BDB, Shanghai Youzhu Exploring Waste Management Solutions For Kedah

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January 22, 2024

ACE Market bound HE Group Berhad saw its IPO oversubscribed by 63.35 times ahead of its listing on the stock exchange.

The company is mainly involved in electrical engineering service, focused on power distribution systems for end-user premises such as industrial plants, as well as industrial and commercial substations.

The comprises of 440,000,000 ordinary shares, featuring a public issue of 86,889,700 new shares at an issue price of RM0.28 per share. This represents 19.75% of the enlarged share capital, with RM24.33 million expected to be raised from the public issue. In addition, there is an offer for sale of 44,000,000 existing shares by way of private placement to selected investors.

HE Group has received a total of 12,201 applicants for 1,415,604,300 shares with a value of approximately RM396,369,204 for the 22,000,000 shares allocated to the Malaysian public, representing an overall oversubscription rate of 63.35 times.

Meanwhile, the private placement of 53,889,700 shares and 44,000,000 offer shares made available for application by way of private placement to selected investors have also been fully placed out.

Notices of allotment will be posted to all successful applicants by 29 January 2024.

HE Group is scheduled to be listed on the ACE Market of Bursa Securities on Tuesday, 30 January 2024. Upon listing, it will have a market capitalisation of approximately RM123.20 million based on the issue price of RM0.28 per share and the enlarged share capital of 440,000,000 shares.

Alliance Islamic Bank Berhad is the Principal Adviser, Sponsor, Sole Underwriter and Placement Agent for the IPO exercise.

Bursa Closes Higher For Second Straight Day On Bargain Hunting

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January 22, 2024

Bursa Malaysia closed higher for the second consecutive day on Monday, thanks to bargain-hunting activities in selected heavyweights and small-cap stocks.

At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.82 points to 1,491.19 from Friday’s (Jan 22) close of 1,486.37.

The barometer index, which opened 0.98 of a point better at 1,487.35, moved between 1,485.51 and 1,493.98 throughout the session.

In line with this, the broader market saw advancers outpacing losers 644 to 375, while 428 counters were unchanged, 816 untraded and 15 others suspended.

Turnover dropped to 4.79 billion units worth RM3.12 billion from 5.39 billion units valued at RM2.73 billion on Friday, Bernama reported.

Bursa Malaysia’s Jan 22, 2024 Top Gainers And Losers

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January 22, 2024

In line with this, the broader market saw advancers outpacing losers 644 to 375, while 428 counters were unchanged, 816 untraded and 15 others suspended.

Top Gainers

NO	STOCK NAME	STOCK CODE	LAST DONE	CHG	VOL (’00)
1	ALLIANZ-PA	1163PA	20.980	+0.780	213
2	MPI [S]	3867	29.000	+0.640	1,772
3	AJI [S]	2658	16.340	+0.320	332
4	ALLIANZ	1163	20.280	+0.220	1,248
5	HLBANK	5819	19.020	+0.220	7,029

Top Losers

NO	STOCK NAME	STOCK CODE	LAST DONE	CHG	VOL (’00)
1	RAPID	7765	1.950	-0.830	5,502
2	YNHPROP [S]	3158	0.555	-0.300	2,337,696
3	SRIDGE [S]	0129	0.385	-0.160	351,386
4	HARISON	5008	8.260	-0.140	163
5	SAM [S]	9822	3.760	-0.100	2,608

Source: Bursa Malaysia

Malaysia – China 50 Years Of Economic Progress And Comprehensive Development

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January 22, 2024

On the occasion of the 50th anniversary of diplomatic relations between, 2024 is seen as a crucial year amidst global political and economic uncertainties and based on this, there is a strong emphasis on kickstarting economic development.

Deputy Investment, Trade And Industry (MITI) Minister Liew Chin Tong said this support of the 7th China International Import Expo (CIIE), and acknowledging the coordinating efforts of the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).

Liew said Prime Minister Datuk Seri Anwar Ibrahim consistently underscores the importance of economic progress and comprehensive development. In line with this, “By the end of 2024, I hope Corporate Asia, including Corporate China, will have the two following impressions about Malaysia.

“Firstly, Malaysia will be seen as a high-end manufacturing hub, departing from its past association with low-end manufacturing. Electrical and electronics, aerospace, medical devices and pharmaceutical, and chemicals are among the key focus for sector development.”

Malaysia’s initial economic take-off before 1997 positioned the country as a high-end manufacturing nation in Asia, and there is a renewed focus on regaining that status.

