Latest news with #CIMBResearch
The Star
4 days ago
- Business
- The Star
Sales tax may pressure planters' competitiveness
PETALING JAYA: The competitiveness of the local palm oil industry will likely be eroded by the implementation of the expanded sales and service tax in July, analysts say. The tax will increase raw material costs, although some of the additional cost may be passed on to buyers, says CIMB Research. Major listed plantation companies with palm oil operations in Malaysia include SD Guthrie Bhd , FGV Holdings Bhd , Kuala Lumpur Kepong Bhd , IOI Corp Bhd and Wilmar International Ltd. 'Overall, we are slightly negative on the indicative 5% sales tax on crude palm kernel oil for Malaysian palm oil players, although the industry may seek a government waiver if the tax undermines local competitiveness against Indonesia,' said CIMB Research in a report yesterday. The research house said it understands from the Malaysian Palm Oil Association and planters that fresh fruit bunches (FFB) will be exempted from the 5% sales tax, despite being listed among taxable goods. 'This is because the sales tax applies only to the manufacturing sector, and FFB is classified as a locally harvested raw material intended for further processing rather than a manufactured product,' CIMB Research said. However, palm kernel oil, refined, bleached and deodorised palm kernel oil and palm kernel shell have been reclassified from tax-exempt goods to those subject to a 5% sales tax under the Sales Tax Order 2025. It remains unclear whether the industry will seek exemptions for these products, added the research house. Meanwhile, CIMB Research said the US Environmental Protection Agency's (EPA) proposal for 5.61 billion gallons of biodiesel under a mandate for next year is supportive of demand for edible oil and crude palm oil (CPO) prices, as the mandate will help sustain US consumption of edible oils. 'We maintain our CPO price forecast of RM4,200 per tonne for this year and reiterate our sector top picks, IOI and Hap Seng Plantations Holdings Bhd ,' said the research house. For next year, the EPA has set a target of 7.12 billion biomass-based diesel renewable identification numbers (RINs), which is expected to translate into 5.61 billion gallons of actual biodiesel blended that year. 'This target is expressed in RINs, in line with the EPA's broader objective to limit the number of RINs generated from imported biofuels,' CIMB Research said. As a result, the EPA now projects that each gallon of biomass-based diesel will generate 1.27 RINs in 2026 and 1.28 RINs in 2027, down from the previous estimate of 1.6 RINs. In comparison, the 2025 biomass-based diesel volume mandate stood at just 3.35 billion gallons, a level widely criticised by the industry as inadequate. Notably, the 2026 blending target of 5.61 billion gallons for biomass-based diesel volume exceeds the 5.25 billion gallons requested by the industry. 'We are positive on the proposed 2026 mandate, as fulfilling the 5.61 billion gallons or 19.2 million tonnes of biodiesel would support the use of edible oils as feedstock to meet the US biodiesel requirement. For context, US biodiesel production last year stood at around 16 million tonnes.' The final rule for the Renewable Fuel Standard (RFS) targets in the United States is expected to be published by the end of this year. Under the RFS, oil refiners are required to either blend substantial volumes of biofuels into the US fuel supply or purchase compliance credits known as RINs from others who exceed their blending obligations. Small refiners may apply for exemptions if they can demonstrate that complying with the mandate would cause undue economic hardship. The proposal reflects a significant shift in biomass-based diesel requirements, noted CIMB Research.
