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Sime Darby Bhd growth
Investment & Market Trends, News

Sime Darby Heading Towards Strong Growth Trajectory

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PETALING JAYA: UOB Kay Hian Research (UOBKH Research) predicts that Sime Darby Bhd will achieve a compounded annual growth rate (CAGR) of 14.8% from the fiscal year ending June 30, 2023 (FY23) to FY26. The positive outlook is supported by Sime Darby’s recent strategic acquisitions, notably UMW Holdings Bhd, and anticipated recovery in the Chinese market. In its coverage initiation on Sime Darby, UOBKH Research recommends a “buy” rating with a target price of RM3.13, based on 12.2 times the estimated price-earnings ratio for FY25. According to UOBKH Research, Sime Darby stands to benefit significantly from its acquisition of UMW, particularly in the motor vehicles segment, by capitalizing on broader opportunities in customers’ car-replacement cycles. UOBKH Research highlighted that Sime Darby’s recent acquisitions, combined with the rebound in the Chinese market, support the projected three-year CAGR of 14.8% from FY23 to FY26. Following the acquisition of UMW, Sime Darby now commands a leading 58% market share in Malaysia’s automobile industry, up significantly from 5% in FY23, driven primarily by Perodua and Toyota brands. In China, where premium and luxury vehicles dominate, Sime Darby holds a modest 5% market share. The company’s revenue from Malaysia and China together contributes 66% of the motor-vehicle division’s revenue, while Australasia and other Southeast Asian countries contribute the remaining 34%. This diversified market presence provides a robust revenue base that helps mitigate risks associated with regional economic fluctuations, according to UOBKH Research. While Sime Darby’s motor-vehicles division experienced a slowdown in China, its largest revenue contributor, there is considerable growth potential in the luxury vehicle market. Despite challenges such as supply chain disruptions and price competition affecting margins, Sime Darby plans to expand its sales networks and introduce higher-margin products. In its industrial division, which accounts for 35% of Sime Darby’s total revenue, growth will continue to be driven by overseas markets, particularly Australasia, supported by a stable order book fueled by strong demand in the mining sector and steady commodity prices. Although commodity prices are projected to soften, UOBKH Research expects continued positive momentum in order book replenishment due to increased demand for metals driven by renewable energy trends and recovery in China’s construction industry. Sime Darby’s strategic focus on acquisitions and divestments aims to strengthen its vehicles and industrial businesses, achieving a more balanced revenue distribution across key markets including Malaysia, China, and Australasia. UOBKH Research also noted that divestment of non-core assets would further enhance the company’s financial position, with assets like Komatsu, Malaysia Vision Valley land, and UMW’s Serendah land potentially being put up for sale in the future.

News

Companies Offering Credit Services In Hot Water With New Law

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KUALA LUMPUR: Bank Negara Malaysia is in the process of drafting a Consumer Credit Act (CCA) that aims to impose tighter regulations on companies that provide ‘buy now, pay later’ (BNPL) services. To achieve this, the central bank will set up a special body in the initial stage to oversee entities that offer similar services. “The consumer credit oversight board task force (CCOB), led by the Ministry of Finance and two agencies, namely BNM and the Securities Commission, has been tasked with developing a comprehensive framework for this purpose,” said BNM Financial Inclusion Department Director Nor Rafidz Nazri. It is said that the task force will regulate the practices of those non-bank entities that offer credit services to consumers, while also regulating the providers of new credit products such as the BNPL service. Rafidz revealed that several other ministries are also involved in the law’s enactment, including the Ministry of Domestic Trade and Cost of Living, as well as the Ministry of Housing and Local Government. According to the CCOB, there are over 2.9 million people who use the BNPL service as of the third quarter of 2023. The top 3 main BNPL service providers are Atome, Shopee and Grab which recorded the highest number (97%) and value (96%) of transactions of the total recorded. “The use of BNPL saw double-digit growth in the third quarter of 2023, involving 52 million transactions worth RM4.3 billion,” it said. “The total outstanding balance of BNPL is relatively small, and most are paid on time with 96% of them having no outstanding payments. However, there are still about 1.3% delayed payments that were recorded within less than three months (of the transactions),” it said. Out of the 2.9 million active users of the BNPL services, a majority of 47% of users are aged between 31-45, while 44% are aged between 21 and 30.

