Latest news with #CIMBSecuritiesSdnBhd
The Sun
9 hours ago
- Automotive
- The Sun
Auto sector to have minimum impact from SST expansion
KUALA LUMPUR: CIMB Securities Sdn Bhd has projected the upcoming Sales and Service Tax (SST) expansion in July 2025 to have a limited direct impact on the automotive sector. In a research note, it said vehicle sales are already subject to a 10 per cent sales tax, while maintenance and repair services incur an 8.0 per cent service tax. 'That said, there may be a slight increase in dealership and showroom rental costs due to the measure, although we believe the impact will be minimal. 'Indirectly, however, weaker consumer sentiment could weigh on new vehicle sales in the second half of 2025 (2H 2025),' it said. The Malaysian Automotive Association (MAA) has reportedly projected a 4.5 per cent year-on-year (y-o-y) decline in total industry volume (TIV) to 780,000 units in 2025, attributing this to demand normalisation and a reduced industry order backlog. CIMB Securities has, however, forecasted a sharper 7.0 per cent y-o-y decline in TIV to 760,000 units, due to potential headwinds from the planned removal of the RON95 petrol subsidy in 2H 2025, which Prime Minister Datuk Seri Anwar Ibrahim has affirmed will proceed as part of the government's subsidy rationalisation. 'Despite this, we expect demand in the sub-RM100,000 segment to remain resilient, supported by national brands and selective entry-level Japanese models. 'We project national brands to retain a dominant 64.5 per cent market share in 2025, with non-national marques accounting for the remaining 35.5 per cent,' it said. CIMB Securities also believed the removal of fuel subsidies could accelerate battery electric vehicle (BEV) adoption. BEV sales nearly doubled y-o-y in 1Q 2025 to 5,394 units from 2,703 units a year ago, with combined BEV and hybrid penetration rising 1.9 percentage points y-o-y to 7.3 per cent. 'With full duty exemptions for imported electric vehicles (EVs) set to expire by end-2025, and the government unlikely to extend it beyond the Dec 31, 2025 deadline, we expect a potential spike in EV demand in 4Q 2025 as buyers rush to benefit from tax savings,' it said. CIMB Securities has maintained its 'Neutral' rating on the sector due to a subdued growth outlook amid intensifying market competition.
The Sun
9 hours ago
- Automotive
- The Sun
Auto sector to have minimum impact from SST
KUALA LUMPUR: CIMB Securities Sdn Bhd has projected the upcoming Sales and Service Tax (SST) expansion in July 2025 to have a limited direct impact on the automotive sector. In a research note, it said vehicle sales are already subject to a 10 per cent sales tax, while maintenance and repair services incur an 8.0 per cent service tax. 'That said, there may be a slight increase in dealership and showroom rental costs due to the measure, although we believe the impact will be minimal. 'Indirectly, however, weaker consumer sentiment could weigh on new vehicle sales in the second half of 2025 (2H 2025),' it said. The Malaysian Automotive Association (MAA) has reportedly projected a 4.5 per cent year-on-year (y-o-y) decline in total industry volume (TIV) to 780,000 units in 2025, attributing this to demand normalisation and a reduced industry order backlog. CIMB Securities has, however, forecasted a sharper 7.0 per cent y-o-y decline in TIV to 760,000 units, due to potential headwinds from the planned removal of the RON95 petrol subsidy in 2H 2025, which Prime Minister Datuk Seri Anwar Ibrahim has affirmed will proceed as part of the government's subsidy rationalisation. 'Despite this, we expect demand in the sub-RM100,000 segment to remain resilient, supported by national brands and selective entry-level Japanese models. 'We project national brands to retain a dominant 64.5 per cent market share in 2025, with non-national marques accounting for the remaining 35.5 per cent,' it said. CIMB Securities also believed the removal of fuel subsidies could accelerate battery electric vehicle (BEV) adoption. BEV sales nearly doubled y-o-y in 1Q 2025 to 5,394 units from 2,703 units a year ago, with combined BEV and hybrid penetration rising 1.9 percentage points y-o-y to 7.3 per cent. 'With full duty exemptions for imported electric vehicles (EVs) set to expire by end-2025, and the government unlikely to extend it beyond the Dec 31, 2025 deadline, we expect a potential spike in EV demand in 4Q 2025 as buyers rush to benefit from tax savings,' it said. CIMB Securities has maintained its 'Neutral' rating on the sector due to a subdued growth outlook amid intensifying market competition.
