Latest news with #RHBResearch
BusinessToday
11 hours ago
- Business
- BusinessToday
SunCon Share Sell-Off, Investors Overreacting
RHB Investment Bank Bhd (RHB Research) and MBSB Investment Bank Bhd (MBSB Research) have both reiterated their BUY calls on Sunway Construction Group Bhd (SunCon), citing strong fundamentals and long-term growth prospects despite a recent corruption probe involving a single employee. RHB Research has trimmed its target price to RM6.55 from RM6.80, implying a 19% upside, while MBSB Research maintains its TP at RM6.44, valuing the stock at 29 times FY26 forecast earnings per share. The Malaysian Anti-Corruption Commission (MACC) recently arrested a SunCon contracts manager under an anti-graft operation known as Op Ways. The employee, suspended pending termination, allegedly received bribes in connection with subcontract awards. Management has clarified that the investigation is limited to the individual and does not implicate SunCon as a corporate entity. Analysts were briefed following the announcement and concluded that the incident is isolated, with no evidence of systemic failure within SunCon's governance framework. According to MBSB Research, SunCon's internal controls remain robust, reinforced by its ISO 37001:2016 Anti-Bribery Management System certification obtained in May. The group's subcontract awards since 2022 have all been executed through e-bidding platforms that prioritise transparency and cost efficiency. The company has undergone recent audits by MRT Corp, Ernst & Young and SIRIM, all of which confirmed full compliance with its internal procedures. RHB Research echoed similar sentiments, noting that SunCon's proactive stance in cooperating with authorities and engaging legal counsel underscores its zero-tolerance policy on corruption. The group has also initiated outreach to existing and prospective clients to mitigate any reputational damage and clarify the situation. Although RHB Research lowered SunCon's ESG score slightly from 3.3 to 3.1 due to governance-related adjustments, the research house maintained its confidence in the company's operational resilience and growth trajectory. Both analysts agreed that the company's financials remain unaffected. MBSB highlighted SunCon's outstanding order book of RM7.90 billion as at May 2025, providing multi-year earnings visibility, particularly in the high-growth data centre segment. The group also stands to benefit from potential contract wins under upcoming infrastructure projects such as the Penang LRT, Penang International Airport expansion and MRT3. While SunCon's share price dropped 8.2% to RM5.49 following news of the investigation, analysts see the selloff as a knee-jerk reaction. RHB Research noted that the stock is still trading below its historical P/E range observed during the previous construction cycle, suggesting further upside if sentiment recovers and new project wins materialise. With no disruption to ongoing construction activities and a strong pipeline of internal and external tenders, both RHB and MBSB consider SunCon well-positioned to weather the current episode and continue delivering earnings growth into FY26. Related
New Straits Times
13 hours ago
- Automotive
- New Straits Times
RHB: Inflation to weigh on Malaysia auto sales in 2H25
KUALA LUMPUR: Malaysia's automotive sector is expected to face softer sales momentum in the second half of 2025 due to looming inflationary pressures on consumers, according to RHB Research. The firm said the decline will also be driven by incumbent non-national marques, which continue to face intensifying competition as a result of new entrants, primarily Chinese carmakers. "The influx of new models coupled with aggressive price discounting has created a highly competitive environment. "Some buyers may delay their purchases in anticipation of further price cuts from both existing and new non-national marques, thereby destabilising the non-national segment," it added. RHB Research kept its total industry volume (TIV) forecast at 730,000 units, representing an 11 per cent decline on a yearly basis. The firm noted that after three consecutive record-breaking years, the market is showing signs of normalisation amid weakening order backlogs, tighter loan approvals and intensifying price competition, particularly in the non-national segment. As of June 2025, TIV stood at 373,636 units, accounting for 51 per cent of RHB Research's full-year projection. Carmakers such as Perodua and Toyota have seen a decline in order backlogs to 90,000 and 15,000 units, respectively, compared to 100,000 and 20,000 units a year ago. Loan approval rates for vehicle purchases have also dipped to 55 per cent year-to-date, down from 58–63 per cent in the 2022–2024 period, pointing to tighter credit conditions. These factors, combined with looming inflationary pressure, suggest further moderation in consumer demand. In the electric vehicle (EV) space, RHB Research expects growth to persist but remain modest due to high prices and limited charging infrastructure. The firm said the current tax exemptions for completely built-up (CBU) EVs, which have supported early adoption, are unlikely to be extended beyond end-2025, as the government shifts its focus to incentivising locally assembled EVs. "An extension of the tax holiday for CBU EVs would be counterproductive for incentivising original equipment manufacturers 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, such as high pricing and limited availability of charging infrastructure. "As such, EVs are unlikely to influence overall TIV in the near term," RHB Research said. The firm added that another overhang is the impending implementation of the revised open market value (OMV) excise duty in January 2026. The firm said that though recently deferred again, it could lead to a 10–30 per cent price hike for CKD vehicles unless mitigated by the authorities. The Finance Ministry has signalled that such a steep hike is unlikely but has yet to finalise the new pricing methodology. "The new OMV takes into account the engineering work, royalty payments and license fees, amongst others. "For CBU vehicles, prices are based on the cost, insurance and freight, on which import and excise duties are imposed," it added. RHB Research maintained its "neutral" stance on the auto and autoparts sector.
