Latest news with #RM2.5bil
The Star
27-05-2025
- Business
- The Star
Deal with U Mobile on 5G network to lift TM's showing
TA Research maintained its FY25 to FY27 earnings forecasts for TM. PETALING JAYA: Telekom Malaysia Bhd 's (TM) tie up with U Mobile Sdn Bhd for the deployment of the second 5G network in Malaysia is deemed as a positive development, though the earnings impact will be minimal, analysts say. The annual revenue contribution for TM is projected to be only 1.8% of TA Research's total revenue forecast for TM next year (FY26). The research house maintained its FY25 to FY27 earnings forecasts for TM and kept its 'buy' call on the stock with a target price of RM8.30 a share. TM signed a RM2.4bil 10-year contract with U Mobile yesterday to provide fibre backhaul services for the second 5G network. TM has the most extensive fibre coverage in Malaysia. UOB Kay Hian Research (UOBKH Research) said TM's initial contract with Digital Nasional Bhd for the first 5G network to supply fibre backhaul services was also valued at approximately RM2.5bil. Based on the previous contract, UOBKH research estimates that the annual revenue and net profit impact for TM is approximately 2% and 1%, respectively. It made no changes to its earnings forecast for TM and maintained its 'hold' call with a target price of RM7 a share. CIMB Research also maintained its 'buy' call with a 4% higher discounted cash flow based target price of RM7.55 a share. Kenanga Research lifted its target price by 1% to RM8.15 from RM8.07 a share based on an unchanged seven-times FY25 enterprise value to earnings before interest, taxes, depreciation and amortisation. It maintained its 'outperform' rating for the stock.
The Star
13-05-2025
- Business
- The Star
Govt's fiscal path remains on track
KUALA LUMPUR: Malaysia's fiscal path this year remains on track, but timely execution of targeted fuel-subsidy reforms will be critical to offset short-term revenue shortfalls caused by delays in tax measures, BIMB Research says. In a report, the research house noted that while the government's fiscal strategy continues to emphasise economic growth, fiscal responsibility and social welfare, delays in the expansion of the sales and service tax (SST) and the rollout of phase three of e-invoicing are expected to result in 'a minor headwind to ongoing fiscal consolidation efforts'. 'Together, these postponements could result in a total revenue shortfall of about RM2.5bil, equivalent to roughly 0.1% to 0.15% of gross domestic product (GDP),' it said. Although this gap is modest, BIMB warned that 'it may put upward pressure on the fiscal deficit, particularly if not offset by other measures or expenditure controls'. The SST expansion, which was expected to begin on May 1, has been delayed to June 1, while the third phase of the e-invoicing rollout – initially set for July – is now being pushed to next January. The research house said the expanded SST was expected to raise RM5bil annually, while the full e-invoicing rollout could generate between RM3bil and RM4bil in additional tax revenue once fully adopted. It said the revised SST would apply to more non-essential goods, including imported premium goods like salmon and avocados, and extend to more commercial services, with 5% for food and beverages, 8% for logistics, and 10% for other services. The research firm said the third phase of e-invoicing, which targets medium-sized businesses, is seen as crucial, as it captures a broad swath of small and medium enterprises, where compliance gaps are most prevalent. It said the SST expansion, which was expected to generate about RM700mil a month in additional revenue, would now contribute a month later than planned, resulting in a RM700mil shortfall. Meanwhile, the research house estimated the deferment of e-invoicing for medium-sized businesses could cost the government an estimated RM1.8bil in tax revenue in the second half of the year (2H25). However, BIMB Research highlighted that the government still has fiscal space if it proceeds with rationalising the subsidy for RON95 petrol, which 'remains a high-impact policy lever'. 'If implemented in 2H25, even a partial rationalisation could yield savings in the range of RM4bil to RM6bil for the year, depending on global oil prices and the targeted coverage,' it said. It added that such savings could more than offset the RM2.5bil shortfall from the delayed SST and e-invoicing, while creating room for development spending or social support. 'Moreover, it would signal strong policy commitment to structural reforms, enhancing Malaysia's fiscal credibility and investor confidence amid heightened global economic uncertainty,' the research house said. It added that Malaysia's fiscal outlook remains stable, supported by sustained growth in tax collection, new revenue measures such as the capital gains tax and digital tax, and the government's commitment to fiscal discipline. 'The slight delay in implementing the expanded SST and third phase of e-invoicing is not expected to significantly derail Malaysia's economic growth trajectory. 'Momentum continues to be underpinned by a recovery in private consumption and strengthening export performance.' It also noted that the government's projected fiscal deficit of 3.8% of GDP for this year could widen slightly due to the delays, but could return to 3.85% with subsidy reforms in place. Meanwhile, the research house expects the country's debt-to-GDP ratio to stabilise around 62% to 63%, below the 65% statutory ceiling. 'Overall, Malaysia's fiscal outlook for this year remains stable. Continued focus on policy execution and the careful sequencing of fiscal initiatives will be key to ensuring both economic resilience and fiscal sustainability in the medium term,' BIMB Research said.
