Latest news with #RHBInvestmentBankBhd
New Straits Times
2 hours ago
- Business
- New Straits Times
SST expansion unlikely to derail construction growth: Analyst
KUALA LUMPUR: The expanded Sales and Services Tax (SST) is expected to have a limited impact on the construction sector, with exemptions and transitional relief cushioning the effects for most players, said RHB Investment Bank Bhd. In a research note today, the firm maintained its 'Overweight' call on the sector, citing continued momentum in data centre construction and targeted tax exemptions under the revised SST regime. "The Finance Ministry's move to broaden the SST to include construction services, among others, is not entirely unexpected," said analyst Adam Mohamed Rahim. "While a six per cent service tax will be imposed on contractors with annual revenue exceeding RM1.5 million, exemptions for residential and public housing projects, along with business-to-business transactions, should help mitigate the impact," he said. RHB Investment said contractors focused on the residential segment such as MGB Bhd and Kerjaya Prospek Group Bhd are unlikely to be affected. In contrast, those involved in commercial, industrial and infrastructure projects, including Gamuda Bhd, Sunway Construction Group Bhd and IJM Corp Bhd, will fall under the new tax scope. It added that most contractors are expected to incorporate the tax into new bids or revise project values, provided the contracts allow for such adjustments. "Non-reviewable contracts, those without provisions to revise the contract sum, will be granted a 12-month exemption from the implementation date," the research firm said. RHB Investment cited Sunway Construction's RM3.9 billion data centre contract in Johor, 44 per cent of its data centre order book, as potentially exempt if deemed non-reviewable and completed within 12 months. It also downplayed concerns over rising costs, noting that a hypothetical RM180 million in SST across three RM1 billion projects would amount to just 0.2 per cent of full-year earnings for hyperscalers like Google or Microsoft. "The sector's data centre theme remains intact. The SST revision is unlikely to derail investment or construction activity in this space," Adam said. However, RHB Investment warned that any future expansion of the SST to include basic construction materials or residential projects would pose a downside risk.
New Straits Times
4 days ago
- Business
- New Straits Times
Re-rating for Econpile on Klang Link boost, meets 2025 target
KUALA LUMPUR: RHB Investment Bank Bhd (RHB Research) sees potential rerating catalysts for Econpile Holdings Bhd, driven by the prospect of faster-than-expected approval for the Sungai Klang Link project, which could contribute RM300 million to RM500 million worth of piling work. In a research note, the firm highlighted that Econpile's year-to-date (YTD) contract wins for the financial year ending 2025 (FY 2025) have already reached RM300 million, meeting RHB's full-year target ahead of time. Its latest contract marks the eighth award for FY 2025, which is a RM42.8 million subcontract from Irama Duta Sdn Bhd to carry out bored piling works for the Penang Light Rail Transit (LRT) project, covering the stretch from East Jelutong to Gelugor. Work is expected to commence in August 2025 and conclude by October 2027. With this award, Econpile's outstanding order book has grown to about RM480 million. This includes jobs for condominium piling, bridge works, and mixed-use commercial developments. Meanwhile, the company's tender book is valued at around RM1 billion, comprising opportunities from both public and private sectors. RHB Research estimates the gross profit margin for the new LRT job to range between 5 per cent and 8 per cent. Notably, prior to securing this subcontract, Econpile had already been involved in test piling for segment 1 of the Penang LRT. "Based on our observation, the stretch between the East Jelutong and Gelugor stations is around 5km against the full estimated 24km length of segment 1 of the Penang LRT. "This suggests there could be five piling packages in total, assuming each package covers about 5km. Hence, we do not discount the possibility of more piling awards taking place in the future," it added. Following the new contract, RHB Research kept its earnings estimate, as the amount is within its FY 2025 job replenishment target. The firm maintained its "buy" call on Econpile with an unchanged target price of 42 sen a share, derived by pegging forecast earnings per share for FY 2026 to a target price-to-book value (P/BV) multiple of 1.9 times. "While our FY 2026-2027 earnings reflect growth versus the core losses incurred during FY 2022-2024, our projections have yet to match the levels seen in FY 2018, when core earnings were at RM87 million. This warrants us continuing to use P/BV to value the stock," it said.
