Latest news with #MaybankIBResearch
The Star
12 hours ago
- Business
- The Star
Fundamentals remain strong for banks this year
PETALING JAYA: Analysts closely monitor the financial performance of banks because they serve as a vital barometer of the broader economy's health. However, after the recently concluded reporting season for results from the first quarter of this year (1Q25), differing views have emerged. Hong Leong Investment Bank Research (HLIB Research) has an 'overweight' call on the sector, viewing the Kuala Lumpur Finance Index's 7% decline year-to-date as a strategic opportunity to build positions ahead of an anticipated market recovery in the second half of this year. 'Our conviction is underpinned by a confluence of compelling fundamentals. Chief among them is an attractive valuation at 1.04 times forward price-to-book. The other factors are robust 5.4% dividend yield offering downside support, and defensive earnings resilience backed by substantial pre-emptive provisions,' said HLIB Research in a report. It expects sector net interest margins (NIMs) in 2Q25 to hold up reasonably well sequentially. HLIB Research said it sees three key forces shaping the landscape: fresh liquidity from the recent cut in the Statutory Reserve Requirement for banks: reduced pressure from deposit competition and a sector-wide shift toward more disciplined loan growth and funding strategies. 'This proactive stance is already visible, with banks cutting promotional fixed deposit rates between five and 15 basis points in May, ahead of a potential overnight policy rate cut, though the full margin benefit may only materialise in the second half of this year,' it added. Asset quality is expected to remain stable, supported by resilient domestic economic conditions and minimal US trade exposure, which is below 1% to 4% of total loans. 'While acknowledging risks from the secondary impacts of trade uncertainty, we believe any potential weakness will be well-contained. 'The sector is significantly more resilient than in previous downturns, primarily due to the formidable provision buffers accumulated over the past five years. This provides a robust defence, capable of absorbing any stress and cushioning the gross impaired loan ratio, which currently stands near historical lows,' said HLIB Research. On the other hand, Maybank Investment Bank Research (Maybank IB Research) said the banking sector 'saw misses when they typically have an unblemished track record', after the results season. 'The first quarter was not a pleasant one, being tilted to a negative bias. There were more misses than wins. There were no sectors that clearly outperformed and banks were mostly below expectations,' said the research house. With expectations of a weaker outlook, Maybank IB Research has downgraded the banking sector to 'neutral' from 'positive' as it anticipates modest earnings growth of 1% and 5% for this year and next, respectively, from the 5.7% and 5.5% previously forecast. Touching on some key statistics, the research house said cumulative loan growth had moderated to 4.4% year-on-year (y-o-y) as of end-March 2025 from 5.5% as of end-December 2024. NIMs slipped by an average of two basis points quarter-on-quarter (q-o-q). With lower non-interest income and negative Jaws ratio that measures the difference between the growth rate of a bank's income and expenses, the research house noted that the sector's core operating profit rose merely 1% y-o-y. Amid lower credit cost, it said core pre-tax and net profit rose at a slightly faster pace of 4% from a year ago. 'However, in light of slower economic growth ahead, we have trimmed our bank earnings forecast by 5% and 4% for 2025 and 2026, respectively, and now forecast 2025 and 2026 net profit growth of 1.1% and 5%, respectively.'