The Star
06-05-2025
- Business
- The Star
Bakers, hawkers say won't crack under pressure without egg subsidy
Carrying on: Phor (right) making char koay teow at her stall in Air Itam, George Town. — ZHAFARAN NASIB/The Star GEORGE TOWN: Bakeries and local hawkers here will absorb any extra cost after the removal of the egg subsidy to ensure their customers are happy. Phor Yok Eng, 62, who has been selling char koay teow for 26 years, said she uses five trays of eggs every day. 'I buy them daily at the local market here near my stall. I do offer the option of servings without eggs, which is cheaper, but many still prefer it with eggs, as it's tastier. 'I charge RM5.50 per plate without an egg and an extra RM1 with an egg. 'While I know my pricing is considerably cheaper than other places, people will still grumble if I suddenly increase the price,' she said when met at her stall in Air Itam. Phor said when she raised her prices two years ago, she received backlash from customers. 'You must be mindful of your customers, as many of them are retirees. 'The removal of the price control on chicken eggs will affect me, but I will have to absorb it,' she said. M. Tan, 34, who runs a bakery selling an array of pastries and cakes, said she uses 30 trays of eggs a week for baking. 'Eggs are our key ingredient after flour. 'It is in pretty much everything we make at our bakery and, usually, each cake requires a few eggs, never just one. 'While it will definitely affect me, I cannot afford to raise prices. 'There is plenty of competition when it comes to cake and pastry shops in Penang, especially on the island. 'If I suddenly raise prices, I will lose customers as they can easily go somewhere else,' she said. Tan said she would rather take a profit cut than risk losing her customers. 'It will add up to a hefty amount but I will manage it,' she said. The Agriculture and Food Security Ministry announced recently that the price control on chicken eggs had been lifted, with subsidies reduced from 10 sen to 5 sen per egg, effective May 1. The egg subsidy will be completely abolished on Aug 1. From February 2022 to December 2024, the government spent nearly RM2.5bil on egg subsidies to cover rising production costs due to the Covid-19 pandemic and the impact of the Ukraine-Russia war. The government has also taken into account that the extended duration of price controls and subsidies is not sustainable for the ongoing viability of the local egg production industry and the nation's finances.
The Star
03-05-2025
- Business
- The Star
Termination of egg subsidy uplifts poultry stocks
CGSI Research raised concerns that the removal of the egg subsidies could impact QL Resources' expansion plans. PETALING JAYA: The stock market reacted positively to the removal of the subsidy and price control for chicken eggs, with most poultry stocks rising following the announcement by the Agriculture and Food Security Ministry. However, the largest listed poultry company by market capitalisation – QL Resources Bhd – declined marginally by 0.21% to RM4.80, valuing the group at RM17.5bil. Last December, CGS International (CGSI) Research raised concerns that the removal of the egg subsidies could impact QL Resources' expansion plans. It estimated that the group's pre-tax margins could ease by 0.4% year-on-year to 9.1% in the financial year 2026 (FY26), as the egg subsidies are reduced. Nonetheless, the decision to end egg subsidies lifted other poultry players. Teo Seng Capital Bhd , which produces more than four million chicken eggs daily, saw its share price hitting the highest level in over a month. The stock rose by 5.15% to RM1.02, while shares of PWF Corp Bhd and Lay Hong Bhd climbed by 4.61% and 4.69%, respectively. Other poultry stocks that moved north were Leong Hup International Bhd (1.63%), CCK Consolidated Holdings Bhd (1.55%) and Malayan Flour Mills Bhd (2.02%). CAB Cakaran Corp Bhd's share price remained unchanged at 53.5 sen after paring down earlier losses during the day. In a statement, the government announced the decision to scrap the price control on chicken eggs and reduce the egg subsidy rate from 10 sen to five sen per egg, effective today. Subsequently, the egg subsidy will be completely abolished on Aug 1, 2025. From February 2022 to December 2024, the government spent nearly RM2.5bil on egg subsidies to the industry to cover rising production costs due to the Covid-19 pandemic and the impact of the Ukraine-Russia war on the import prices of soybeans and corn. In deciding to remove the price control and subsidy, the Agriculture and Food Security Ministry said it has also taken into account that the prolonged period of price controls and subsidies is unsustainable for the continuity of the local egg production industry and the country's finances. 'The decision was taken after taking into consideration the industry's commitment to ensure enough supplies and costs which had stabilised,' according to the ministry.
The Star
30-04-2025
- Business
- The Star
Egg subsidy rate reduced from RM0.10 to RM0.05 per egg, effective May 1
PETALING JAYA: The government has agreed to end the price control on chicken eggs and reduce the egg subsidy rate from RM0.10 to RM0.05 per egg, effective May 1, 2025. Subsequently, the egg subsidy will be completely abolished on August 1, 2025. From February 2022 to December 2024, the government spent nearly RM2.5bil on egg subsidies to the industry to cover rising production costs due to the Covid-19 pandemic and the impact of the Ukraine-Russia war on the import prices of soybeans and corn. The government has also taken into account that the prolonged period of price controls and subsidies is unsustainable for the continuity of the local egg production industry and the country's finances.