The Star
13-06-2025
- Business
- The Star
Expansion, new orders to lift VSI's earnings despite trade uncertainty
CIMB Research cut its earnings per share forecasts by between 10% and 20% for FY25 to FY27. PETALING JAYA: Analysts remain divided on the outlook for electrical and electronics manufacturing company VS Industry Bhd (VSI) following the release of its results for the third quarter of its financial year ending July 31 (3Q25), which came in below expectations. VSI posted net profit of RM23.77mil and revenue of RM909.41mil for the quarter. This was down from RM54.42mil and RM1.01bil in the same quarter a year ago. The results came in below CIMB Research's expectations, accounting for 49% of its full-year estimate and 52% of consensus. The year-to-date earnings declined 42% year-on-year and was said to be mainly due to weaker demand, higher labour costs in Malaysia, and start-up expenses from its new operations in the Philippines. Given the ongoing demand uncertainty amid subdued consumer sentiment and possible tariffs, CIMB Research cut its earnings per share forecasts by between 10% and 20% for FY25 to FY27. 'Near-term order flows from Malaysia and Singapore will remain dependent on evolving consumer sentiment and clarity on US tariffs following the end of the 90-day grace period in early July,' CIMB Research said. Following its earnings revision, CIMB Research maintained a 'hold' call on VSI with a lower target price of 79 sen, adding that the discount appropriately captures the heightened earnings risks. Hong Leong Investment Bank Research (HLIB Research) also flagged concerns about the group's earnings visibility. HLIB Research reported that VSI's core profit after tax and minority interest of RM69.6mil for the nine months of its current financial year (9M25) was 26.3% lower, meeting only half of its full-year forecast. 'While we anticipate some frontloading activity from US-exposed customers in 4Q25, we see downside risk to management's FY26 guidance given potential inventory adjustments and an uncertain order environment after frontloading,' HLIB Research said. Despite this, the research house pointed to a potential earnings boost from the ramp-up of the group's Philippines operations and a newly secured contract from a big customer. HLIB Research maintained its 'hold' rating on VSI with a lower target price of 72 sen, from 86 sen.
BusinessToday
09-06-2025
- Business
- BusinessToday
Stonepeak Partners' Reported Acquisition Of Yinson Could Value The Deal At RM9 Billion
Yinson Holdings Bhd - FSO (FPSO) Helang New York-based infrastructure investment firm Stonepeak Partners is reportedly in exclusive negotiations to acquire Malaysian energy infrastructure company Yinson Holdings Berhad, in a deal that could value the company at up to RM9 billion (US$2.1 billion). The development was first reported by Bloomberg. According to analysis by CIMB Research, this valuation translates to approximately RM3.23 per share, based on Yinson's 2.784 billion existing shares. CIMB Research indicated that if the report proves accurate, these exclusive talks could pave the way for a privatisation offer for the remaining shares of Yinson. Yinson's current market capitalisation stands at around RM6.5 billion. CIMB Research noted that the exclusivity arrangement suggests the deal has entered advanced stages of negotiation. The Lim family, who founded Yinson, currently holds a significant 26.6% stake in the company. The research house also commented that Stonepeak's investment focus appears to align well with Yinson's strategic direction, particularly given Yinson's growing presence in floating production, storage, and offloading (FPSO) and renewable energy sectors. From a valuation perspective, CIMB Research highlighted that the indicative RM9.0 billion take-private valuation, equivalent to RM3.23 per share, implies a substantial 38.0% premium to Yinson's last closing price. Relative to CIMB Research's own target price of RM2.93, the proposed acquisition price would represent a slight premium of 10.2%, suggesting potential additional upside should a formal offer materialize. Related
The Star
08-06-2025
- Business
- The Star
Alliance Bank steady on robust loans, healthy NIM
