MONEY MASTER

Here’s a summary of key updates in Malaysia’s financial markets today: Top Highlights Maybank (1155.MY) : Reported a  7.6% increase  in  3Q2024 net profit  to  RM2.54 billion , driven by higher  non-interest income  despite a decline in  net interest income . The bank aims for a  11% ROE  for FY2024. Sunway (5211.MY) :  Net profit doubled  to  RM376.08 million  in 3Q2024, with a  31.8% increase  in revenue to  RM2.03 billion . IOI Corp (1961.MY) :  1Q2025 net profit surged 133.8%  to  RM710.7 million , boosted by  forex gains  and  biological asset adjustments . KLK (2445.MY) :  4Q2024 net profit dropped 94.18%  to  RM6.77 million , impacted by  inventory write-downs  and  investment losses  in Synthomer Plc. Airports (5014.MY) :  3Q2024 net profit more than doubled  to  RM210.37 million , driven by increased  passenger...

A proposed increase in Malaysia's minimum wage is expected to raise operating costs for the country's plantation sector and encourage a shift toward automation, according to Public Investment Bank . The Ministry of Human Resources plans to propose raising the monthly minimum wage from RM1,500 to RM1,700 , as reported by Nanyang Siang Pau citing unidentified sources. If implemented, the operating costs for plantation companies could rise by up to 3% , the bank estimates. Impact on Labour-Intensive Industry A higher minimum wage will likely push the labour-intensive plantation sector to allocate more capital for the automation of work processes to reduce headcount, including investments in robotic arms, drones, and other specialized machinery. This shift could also help reduce the industry’s heavy reliance on foreign workers, especially since the new hiring quota remains frozen . The government is set to review the minimum wage this year, as required by law, which mandates a ...

Retain HOLD with a higher target price (TP) of RM12.21 Highlights FFB output growth to mitigate lower palm prices…  GENP registered FFB output growth of 28.5% yoy in 1Q17 , boosted by yield recovery (as lagged impact of El Nino subsided since end-FY16) and more areas moving into mature and higher yielding bracket (for its plantation estates in Indonesia). Management remains confident that the strong FFB output growth achieved in 1Q17 will sustain into the next few quarters (with output ratio of 45:55 in 1H and 2H), underpinned by young age profile for its plantation operations in Indonesia (with average age of only ~ 5 years as at end- FY16), which will in turn cushion lower palm product prices. The opening of GHPO to boost JV’s earnings from 2H…  We expect the opening of Genting Highland Premium Outlet (GHPO, likely by end-2Q) to perform as well as Johor Premium Outlets (JPO), if not better, as it will be serving a more diverse group of shoppers vis-à-...

Reiterate MARKET PERFORM with an unchanged target price (TP) of RM9.50 SIME recently announced a tender invitation for the repurchase of its 2018 and 2023 sukuk totalling USD800.0m. Meanwhile, SPSETIA announced the acquisition of 342.5 acres land in Bangi from SIME’s 40%- owned associate Seriemas for RM447.6m. We are neutral on both developments, though we upgrade FY18E NP by 6% to reflect one-off gains. Maintain MARKET PERFORM with unchanged TP of RM9.50 based on SoP. Sukuk repurchase and associate’s land sale.  Sime Darby Berhad (SIME) recently invited eligible holders of its outstanding 2018 and 2023 sukuk to tender the respective sukuk (totaling USD800.0m) for repurchase. The company also announced a consent solicitation seeking the substitution of Sime Darby Plantation Sdn. Bhd. (Plantation) as the new obligor for the said sukuk, among other adjustments to the terms and conditions. Separately, SP Setia Berhad (SPSETIA) recently announced the acquisition of 342.5 ...

Retain NEUTRAL with a higher target price (TP) of RM24.90 We had a meeting with Kuala Lumpur Kepong (KLK)’s management recently and came away with a steady view on the company’s outlook. Despite seeing strong CPO price performance, we think current valuation remains unattractive at 23x forward PER. Hence, we maintain our  Neutral  call but with a higher  TP  of  RM24.90  (up from RM23.46) after rolling over our valuations to FY18. A rebound in FFB production.  After experiencing an 8.1% drop in FY16 FFB production, the company expects to see a recovery in FY17 with a 3-5% growth. The growth will mainly come from Kalimantan Tengah, which has seen a dip for 2 consecutive years. Malaysian production may be struggling to see a recovery due to a lagged effect of El Nino’s impact last year. Targeting a steady production cost.  Despite expecting an increase in fertiliser and labour expenses, the company targets to keep its prod...