The Star
18 hours ago
- Business
- The Star
Bargains drive demand as margins face pressure
PETALING JAYA: Growth numbers for the consumer sector could moderate in the second half of 2025, especially for retailers, following a strong start to the year with the Hari Raya celebrations. This was despite the sector providing a defensive shelter amidst the uncertain global macroeconomic outlook, thanks to the domestic-centric earnings base and resilient consumption on stable employment and continuous financial support. In a report, RHB Research said the prospects of subdued consumer sentiment and rising operating expenditure (opex) will cap earnings growth. 'Therefore, we strategically advocate for the liquid large-cap retailers with better earnings visibility, backed by superior operational scale and efficiency. We maintain a 'neutral' call,' RHB Research said. It added that moving past the immediate term, it foresees consumer sentiment staying soft, impacted by elevated inflationary pressures as well as uncertain economic and income outlooks stemming from global trade tensions. 'As such, inflation-weary consumers will continue to spend selectively, prioritising essential purchases and bargain-hunting for value, hence capping discretionary spending,' it noted. RHB Research said it prefers defensive and liquid large-cap names like MR DIY Group (M) Bhd and 99 Speed Mart Retail Holdings Bhd for their ability to capture consumer spending and reasonable valuations versus consumer staple peers. The research house also likes Farm Fresh Bhd for its ambitious drive to penetrate more segments in the dairy industry and favours Guan Chong Bhd for its stellar earnings outlook, supported by forward sales at elevated combined ratios and normalised production volumes. 'We also highlight Focus Point Holdings Bhd 's undemanding valuation, notwithstanding the robust optical sales momentum on the back of the rising myopic population and proactive marketing drive.' On the sales and service (SST) tax, RHB Research said it does not reckon companies will be able to pass on the additional costs considering the demand elasticity and anti-profiteering regulation in place. With that, it opined that margin trends could turn subdued, particularly for retailers like Aeon Co (M) Bhd, Padini Holdings Bhd , Mynews Holdings Bhd and Focus Point, unless there are significant efficiency gains to offset the impact. 'On the other hand, things are turning more favourable for food manufacturers like Nestle Malaysia Bhd , Farm Fresh and Power Root Bhd as easing commodity prices and strengthening of the ringgit should translate to a promising margin outlook.' Risks include a major slowdown in economic growth and a sharp surge of commodity prices. 'We believe they can better mitigate opex inflation owing to their dominant market share, massive scale of operations, and established brand equity,' it said.
The Star
18 hours ago
- Business
- The Star
Govt policy boosts Samaiden's transition to RE asset owner
PETALING JAYA: Samaiden Group Bhd 's renewable-energy (RE) ambitions have received a timely boost following its latest success under Malaysia's Feed-in Tariff (FiT) 2.0 programme, with RHB Research reiterating its 'buy' call on the stock, keeping to a target price of RM1.44. The award of three new bioenergy assets – two biomass and one biogas plants – signals continued momentum in Samaiden's transition from an engineering, procurement, construction and commissioning (EPCC) contractor to an RE asset owner. 'We reiterate our positive stance on Samaiden's outlook following its latest win, which reinforces the group's strong position in the RE space,' said the research house. The new plants, awarded to Samaiden's subsidiaries Legasi Green Resources Sdn Bhd (88%-owned), Sumas Energy Sdn Bhd (51%) and SC Green Solutions Sdn Bhd (100%), collectively adds 18MW of installed capacity to the group's portfolio. They will be developed under a 21-year power purchase agreement (PPA), with the FiT 2.0 scheme offering a fixed tariff for the first 10 years, and a bidding-based mechanism thereafter. 'These assets further strengthen Samaiden's diversified RE portfolio – spanning solar, biogas, and biomass – and underscore its growing role in driving Malaysia's clean-energy transition,' said RHB Research in a note to clients yesterday. While earnings estimates remain unchanged for now, back-of-envelope calculations by RHB Research suggest the trio of plants could add around RM11mil to annual earnings, based on effective equity stakes. 'Management is guiding for a high single-digit to low double-digit internal rate of return (IRR),' said the research house, adding that capital expenditure for the plants is generally estimated at RM10mil to RM12mil per megawatt. The facilities are expected to be running by 2028. In addition to its asset-building plans, Samaiden also stands to benefit from EPCC contracts related to other shortlisted FiT 2.0 projects, with RHB Research noting potential upside to its valuation as contributions from these new bioenergy projects and Samaiden's large scale solar 5 (LSS5) asset are not yet included in the research house's base case. Seeing potential upside to its valuation of the stock, which had risen 24.8% in the last month, RHB Research is forecasting recurring net profit for Samaiden to rise 24.2% for its financial year ended June 2025 (FY25) and 41.6% in FY26.
