Latest news with #PublicInvest
New Straits Times
16-07-2025
- Business
- New Straits Times
Rising regulatory risks may force planters to scale back in Indonesia
KUALA LUMPUR: Rising regulatory risks in Indonesia could prompt some plantation companies to scale down or exit their operations over the longer term following a wave of large-scale land seizures, Public Investment Bank Bhd (PublicInvest) said in a recent note. Last week, Indonesian authorities confiscated 394,547 hectares of plantation land spanning Central Kalimantan and Riau, as well as North and South Sumatra. The land, previously controlled by 232 companies, has been transferred to Agrinas, a state-owned company established in early 2025 under the administration of President Prabowo Subianto. The operations were carried out jointly by the Ministry of Environment and Forestry, Ministry of Defence, and the Attorney General's Office. The task force has set a target to reclaim up to three million hectares of plantations deemed illegally operating within forest areas by August. With the latest seizures, Agrinas now controls approximately 833,000 hectares of plantation land, making it one of the largest plantation operators globally. With this latest addition, the total plantation area under the Agrinas Group now stands at 833,000 hectares, making the company one of the largest plantation firms in the world. Based on PublicInvest's channel checks, several local plantation companies have surrendered a small portion of their plantation land to the Indonesian authorities. "We understand that the impact on their earnings is largely muted. However, this development raises regulatory risks for industry players with significant exposure in Indonesia, which could weigh on their valuations over the long term," it noted. The firm also views this as a potential long-term environmental, social and governance risk. Furthermore, PublicInvest said investment in replanting activities is expected to be more cautious, as it may compromise the companies' interests. The firm added that it is also concerned the military-led enforcement in plantations could exacerbate the declining trend in Indonesian palm production, as there are doubts over the state's ability to manage these plantations effectively. "Based on our rough forecast, if 50 per cent of the entire seized 833,000 hectares plantation remains unproductive, the annual palm oil production could decline by about four per cent or 1.7 million metric tonnes," it said. Meanwhile, PublicInvest said the recent surge in crude palm oil prices to over RM4,200 per metric tonne may reignite investor interest in plantation counters. The firm has maintained a neutral outlook with a full-year crude palm oil price forecast of RM4,200 per metric tonne.
New Straits Times
30-06-2025
- Business
- New Straits Times
Gamuda's outlook positive on strong project pipeline: analysts
KUALA LUMPUR: Gamuda Bhd's outlook remains upbeat, supported by a robust project pipeline, according to analysts. Hong Leong Investment Bank Bhd (HLIB) said that despite some delays in converting contracts and minor challenges in its bid for the Suburban Rail Loop (SRL) systems package, Gamuda's order book is still expected to grow to between RM40 billion and RM45 billion by the end of the year. HLIB also highlighted that the company has recently been shortlisted for more projects, including New Zealand's Northland Corridor highway. "Gamuda is optimistic of prospects in Taiwan as the award timing of the RM11 billion rail extension could come earlier than expected. "Accounting for the SRL systems setback, Gamuda's high certainty pipeline remains massive at more than RM25 billion. "Further to this, we view the recent conclusion of Australian GE as reinforcing renewables' growth trajectory which bodes well for its existing pumped hydro ECIs (worth RM5 billion each)," it said. Meanwhile, Public Investment Bank Bhd (PublicInvest) noted that Gamuda's year to date project wins have reached RM15.8 billion, with its current outstanding construction orderbook estimated at RM34.6 billion. It said the jobs pipeline remains encouraging, with an additional RM15-20 billion new wins expected by end of calendar year 2025 (CY25), spanning water infrastructure, data centers (DC), renewables, and other key projects across Malaysia, Australia, and Taiwan. "On the property front, unbilled sales are now estimated at RM7.7 billion, with a RM5 billion sales target for FY25. "Regarding the data centre (DC) pipeline, Gamuda's DC partners indicated no plans to slow down or delay rollouts, and negotiations for additional DC projects are progressing well," it said. Gamuda reported a stronger quarter in the third quarter (Q3) financial year 2025 (FY25), with core net profit reaching RM246.8 million, mainly driven by improved performance in its domestic engineering & construction (E&C) division. However, PublicInvest said the cumulative nine month FY25 core net profit of RM664.5 million came in below both the firm's and consensus expectations, accounting for only 66.2 per cent and 63.8 per cent of respective full year estimates. It said the shortfall was primarily due to slower than expected earnings recognition from its overseas construction and property projects. "That said, we keep our earnings forecasts unchanged, as we expect Gamuda's performance to catch up in the final quarter, which has historically been its strongest. "We remain optimistic about its prospect, supported by encouraging project pipeline, and maintain our Outperform call on Gamuda with unchanged target price of RM5.30," it added.
