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The Star
06-08-2025
- Business
- The Star
Optimistic growth prospects for Frontken
Maybank IB said the projected better 2H25 is consistent with historical seasonality. PETALING JAYA: Frontken Corp Bhd is on track to deliver stronger results in the second half of 2025 (2H25), underpinned by rising demand for advanced nodes, the commissioning of Plant 3's new capacity, and plans for a new eight-storey facility. Maybank Investment Bank Research (Maybank IB) said the projected better 2H25 is consistent with historical seasonality. The research house added management also disclosed that a fresh US merger and acquisition (M&A) opportunity is being explored, following the lapse of a prior acquisition deal. Frontken's 1H25 core profit came in above Maybank IB's expectations and in line with consensus, lifted slightly by better-than-expected margins. 'We continue to expect a stronger 2H25, supported by seasonal trends and new capacity ramp-up,' the research house said in a report yesterday. The group's 1H25 core profit, excluding RM18mil in one-offs which are primarily foreign exchange (forex) losses, rose by 39% year-on-year (y-o-y) to RM82mil, beating Maybank IB's expectations and meeting consensus at 51% of the research house's financial year 2025 (FY25) estimates and 48% of the street's. Revenue grew 5% y-o-y to RM289mil, led by stronger performance in Taiwan (up by 15% y-o-y), while Malaysia (down by 19%), Singapore (down by 17%), and the Philippines (down by 0.4%) saw declines. 'Earnings before interest and taxes (Ebit) margin fell 2.4 percentage points y-o-y to 31.6%, largely due to forex headwinds in Taiwan; however, stripping out forex impact, Ebit margin would have reached 38.2%, with core profit margin improving 6.9 percentage points y-o-y to 28.4%. 'The earnings beat was driven by improved margins on a more favourable product mix,' Maybank IB said. Maybank IB has raised its FY25 to FY27 earnings forecast by 2% to reflect stronger-than-expected margins. The research house maintained a 'buy' call on Frontken with a higher target price of RM5.19 from RM5.10 based on an unchanged 43 times FY26 price-to-earnings ratio. Further, Hong Leong Investment Bank (HLIB) Research said Frontken has delivered on the key catalysts outlined in its previous report, that is stronger-than-expected earnings and clear M&A plans for the warrant proceeds. 'We believe continued delivery on these fronts, backed by strong institutional interest, could absorb the incremental share overhang from warrant conversion and support a re-rating beyond the RM4 range,' the research house said. HLIB Research upgraded Frontken to a 'buy' from a 'hold' with a revised target price of RM4.95 based on a higher target price-to-earnings ratio of 37 times FY26 earnings per share (from 35 times, reflecting a better margin profile). The research house remains positive on Frontken's growth prospects, underpinned by structural semiconductor tailwinds from artificial intelligence-driven demand, ongoing migration to leading-edge nodes, and robust foundry capital expenditure spending. 'Its solid balance sheet (net cash of RM509mil or 32 sen per share) will help support expansion plans in Taiwan, Singapore and the United States,' HLIB Research said. Philip Capital said operationally, Frontken has completed preliminary qualification for a new customer in Singapore and is awaiting final approval, targeted for September 2025. To support rising demand, the group has added new production lines at its P1 and P2 facilities and plans to relocate less critical processes to the newly acquired P3 site, freeing up space for more complex and higher-value operations.
New Straits Times
20-05-2025
- Business
- New Straits Times
Malaysia's trade hits record high in April, economists see room for optimism
S. Birruntha KUALA LUMPUR: Malaysia's trade performance maintained its upward trajectory in April, with both exports and imports posting strong double-digit growth, a development economists view as a promising start to the second quarter of 2025. According to the Ministry of Investment, Trade and Industry (Miti), trade rose 18.2 per cent year-on-year (YoY) to RM261.94 billion, the highest monthly value recorded since August 2022. Exports increased by 16.4 per cent to RM133.56 billion, while imports climbed 20 per cent to RM128.37 billion. This marked the 60th consecutive month of trade surplus, reaching RM5.19 billion. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the latest export figures far exceeded expectations, with the April performance outpacing the consensus estimate of 7.5 per cent growth. He said this encouraging trend could set a strong base for the second quarter of 2025 (2Q25), although the sharp increase may also be linked to front-loading activities by trade partners. "Exports to the US, which accounted for 14.4 per cent of total exports in April, rose 45.6 per cent, albeit slightly lower than the 50.8 per cent growth recorded in the previous month," he told Business Times. "Other jurisdictions such as Taiwan, Thailand and Singapore also posted notable gains, with growth of 29.9 per cent, 17.8 per cent and 12.4 per cent respectively in April," he added. Afzanizam cautioned, however, that uncertainties tied to US trade policy could influence future performance. He noted that negotiations with the US remain fluid and the 10 per cent universal tariff rate is still in effect. He said import tariffs could raise the cost of doing business and potentially lead to higher prices in both the US and China as both countries continue to retaliate with new measures. "Demand in the US may weaken, which could translate into fewer export orders. This makes it crucial