Latest news with #MBSBResearch
The Star
25 minutes ago
- Business
- The Star
Property sector poised for ESG-driven growth
MBSB Research anticipates deeper integration of ESG principles into investment decisions and operations of property companies. PETALING JAYA: MBSB Research has maintained a 'positive' call on the property sector as developers continue to integrate environmental, social and governance (ESG) principles into their operations, with benefits seen in risk management, cost efficiency and long-term value creation. In a report, the research house said most developers under its coverage are included in the FTSE4Good Bursa Malaysia Index, which highlights companies that adopt practices to address ESG risks. 'We observed that property companies under our coverage saw higher adoption of ESG practices due to growing concerns about environmental impacts, social and governance issues,' it said. Among those with a four-star ESG grading are Sunway Bhd , IOI Properties Group Bhd (IOIProp), Mah Sing Group Bhd and Eco World Development Group Bhd , while S P Setia Bhd, Matrix Concepts Holdings Bhd and UOA Development Bhd hold three-star ratings. On the environmental front, initiatives include sustainable design features such as green certification, allocation of open green areas, energy-efficient building orientation and the use of low volatile organic compound paint. Developers are also installing solar panels, rainwater harvesting systems and electric vehicle charging stations for a more sustainable use of resources. MBSB Research said social initiatives are measured partly through the Construction Industry Development Board's QLASSIC scores, which assess workmanship quality. For example, Mah Sing achieved scores of between 80% and 86% for various projects, while Sunway's 2024 completions averaged 84%. Developers are also participating in affordable housing programmes to address supply gaps, especially in the affordable housing segments. From a governance standpoint, the research house noted that most developers set targets of zero corruption or bribery cases, conduct anti-corruption training and have committees overseeing audit, risk and sustainability matters, alongside policies on data privacy and cybersecurity. Notably, Mah Sing, Sunway, Eco World and IOIProp are leading in ESG adoption, particularly in sustainable design, renewable energy use and maintaining high construction quality. Other players such as S P Setia, Matrix Concepts and UOA Development are progressing towards stronger integration. 'We believe that embracing ESG principles is a pathway to long-term value creation, enhancing brand reputation and supporting long-term financial performance. 'Going forward, we anticipate deeper integration of ESG principles into investment decisions and operations of property companies as we believe ESG can help property companies make sound decisions and achieve better long-term returns,' it said. MBSB Research maintained 'buy' calls on Mah Sing, UOA Development and Matrix Concepts and 'neutral' on Eco World, S P Setia, Sunway and IOIProp.
The Star
a day ago
- Business
- The Star
Pekat Group to leverage on data centre growth
MBSB Research said in line with the aggressive rollout of solar schemes and policies by the government, Pekat has a good future. PETALING JAYA: Analysts expect Pekat Group Bhd 's prospects to remain positive, backed by its strong earth and lightning protection or ELP business due to the growth in data centre projects. In a report, MBSB Research said in line with the aggressive rollout of solar schemes and policies by the government, the ongoing large-scale solar five (LSS5) and the upcoming LSS5+ and LSS6, Pekat has a good future. Pekat is among the renowned names in the solar engineering, procurement, construction and commissioning business and switchgears are among the crucial components in the solar photovoltaic or PV systems. Pekat's 60% indirectly owned subsidiary, EPE Switchgear (M) Sdn Bhd, is set to become a crucial contributor to the group, having secured RM260mil worth of contracts from TNB year-to-date. EPE Switchgear has a factory at the Arab Malaysian Industrial Park in Nilai, Negri Sembilan and an annual production capacity of 2,000 panels. According to MBSB Research, EPE Switchgear specialises in the medium-voltage segment and its products are mainly used by solar farms that are no larger than 30MW. 'We believe programmes such as the Corporate Renewable Energy Supply Scheme could further drive the demand for EPE Switchgear's products. Its 11 kilovolts (kV) and 33kV switchgears are also suitable for data centres that are 30MW and below. Those larger than that will usually have 132kV requirements,' MBSB Research said. Furthermore, EPE Switchgear clients also include Sarawak Energy, Sabah Electricity and independent power producers, as well as cater to shopping complexes, universities, hospitals, commercial buildings and factories, among others. 'The breakdown of its customer segments is approximately 70% for local utilities, 20% for local industries and 10% for exports to countries in Asia Pacific, the Middle East and Africa. EPE Switchgear has been consistently securing contracts,' the research house noted. As for Pekat's consolidated orderbook, it currently stands at more than RM600mil, led mainly by EPE Switchgear at about RM220mil, driven by ongoing deliveries for power distribution equipment and upcoming utility and private sector contracts. The research house also made note of Pekat's undertaking of a private placement of up to 10%, mainly for the capital expenditure for its current and future solar PV projects. Furthermore, Pekat's acquisition of a 60% stake in Apex Power Industry Sdn Bhd for RM96.0mil via its wholly-owned subsidiary will also bode well for the group. It maintained a 'buy' call on the group with a target price of RM1.86, derived by pegging its FY26 earnings per share of 6.9 sen to a forward price to earnings ratio of 27 times based on its three-year historical mean.