The Star
2 days ago
- Business
- The Star
Approval for MRT3 a positive for builders
PETALING JAYA: The approval for the Mass Rapid Transit 3 (MRT3) Circle Line last week provides more clarity that the mega project is progressing, strengthening the optimism for the construction sector, analysts say. RHB Research said the key beneficiaries of MRT3 can be divided into the first-liners (main contractors) and second-liners (subcontractors). 'Based on the track records in the previous MRT1 and MRT2 projects – contractors such as Gamuda Bhd , Sunway Construction Group Bhd , IJM Corp Bhd , Malaysian Resources Corp Bhd (MRCB), WCT Holdings Bhd , Gadang Holdings Bhd and Mudajaya Corp are expected to be the first-liners. 'Meanwhile, builders such as Econpile Holdings Bhd , Gabungan AQRS Bhd , Kimlun Corp Bhd and TRC Synergy Bhd could play a role as subcontractors for the MRT3 project,' the research house said in a report recently. Last week, Transport Minister Anthony Loke formally signed off on the MRT3 project following a public-inspection exercise conducted between September and December last year. After the approval of the final railway scheme for MRT3, the land acquisition process begins and is expected to be completed by end-2026. The public inspection exercise held last year saw Malaysia Rapid Transit Corp (MRT Corp) receive over 45,000 written feedback submissions. According to MRT Corp, an overwhelming 93.3% of the feedback expressed support for the project, reflecting strong public and stakeholder endorsement Following the feedback received, several improvements were made to the placement of stations and viaducts along the project's alignment, as well as the design of the MRT3 Circle Line's rail system by MRT Corp. Thirty two stations were planned for MRT3 – 22 elevated, seven underground, and three provisional ones with an alignment spanning 51km (39km elevated, 12km underground), during the public inspection exercise last year. It was also highlighted by MRT Corp that land acquisitions have been reduced from 1,012 to 690 lots, and improvements were made to station and viaduct placements along the alignment. 'We envisage some details on MRT3 being announced during the upcoming tabling of either the 13th Malaysia Plan on July 31 or Budget 2026 on Oct 10, perhaps regarding the funding mechanism, latest estimated cost, and also if a fresh round of re-tendering is required. 'In the revised Budget 2023 tabled in February 2023, the government announced an intention to review the cost of the MRT3 project in the hopes of reducing the total amount to below RM45bil from the estimated RM68bil in 2018,' RHB Research said. RHB Research's top picks with regards to the project include Gamuda, Sunway Construction, and Binastra Corp Bhd with a target price of RM5.86, RM6.80 and RM2.64, respectively. MBSB Research said it expects a re-tender exercise to be called by mid-2026, and contracts to be awarded towards the end of the land acquisition exercise, which will likely be between end-2026 and mid-2027. 'MRT Corp had previously sought four extensions for the tender validity of MRT3. No extensions were sought after the fourth extension ended in March 2024, which would mean that the tenders have naturally lapsed. 'We believe there would also be some changes to the original alignment of the project and the placement of stations, considering the reduction in plots of land for acquisition,' the research firm said. MBSB Research stated while the approval of the final railway scheme was slightly behind the initial schedule, where it was expected to be approved by the fourth quarter of financial year 2024 (4Q24), nevertheless, it is still 'a positive' as this marks 'a step forward for the mega rail project'. 'MRT Corp expects the land acquisition process to be completed by the end of next year, which will then pave the way for construction to begin. 'We also do not discount the possibility that the land acquisition process may take slightly longer than expected. Notices for landowners to vacate acquired land should be issued starting 1Q26, where they will be given up to six months to vacate,' the research house said. MBSB Research maintained 'positive' on the construction sector following the latest developments. The research house expects Gamuda, which has a 'buy' call with a target price of RM5.42, and its joint venture partner MMC Corp Bhd to be the front-runner for the largest MRT3 package when the retender exercise is called, premised on their large degree of experience with MRT1 and MRT2. 'Other potential contenders for the two smaller packages are YTL Corp Bhd with a 'buy' call target price of RM2.84, IJM Corp with a 'buy' call and target price of RM3.74, MRCB with a 'buy' call and target price of 56 sen, and Sunway Construction with a 'buy' call and a target price of RM6.44. 'We also expect Malayan Cement Bhd , with a 'buy' call and target price of RM7.49, to be a direct beneficiary of the project,' MBSB Research said.