New Straits Times
27-06-2025
- Business
- New Straits Times
Poh Huat earnings under pressure amid cost surge, tariffs
KUALA LUMPUR: Furniture manufacturer Poh Huat Resources Holdings Bhd is likely to see softer near-term earnings, weighed down by persistent inflation, rising operating costs, and the appreciation of the ringgit, according to Public Investment Bank Bhd (PublicInvest). The company's key export market, the United States, has seen buyers take a cautious stance after having front-loaded orders in anticipation of higher tariffs. "This is worsened by the fact that customers are now adopting a wait-and-see strategy after they had front-loaded orders ahead of higher tariff implementation. "On a positive note, a slight rebound in office furniture orders is expected next quarter, as some customers have confirmed orders and are expediting their shipments within the 90-day tariff grace period," it said. PublicInvest has also revised Poh Huat's financial year 2025 to 2027 (FY25-FY27) earnings forecast downwards by approximately 20-50 per cent. It said this is to factor in the persistent inflationary pressures, rising operational costs and global trade uncertainties stemming from the imposition of import tariffs by the US. The firm has maintained an "Underperform" call on Poh Huat, with a lower target price of RM0.90 from RM1.16 previously. Poh Huat's headline net profit for the second quarter (2Q) of FY25 declined by 92.0 per cent year-on-year (YoY) to RM0.6 million. The sharp decline was attributed to lower orders and shipments of office furniture from its Malaysian operations, higher material and labour costs, and a decline in net other income due to a foreign exchange loss of RM1.9 million, compared to a gain of RM2.3 million in the same quarter last year. Excluding non-operating items, Poh Huat's first half (1H) of FY25 core net profit of RM10.9 million came in below PublicInvest's and consensus estimates at 28.7 per cent and 32.8 per cent of full-year forecasts, respectively. "The discrepancy in our forecast was mainly due to the lower-than-expected contribution and higher operating costs from the Malaysian operations," PublicInvest noted. The group's revenue also declined to RM98.3 million in 2Q25, mainly due to reduced office furniture shipments from Malaysia, as customers had front-loaded orders ahead of the second presidency of Donald Trump and anticipated trade barriers. Its home furniture shipments from Vietnam also remained weak, with some US customers holding back orders in April 2025 due to new import tariffs. Nevertheless, Poh Huat had declared a second interim dividend of two sen for the financial period.
Malaysian Reserve
23-06-2025
- Business
- Malaysian Reserve
TNB tariff reform neutral to earnings but enhances transparency and cash flow
TENAGA Nasional Bhd (TNB) is expected to maintain earnings stability while benefiting from improved cost recovery and billing clarity under the newly announced Regulatory Period 4 (RP4) electricity tariff framework for Peninsular Malaysia. The revised tariff, announced by the Energy Commission and published on Bursa Malaysia earlier today, will come into effect on July 1, 2025, and remain in place until December 31, 2027. It includes a new base tariff of 45.40 sen/kWh, replacing the previous 39.95 sen/kWh, and introduces a monthly automatic fuel adjustment (AFA) mechanism in place of the current semi-annual imbalance cost pass-through (ICPT) system. CIMB Securities views the tariff change as earnings-neutral. 'Regardless of tariff changes, the IBR framework provides regulatory adjustments such that TNB ultimately earns the regulatory rate of return (7.3%) on the regulated asset base (RAB),' the research house said in a note. It added that the AFA 'will reflect the market fuel prices and forex on a monthly basis (instead of every 6 months),' which would help the utility better manage working capital amid fuel price volatility. PublicInvest Research, which maintained an 'Outperform' rating on TNB with a target price of RM16, also welcomed the new mechanism. 'The AFA mechanism is expected to ease TNB's working capital requirement amid volatile fuel prices,' it said, highlighting that the structural shift allows for 'more timely cost recovery.' The base tariff of 45.40 sen/kWh is slightly lower than the 45.62 sen/kWh announced in December 2024, and according to PublicInvest, 'the marginal reduction in base tariff is likely attributable to lower generation cost components, reflecting the decline in fuel prices observed in 1H2025.' For residential users, the new structure is expected to be favourable, with CIMB noting that 'residential customers that use 50–900 kWh per month will see their electricity bills fall by 1–15%,' aided by Energy Efficiency Incentive (EEI) rebates of up to 25 sen/kWh. However, customers who consume more than 1,000kWh monthly will be subject to fuel price adjustments under the AFA. The tariff structure also introduces a revamped classification system based on voltage levels – categorising users into domestic and non-domestic groups – and breaks down charges into five components: energy, capacity, network, retail, and AFA. PublicInvest pointed out that the change 'enhances billing transparency' and extends the time-of-use (ToU) scheme to domestic users, allowing them to optimise electricity consumption during off-peak hours. Non-domestic customers, especially in the medium and high voltage categories, will face a higher effective maximum demand (MD) charge. 