PETALING JAYA: CIMB Research is maintaining its 'buy' call on Alliance Bank Malaysia Bhd with an unchanged target price of RM4.80. It stated that the lender's key catalysts include robust loan growth and a healthy net interest margin or NIM. In a report to clients, the research house said its target price of RM4.80 (ex-rights basis) was based on a return on equity (ROE) of 9.7% and a fair price-to-book value of one times to the lender's financial year ending March 31, 2026 (FY26). The bank's other key catalysts include benign credit costs and a potential merger, CIMB Research said. The research house said the bank's downside risks include higher-than-expected credit costs and higher cost of funds. In the report, it also noted that Alliance Bank had announced its rights issue price fixed at RM3.33. The entitlement basis is two rights shares for every 17 existing shares. 'These are in line with our expectations. 'The total funding raised from the rights issue of RM606.5mil is consistent with the earlier indicative amount of RM600mil. 'Overall, there were no major surprises in the latest rights issue announcement,' the research house said. CIMB Research said the bank announced in March a renounceable rights issue to raise gross proceeds of RM600mil with a rights issue price of RM4.20 per rights share (reflecting a discount of approximately 20% to the then-market price of RM5.09), with an entitlement basis of three rights shares for every 32 shares. The research house reiterated that the change was in line with its expectations and that the latest announcement did not come as a surprise, and was in line with its earlier estimate that the rights price may have to be adjusted down, owing to the drop in Alliance Bank's share price. CIMB Research estimated that the rights price might have to be revised down to RM3.20 (from the earlier indicative RM4.20) if set at a 20% discount to the current share price, with the number of rights increased to 186 million from the earlier indicative 145.1 million. This is based on an estimated revised entitlement of four rights shares for every 32 shares. The research house pointed out that Alliance Bank's key targets for FY26 included an ROE of more than 10% post rights issue, loan growth of between 8% and 10%, net interest margin of between 2.40% and 2.45%, net credit cost of between 30 and 35 basis points, cost-to- income ratio of 48%, and a dividend payout ratio of 40% to 50%.
The Star
03-06-2025
- Business
- The Star
Fresh catalysts needed to spur local bourse
CIMB Research lowered its end-2025 FBM KLCI target to 1,560 points from 1,657 points. PETALING JAYA: The market may remain listless for the time being in the absence of fresh catalysts, say analysts. Compared with the markets in the United States and Europe, investors in the local market appeared to be more cautious amid continued suspense on the US trade talks front. Stocks in the United States appeared to be on a risk-on mode – they reportedly churned out their best month in May with the Dow Jones Industrial Average jotting a 3.9% gain while the Nasdaq Composite was 9.6% higher. Fund flow data for the previous week also indicated that foreign investors withdrew a net RM1.02bil from Malaysian equities. The increase in net selling from the previous week was in line with what is happening in the region where foreign investors had been selling down their holdings amid growing anxieties over economic uncertainties. iFast Capital's assistant research manager Kevin Khaw said the local market's direction would be determined by the developments and the eventual outcome of the US tariff negotiations. 'We think the possibility of an extension of deadline is unlikely despite the fact that we are approaching July, the end of the 90-days grace period,' Khaw told StarBiz. He also expected foreign funds to maintain their neutral stance on risk and might not aggressively buy into the local market. 'They will possibly tilt towards a wait-and-see approach, given the current tariff uncertainties alongside elevated US treasury yields. 'Having said that, we are not expecting foreign funds to revisit Malaysia as long as there is no increased certainty on the US-tariff front,' Khaw said. In terms of fundamentals, the medium to large capitalised stocks provided viable opportunities for investors. 'Valuation-wise, we are only approaching the pre-Liberation day levels, hence it is not considered as lofty. 'In a shorter term, we have revised the earnings estimate of Malaysian equities downwards due to the looming uncertainties, from the tariff impact and forthcoming subsidy removal,' Khaw added. 'On the other hand, we think the potentially stronger ringgit will encourage fund flows, under the assumption that the dollar to ringgit level is maintained at a stable RM4 to RM4.20, as a stronger ringgit often signals economic stability and sound macroeconomic management.' Meanwhile, CIMB Research had revised its earnings forecasts for the FBM KLCI down by 5.6% for both 2025 and 2026 on widespread underperformance in the recent first quarter earnings season. It had also lowered its end-2025 FBM KLCI target to 1,560 points from 1,657 points, based on an unchanged price-to-earnings (P/E) multiples of 14.7 times. 'The KLCI is trading at a 12-month forward P/E of 12.7 times with attractive dividend yields of circa 4.2%, but the upside may be capped by downside risks ahead,' it said. They include a potential imposition of a default 10% US import tariffs with the end of the tariff reprieve on July 9, potential hike in the sales and service tax, petrol subsidy revamp and higher electricity tariffs that are expected in July, it added.
