Latest news with #CGSInternationalResearch
The Star
25-06-2025
- Business
- The Star
Price pressures expected to inch up
CGSI Research is maintaining its 2025 CPI forecast at 2% y-o-y. PETALING JAYA: Inflationary pressures are expected to gradually gain momentum in the second half of the year with headline inflation projected to hover between 2% and 2.1% for 2025. CGS International Research (CGSI Research) said inflationary pressures are poised to build up in the second half of the year as the government reforms take place. 'We think inflationary pressures will slowly build up towards the latter part of the year with the implementation of the sales and service tax (SST) expansion in July 2025, following which we expect a short-term spike in prices where the consumer price index (CPI) headline could rise 0.5% month-on-month (m-o-m) in July before peaking in September. 'We deduced that the SST expansion could add 10 to 20 basis points (bps) to the country's annual CPI growth in 2025,' it noted. For the month of May, CPI rose 0.1% m-o-m and 1.2% year-on-year (y-o-y) – the lowest recorded since February 2021 – below consensus expectations. Meanwhile, core CPI gained 0.2% m-o-m, lifting y-o-y growth to 1.8% (April 2025: 2%). The headline CPI was driven by softer costs in all components except transport, health and accommodation services. CGSI Research is maintaining its 2025 CPI forecast at 2% y-o-y. 'We believe changes to the current electricity tariffs will likely be limited, as market prices for coal and gas have remained steady.' The research house said subsidy retargeting for RON95, which is anticipated to take place in the second half of the year, could lead to some impact on consumers and businesses, subject to the mechanism of price adjustments. 'Based on our estimates, such adjustments could add 20 bps to Malaysia's annual CPI growth in 2025. 'We anticipate prices of commodities such as crude oil and palm oil to continue remaining weak in the next few months, which could provide a buffer against any potential price pressures ahead,' the brokerage noted. Meanwhile, Hong Leong Investment Bank Research (HLIB Research) said while there remains some upside risk from higher global oil prices due to geopolitical tensions, it is revising down its 2025 CPI forecast to 2% from 2.7% in 2025. 'This downgrade reflects limited direct impact of the SST expansion (0.1 to 0.2 percentage points), minimal effect from the electricity tariff restructuring, given that 23 million users are expected to see a reduction in their bills in July. 'Additionally, the targeted implementation of RON95 fuel subsidy rationalisation requires a smaller adjustment than previously anticipated due to lower global commodity prices and stronger ringgit,' it said. TA Research said at this juncture, it is maintaining its full-year inflation forecast at 2.1% for 2025, reflecting a gradual uptick in price pressures in the second half of the year. Looking ahead, it, however, sees upside risks to the inflation trajectory emerging in the second half of the year. Notably, the planned rationalisation of RON95 fuel subsidies may trigger a one-off increase in pump prices and transport-related costs, TA Research said. 'The expansion of the SST to cover a broader range of services beginning July 1, although estimated to have a modest direct impact on the CPI, could still raise input costs for businesses, with partial pass-through to consumers likely over time. 'Furthermore, the recent volatility in Brent crude oil prices, which spiked from US$66 to nearly US$79 per barrel in mid-June amid escalating geopolitical tensions in the Middle East, introduces renewed inflationary pressure through imported fuel and logistics channels, especially if the price remains elevated. 'While the current disinflation trend is intact, these developments warrant close monitoring, particularly as fiscal consolidation measures gain momentum. 'We maintain our view that headline inflation may reaccelerate modestly in the second half of the year,' the brokerage said.
The Star
09-06-2025
- Business
- The Star
QL Resources growth trajectory remains intact
PETALING JAYA: CGS International Research (CGSI Research) expects QL Resources Bhd 's potential expansion into adjacent verticals could possibly bolster further growth for the agro-based group moving forward. Following a recent analysts' call with the QL Resources' management, the research house said 'apart from expanding its product range in the proteins business, which we assume encompasses its ongoing ventures in broiler chickens and aquaculture, the group's management alluded to the need to have better control over the supply chain of its products, potentially expanding its retail reach outside of convenience stores. 'While no further details were provided, given QL Resources' success with the Family Mart franchise, this seems a credible opportunity to plug the earnings gap from the sale of its plantations business,' CGSI Research said in a report yesterday. 'With a net gearing of less than 10%, this provides the group with financial flexibility, in our view,' the research house added. QL Resources' management also provided a neutral outlook on its earnings for its financial year ending March 31, 2026 (FY26) . It expects the combination of egg subsidy rationalisation (five sen each in May and August this year) coupled with the lifting of the price ceiling by Aug 1 to lead to a normalisation in profits on subsidised eggs to between three sen and four sen per egg. 'An expansion of its branded egg segment, currently around 20% of eggs, is hoped to lift profitability over time,' added CGSI Research. Management was also upbeat on the clean-energy business under 53%-owned BM Greentech Bhd , whose pre-tax profit jumped 35% year-on-year (y-o-y) to RM73.5mil in FY25 helped by the acquisition of solar company Plus Xnergy in July 2024. The research house upgraded the stock from a 'reduce' call to 'hold' following its 10.9% share price decline over the past six months, but at a lower target price of RM4.37 per share. 'We believe QL Resources' 30.5 times calendar year 2026 price-earnings ratio better reflects its 14.3% recurring return on equity, but the upside is likely to be capped by slowing earnings growth in FY26,' it noted.
New Straits Times
25-05-2025
- Business
- New Straits Times
Inflation seen moderating on weaker demand, slower policy rollout
KUALA LUMPUR: A potential delay in policy reforms, due to softening domestic activity and external demand risks, is expected to moderate inflation growth in the near term, said CGS International Research. The research house said recent macroeconomic data showed a decline in domestic demand, while tariff threats from United States presidential candidate Donald Trump may further weigh on sentiment. As a result, it expects the Malaysian government to adopt a more cautious approach in implementing reform policies. "Given the modest consumer price index (CPI) growth, softer global commodity prices, and delay in price reforms, we revise lower our 2025F CPI growth forecast to 2.0 per cent year on year (yoy) from 2.3 per cent previously. "Trend-wise, we still think prices will begin to elevate from the second half of 2025 onwards towards 2026," it said in a note. Meanwhile, CGS International believes there will be minimal impact on inflation following removal of eggs subsidy. On April 30, the Agriculture and Food Security Ministry announced that Malaysia would discontinue price controls on eggs starting May 1, as part of the government's gradual adjustment of subsidies. CGS International Research said the decision to lift price controls signals that input costs and egg supply have stabilised. "As such, we believe the potential for future price spikes in eggs is unlikely despite the removal of price caps. In terms of fiscal, we estimate this could save the government around RM400 million in 2025 subsidy expenses. "Overall, we think this may lead to a minimal impact on 2025F CPI (eggs portion in the CPI basket is only 0.4 per cent)," it added.
