The electronics manufacturing services (EMS) sector in Malaysia has seen mixed performance in 2024 despite being part of the broader tech upcycle, with rising costs, inflation, and supply chain disruptions offsetting growth from increased global demand and outsourcing trends. Key EMS Performances Winners : SKP Resources Bhd (+76% YTD) V.S. Industry Bhd (+47% YTD) NationGate Holdings Bhd (+51% YTD) P.I.E. Industrial Bhd (+29% YTD) Strugglers : ATA IMS Bhd (-8% YTD) JHM Consolidation Bhd (-36% YTD) Growth Drivers and Challenges Diversification Opportunities : The China+1 and Taiwan+1 strategies have positioned Malaysian EMS players to gain market share. However, reliance on major customers, such as Dyson, continues to be a concern. Cost Pressures : High inflation and production costs have affected profit margins. Company Highlights SKP Resources : Recorded a 27% y-o-y net profit increase , benefiting from a recovery in consumer demand. V.S. Indust...
CapitaLand Investment Ltd, one of Asia’s largest property investors, has flagged potential losses as it works to reduce its exposure to China’s troubled real estate market.
The Singapore-based firm plans to cut its China exposure to 10-20% of its targeted S$200 billion in funds under management by 2028. Currently, 27% of its S$113 billion portfolio is tied to China. This transition could result in “fair value or divestment losses” that impact its near-to-medium-term earnings, the company said during its Investor Day presentation on Friday.
Key Points
- China Exposure Reduction: CapitaLand aims to decrease reliance on China, citing years-long real estate downturns that have hurt investments in office space and malls.
- Current Divestment Progress: Of the S$4.6 billion in divestments this year, most assets sold were in Singapore and Japan, with limited sales in China.
- Target Adjustments: The company plans to divest about S$1 billion in China this year, but as of early November, only S$300 million has been sold, according to Citigroup estimates.
Strategic Outlook
CapitaLand is focusing on growth outside China, including a recent acquisition of SC Capital Partners Group, a Japan-focused property investor. It is also exploring new real estate investment trust (REIT) listings in Australia, China, and India.
The company aims to double operating earnings to over S$1 billion by 2028-2030 while ceasing to issue divestment targets from 2025.
Market Impact
CapitaLand’s struggles with its China portfolio have weighed on its stock, which has fallen 12% year-to-date, compared to a 16% gain in Singapore’s benchmark equity index.
As CapitaLand shifts focus to diversify its global investments, its move to scale down exposure in the world’s second-largest economy marks a critical pivot for its long-term strategy.
Comments
Post a Comment