Citi Bank
Investment & Market Trends, News

Citi Bank And Leading Banks Streamline Workforce For Enhanced Efficiency

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KUALA LUMPUR:  Citigroup’s headcount dropped by 2,000 employees following a comprehensive reorganization aimed at boosting profits and streamlining management layers. Similarly, Bank of America, Wells Fargo, and PNC Financial collectively trimmed more than 2,000 jobs in the three months ended March 31 compared to the previous quarter. This downsizing reflects banks’ efforts to manage costs amidst economic uncertainty, though expectations about future interest rate adjustments remain unsettled. Citigroup‘s recent layoffs are part of a broader initiative to cut 7,000 jobs, which will be reflected in upcoming quarterly earnings as employees complete their notice periods. The goal is to reduce Citi’s workforce by 20,000 over the next 2 years. Other banking executives acknowledged the challenges posed by changing interest rates, with higher funding costs and fluctuating trading results contributing to a cautious approach. Bank of America’s CEO noted a planned reduction in headcount, which has already decreased by over 4,700 since the first quarter of 2023. Meanwhile, investment banks like Goldman Sachs and Morgan Stanley saw declines in their workforce sizes, although they remain optimistic about increased revenue from capital markets activities like equity offerings and mergers. JPMorgan Chase, in contrast, expanded its workforce by nearly 2,000 employees in the first quarter, reaching a total of 311,921 employees, bucking the overall trend of workforce reductions across the industry.

Huawei
Energy & Technology, News

Huawei Malaysia Anticipates 5.5G Adoption Among Industries

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KUALA LUMPUR: Huawei Technologies (Malaysia) Sdn Bhd (Huawei Malaysia) is envisioning the transformative potential of its 5G- Advanced (5.5G) technology and its forthcoming implementation among major industries in Malaysia. Huawei Malaysia chief executive officer Simon Sun said the 5.5G technology is not targeted at individual consumers but provides greater connectivity capabilities that could benefit many crucial industries in the country such as the manufacturing sector. “The 5.5G technology, compared with 5G, is 10 times faster, supports 10 times more connections and has lower latency. We need to bring these cutting-edge digital facilities into the country, especially for the benefit of major industries to enhance operational efficiency as well as sustainability. “For example, previously in some factories, a lot of people or manpower were used to check quality. But now with 5.5G, high-definition artificial intelligence (Al) cameras can simultaneously analyse and give instructions to the production line. “It will be a game changer. Without this base foundation and good connectivity within the industries as an enabler, enhanced operational efficiency, which also leads to sustainability, will not happen,” he told Bernama. Sun elaborated that 5.5G unlocks numerous application possibilities, for example, its speed and low latency will deliver advanced, almost real-time capabilities for navigation systems in vehicles “With 5.5G, we have millimetre-wave radar technology that can help us detect objects when we navigate our vehicles in really bad weather conditions such as foggy days, low light conditions or under heavy smoke,” he said. Recently, Huawei Malaysia and Maxis Bhd inked a memorandum of understanding (MoU) to work on a 5G-Advanced (5.5G) acceleration programme. According to Sun, the collaboration with Maxis provides a commercial deliverable use case of the latest 5.5G technology advancements and not just a proof of concept from the lab. “What you see (in the collaboration) is what you will experience in the market,” he said. The collaboration would include several areas to drive commercialisation and adoption in Malaysia, spanning use cases, key technologies, technology evolution and the ecosystem. Both companies will explore initiatives to promote adoption and facilitate migration, showcasing the benefits of end-to-end 5.5G versatility, security and robustness via trial and testing and further accelerating the technology acceptance. Moving forward, Sun said Huawei Malaysia will continue to actively pursue its green energy strategy, focusing on solar inverters technology, data centres as well as technology and components for the electric vehicle industry. —BERNAMA

