Latest news with #RM130mil
The Star
7 days ago
- Business
- The Star
Deposit costs to buoy Affin Bank
HLIB Research said Affin's loan pipeline remains robust at about RM9bil. PETALING JAYA: Affin Bank Bhd 's net interest income (NIM) is expected to remain resilient in the lender's upcoming second quarter (2Q25) earnings announcement, analysts say. Affin's NIM is expected to be underpinned by a solid loan base, said Hong Leong Investment Bank Research (HLIB Research). Despite some churn, the research house said Affin's loan pipeline remains robust at about RM9bil. 'Concurrently, 2Q25 NIM is expected to remain stable sequentially as proactive cost of funds optimisation efforts are set to largely offset any asset yield pressure from loan competition. 'Meanwhile, with the yields for 10-year Malaysian Government Securities currently still below 3.5%, there's significant room for Affin to capitalise on favourable trading opportunities,' HLIB Research said in a report. HLIB Research also expects the bank's gross credit cost to remain stable, supported by steady asset quality. Additionally, improved recovery momentum should help keep net credit costs within single digits for this financial year (FY25). 'We maintain our 'buy' rating on Affin, with an unchanged target price of RM3, implying a 0.60 time FY26 price-to-book value. 'We believe the bank is on the cusp of a notable enhancement in profitability, primarily driven by a fundamental shift in its funding mix, alongside a robust loan pipeline and enhanced operational efficiencies, which are set to drive return on equity.' The research house said while sector-wide asset yields have gradually declined, Affin's primary challenge and significant opportunity lie in managing its cost of deposits. It said liquidity following the cut in the Statutory Reserve Requirement could partially offset the impact of the recent 25 basis points (bps) cut in the overnight policy rate (OPR) . Deposit competition is easing and Affin is expected to benefit from an increase in low-cost current account and savings account deposits, driven by inflows from Sarawak, the bank's major shareholder. This is estimated at around RM130mil per month by 3Q25. According to HLIB Research, this allows the bank to shift from costly promotional rates for deposits to lower-cost payroll-based accounts, helping build a more stable and cheaper funding base. 'Interestingly, our tracker on retail fixed deposit (FD) promotional rates showed that after the 25bps OPR cut on July 9, Affin aggressively slashed its FD promotional rates by between 35bps and 50bps, whereas peers only cut up to 25bps. 'This steeper reduction suggests a deliberate strategy, likely driven by the anticipation of cheaper funding sources coming online, which enables Affin to reduce reliance on higher-cost deposits,' the research house said.
The Star
17-06-2025
- Business
- The Star
Bursa Malaysia slips amid cautious sentiment over Middle East tensions
KUALA LUMPUR: Market sentiment turned cautious on Tuesday as escalating tensions in the Middle East weighed on investor confidence, leading to a broadly weaker performance on Bursa Malaysia. The FBM KLCI fell 8.35 points, or 0.55%, to 1,511.64, recovering from an intraday low of 1,510.92. Across the broader market, decliners outnumbered advancers 538 to 353, with 3.03 billion shares worth RM1.93bil transacted. Among the losers, Nestle tumbled RM1.02 to RM71.70, United Plantations slid 32 sen to RM21.84, Heineken lost 32 sen to RM26.88 and Carlsberg declined 28 sen to RM18.98. Meanwhile, the top gainer was Westports, which added 27 sen to RM5.30. PETRONAS Dagangan added 16 sen to RM21.20, KESM gained 16 sen to RM2.95 and PETRONAS Gas climbed 14 sen to RM18.10. Stock market data showed that foreign investors were net sellers of Malaysian equities on Monday, with a total outflow of RM130mil. Local institutions and retail investors were net buyers, picking up RM85mil and RM45mil worth of equities, respectively. On the forex market, the ringgit slipped 0.08% against the US dollar to 4.2443. However, it strengthened against several other major currencies — rising 0.19% against the British pound to 5.7525, gaining 0.11% against the Singapore dollar at 3.3097, and climbing 0.2% against the euro to 4.9032. On the external front, MSCI's Asia ex-Japan stock index inched up by 0.02%. Japan's Nikkei 225 rose 0.59%, while South Korea's Kospi edged up 0.12%. In contrast, Hong Kong's Hang Seng Index slipped 0.34%. On the mainland, China's CSI 300 Index fell 0.09%, and the Shanghai Composite Index eased 0.04%.
