Latest news with #HLIB
New Straits Times
18 hours ago
- Business
- New Straits Times
HLIB cuts Astro forecasts after weak Q1 results, maintains 'sell' at 13 sen
KUALA LUMPUR: Astro Malaysia Holdings Bhd is expected to face limited near-term catalysts amidst a challenging macroeconomic environment and ongoing structural shifts in the media industry, according to Hong Leong Investment Bank Bhd (HLIB). HLIB said Astro continues to grapple with mounting structural challenges, particularly due to cord-cutting trends and intensifying competition from over-the-top platforms. The firm noted that the recent launch of the rebranded "Astro One", which offers simplified and lower-priced bundles such as entertainment, sports, and epic packs starting at RM49.90, aims to improve affordability and value perception. "While this initiative may support subscriber acquisition, it has also led to average revenue per user dilution, which declined to RM98," HLIB said. HLIB highlighted that subscription revenue has historically contributed between 62 per cent and 77 per cent of group revenue. "As such, although the new pricing strategy may be tactically sound, it introduces near-term pressure on top-line performance and profitability. "Despite Astro's strong position in local content creation, advertising expenditure (adex) remains muted, and revenue headwinds continue to persist," it added. HLIB has maintained a "sell" rating on Astro, with a target price of 13 sen. The firm believes that Astro's earnings visibility remains clouded in light of persistent subscription decline with cord-cutting behaviour and softening adex. For the first quarter ended April 30, 2025, Astro recorded core profit after tax and minority interest of RM700,000, which only made up one per cent of HLIB's and consensus full-year forecasts. The negative deviation was due to lower revenue caused by a decline in advertising and subscription revenue. Meanwhile, year-on-year top-line was down by nine per cent on the back of the reduction in subscription and advertising revenue. Segment-wise, both TV and radio fell by eight per cent and 28 per cent respectively. The contraction in TV was due to lower subscription and advertising revenue, while radio was impacted by soft consumer sentiment leading to lower advertising spend. In view of the results shortfall, HLIB has cut its financial year 2025 (FY25) and FY26 forecasts by 51 per cent and 58 per cent respectively.
New Straits Times
2 days ago
- Business
- New Straits Times
HLIB raises MN earnings forecasts on new CLS contract
KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) has increased its earnings forecast for MN Holdings Bhd for financial year 2026 (FY26) and FY27. This follows a new contract award and a higher assumption for future job wins. The firm has revised its FY26 and FY27 earnings upwards by 6.8 per cent and 7.5 per cent, respectively, it said in a research note today. The firm also maintained its "buy" call for the company, raising its target price to RM1.88 a share from RM1.76 previously. This is based on 20 times the FY26 fully diluted earnings per share of 9.4 sen. This revision reflects a RM39.5 million contract secured for a cable landing station (CLS) expansion project and a higher projected FY26 contract win assumption of RM450 million, up from RM397 million. "We view this latest win as a strong validation of MN Holdings' execution capabilities and believe it strengthens the group's position to secure upcoming CLS-related packages at this site. "If successful, we estimate this site alone could contribute an additional RM130 million in contract opportunities," it said. HLIB noted that one of MN Holdings' major data centre projects is nearing completion, with progress at 80 per cent. In view of this, only minimal contribution is expected in the coming quarter. The firm expects a temporary quarterly decline in earnings before growth resumes in subsequent quarters as newly secured data centre projects begin to ramp up. "In our view, this short-term softness is already well anticipated by the market and is unlikely to pose significant downside risk to the group's share price, given its transitory nature," it added. Within the ongoing data centre tender pipeline, MN Holdings has up to five active projects involving a mix of Chinese and US players. HLIB expects more data centre-related infrastructure jobs to come onstream following Tenaga Nasional Bhd's (TNB) latest data centre electricity supply agreement signings, which have now increased to 6.4 gigawatts (GW) from 5.9GW in the fourth quarter of 2024. "We continue to see MN Holdings as a credible co-tender, supported by its solid execution track record, particularly in delivering CLS projects under tight timelines. "This capability has been evident in several of its recent data centre-related wins, many of which marked the clients' first data centre set-ups in Malaysia," it added. The firm noted that the company's order book remained robust at RM1.13 billion as of March 27, with approximately 90 per cent stemming from the substation engineering segment. Despite the strong order book, tender activity remains healthy, with jobs valued at around RM1.85 billion, over 70 per cent comprise data centre and TNB projects.