Energy & Technology, News

Over RM90 Bil Investment Needed to Fund Crucial Energy Projects In Malaysia

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KUALA LUMPUR: According to Natural Resources and Environmental Sustainability Minister Nik Nazmi Nik Ahmad, Malaysia would need an allocation of RM60 billion to RM90 billion from the government for the next 10 years to fund critical projects revolving around energy transition. The projects would involve improving the public transportation sector, strengthening grid infrastructure and workforce upskilling. Nik Nazmi explained that it is important to have a robust and adaptable grid to handle the increasing reliance on renewable energy sources. He also added that the estimated cost for the grid alone could reach over RM180 billion by 2050. He said this during a memorandum of understanding (MoU) signing ceremony between Bursa Malaysia and the UK government’s Mobilising Institutional Capital Through Listed Product Structures (MOBILIST) programme in Kuala Lumpur today. Nazmi said that the collaboration – aimed at enabling greater investment and advancing the UN’s Sustainable Development Goals (SDGs) in Malaysia – will be a catalyst for positive change that could encourage more green investments across the region. “Our thanks also go to the UK government for its leadership in establishing this programme. This collaboration on sustainable finance builds on a strong foundation of collaboration between our countries, such as the existing MoU between the UK and Malaysia to jointly work towards addressing climate issues,” he added. Improving Electricity Supply In Sarawak Meanwhile, Sarawak Energy Bhd provided an allocation of RM42 million last year to finance several improvement projects in Sibu, Kanowit, Kapit, Daro and Dalat, which will ensure the stability of electricity supply to consumers. Earlier this month, the company’s Group Chief Executive Officer Datuk Sharbini Suhaili said that the allocation is used to fund the construction of a new substation in Kemuyang (Sibu). The new substation is aimed at increasing the electricity supply and managing the distribution system. He also mentioned that Sawarak Energy will implement a smart grid project to help achieve the desired level of supply security and reliability. The smart grid project is expected to be fully implemented by 2025. “As the main electricity supplier in the state, Sawarak Energy achieved an almost full electricity rate throughout the state,” Sharbini added. — BERNAMA

Bursa
Investment & Market Trends, News

Bursa Rebounds Slightly from Beaten-down Prices

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KUALA LUMPUR: Bursa Malaysia’s downward momentum is anticipated to ease today after Wall Street’s mixed performance, with the Dow Jones edging up slightly. The FBM KLCI benchmark opened marginally higher at 1,535.05, reflecting cautious sentiment in the market. Key Malaysian stocks rebounding from previous losses included Axiata, climbing five sen to RM2.55, MISC adding 3 sen to RM7.82, Telekom Malaysia rising 3 sen to RM6.03, and YTL Power advancing 3 sen to RM3.85. Consumer stocks saw gains too, with Dutch Lady adding 44 sen to RM32 and Heineken Malaysia climbing 30 sen to RM22.80. Ingenieur Gudang was highly active, rising one sen to 15.5 as the most traded share, while SBH held steady at 27.5 sen and MRCB edged up one sen to 66.5 sen. In the US, blue-chip stocks rebounded slightly on Tuesday after a significant decline, driven by hotter-than-expected inflation data that hinted at delayed interest rate cuts. Federal Reserve Chairman Jerome Powell, speaking at a recent policy forum, suggested policymakers would wait longer before adjusting rates, aligning with investor expectations of rate stability. Apex Securities Research predicts bargain-hunting in the domestic market following recent declines, with potential relief from China’s economic growth. The firm advised caution, recommending defensive strategies focusing on fundamentally strong stocks amid volatility. It also highlighted potential benefits for export-oriented companies from a strengthening USD and expressed optimism towards commodities-related stocks, especially in the oil and gas sector, supported by sustained high oil prices.

