Bermaz Auto downgraded to Hold, target price lowered to 93 sen
(Calls by analysts tracked by Bloomberg: 4 Buy, 10 Hold, 2 Sell; Consensus target price: RM1.10)
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The Sun
4 days ago
- The Sun
Southern Cable in line to win MRT3 deals: Apex Securities
KUALA LUMPUR: Southern Cable Group Bhd is well-positioned to secure a substantial share of the MRT3 cable supply package, building on its strong track record in MRT2, comprehensive product range, and established market leadership. In a recent report, Apex Securities Bhd estimated that, assuming a cable supply package valued at RM600 million, with 60% market share and a blended gross profit margin of 15%, Southern Cable could generate RM54 million in gross profit from MRT3—equivalent to 25% of the research firm's FY25 forecast. 'This would provide a meaningful uplift to earnings visibility over the medium term,' Apex said. The MRT3 project has received final approval from the Transport Ministry, enabling the land acquisition process to begin. The project is targeted for completion by end-2026. The MRT3 Circle Line will span 51km, comprising 31 stations. Construction is scheduled to begin in 2027, with full operations expected by 2032. In rail infrastructure projects, cable supply contracts are usually split across several key work packages including power supply systems, signalling and control systems, track works, and station components. As a reference point, MRT2, which spans 52.2km with 36 stations, has a total project cost of RM56.9 billion. Cable supply contracts for MRT2 were estimated at around RM550 million, according to market sources. 'Given the comparable scale of MRT3, we estimate the cable supply package to be valued at RM600 million,' Apex added. In light of MRT3 and other infrastructure rollouts such as the Penang LRT, Apex Securities has revised its earnings forecasts upward by 9.5% for FY26 and 18.5% for FY27. The research firm noted that cable orders for large infrastructure projects are typically distributed across multiple packages and subcontractors. This results in staggered purchase orders, rather than a single lump-sum entry in Southern Cable's order book. 'We raise our price-earnings (PE) multiple from 15x to 17x to reflect Southern Cable's improving earnings visibility and robust growth outlook. 'Valuation remains attractive, with a price/earnings-to-growth (PEG) ratio of 0.4x, based on our projected EPS compound annual growth rate (CAGR) of 33.9% for FY24–27. 'Our revised target price of RM2.14, up from RM1.72, is based on a 17x FY26 EPS of 12.6 sen, and supported by a three-star ESG rating. 'We maintain a 'Buy' call on Southern Cable. We remain positive on the company, given its position as a proxy for Malaysia's rising power demand, growing need for high-voltage power cables, and export exposure to the US market,' Apex Securities concluded.
The Star
18-07-2025
- The Star
Willingness to address US concerns a positive
Apex Securities said Malaysia may need to pivot to increasing imports of US goods. PETALING JAYA: The 25% tariff imposed on Malaysia is likely due to Trump administration's dissatisfaction with the concessions offered so far, says Apex Securities. Earlier this week, Investment, Trade and Industry Minister (Miti) Tengku Datuk Seri Zafrul Abdul Aziz said the United States had urged Malaysia to lift foreign equity restrictions in key sectors as part of ongoing tariff negotiations. While sectors like logistics and construction could have some liberalisation, other sectors that are more strategic, like oil and gas, telecommunications and finance, are unlikely due to sovereignty and national security considerations. In a report, the research house said the automotive industry is unlikely to see full liberalisation. However, targeted tariff reductions on US-made vehicles may be offered as a trade-off. It added the country's recent policy moves indicate a willingness to address concerns from the United States. 'Miti's new requirement for trade permits on the export, transshipment, and transit of high-performance artificial intelligence chips of US origin is a constructive step, and its decision to centralise the issuance of certificates of origin for exports to the United States aims to tighten control over potential transshipment abuses,' Apex Securities said. Still, the research house opined that Malaysia may be compelled to accept higher tariffs on transhipped goods as part of a broader compromise. On top of that, the country's bumiputra policies are sensitive and non-negotiable, so the government's preference for bumiputera-owned companies in procurement will be intact. 'Malaysia's globally respected halal certification system is unlikely to be diluted. 'The most feasible concession may involve streamlining the certification process to facilitate US meat imports,' Apex Securities said. Additionally, countries with high export exposure to the United States, including Malaysia, are likely to face stronger pressure to compromise, thereby raising the odds of a favourable outcome. In light of that, Apex Securities said Malaysia may need to pivot to increasing imports of US goods, such as liquefied natural gas, agricultural commodities like corn and soybeans, Boeing aircraft, or possibly defence assets. 'Collaboration in emerging sectors such as nuclear technology or small modular reactors is plausible but constrained by high capital costs,' it noted. Meanwhile, the research house said if final tariffs settle at 20% or higher, the gross domestic product growth could risk falling below 4%. It explained that given the limited room for large fiscal stimulus due to political resistance, monetary policy is likely to bear the primary burden of supporting growth. 'A lower overnight policy rate (OPR) would help support real estate investment trusts while falling bond yields point to potential upside for fixed income,' it said. On a brighter note, Apex Securities said Malaysia's underlying fundamentals are still quite resilient. 'Malaysia remains well positioned, given its pivotal role in the global semiconductor supply chain and relative competitive advantage with lower tariffs relative to peers,' it said. Furthermore, the research house said it had revised the 2025 forecasts, taking into account the year-to-date inflation figure of 1.5%. 'We revised our 2025 inflation forecast to 1.9% from 2.4% previously. 'Similarly, following Bank Negara's 25-basis-point cut in July, we now expect the OPR to stay at 2.75% for the remainder of the year.'
Barnama
17-07-2025
- Barnama
Malaysia Stands 55 Pct Chance Of Lower US Tariffs At 15-19 Pct -- Apex Securities
BUSINESS KUALA LUMPUR, July 17 (Bernama) -- Malaysia stands a 55 per cent chance of reducing the final United States (US) tariff to a 15 per cent-19 per cent range from the current 25 per cent, if positive trade agreements are reached, said Apex Securities Bhd. The stockbroking firm said the recent US-Indonesia trade deal, which saw the tariff being reduced to 19 per cent from 32 per cent, is an encouraging sign for Malaysia, supporting the view that Washington remains open to negotiations if meaningful concessions are offered. It said that after the US Trade Representative's 2025 National Trade Estimate Report identified several structural trade and investment barriers in Malaysia, the cabotage policy emerged as the most likely area for reform. 'We anticipate that Malaysia may offer a framework for the permanent exemption of foreign vessels engaged in submarine cable repairs in Malaysian waters,' it said in a note today. As for the request to lift foreign equity restrictions, Apex Securities said that while sectors such as logistics and construction could see partial liberalisation, more strategic industries, namely oil and gas, telecommunications, and finance, are unlikely due to sovereignty and national security considerations. 'As for the automotive sector, full liberation is unlikely. However, targeted tariff reductions on US-made vehicles may be offered as a trade-off,' it said. On government procurement and halal certification, Apex Securities also did not expect any shift in stance, as Malaysia's bumiputera policy is politically sensitive and widely viewed as non-negotiable. 'The most feasible concession may involve streamlining the certification process to facilitate US meat imports,' it said. Apex Securities said that given limited negotiating leverage, Malaysia might need to pivot towards increasing imports of US goods, such as liquefied natural gas, agricultural commodities, such as corn and soyabeans, Boeing aircraft, or possibly defence assets.