The Star
2 days ago
- Business
- The Star
CPO prices expected to remain firm in 2025
MBSB Research expects the CPO price to average at RM4,100 a tonne in 2025. PETALING JAYA: Crude palm oil (CPO) prices remain supported by bullish fundamentals and higher demand from price-sensitive markets like Pakistan and India, despite signs of production and stock levels rising. Indonesia's plans to roll out a B50 biodiesel mandate in 2026 and call on local producers to raise sales in the domestic market are supportive of CPO prices, CGS International Research (CGSI Research) noted. 'We view the recent price support from Indonesia's biodiesel and Domestic Market Obligation measures is likely to be temporary, while ample global vegetable oil supply and sluggish demand fundamentals should continue to cap meaningful upside in CPO prices,' the research house stated in a report. It expects sustained earnings from pure upstream plantation players given current CPO is holding around the RM4,200 per tonne price level. Malaysia's CPO stock level rose to a 19-month high of 2.1 million tonnes in July as production rose 7.1% and exports eased to 1.3 million tonnes, down some 22.9% year-on-year (y-o-y). The fall in exports came despite a widening price premium over soybean oil in July at US$332 per tonne. Furthermore, MBSB Research noted that despite the July discount premium being 55% above the three-year average of US$214 per tonne, demand for CPO remained muted. It expects the premium risk to ease as fresh fruit bunches and CPO output continue to recover amid ample stock levels. It expects the CPO price to average at RM4,100 a tonne for 2025. Malaysia's CPO production is forecast to rebound in 2025, as the year-to-date production of 10.77 million tonnes is running at 4% above the 10-year January-to-July output of 10.35 million tonnes. Oilworld, a source of independent global market analyses and forecasts, is expecting the country's total production to hit 19.3 million tonnes while the US Department of Agriculture is forecasting 19.4 million tonnes output. Kenanga Research is of the view that Malaysia's 2025 CPO production will hit 19.2 million tonnes, which is above the historical 10-year average of 19 million tonnes. It expects demand supply fundamentals of the global edible oil market to support CPO prices in 2025 and 2026.
The Star
2 days ago
- Business
- The Star
Challenges expected for oil and gas sector
MBSB Research maintained its 'neutral' call on the sector. PETALING JAYA: The oil and gas sector is currently in a state of equilibrium, according to MBSB Research. The research house said the sector is facing lower commodity prices, reduced capital spending and a challenging services market. However, at the same time, there are positive factors too, it added. These include the resilience of natural gas and liquefied natural gas (LNG), stable midstream demand, and a more positive long-term outlook. 'The sector is not expected to see a significant surge in earnings or valuations in the near term and is highly likely to be focused on selective segments,' MBSB Research said. However, the research house said it believes the sector also has strong foundational elements that prevent a major collapse. This ensures that it will perform broadly in line with the wider market, with limited short-term catalysts, barring any events that would warrant a spike in oil and gas prices and further sustain the surge. The research house maintained its 'neutral' call on the sector, its top pick being MISC Bhd with a 'buy' call and a target price of RM8.13. 'We favour MISC for its strong business model built on stability and long-term growth, effectively insulating it from the volatility impacting other segments. 'MISC's core revenue comes from long-term contracts for its LNG carriers and offshore assets, providing predictable earnings,' MBSB Research added. It highlighted that the company is also strategically aligned with the resilient natural gas market and the global energy transition, as evidenced by its robust LNG carrier fleet and its involvement in next-generation technologies like liquefied carbon dioxide carriers. 'This combination of stable cash flows, exposure to growth sectors, and a defensive posture against short-term market fluctuations makes it a compelling company to look into, amid the uncertainties and headwinds plaguing the sector,' the research house noted. On the outlook of the sector, MBSB Research said it believes the downward pressure on oil prices will continue. 'The global oil supply is expected to remain positive in August, driven by the continuous unwinding of the voluntary production cuts by the Organization of the Petroleum Exporting Countries (Opec) and the sustained production growth from non-Opec countries, notably Brazil and the United States,' the research house said. It also cautioned about the rise in global oil inventories, mostly in China, ahead of the full impact of the US trade tariffs on the industrial sector around the world. 'This signals that the market may be well-supplied in the coming months. Additionally, demand growth has been projected to slow due to uncertainty in the economy and the rapid shifts to cleaner energy,' it said. The research house said it expects Brent crude to average around US$67 per barrel in August. 'We still maintain vigilance on the geopolitical risks that could cause sudden price spikes, as well as any further Opec decisions on supply cuts,' it added. MBSB Research anticipated similar mixed results for the second quarter of this year. 'Given that the Malaysian oil and gas sector is highly correlated with global trends, we expect that oil and gas companies are likely to face the same headwinds that impact their international counterparts,' the research house said.