'This will incentivise large-scale commercial and industrial consumers to optimise their energy usage, particularly by reducing load during peak demand periods,' said PublicInvest. While the new structure may introduce variability in bills for business users depending on usage profiles, peak/off-peak load patterns, and maximum demand, analysts believe it encourages long-term grid stability and sustainable electricity use. CIMB forecasts TNB's core net profit will grow from RM4.36 billion in FY2025 to RM4.97 billion in FY2026, supported by regulated earnings and a healthy capex pipeline. 'Under RP4, the RAB is expected to grow healthily, led by a 12% higher base capex of RM26.6 billion and contingent capex of RM16.3 billion,' the firm added. PublicInvest remains bullish on the sector, citing rising demand, TNB's RM42.9 billion planned capex, and the expansion of renewable energy initiatives. 'We maintain our Overweight rating on the sector,' it said, identifying TNB as its top pick. TNB, in its own announcement today, reaffirmed that the implementation of RP4 supports the goals of the National Energy Transition Roadmap (NETR), and that it remains committed to ensuring a reliable and sustainable power supply for the country. — TMR
New Straits Times
16-06-2025
- Business
- New Straits Times
PublicInvest: OPR cut likely in Q3, REITs outlook Neutral
KUALA LUMPUR: Public Investment Bank (PublicInvest) has revised its base case to include a 25 basis point cut in the Overnight Policy Rate (OPR) in the third quarter of 2025, subject to the continuation of reciprocal tariff suspensions and broadly stable domestic conditions. Although Bank Negara Malaysia (BNM) kept the OPR unchanged at 3.00 per cent in its recent monetary policy meeting, the central bank adopted a more accommodative stance by lowering the Statutory Reserve Requirement (SRR) from 2 per cent to 1 per cent, effective May 16. This move is expected to release about RM19 billion into the banking system to support economic growth amid rising external uncertainties, particularly ongoing trade tensions linked to US President Donald Trump's tariff policies. According to PublicInvest, the central bank's May policy statement cited several downside risks, including a sharper slowdown in key export markets, weaker consumer and business sentiment, and softening commodity output. The firm noted that the inclusion of "weaker sentiment" may indicate the early stages of a slowdown in private consumption and investment. While the OPR remains unchanged for now, PublicInvest said the SRR cut represents a proactive measure to ease liquidity pressures and pre-emptively safeguard domestic growth. Despite the policy shifts, the impact on earnings for real estate investment trusts (REITs) under PublicInvest's coverage, particularly those with floating-rate loans, is expected to be limited. The firm estimates a potential 1 per cent to 2 per cent reduction in interest costs should a 25 bps OPR cut materialise. "We keep our earnings estimates unchanged for now. Although we still believe the sector is fairly valued for now and maintain our Neutral stance, the attractive dividend yield of around 5 per cent looks sustainable," the firm said in a note. KL-listed REITs are currently offering an average gross yield of about 6 per cent, reinforcing the sector's appeal amid market volatility. Among its REIT coverage, PublicInvest has reiterated its preference for Sunway REIT (SREIT), citing its diversified asset portfolio and ambitious growth plan under the Transcend 27 roadmap. The strategy targets portfolio expansion from RM10 billion to RM14 billion to RM15 billion within the next two to three years. SREIT is expected to benefit from full-year earnings contributions in FY2025 from recently acquired assets, including 163 Retail Park in Mont Kiara, Kluang Mall in Johor, and an industrial facility in Prai, Penang. Additionally, the reconfiguration of Oasis retail space at Sunway Pyramid, down to 260,000 sq ft from 320,000 sq ft as of November 2024, is anticipated to enhance rental efficiency. In light of these developments, PublicInvest has raised SREIT's target price to RM2.10 (from RM1.80), reflecting an implied forward dividend yield of approximately 5.5 per cent based on FY2026 estimates. PublicInvest also noted that while Malaysia's retail sales are on a recovery path, rental reversions for malls in key urban locations are likely to remain flat in the near term. This is due to incoming retail supply and ongoing market uncertainty stemming from renewed trade tensions. "That said, we believe those established malls with a good tenant mix are expected to stay resilient and hence occupancy rates are likely to remain steady."