Maintain HOLD with lower target price (TP) of RM1.68 Results 3Q16 core net profit of RM18.9m (qoq: -18.5%; yoy: - 18.1%) took 9M16 core net profit to RM57.8m (-18.2%), accounting for 59.1% and 56.5% of our and consensus full- year forecasts. We deem the results below expectations, despite expecting stronger 4Q results (underpinned by stronger 4Q FFB output and sustained palm product prices). Deviations Higher-than-expected finance costs. Dividend None. Highlights QoQ…  Despite a flattish revenue growth, 3Q16 core net profit declined by 18.5% to RM18.9m, as higher plantation earnings (arising from FFB output recovery), reduced losses on wood product division, and higher associate and JV contribution were more than offset by higher finance costs and tax expense. FFB output increased by 30.1% to 151.3k tonnes, boosted mainly by output recovery at its Indonesian operations (while Sabah estate has yet to show improvement). YTD…  9M16 core ne...

Maintain OUTPERFORM call with an unchanged target price (TP) of RM0.85 TDM 9MFY16 reported a core net profit of RM36.1m, making up 55% of our full year earnings forecasts after stripping out unrealized gain on the foreign exchange in fixed income securities amounting to RM8.4m and impairment loss on receivable, RM1.3m. Though it fell below our expectations, we think that it will be able to catch up in 4Q given the recovery in FFB production and sharp increase in CPO prices. Hence, our earnings forecasts remain unchanged. No dividend was declared for the quarter. We maintain our  Outperform  call with an unchanged TP of  RM0.85 . 3QFY16 revenue (QoQ: -0.3%, YoY: +4.3%).  3QFY16 revenue increased 4.2% YoY to RM102.8m, led by an improved revenue from healthcare segment while plantation sales remained steady. During the quarter, plantation sales fell slightly to RM57.9m as weaker FFB production (-26.7% YoY) was cushioned by stronger CPO prices (+25.2%...

Maintain PERFORM with unchanged target price (TP) of RM3.60 1H17 CNP at RM55m was within expectations at 46% of both consensus? RM118m and our RM119m forecasts. No dividend was declared, as expected. We maintain our FY17-18E CNP forecasts at RM119-142m. No change to our MARKET PERFORM call and TP of RM3.60. 2Q17 meets expectations.   IJM Plantations Berhad (IJMPLNT) 1H17 CNP at RM55m came in within expectations at 46% of both consensus? RM118m forecast and our expected RM119m. Group production at 424.1k MT was within our expectations as well, at 47% of full-year forecast. No dividend was announced, as expected. Price improvement.  YoY,  CNP rose 21% on flat FFB volume, driven by large increases in CPO prices in Malaysia (+23%), Indonesia (25%) and a sharp jump in PK prices (+74%) due to tight supply and rising demand for palm kernel oil as a coconut oil alternative. This led to a 57% improvement in Malaysian operations PBT, and a reversal in Indonesia...

The focus today will be on both the Ringgit against a much stronger US dollar and the plantation sector. The Malaysian Palm Oil Board will announce this week Oct inventory, output and export numbers, thus the spot light on the plantation sector. Last Monday, the KLCI eked out a 0.41-point gain to settle at 1,686.11. Yesterday, the Malaysian stock market was closed for the Deepavali holiday. However, overnight US dollar gains could put the ringgit in the spotlight today. The ringgit was last traded weaker at 4.3825 versus the US dollar. The Ringgit on spot light against a stronger US dollar Reuters reported that the prospect of a US rate hike sent the dollar to a seven-month high. A strong dollar eats into the overseas sales at US companies. In overnight US share trades, the Dow Jones Industrial Average rose 0.16% to  17,758.21 points. Nasdaq Composite fell 0.24% to 5,083.24. With the plantation shares like Sime Darby Bhd, Kuala Lumpur Kepong Bhd, ...