New Straits Times
2 days ago
- Business
- New Straits Times
HLIB maintains forecast for Bank Negara to cut OPR to 2.75pct in 2H 2025
KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) has maintained expectations for Bank Negara Malaysia (BNM) to lower the overnight policy rate (OPR) by 25 basis points (bps) to 2.75 per cent in the second quarter of 2025 (2H 2025), if economic conditions warrant. Key factors to be monitored include the United States (US) upcoming economic data releases such as May inflation on June 27, US June nonfarm payroll (July 3) and Malaysia's May trade release (June 20). "Malaysia-US tariff negotiation developments, set to conclude by July 9, and geopolitical tension escalation in the Middle East also must be monitored," it said in a research note. It was reported that the US Federal Reserve (Fed) has maintained its interest rate at 4.25 to 4.50 per cent for the fourth consecutive meeting. The Fed reiterated that it is awaiting further information on the extent of tariff pass-through, while noting that the labour market remains relatively stable. HLIB said while the Fed has downgraded its growth forecast, it has raised its inflation projection. "Reflecting these mixed signals, the median forecast for two cuts (50 bps) was unchanged. "However, a closer look at the individual dot plot reveals a more cautious stance," it said. Citing data from the Federal Open Market Committee (FOMC), HLIB said the FOMC has observed recent indicators pointing to continued solid growth in US economic activity. Unemployment remains low, labour market conditions remain solid, but inflation stays somewhat elevated, HLIB said. "The committee seeks to achieve maximum employment and inflation at the 2.0 per cent rate over the longer run. "In considering the extent and timing of additional adjustments to the target range for the Fed funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks, and will continue to reduce its holdings of treasury securities and agency debt and agency mortgage-backed securities," it said.
New Straits Times
4 days ago
- Business
- New Straits Times
Bursa Malaysia remains lower at midday as profit-taking continues
KUALA LUMPUR: Bursa Malaysia remained easier at midday today due to continuing profit-taking, especially on plantation and energy stocks, said analysts. At 12.30 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) shed 5.88 points, or 0.38 per cent, to 1,514.83 from Monday's close of 1,519.99. The benchmark index opened 1.17 points lower at 1,518.82 and subsequently moved between 1,510.92 and 1,520.89 throughout the morning session. Market breadth was negative, with 462 decliners overtaking 284 gainers, while 455 counters were unchanged, 1,215 untraded and 22 suspended. Turnover stood at 2.01 billion shares worth RM947.77 million. Hong Leong Investment Bank Bhd (HLIB) said in a note that domestically, sentiment is expected to remain cautious, weighed down by uncertainty over a pending US-Malaysia tariff agreement, June's typically weak market performance, and potential policy drags from second half 2025's (2H25) fuel subsidy rationalisation and the Sales and Service Tax (SST) expansion on July 1 -- both of which could dampen consumer spending and cloud corporate earnings visibility. Nevertheless, it said downside risks may be cushioned by strengthening ringgit versus the US dollar, which appreciated 5.3 per cent year-to-date, potentially aiding foreign inflows and reducing import costs. "Besides, policy-driven catalysts, namely the National Energy Transition Roadmap (NETR), the Johor-Singapore Special Economic Zone (JS-SEZ), and the New Industrial Master Plan 2030 (NIMP 2030), can also support the local bourse. "Key weekly supports are established between the 1,476-1,500, while resistances are located at 1,524-1,556 range," HLIB. Among the heavyweights, SD Guthrie fell 9.0 sen to RM4.61, Petronas Chemicals Group and IOI Corp shaved 5.0 sen each to RM3.35 and RM3.67, respectively, while Hong Leong Financial Group fell 18 sen to RM15.86, and Telekom slid 7.0 sen to RM6.59. As for the most active stocks, Top Glove slipped 3.5 sen to 72 sen, MYEG and Tanco Holdings added 1.0 sen each to 94 sen and 96.5 sen, Velesto Energy eased half-a-sen to 18.5 sen, and Jiankun International was flat at 3.0 sen. On the index board, the FBM Emas Index slipped 37.89 points to 11,322.90, and the FBMT 100 Index decreased 36.35 points to 11,102.00. The FBM Emas Shariah Index eased 31.41 points to 11,342.25, and the FBM ACE Index weakened 23.48 points to 4,448.33, while the FBM 70 Index declined 26.57 points to 16,256.89. Sector-wise, the Plantation Index trimmed 68.34 points to 7,281.93, and the Energy Index sank 14.40 points to 737.76. The Financial Services Index dropped 86.85 points to 17,414.15, and the Industrial Products and Services Index decreased by 0.62 of-a-point to 150.51.
