Latest news with #RM700mil
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
08-05-2025
- Business
- The Star
CelcomDigi's capex to modernise its IT systems
RHB Research said CelcomDigi is committed to delivering steady-state pre-tax merger synergies of between RM700mil and RM800mil from FY27. PETALING JAYA: RHB Research expects CelcomDigi Bhd's stronger commercial execution and realisation of merger synergies to drive a re-rating of the stock, even as the group steps up investment in information technology (IT) system upgrades that will raise near-term costs. Following an engagement with the group, the research house was guided that the bulk of CelcomDigi's financial year ending Dec 31, 2025 (FY25) capital expenditure, estimated at RM1.8bil to RM2bil, would go towards modernising its IT systems. This, it said, was expected to lift operating expenditure (opex) in the short to medium term, largely due to new software licences. 'The higher opex and accelerated depreciation charges for network assets (expected to taper off in FY25 and FY26) are factored into CelcomDigi's FY25 earning before interest and taxes guidance of a low to mid-single-digit growth which also considered higher 5G wholesale charges,' the research house noted. Nevertheless, RHB Research said CelcomDigi is committed to delivering steady-state pre-tax merger synergies of between RM700mil and RM800mil from FY27. To reflect near-term integration cost and delayed savings, the research house adjusted its FY25 and FY26 earnings forecasts down by 6.9% and 8.8% respectively, but kept FY27 broadly intact. Separately, RHB Research highlighted a slight delay in the network integration timeline from mid-2025 to the second half of the year (2H25), citing changes in Digital Nasional Bhd's (DNB) operating model. The shift, it said, is impacting the remaining 25% of sites, or about 4,000 locations, yet to be integrated. According to RHB Research, CelcomDigi expects mobile network operators and shareholders to 'come to a landing' soon with DNB that will result in a revised wholesale framework. The 5G traffic is expected to be shared with U Mobile Sdn Bhd – the second 5G infrastructure provider.
The Star
08-05-2025
- Business
- The Star
Merger synergies to drive CelcomDigi re-rating- RHB
PETALING JAYA: RHB Research expects CelcomDigi Bhd's stronger commercial execution and realisation of merger synergies to drive a re-rating of the stock, even as the group steps up investment in information technology (IT) system upgrades that will raise near-term costs. Following an engagement with the group, RHB Research said it was guided that the bulk of CelcomDigi's financial year ending Dec 31, 2025 (FY25) capital expenditure estimated at RM1.8bil to RM2bil will go towards modernising its IT systems. This, the research house said, is expected to lift operating expenditure (opex) in the short to medium term, largely due to new software licences. 'The higher opex and accelerated depreciation charges for network assets (expected to taper off in FY25-FY26) are baked into CelcomDigi's FY25 earning before interest and taxes guidance of a low-to mid-single digit growth which also factors in higher 5G wholesale charges,' it noted. Nevertheless, RHB Research said CelcomDigi is committed to delivering steady-state pre-tax merger synergies of between RM700mil and RM800mil from FY27. To reflect near-term integration cost and delayed savings, the research outfit adjusted its FY25 and FY26 earnings forecasts down by 6.9% and 8.8% respectively, but kept FY27 broadly intact. Separately, RHB Research highlighted a slight delay in the network integration timeline from mid-2025 to the second half of the year (2H25), citing changes in Digital Nasional Bhd's (DNB) operating model. The shift, it said, is impacting the remaining 25% of sites, or about 4,000 locations, yet to be integrated. RHB Research said CelcomDigi expects the mobile network operators (MNOs) and shareholders to 'come to a landing' soon with DNB that would result in a revised wholesale framework. This is as 5G traffic is expected to be shared with U Mobile, the second 5G infrastructure provider. 'While no discussion has taken place with the latter, CelcomDigi acknowledged that a fresh wholesale agreement inked going forward would be commercially-driven,' RHB Research said. It said the current wholesale structure allows MNOs to exit their existing agreements within 30 days of an alternative 5G network becoming available, or before January 2028 with prior notice. 'This suggests the earliest an MNO could do so would be in 2H26, based on U Mobile's reported rollout timeline,' it said. RHB Research also noted that CelcomDigi views current mobile pricing as suboptimal, given its scale. 'CelcomDigi believes the current mobile plans/pricing are not reflective of its position as the largest MNO by mobile revenue and sub market share, an area that it hopes to address over the medium term with the support of a vastly modernised network, integrated IT platforms, and distribution channels,' it noted. 'On enterprise, management views the lack of fibre assets as an impediment where it is prepared to further invest in the medium term.' Overall, the research house has maintained its 'buy' call on CelcomDigi, raising its target price slightly to RM4.40 from RM4.30 a share. 'We see stronger commercial execution and realisation of merger synergies from the completion of CelcomDigi's network integration driving a re-rating of the stock,' it said, adding that valuation remains undemanding at 8.7 times FY26 enterprise value to earnings before interest, taxes, depreciation and amortisation.