The Star
03-06-2025
- Business
- The Star
Dayang poised to reap profit margin from new AWB purchase
PETALING JAYA: Dayang Enterprise Holdings Bhd could reap a profit margin of about one-fifth from the purchase of a new accommodation work boat (AWB). As for daily charter rate, the group's management anticipates it be around RM80,000. Dayang intends to acquire a new 60-tonne AWB with a capacity of 239 passengers at about RM130mil to replace an ageing vessel. The boat will be constructed by Shin Yang Group Bhd with completion targeted by the third quarter of financial year 2027 (3Q27). ]The acquisition will be financed through a 60:40 equity-to-debt ratio. 'Management anticipates a daily charter rate of circa RM80,000 and expects a 22% profit margin from the AWB. 'With full utilisation projected for 2028, we see the vessel acquisition as a strategic move to enhance Dayang's competitiveness in tender bids and optimise operational efficiency,' Phillip Capital Research said in a report. Despite a bad monsoon in the 1Q25, the research firm expects vessel utilisation rate to improve in the 2Q25 with Dayang's fleet operating at full capacity. Meanwhile subsidiary Perdana Petroleum Bhd 's fleet has been operating at 80% since April this year. According to the research firm, Dayang's current order book stood at RM5.1bil (versus RM5.2bil in 4Q24), and revenue recognition is expected to accelerate in the coming quarters following the completion of the maintenance, construction, and modification contract transition phase in March. 'We expect Dayang's strong order book will keep the group busy over the next four years until 2029. 'The RM3bil worth of offshore platform decommissioning tender – covering 31 platforms across Sabah, Sarawak, and Peninsular Malaysia over three years – is currently under commercial evaluation. 'We gathered that Sapura Energy Bhd is one of the bidders for the Sabah and Peninsular Malaysia areas.' The research firm said Dayang's management noted that the decommissioning contract allows for operational flexibility. Given its strong local presence, Dayang is well-positioned to secure the Sarawak package, it added. Trading ideas: Alliance, LSH, LYC, 7-Eleven, RHB, Master Tec, Mah Sing, CIMB, Capital A, SKP, Yinson, Berjaya, BAT, Bintulu, Bank Islam
The Star
30-05-2025
- Business
- The Star
LSH Capital proposes RM17.4mil land acquisition for Titiwangsa serviced apartment project
KUALA LUMPUR: Lim Seong Hai Capital Bhd (LSH Capital) has proposed to acquire three parcels of land along Persiaran Titiwangsa 3 in Kuala Lumpur, for RM17.4mil cash. LSH Capital, in a filing with Bursa Malaysia, said its wholly-owned subsidiary, Lim Seong Hai Development Sdn Bhd (LSH Development), entered into a sale and purchase agreement (SPA) with Lim Seong Hai Holdings Sdn Bhd (LSH Holdings) to acquire Lot 19, a freehold parcel measuring approximately 910.51 sqm, for RM7.6mil. LSH Development also entered into a conditional SPA with LSH Holdings to acquire Lot 20009, a leasehold parcel of about 286 sqm, for RM2.6mil. Separately, it also entered into an SPA to acquire Lot 20, a freehold parcel measuring approximately 1,241.84 sqm, from the executors of the estate of the late Lim Tee Hui for RM7.2mil. The proposed acquisitions are expected to be financed fully via internally generated funds. LSH Development intends to amalgamate and submit a development order consisting of all the lands to the relevant authorities, including to Kuala Lumpur City Hall, to undertake a property development project consisting of approximately 240 units of serviced apartments. The application for approval is expected to be submitted in the second half of 2025. 'The proposed Titiwangsa Development is expected to have a gross development value (GDV) of RM130mil and, subject to obtaining all relevant approvals, the construction for the project is expected to commence in 2027 and to be fully completed by 2030,' it said. The LSH Capital Group is also expected to be appointed as the design and build contractor for the proposed Titiwangsa Development with an estimated GDV of RM103.1mil. The cost of development for the proposed Titiwangsa Development will be funded via a combination of internally generated funds, bank borrowings and/or sale proceeds from the proposed Titiwangsa Development itself after taking into consideration LSH Development's gearing level and working capital requirement. LSH Capital said the proposed acquisitions would also allow the group to expand its construction portfolio and orderbook when the proposed Titiwangsa Development commences. 'With the addition of the proposed Titiwangsa Development, the group's portfolio will also carry an additional property development project, thereby increasing the total property development GDV of the group to RM1.68bil which is expected to provide earnings visibility until 2029. 'In addition, the proposed Titiwangsa Development is also expected to contribute to LSH Capital Group enlarged secured construction orderbook amounting to RM2.09bil with an overall outstanding orderbook of RM1.54mil,' it said.