for Malaysian companies to diversify their customer base," he said, adding that agencies such as Miti and Matrade play a vital role in helping businesses access new markets. Afzanizam also flagged risks related to excess supply from China, which could negatively affect local industries, particularly in sectors such as iron and steel, plastics, ceramics, solar panels and textiles. Despite these challenges, April marked Malaysia's 16th straight month of YoY export growth since January 2024. Miti said the expansion was largely driven by strong demand for manufactured goods, particularly electrical and electronic (E&E) products, which alone saw an increase of almost RM16 billion. Palm oil and related agriculture products also contributed significantly to export growth. Strong export growth was registered to major trading partners, including Asean, China, the United States, the European Union and Taiwan, which posted a new record high. Exports to free trade agreement partners also rebounded sharply. Meanwhile, UOB economists Julia Goh and Loke Siew Ting attributed the strong April performance to accelerated shipments ahead of anticipated US tariffs, under a 90-day reciprocal tariff pause. They said re-exports surged 46 per cent — the highest since September 2022 — outpacing domestic exports. However, they cautioned that the momentum may not be sustained. "Bank Negara has indicated that the front-loading of exports will likely normalise in the coming months as inventories are drawn down and trade flows stabilise," they said in a research report. The economists highlighted Malaysia's deep exposure to the global E&E supply chain, noting that semiconductors make up 40 per cent of the nation's total exports and accounted for 23 per cent of its shipments to the US in 2024. "Malaysia ranks as the ninth-largest E&E exporter globally and is the third-largest source of electrical machinery to the US in Asia after China and Taiwan," they said. In light of these risks, UOB is maintaining its export growth forecast for 2025 at 3.8 per cent, down slightly from 4.5 per cent in 2024. Nonetheless, the World Trade Organisation recently reported that Malaysia improved its global trade ranking to 24th position in 2024 from 26th in 2023, a testament to the country's growing trade relevance. To strengthen resilience and support continued growth, Miti and its export promotion arm Matrade are ramping up efforts to diversify markets. Initiatives such as international trade fairs, export acceleration missions, business matching programmes and the Madani Digital Trade platform are actively helping Malaysian exporters expand their global reach.
New Straits Times
20-05-2025
- Business
- New Straits Times
Malaysia hits RM261.9bil trade record in April, extends growth to 16 months
KUALA LUMPUR: Malaysia's trade momentum remained strong in April 2025, charting its 16th consecutive month of year-on-year (YoY) growth and recording the highest monthly trade value since August 2022. According to the Ministry of Investment, Trade and Industry (MITI), total trade surged 18.2 per cent YoY to RM261.94 billion — supported by robust expansion in both exports and imports. Exports climbed 16.4 per cent to RM133.56 billion, while imports grew 20 per cent to RM128.37 billion, resulting in a trade surplus of RM5.19 billion. This marks the country's 60th straight month of surplus since May 2020. MITI said the solid export performance was driven largely by higher global demand for manufactured goods, particularly electrical and electronic (E&E) products, which contributed nearly RM16 billion to overall export growth. Another equally important sector was agricultural goods, especially palm oil and palm oil-based agricultural products, which also played a significant role in supporting the overall expansion in exports. In terms of markets, strong export growth was posted to major trading partners, namely Asean, China, the United States (US), the European Union (EU), and Taiwan, which reached a new record high. Overall exports to Free Trade Agreement (FTA) partners also saw a strong rebound. Among markets that recorded export increases were Mexico, India and the Republic of Korea (ROK), attributed to higher shipments of E&E products. Meanwhile, during the period January to April 2025, trade, exports and imports recorded the highest periodic value to date. Trade was up by 7.2 per cent YoY to RM977.61 billion, exports rose 7.3 per cent to RM511.92 billion and imports climbed seven per cent to RM465.69 billion. Trade surplus recorded double-digit growth of 10.4 per cent to RM46.23 billion. Net exports contributed to Malaysia's achievement of a 4.4 per cent gross domestic product (GDP) in the first quarter of 2025 (1Q25), as reported by Bank Negara Malaysia (BNM). Additionally, the World Trade Organisation's (WTO) recent report also showed Malaysia's improvement in global trade ranking to 24th position in 2024, from the 26th place in 2023. In recognition of how global trade challenges may hamper the pace of growth, MITI and its export promotion agency, the Malaysia External Trade Development Corporation (MATRADE), are intensifying efforts to increase exports while also diversifying Malaysia's export destinations. In addition to maintaining strong ties with established trade partners, MATRADE is actively exploring emerging markets through strategic initiatives such as international trade fairs, export acceleration missions, business matching programmes and the Madani Digital Trade (MDT) platform. These initiatives are aimed at empowering Malaysian exporters, particularly small and medium enterprises (SMEs) and mid-tier companies (MTCs), to boost their global competitiveness and broaden their international reach.