Investment & Market Trends, News

Concern Rises As Ringgit Heads Toward Worrying Level

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KUALA LUMPUR: The ringgit may again reach its lowest valuation point as it nears the 4.80 level again against the strengthening US dollar (USD). US inflation data, rising US treasury yields, and escalating Israel-Iran tensions in the Middle East have thrown a spanner in the ringgit’s steady recovery against USD over the past month, following policy measures by Bank Negara Malaysia (BNM). The ringgit opened lower against the USD yesterday for the second consecutive day, falling to 4.7885 from Monday’s closing of 4.7785, which weakened even further to 4.7945 by 6pm. The ringgit touched RM4.80 against the greenback in February, which is its weakest level since January 1998 during the height of the Asian financial crisis. Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said US data continued to point towards robust economic growth with retail sales in March, rising more than expected to 0.7% month-on-month (MoM) and beating the consensus forecast of 0.4%. “Consequently, the futures market has assigned a lower probability for rate cuts, suggesting the monetary easing thesis this year has diminished and lending more support to USD. “We have a heightened geopolitical risk which resulted in forex players flocking to the US dollar, and we have the US Federal Reserve (Fed) which is likely to keep the rate higher for longer,” he told Bernama. He also said the Fed seemed unlikely to cut the interest rate in the near- term considering the stubbornly high inflation rate recorded in March at 3.5%. Meanwhile, on Monday, BNM issued a statement reaffirming it will ensure that Malaysian financial markets remain orderly and continue to function efficiently in light of the geopolitical situation in the Middle East. The central bank said it would also ensure sufficient liquidity and the orderly functioning of the foreign exchange (FX) market, supported by ongoing initiatives with government-linked companies (GLCs), government-linked investment companies (GLICs), corporations and exporters bringing more inflow and liquidity into the forex market. Earlier this month, BNM’s Financial Markets Committee (FMC) said it was encouraged by the central bank’s “enhanced efforts” to further promote FX conversion activities by government-linked entities, Malaysian corporates and businesses. It noted that between Feb 26 and April 5, the ringgit was the only regional currency that strengthened against USD, gaining 0.6%.

Minister of Investment, Trade & Industry Malaysia.
Investment & Market Trends, News

MIDA, a Vital Instrument to Remove Obstacles for Prospective Investors- Tengku Zafrul

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KUALA LUMPUR: The Malaysian Investment Development Authority (MIDA) plays an instrumental investment facilitator role in removing obstacles for prospective investors, said Investment, Trade and Industry (MITI) Minister Tengku Datuk Seri Zafrul Abdul Aziz. He noted that MIDA, which was established in 1967, has now transformed into Malaysia’s key investment promotion and marketing agency, a strategic move to strengthen the country’s investment landscape, ensuring the nation remains a competitive and attractive investment destination. “It is on that note that I would like to further expand on MIDA’s contribution to Malaysia’s socio-economic growth, and what better way to recognise MIDA’s valuable legacy than through the coffee table book that we are launching,” said Tengku Zafrul at the launch of the coffee table book, titled “Stepping Stones: MIDA’s Journey”, here today. Also present was MIDA’s chief executive officer (CEO) Datuk Arham Abdul Rahman and Hong Leong Bank (HLB) group managing director and CEO Kevin Lam. The book was penned by Malaysian National News Agency (Bernama) former chairman Datuk Seri Azman Ujang and former editor-in-chief Datuk Yong Soo Heong, along with biographer and publisher Bernice Cynthia Narayanan. Tengku Zafrul said the book is a must-read for anyone looking to delve into Malaysia’s industrial policymaking and nation-building journey post-independence. “I was told that the Stepping Stones book project began a decade ago, so I must say well done to Datuk Arham whose leadership eventually brought MIDA’s stories from concept to print. “The collaboration with MIDA also goes deeper than a simple partnership; banks like Hong Leong have a key role to play in supporting a vibrant industrial and investment ecosystem, and in advancing Malaysia’s socio-economic prosperity,” he added. Meanwhile, in a joint statement today, MIDA and HLB said they have inked a memorandum of understanding to support the overall investment ecosystem and provide comprehensive financing and banking services for businesses entering the Malaysian market. Aligned with the government’s commitment to making Malaysia the chosen investment destination for foreign and domestic investors and businesses, HLB has formed a strategic collaboration with MIDA, pledging to support the overall investment ecosystem and provide comprehensive financing and banking services for businesses entering the Malaysian market. The agreement marks a commitment by both parties to foster a strategic alliance that promotes sustained business growth and engagement across Malaysia’s small and medium enterprises and commercial sectors, said HLB and MIDA. – BERNAMA