The Sun
16-05-2025
- Business
- The Sun
RHB maintains 2025 GDP forecast at 4.5% amid global uncertainty
KUALA LUMPUR: RHB Investment Bank Bhd (RHB IB) has maintained its 2025 gross domestic product (GDP) forecast at 4.5 per cent year-on-year (YoY), despite Malaysia's first quarter 2025 (1Q 2025) GDP growth data coming in slightly lower than expected at 4.4 per cent. The investment bank said in a note today that the downside risks of growth slowing to 3.5-4.0 per cent appear limited, thanks to the recent progress in US-China trade talks. 'However, we urge caution against premature optimism -- risks may still linger after July 8, when the initial 90-day postponement of tariffs expires. 'Thus far, the exemption from tariffs has been limited to China and the UK, with little information regarding other regions,' it added. Despite a cautious view on external developments, several factors are expected to support Malaysia's economy amid heightened external uncertainties, said the investment bank. 'Domestic demand, in particular, is anticipated to cushion the potential blows from these external challenges as the domestic economy has demonstrated resilience, driven by robust consumer spending and steady investment. 'Strategic initiatives within the MADANI Economy framework, including the National Energy Transition Roadmap and the New Industrial Master Plan 2030, are set to stimulate investment flows over the medium term,' it said. Meanwhile, OCBC senior ASEAN economist Lavanya Venkateswaran said she expects GDP growth to slow to 4.3 per cent YoY in 2025 versus 5.1 per cent in 2024, with the current account surplus likely to be 1.7 per cent of GDP in 2025 versus 1.4 per cent in 2024. 'Under such circumstances, counter-cyclical policy measures will likely be adopted, includlng potential shifts in the government's RON95 rationalisation agenda, targeted support for small and medium enterprises (already started) and targeted additional tax relief. 'For its part, Bank Negara Malaysia (BNM) sounded more dovish at its May 8 meeting, highlighting the heightened uncertainties and downside risks to growth, and it reduced the Statutory Reserve Requirement (SRR) from two per cent to one per cent, effective May 16, releasing RM19 billion of liquidity into the system,' she said in a separate note. Lavanya said further action from BNM boils down to how elevated levels of uncertainty feature in BNM's reaction function. 'We now bring forward our call for BNM to cut its policy rate by a cumulative 50 basis points to the second half of 2025 (2H 2025) from 1H 2026, allowing space for BNM to be pre-emptive. 'We will determine the exact timing of the rate cuts in terms of July 9, Sept 4 and Nov 6 meetings based on incoming economic data and tariff negotiation outcomes with the US,' she added.
The Sun
16-05-2025
- Business
- The Sun
RHB, OCBC maintain cautious Malaysia 2025 GDP outlook
KUALA LUMPUR: RHB Investment Bank Bhd (RHB IB) has maintained its 2025 gross domestic product (GDP) forecast at 4.5 per cent year-on-year (YoY), despite Malaysia's first quarter 2025 (1Q 2025) GDP growth data coming in slightly lower than expected at 4.4 per cent. The investment bank said in a note today that the downside risks of growth slowing to 3.5-4.0 per cent appear limited, thanks to the recent progress in US-China trade talks. 'However, we urge caution against premature optimism -- risks may still linger after July 8, when the initial 90-day postponement of tariffs expires. 'Thus far, the exemption from tariffs has been limited to China and the UK, with little information regarding other regions,' it added. Despite a cautious view on external developments, several factors are expected to support Malaysia's economy amid heightened external uncertainties, said the investment bank. 'Domestic demand, in particular, is anticipated to cushion the potential blows from these external challenges as the domestic economy has demonstrated resilience, driven by robust consumer spending and steady investment. 'Strategic initiatives within the MADANI Economy framework, including the National Energy Transition Roadmap and the New Industrial Master Plan 2030, are set to stimulate investment flows over the medium term,' it said. Meanwhile, OCBC senior ASEAN economist Lavanya Venkateswaran said she expects GDP growth to slow to 4.3 per cent YoY in 2025 versus 5.1 per cent in 2024, with the current account surplus likely to be 1.7 per cent of GDP in 2025 versus 1.4 per cent in 2024. 'Under such circumstances, counter-cyclical policy measures will likely be adopted, includlng potential shifts in the government's RON95 rationalisation agenda, targeted support for small and medium enterprises (already started) and targeted additional tax relief. 'For its part, Bank Negara Malaysia (BNM) sounded more dovish at its May 8 meeting, highlighting the heightened uncertainties and downside risks to growth, and it reduced the Statutory Reserve Requirement (SRR) from two per cent to one per cent, effective May 16, releasing RM19 billion of liquidity into the system,' she said in a separate note. Lavanya said further action from BNM boils down to how elevated levels of uncertainty feature in BNM's reaction function. 'We now bring forward our call for BNM to cut its policy rate by a cumulative 50 basis points to the second half of 2025 (2H 2025) from 1H 2026, allowing space for BNM to be pre-emptive. 'We will determine the exact timing of the rate cuts in terms of July 9, Sept 4 and Nov 6 meetings based on incoming economic data and tariff negotiation outcomes with the US,' she added.
BusinessToday
16-05-2025
- Business
- BusinessToday
Hang Seng Index Futures Rally Cools, But Bulls Still In Charge
RHB Investment Bank Bhd (RHB Research) is maintaining a positive trading bias on the Hang Seng Index Futures (HSIF) despite a pullback, urging traders to stay on long positions. The index slipped 134 points to close at 23,383 pts on Thursday, after reaching an intraday high of 23,651 pts. The evening session saw further losses, with the index falling another 148 points to last trade at 23,235 pts. RHB Research reported that the bearish candlestick with a long upper shadow indicates profit-taking is emerging, signalling waning buying pressure following a strong rally. However, the index remains above its 20- and 50-day simple moving averages (SMA), suggesting the broader trend is still intact. 'The pause in upside momentum may lead to a consolidation phase,' RHB Research noted. 'But as long as the HSIF stays above the 22,000-pt support, bulls will retain the technical advantage.' Traders are advised to maintain long positions from the 21,416-pt level (April 14 close), with a stop-loss at 22,000 pts. Immediate resistance levels are set at 24,500 pts and 26,000 pts, while support sits at 22,000 pts, followed by 21,000 pts. Related
