1 deadline 'Therefore, we see the FBM KLCI weekly supports and resistances at 1,500-1,528 and 1,551-1,570, respectively,' it said. Meanwhile, Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng believes that the local market velocity should improve going forward, though the impact from the overnight policy rate (OPR) cut will not be immediately felt.
New Straits Times
15-07-2025
- Business
- New Straits Times
Data centres push electricity demand to new high
KUALA LUMPUR: Malaysia's power infrastructure sector is entering an upcycle, driven by surging electricity demand and a strong pipeline of new supply projects, Hong Leong Investment Bank Bhd (HLIB) said. The country recorded a peak power demand of 21,049 megawatts (MW) on May 28, 2025, a 10.4 per cent increase from a year earlier. HLIB attributed the jump to organic growth and higher load requirements, particularly from data centres, where utilisation reached 485MW in March compared with 148MW a year ago. "In response to the sharp rise in demand, the Energy Commission has called for tenders for new and existing gas-fired power capacities, scheduled for rollout between 2025 and 2029 to ensure a healthy reserve margin," it said in a note. At the same time, HLIB said renewable energy (RE) deployment remains a key policy focus, with national targets set at 31 per cent RE capacity by 2025 and 40 per cent by 2035. "Amid this backdrop of rising demand and a strong pipeline of new power supply, we see a compelling multi-year investment opportunity in the domestic power infrastructure space," it said. Over the current Regulatory Period 4 (RP4), HLIB estimates Tenaga Nasional Bhd will channel RM3 billion to RM3.5 billion annually from its base capital expenditure into grid infrastructure. It said this is expected to generate RM6.7 billion to RM7.8 billion worth of job opportunities in the transmission substation segment, benefiting mechanical and electrical (M&E) engineering players. "Looking ahead, Tenaga's RM90 billion grid investment plan implies another RM47 billion could be deployed under RP5 (2028-2030), exceeding RP4's RM42.8 billion and this points toward sustained momentum in power infrastructure rollout. "We reckon listed power infrastructure players who have access to capital and economies of scale are prime beneficiaries," it said. Overall, given the robust project pipeline and rising infrastructure requirements, HLIB believes the sector has not yet reached its cyclical peak. "As such, we are Overweight on the power infrastructure sector. Our top picks are MN Holdings Bhd and Southern Cable Group Bhd, both key beneficiaries of grid expansion. "We also favour SMRT Holdings Bhd for its strategic involvement in the digitalisation of Malaysia's distribution substation," it added.
