MONEY MASTER

 Malaysia’s real estate investment trust (M-REIT) sector may face a sharp drop in investor appeal if a long-standing  withholding tax relief on REIT distributions expires on Dec 31, 2025 , Maybank Investment Bank (Maybank IB) warned. The concession — in place since YA2016 — keeps tax on REIT income at  10% for most investors ,  0% for resident corporates , and  24% for non-resident corporates . Although repeatedly extended in the past, authorities have remained  silent  on whether it will continue into YA2026. What Happens If the Tax Relief Ends? Maybank IB said that without an extension, REIT distributions would revert to  marginal tax rates , potentially cutting  post-tax yields by 50–100 basis points . Such a reduction could: Lower net income for retail and institutional investors Make Malaysia’s REITs  less competitive  versus regional peers Deter foreign inflows Undermine sentiment despite the sector’s currently attractive...

Tariff Shock Pushes Firm Into the Red Electronics manufacturing services provider  VS Industry Bhd (KL:VS)  slipped into a net loss of  RM33 million in 4QFY2025 , compared with a net profit of  RM126.6 million  a year earlier. Revenue tumbled  29% y-o-y to RM858.8 million  from RM1.21 billion, as US reciprocal tariffs triggered sharper-than-expected adjustments from customers. Additional Headwinds Beyond weaker sales, the group’s results were weighed down by: Cost-down pressures  from customers Start-up losses  at its Philippines operations Impairments  on trade receivables and plant & equipment No dividend was declared for the quarter. For the full FY2025,  net profit plunged 85% y-o-y to RM36.7 million , while revenue fell nearly  11% to RM3.79 billion  from RM4.25 billion. Outlook: Challenging but Improving VS Industry expects operating conditions to remain  challenging , with performance tied to consumer senti...

  Key Takeaways: Loan growth projected to ease to  4%-5%  over the next two years vs. 5.5% in 2024. Non-performing loans (NPLs)  may rise 20-25 bps to 1.6% by end-2026, mainly from SMEs and low-income households. Strong household and corporate balance sheets should cushion downside risks, but  intense competition in mortgages and deposits  will pressure profitability. Slower Loan Growth Outlook Malaysia’s banking sector is facing headwinds from slowing economic growth and weaker corporate loan demand, according to a new report by  S&P Global Ratings . The agency flagged that  external risks , including higher tariffs and supply chain disruptions, could weigh heavily on smaller businesses. S&P estimates that  loan growth  will slow to  4%-5%  annually over 2025–2026, down from  5.5% in 2024 , as corporates delay capital expenditure plans amid external uncertainties. Rising Credit Risks S&P cautioned that  n...

CIMB Securities has expressed a positive outlook for the glove industry , despite cost pressures from Budget 2025 measures. These cost pressures arise from higher labour costs , including increased foreign worker levies and a minimum wage hike . However, analysts remain confident that glove manufacturers will pass these increased costs to consumers by raising average selling prices (ASPs) . With labour costs making up around 9% to 11% of total production costs, production costs are estimated to rise by 1.7% to 2.4%. Glove makers are responding by raising ASPs between 5% and 10%, and prices are now between US$21 to US$23 per 1,000 pieces for orders slated for December and January delivery . A significant tailwind for Malaysian glove manufacturers comes from the upcoming hike in US tariffs on gloves from China . Starting in January 2025, US tariffs on medical and surgical gloves from China will rise from 7.5% to 50%, with further increases to 100% by 2026. This development is expec...

 RHB Research has kept a 'neutral' rating on the non-bank financial sector , urging a selective investment approach amid catalysts such as the anticipated US Federal Reserve rate cut cycle and Malaysia's civil servant salary revision . While the sector holds potential, not all players are expected to benefit equally due to varied valuation profiles . RHB recommends prioritizing undervalued high-growth stocks or those with potential dividend upsides . Among its top picks are Bursa Malaysia Bhd (TP: RM11.25) and AEON Credit Service (M) Bhd (TP: RM8.80). Bursa Malaysia posted a strong performance in the first half of 2024, with a net profit of RM155.5 million , benefiting from a robust initial public offering pipeline and trading liquidity. Additionally, the firm hinted at the possibility of special dividends , citing Bursa's cash surplus. AEON Credit is favored for its digital banking platform and undemanding valuation , while Syarikat Takaful Malaysia Keluarga Bh...

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 ...

RHB Research has downgraded the Malaysian transportation sector from 'overweight' to 'neutral,' citing limited upside potential as key players, Malaysia Airports Holdings Bhd (MAHB) and Westports Holdings Bhd, reach their fair valuations. Key Takeaways: Downgrade Due to Valuation Concerns : The downgrade reflects RHB's view that stocks like MAHB and Westports have hit their fair valuations, limiting potential for further growth. MAHB saw a strong 74% year-on-year profit increase in the first half of FY2024 due to the recovery in international passenger traffic, but its share price is now close to its privatization offer price of RM11, suggesting limited upside. Positive Outlook on Tasco Bhd : Despite a 25% year-on-year drop in Tasco Bhd’s core net profit for 1QFY2025 due to weaker contract logistics and air freight performance, RHB maintained a 'buy' call with a target price of RM1.15. The positive outlook is based on Tasco's diversified client base, bus...

CIMB Securities has maintained a "neutral" outlook on the consumer sector, predicting softer quarter-on-quarter results for Q3 2024, following weak consumer sentiment seen in Q2 2024. The lack of festive seasons in the July-September period is also expected to contribute to the sector's seasonal weakness. Key Takeaways: Persisting Weak Sentiment and Limited Price Hikes : CIMB Securities notes that consumer companies face limited room for price hikes due to weak consumer spending patterns, with any adjustments aimed at covering higher input costs. In the recently concluded Q2 2024 results, sales were weaker than expected due to low sentiment and boycotts, with earnings exceeding forecasts primarily due to better margins. Medium-Term Catalysts for Recovery : A civil service salary hike starting in December is expected to boost purchasing power, potentially leading to an increase in private sector minimum wages. Higher consumer spending power could shift the sales mix toward...