New Straits Times
12 hours ago
- Automotive
- New Straits Times
Tax expansion poses limited direct impact on auto sector
KUALA LUMPUR: The upcoming expansion of the service tax scope, effective next month, will have a limited direct impact on Malaysia's automotive sector, according to CIMB Securities Sdn Bhd. The firm said this is because vehicle sales are already subject to a 10 per cent sales tax, while maintenance and repair services incur an eight per cent service tax. "That said, there may be a slight increase in dealership and showroom rental costs due to the measure, although we believe the impact will be minimal. "Indirectly, however, weaker consumer sentiment could weigh on new vehicle sales in the second half of 2025 (2H25)," it added. CIMB Securities also highlighted that the Malaysian Automotive Association has forecast a 4.5 per cent year-on-year (YoY) decline in total industry volume (TIV) to 780,000 units in 2025. This is attributed to demand normalisation and a reduced industry order backlog. The firm said MAA also flagged global economic uncertainty, exacerbated by US-China trade tensions, as a risk to Malaysia's economic outlook. In addition, the government has postponed the implementation of the revised open market value (OMV) calculation from January 2025 to January 2026. CIMB Securities views this delay as a short-term positive for the sector, as the new OMV formula could raise the average selling price of locally assembled vehicles by 10–30 per cent, based on MAA estimates. The firm also expects a sharper seven per cent YoY decline in TIV to 760,000 units, mainly due to potential headwinds such as the planned removal of the RON95 petrol subsidy in 2H25. "Despite this, we expect demand in the sub-RM100,000 segment to remain resilient, supported by national brands and selected entry-level Japanese models. "The government's plan, outlined in Budget 2025, to retain subsidies for at least 85 per cent of RON95 users should help cushion the impact and support affordability in the mass-market segment. "Consequently, we project national brands to retain a dominant 64.5 per cent market share in 2025, with non-national marques accounting for the remaining 35.5 per cent," it said. Furthermore, CIMB Securities believes the removal of fuel subsidies could further accelerate battery electric vehicle adoption. The firm also expects a potential spike in electric vehicle (EV) demand in the fourth quarter of 2025 as buyers rush to benefit from tax savings. Full duty exemptions for imported EVs are set to expire by the end of 2025, and the government is unlikely to extend them beyond the December 31, 2025 deadline. "Within our coverage, Sime Darby Bhd is well-positioned to ride this wave, supported by its expanding EV line-up across brands like BMW, Mini, Porsche, BYD, and Volvo," it said. Overall, CIMB Securities has maintained a "Neutral" rating on the auto sector due to a subdued growth outlook amid intensifying market competition. It noted that Sime Darby remains its top sector pick, supported by earnings recovery in the Australian mining sector, a broad EV portfolio, its stake in Malaysia's auto market leader Perodua, and the potential monetisation of non-core and land bank assets. Moving forward, the firm said key catalysts for the sector include the strengthening of the ringgit against the US dollar and Japanese yen, a reduction in interest rates, and favourable government policies aimed at reviving domestic demand. Key downside risks to its call include depreciation of the ringgit, interest rate hikes, and weaker consumer sentiment stemming from the potential subsidy rationalisation programme and new taxes.
New Straits Times
2 days ago
- Business
- New Straits Times
Rising SME loan risks may lift banking sector credit costs
KUALA LUMPUR: Rising risks within the small and medium enterprise (SME) loan segment could marginally increase overall credit costs for the banking sector, according to CIMB Securities Sdn Bhd. The firm said that assuming the probability of default (PD) for SME loans rises to 6.0 per cent from 4.5 per cent, while maintaining the loss given default at 50 per cent, estimated credit losses for the SME portfolio may need to be raised by 75 basis points (bps) amid a slowing growth environment. "On an overall basis, this translates to a 12 bps increase in sector credit costs, as SME loans currently account for 16.5 per cent of total loans," it said in a note. However, CIMB Securities noted that this projection remains within its earlier assumption of a 15 bps increase in sector credit costs and therefore it is maintaining its current credit cost assumptions for now. On historical credit cost trends, the firm said credit costs typically increase in times of slower gross domestic product (GDP) and export growth. It stated that during normal economic cycles, credit costs tend to range between 20 20bps and 30bps, while favourable conditions usually see benign levels of 10–20 bps. However, in slower growth cycles, credit costs often climb above 30bps to between 40bps and 50bps. "The most recent recession during the 2020 Covid-19 pandemic caused a significant jump in credit costs to 79bps in 2020, coinciding with a 5.5 per cent year-on-year (YoY) decline in GDP and an 8.6 per cent YoY drop in exports. "Prior to that, during the 2008 recession, credit costs peaked at 70bps as GDP declined by 1.5 per cent YoY and exports contracted by 10.9 per cent YoY," the firm added. While direct trade-related loans remain insignificant, accounting for just 1.0 to 4.7 per cent of total loans for banks under its coverage, CIMB Securities said larger impacts are likely to emerge from secondary spillover effects on trade-related supply chain vendors and suppliers. "The initial segment that may face some risk is likely to be the SME segment, which currently accounts for 16.5 per cent of total loans on average for the banks under our coverage," it said. CIMB Securities remains "neutral" on the banking sector and maintained its "buy" call on Alliance Bank Malaysia Bhd, Public Bank Bhd and RHB Bank Bhd as dividend yields remain attractive at current levels. The firm said the key upside risks include lower credit costs, higher net interest margins, and non-interest income bond gains. Meanwhile, key risks include higher-than-expected cost of funds, liquidity outflow and worse-than-expected asset quality.
New Straits Times
3 days ago
- Business
- New Straits Times
KLCI extends weekly gains despite SST, geopolitical concerns
KUALA LUMPUR: The Kuala Lumpur Composite Index (KLCI) recorded its second straight weekly gain, edging up by 0.1 per cent on a week-on-week (WoW) basis. According to CIMB Securities Sdn Bhd, the uptick came in the wake of news that the United States and China had reached an agreement on a framework to implement their trade truce on June 11. "However, the positive momentum was partially offset by concerns over Malaysia's expanded Sales and Service Tax (SST)'s potential impact on corporate earnings and rising geopolitical risks after Israel launched strikes on Iranian military and nuclear sites, including in central Tehran, on June 13," it added. Meanwhile, the average daily trading value (ADTV) increased by four per cent WoW to reach RM2.1 billion. CIMB Securities said in the first quarter of 2025, real estate investment trusts (REITs) within its coverage posted earnings that met expectations. The sector's core net profit (CNP) saw a 13 per cent year-on-year increase, largely supported by acquisitions completed during the 2024 financial year. "However, we observed signs of weaker consumer sentiment, reflected in lower variable rent contributions among retail REITs. "We expect a more challenging second half of 2025 (2H25), with potential headwinds from the expanded SST and a possible review of electricity tariffs," it adds. CIMB Securities expressed a preference for Axis REIT, citing its strong upside potential, relatively steady cost structure, and a robust portfolio of tenants.