News

Bursa Extends Serba Dinamik’s Deadline for Regularisation Plan Until May 15

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KUALA LUMPUR: Serba Dinamik Holdings Bhd, a Practice Note 17 (PN17) company, has been given until May 15 by Bursa Malaysia to present its regularisation plan. This extension marks the company’s second extension after missing the initial deadline of July 5, 2023. The reasons behind the company’s failure to meet the July 5 deadline remain undisclosed. After receiving a six-month extension, Serba Dinamik was scheduled to submit the plan in January 2023. A Bursa filing on Tuesday stated that failing to submit the regularisation plan by May 15 would result in Serba Dinamik’s delisting from the stock market. Additionally, delisting could occur if the company fails to obtain approval for the plan’s implementation, if its appeal is unsuccessful, or if the plan is not implemented within the specified timeframe. As of now, trading of Serba Dinamik’s shares remains suspended until further notice. Bursa Malaysia initially suspended its trading on January 18, 2023. Serba Dinamik entered PN17 status on January 6, 2022, after Nexia SSY PLT, its external auditor, issued a disclaimer of opinion on its audited financial statements for the 18 months ending June 30, 2021, due to a change in Serba Dinamik’s financial year-end. In April 2020, the Securities Commission Malaysia imposed a compound of RM16 million on Serba Dinamik, its group managing director and chief executive officer Datuk Mohd Abdul Karim Abdullah, and three other senior executives. This action was taken regarding submitting a false statement concerning revenue of RM6.01 billion for the financial year ending December 31, 2020, which had been flagged by the company’s external auditor, KPMG. In August 2023, Serba Dinamik announced that it had lodged an appeal with Bursa Malaysia regarding the exchange’s decision to delist the company on August 28 due to its failure to submit a financial regularisation plan within the specified timeframe. In November 2023, Serba Dinamik again failed to meet the deadline to submit its quarterly report for the fourth consecutive time without clarifying the reasons behind the delay. The company additionally did not release its annual report for the financial year ending June 30, 2023, by the October 31, 2023 deadline and has still not done so. Bursa Malaysia denied the request for Serba Dinamik for an extension until January 15, 2024.

News

GDEX In IT Diversification Drive

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KUALA LUMPUR: Express delivery firm GDEX Bhd, which has incurred losses over the past two financial years, intends to expand its operations into information technology (IT) services and solutions in a bid to bolster its revenue streams. GDEX previously acquired ownership stakes in three IT enterprises in 2022, namely Web Bytes Sdn Bhd with 38 per cent ownership, Sweetmag Solutions Sdn Bhd with 51 per cent ownership, and Anon Security Sdn Bhd with 60 per cent ownership. In a Tuesday filing to the stock exchange, GDEX outlined these acquisitions as the initial steps in its strategic turnaround plan. According to the filing, investments in Web Bytes, Sweetmag, and Anon Security are a gateway for GDEX into the IT services and solutions sector, encompassing areas such as e-commerce and website development, enterprise software solutions, and cybersecurity consulting. For the financial year ending December 31, 2023 (FY23), the company’s IT division generated RM33.4 million, comprising 8.4 per cent of the total revenue of RM397.18 million. However, despite this revenue contribution, the segment incurred a net loss of RM1 million for the year. This loss was primarily attributed to escalated staff expenses, as the IT subsidiaries expanded their workforce to accommodate operational requirements. GDEX foresees a turnaround in this segment, which it perceives as poised for sustained growth, propelled by the escalating demand for technology-driven solutions. The company anticipates that the IT segment will rebound and contribute 25 per cent or more of its net profit in the future. Moreover, GDEX plans to pursue further initiatives, including investments, acquisitions, and strategic partnerships with other promising IT firms, to bolster the potential of its IT services and solutions business. Across the board, GDEX’s net loss doubled to RM34.8 million in FY23, compared to RM17.27 million in FY22. This was attributed to challenges in its core express delivery business, including intensified competition from foreign courier firms and what it termed ‘delivery masking,’ hindering access to the company’s delivery services on e-commerce platforms. On Tuesday, GDEX shares declined by half a sen or 2.86 per cent, closing at 17 sen, resulting in a market capitalisation of RM959.04 million. Year-to-date, GDEX shares have fallen by three sen or 15 per cent.

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