The Star
03-06-2025
- Automotive
- The Star
Tan Chong forecast to stay in low gear for now
PETALING JAYA: With the challenges it is facing expected to persist, Tan Chong Motor Holdings Bhd has been downgraded to a 'sell' rating by Maybank Investment Bank Research (Maybank IB Research). The research house expects the automotive group to record losses for this financial year (FY25) despite its return to the black with a RM4.14mil net profit in the first quarter of financial year ended March 31 (1Q25). Revenue for 1Q25 declined slightly by 2% year-on-year to RM553mil, mainly due to continued weakness in the sales of Nissan vehicles, which fell by one-fifth to 1,811 units from a year ago. On a positive note, operations in other regions like Vietnam, Cambodia, Laos and Myanmar posted growth, which partially offset the domestic sales decline. However, Maybank IB Research expects challenges in the group's automotive segment to persist, underpinned by weak product appeal and intensifying competition. 'While, we maintain the stock's 38 sen target price based on 0.1 time FY25 book value, we have downgraded our call to 'sell', as we believe downside risks have increased following the recent rally in the share price.' Meanwhile, MIDF Research said Tan Chong's efforts to expand its product portfolio may not translate to meaningful volume contributions from the newer marques in the near term as building brand awareness will likely take time. Thus, it expects the group to stay loss-making. MIDF has a 'sell' rating and 34 sen target price on the stock. Hong Leong Investment Bank Research (HLIB Research) expects some improvement in coming quarters, driven by the recent appreciation of the ringgit. Still it is cautious about the group's outlook because of stiff market competition despite the new launches planned. According to HLIB Research, the launch of new Kicks sport utility vehicle last December is expected to improve group sales in Malaysia. Tan Chong has also started exporting the Serena multi-purpose vehicle to Thailand and recently signed a collaboration agreement with SAIC GM Wuling Automobile to locally assemble the Tan Chong-branded TQ Wuling Bingo electric vehicle (EV), an affordable entry-level compact EV targeting value-driven and urban commuters. 'Management also expects improvements in the Vietnam market, following increasing the introduction of new GAC models into the market. 'Nevertheless, we remain cautious about the group's domestic market outlook, due to the ongoing stiff competition in various segments, as both national marques and non-national original equipment manufacturers introduce new attractive models. 'Recent ringgit appreciation is expected to improve the cost structure of its Malaysia operations' said HLIB Research. The research house has a 'hold' rating on the stock, with a higher target price of 42 sen from 35 sen.
The Star
13-05-2025
- Business
- The Star
Challenges to persist for Berjaya Food
PETALING JAYA: Berjaya Food Bhd is expected to continue facing a challenging operating environment as the lingering effects of geopolitical tensions show no clear signs of abating, analysts say. Compounding this is the increasingly crowded coffee chain landscape, which may hinder its efforts to regain market share, according to Maybank Investment Bank Research (Maybank IB Research). Berjaya Food operates the franchises for Starbucks, Kenny Rogers Roasters and Jollibean Foods cafés and restaurants in Malaysia. For its third quarter ended March 31, 2025 (3Q25), the group's net loss widened to RM37.19mil from RM29.76mil in the same period a year ago. This was mainly due to the weaker performance from its Kenny Rogers Roasters operations. Following the weak set of results, Maybank IB Research said it was projecting the net loss for FY25-FY26 increasing to between RM24mil and RM130mil. As for FY27, its earnings estimates have been lowered by 17%. 'Maintain 'sell' with a lower target price of 20 sen based on 2026 price-to-book value of 1.3 times,' the research house said in a report. It added that the group's sales volume remains on a declining trend year-on-year due to a reduced network of Starbucks cafes following the closures of more than 10 stores year-to-date. It also saw softer sales during the Ramadan period, with sales being impacted due to geopolitical tensions. At the same time, the group continued to run heavy product promotions in attempt to drive sales. To reflect a slower-than-expected sales recovery, CIMB Research also lowered its core net loss estimates for FY25 to FY27. 'Accordingly, our target price is lowered to 28 sen from 32 sen and we now peg the stock to a 2.2 times 2026 price-to-book value,' CIMB Research said in a report. The adjustment was to account for Starbucks' weaker brand equity in Malaysia and rising competition in Malaysia's food and beverage segment. The research house said the stock's current valuations have yet to account for the expectations of continued, albeit narrowing, losses through FY25 to FY27. Trading ideas: Perak Transit, Eco-Shop, Sapura Energy, Yoong Onn, Muhibaah, HeiTech Padu, Dnex, Pentamaster, CJ Century, 3REN, ES, ManagePay, Wesrports, Sentral REIT