The Star
2 days ago
- Business
- The Star
Premium aged-care demand on the rise
MBSB Research said the silver economy opens up major opportunities in gerontechnology, senior living, preventive wellness, and financial services. PETALING JAYA: Malaysia is steadily heading towards an aged nation status. By 2048, the country could be officially classified as an aged society, with citizens aged 65 and above making up a significant portion of the population. Current projections estimated that this age group would grow from 8% in 2025 to 18.3% by 2060, underscoring a demographic shift with far-reaching social and economic consequences, said MBSB Research. According to the research house, the silver economy opens up major opportunities in gerontechnology, senior living, preventive wellness, and financial services. Government policy is also starting to align with this shift, with frameworks like the 13th Malaysia Plan and the National Ageing Blueprint placing greater focus on long-term care, social protection and age-friendly infrastructure. Complementing these, private sector players such as Sunway Bhd , UOA Development Bhd and IGB Bhd are moving ahead with premium aged-care and integrated senior living developments, signalling rising demand for high-quality, lifestyle-focused eldercare solutions among the country's growing ageing population. One notable example is Sunway Sanctuary, a flagship senior living residence launched in 2023 by Sunway Healthcare Group. The first phase of the development includes 235 out of 473 planned units and according to MBSB Research, occupancy has risen from 30% in 2024 to 50% currently. The second phase is expected to be launched at a later date. 'Given the positioning of Sunway Sanctuary for premium aged care services in Malaysia, we think that it could be selected for international seniors. 'As such, the occupancy rate of Sunway Sanctuary could be helped by medical tourism in Malaysia. 'We think that seamless access to Sunway Medical Centre or Sunway Sanctuary is one of the key attractions,' said the research house. It added that the upcoming listing of Sunway Healthcare Group, which is expected by the first half of financial year 2026 (FY26), will remain the near-term catalyst to Sunway. 'Nevertheless, the upside for Sunway's share price is limited. Hence, we maintain a 'neutral' call on the stock and keep the RM5.01 target price unchanged.' As for UOA, the research house said the property developer is reaping recurring income from its Komune Living and Wellness (KLW) facility in Cheras. KLW, a joint-venture between UOA and Care Concierge Care Centre Sdn Bhd, was launched in May 2022 with a total cost of RM250mil. 'The occupancy rate of KLW continues to improve from 40% to 50% in financial year 2023 (FY23) to 78% in the first quarter of FY25, which exceeded management expectations. 'KLW is one of the investment properties of UOA which contributed to its recurring income. Note that other income which was made up mainly by income from rental and hospitality contributed to RM383mil in FY24,' said MBSB Research. Backing its 'buy' call on UOA, the research house said the group's dividend yield is attractive at 5.7%, while its balance sheet is in a net cash position. Meanwhile, IGB ventured into the silver economy sector in 2022 with the launch of ReU Living, an assisted living operator. It provides post-surgery recovery to help the recovery journey of individuals in need of post-operative or post-hospitalisation support. 'We gather that occupancy rate is high at near full capacity due to the stay of long-term residents, post-hospitalisation short term guests and day care guests. 'Demand for post-surgery recovery packages is strong as it makes up 40% of guests at ReU Living, while assisted living makes up 60% of guests.' For now, the target market of ReU Living is primarily locals, but the centre expects a growing interest from foreigners. Valuation wise, MBSB Research placed a fair value for IGB at RM3.10 based on price-earnings multiple of 9.2 times, pegged to FY26 earnings per share of 33.8 sen.