Focus Malaysia
4 days ago
- Business
- Focus Malaysia
Crude prices climb on fears of Iran supply disruption, regional escalation
THE Middle East geopolitical unrest caused Brent oil prices to surge 7% and settle at USD74 per barrel, its highest level in 3 months. Over the weekend, tensions intensified as Israel expanded its strikes to Iran's critical oil and gas infrastructures. As such, the re-emergence of Middle East conflict has raised geopolitical risk premiums on oil prices given a potential full-blown warfare may stifle Iran's oil producing and refining capacity and put a strain on global supply. The extent of Iran's crude oil supply disruption is still not yet ascertained at this juncture as we understand that the facilities under attack were mainly the downstream refineries and gas-related facilities. 'Although Iran's crude supply should remain intact for now, we believe oil price is skewed to the upside in the near-term given rising fear of more widespread attacks on Iran's oil fields and refinery facilities,' said Hong Leong Investment Bank (HLIB) in a recent report. This could portend a higher geopolitical premium on crude oil. Should Iranian crude exports face meaningful disruption, HLIB believes the shortfall could be partially offset by OPEC+'s spare capacity of five million barrels per day, primarily from Saudi Arabia and the UAE. 'As such, we do not foresee a structural tightening of the oil market as our base case, though volatility may persist,' said HLIB. Assuming no material changes on the supply side, HLIB reckons the oil demand-supply fundamentals still remain lacklustre, dragged by OPEC+'s accelerating production hikes and demand uncertainty caused by US's Liberation Day tariffs. Upside risks include further escalation in the Middle East conflict, trade disruption at the Straits of Hormuz. Iran sits right next to the Straits of Hormuz, which accounts for 30% of the global seaborne oil trade. 'We do not rule out Iran closing the choke point in the event of a broader escalation in the Middle East conflict,' said HLIB. Nonetheless, HLIB believes such worst-case scenario is unlikely to take place. Not only does it cut off its own fuel export revenue, it puts the economic interests of other Gulf states in jeopardy by curbing their crude exports. Although the oil price recovery may not be sustainable, we reckon it could offer some respite to upstream producers like Hibiscus given that it has been suffering from depressed realised oil prices since the US Liberation Day announcement in early Apr. 'Should the oil prices prove able to sustain at above USD70 per barrel in the medium term, we believe Velesto could benefit from better drilling activity pipeline as higher oil price encourages exploration and production works,' said HLIB. HLIB slightly increased their average Brent oil price forecasts for 2025 to USD67 per barrel but retained 2026 assumption at USD70 per barrel to reflect higher geopolitical risk premium in the near term. While their base case view on oil market fundamentals are intact, barring any material disruption to Iran's crude production, they are raising their stance to Tactical Overweight from Neutral in light of the sharp rebound in oil prices, driven by heightened geopolitical risk. 'In our view, sustained Brent prices above USD70 per barrel could catalyse a short-term re-rating across the Oil & Gas space, particularly for upstream and service-related names,' said HLIB. —June 16, 2025 Main image: Daily Trust