The Star
21-05-2025
- Business
- The Star
Positive developments in 1Q25 for Affin Bank
CGSI Research sees potential net profit growth of around 10% in 2Q25 at around RM130mil. PETALING JAYA: Affin Bank Bhd's had a decent start with a RM124mil net profit in the first quarter of financial year ended March 31 (1Q25). The performance was below consensus estimates of analysts but they note a couple of positive developments in the quarter. One is overhead costs were flattish year-on-year (y-o-y) in 1Q25 potentially due to cost savings from its early retirement scheme implemented in 4Q24. The other positive as observed by CGS International (CGSI) Research is the bank's cost of fund declined by 11 basis points y-o-y and 16 basis points from 4Q24, which led to an expansion in net interest margin (NIM) in 1Q25. The research firm sees potential net profit growth of around 10% in 2Q25 at around RM130mil, underpinned by higher net interest income and benign credit cost. 'Upgrade to 'hold' as we see Affin as one of the key beneficiaries of the recent Statutory Reserve Requirement (SRR) cut and potential overnight policy rate (OPR) cuts by Bank Negara in 2025,' CGSI Research said in a report. It expects the central bank to cut OPR by 25 basis points to 2.75% in the second half of this financial year. For every 25 basis point cut in OPR, this would raise Affin's financial year 2026 (FY26) net profit by around 3%, it projects. As for FY25 to FY27, it projects the bank's net profit to grow between 1.7% and 2.5%, taking into account the SRR cut from 2% to 1% effective May 16, 2025. The profitability estimates also factored in Affin's bonus issues which led to an issuance of 133.3 million new shares. Another positive is the bank's robust inflow of CASA (current account savings account) from Sarawak government-linked companies. According to analysts, this signals early tangible benefits stemming from the Sarawak government's strategic involvement as the bank's largest shareholder. Coupled with the anticipated implementation of the Sarawak state civil servant payroll and a strong pipeline of new corporate payroll accounts, Hong Leong Investment Bank (HLIB) Research said these underpins expectations for further NIM expansion. At the same time it noted that Affin is actively reducing reliance on expensive fixed deposits to focus on its overall deposit pricing strategy to further strengthen its NIM. Loan growth moderated to 7.1% y-o-y, falling short of management's ambitious 12% loan growth target for 2025. However, HLIB Research said the bank's management indicated a substantial loan pipeline of RM9.5bil remains. Coming to asset quality, Affin's gross impaired loan (GIL) ratio improved 10 basis points from the previous quarter to 1.84% in 1Q25. 'Despite that, mortgage GILs continued to trend upwards given pockets of stresses in that portfolio. 'Meanwhile, management highlighted that stress testing indicated that while the impact from loan exposure related to US trade is minimal, a greater adverse impact is anticipated from a broader economic slowdown instead,' said HLIB Research, which kept its 'buy' call and RM3 target price on the stock. According to analysts, the bank's management has retained its key 2025 guidance of a return on equity of 6%, loans growth at 12% and NIM of 1.55%. Valuation wise, HLIB Research said the stock currently trades at one standard deviation to its 10-year mean. 'We believe the premium is fair given the emergence of the Sarawak government as Affin's largest shareholder, presenting it with better prospects to leverage the state's growth ambitions.' However, UOB Kay Hian Research is maintaining its 'sell' call with a target price of RM2.38 despite an improving CASA mix. It thinks the value unlocking potential from the Sarawak government has been more than priced in. The Sarawak government emerged as Affin's major shareholder in Nov 2024. At the time of writing the stock was trading at RM2.71, which is close to levels it was at the start of 2025.