Secondly, Liew said, is the vision is to establish Malaysia as a key nation recognised for high-end services in Asia, in what is known as Services 2.0. Efforts are underway to position Malaysia as an attractive destination for high-end services such as legal and arbitration, manufacturing-related services and logistics, engineering, and environmental services, and establishment of regional headquarters especially for China and Asian businesses.

Chinese companies expanding globally are encouraged to consider Malaysia as their regional headquarters.

In the context of high-end manufacturing and services, there is a call for greater integration between government and private entities.

“Our responsibility is to improve Malaysia’s regulations and propose initiatives that create a positive impact on Malaysia-China businesses, focusing on high-end manufacturing and services within the policy and legal frameworks,” Liew added.

Economic alignment and collaboration between businesses are very much emphasised, and events like CIIE provide a platform for Malaysian entrepreneurs to engage with Chinese businesses, facilitating trade relations and benefiting both nations.

The key point is to encourage substantive cooperation, assist mutual understanding through exhibitions and expos, and foster an understanding of each other’s regulations and economic controls.

Foreign Exchange Rates Jan 22, 2024

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January 22, 2024

The closing Foreign Exchange rates (from Maybank) as at 5pm, Jan 22 are as presented below:

Currency	Bank sell TT/OD	Bank buy (TT)	Bank buy OD
1 US DOLLAR	4.7900	4.6560	4.6460
1 AUSTRALIAN DOLLAR	3.1730	3.0450	3.0290
1 BRUNEI DOLLAR	3.5740	3.4710	3.4630
1 CANADIAN DOLLAR	3.5590	3.4610	3.4490
1 EURO	5.2340	5.0660	5.0460
1 NEW ZEALAND DOLLAR	N/A	N/A	N/A
1 P NEW GUINEA KINA	N/A	N/A	N/A
1 SINGAPORE DOLLAR	3.5740	3.4710	3.4630
1 POUND STERLING	6.1070	5.9180	5.8980
1 SWISS FRANC	5.5040	5.3800	5.3650
100 BANGLADESH TAKA	4.4440	4.1510	3.9510
100 DANISH KRONER	71.7600	65.9900	65.7900
100 HONGKONG DOLLAR	61.8800	58.7600	58.5600
100 INDIAN RUPEE	5.8600	5.4900	5.2900
100 INDONESIAN RUPIAH	0.0317	0.0287	0.0237
100 JAPANESE YEN	3.2450	3.1430	3.1330
100 NORWEGIAN KRONER	46.8200	43.0300	42.8300
100 PAKISTAN RUPEE	1.7400	1.6400	1.4400
100 PHILIPPINES PESO	8.6900	8.1800	7.9800
100 SAUDI ARABIAN RIYAL	129.0000	122.4600	122.2600
100 SOUTH AFRICAN RAND	26.0700	23.5400	23.3400
100 SRI LANKA RUPEE	1.5400	1.4100	1.2100
100 SWEDISH KRONER	47.1700	42.9200	42.7200
100 THAILAND BAHT	14.0600	12.4600	12.0600
100 ARAB EMIRATES DIRHAM	131.8300	124.9400	124.7400
100 QATAR RIYAL	132.7100	125.9800	125.7800
100 NEW TAIWAN DOLLAR	16.3000	N/A	N/A
100 CHINESE RENMINBI	66.9900	64.1200	N/A

Thaipusam Celebration: 7 Roads To Batu Caves Closed From Tonight

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January 22, 2024

Seven roads will be closed to give way for Hindu devotees to celebrate Thaipusam in Batu Caves beginning 10pm.tonight.

Selangor police chief Datuk Hussein Omar Khan this was to facilitate the 1.5 to 2 million visitors who were expected to attend the celebration this year.

He the seven roads under the administration of the Gombak police headquarters will be closed until Jan 27.

These roads include the intersection of Jalan Bunga Raya heading to Jalan Batu Caves, traffic lights at Jalan Station (Batu Caves Bypass), exit from the Batu Caves roundabout (MRR2) heading to Batu Caves temple, exit from Gombak (MRR2) heading to Batu Caves temple, intersection of Jalan SBC 8 and Jalan Lama Batu Caves, Jalan Perusahaan heading to Batu Caves temple, and lastly, the traffic light junction at Sri Batu Caves heading out to MRR2.

Hussein said, in conjunction with Op Palu 2024, 1,600 police officers from the state and other states have been assigned to ensure the safety and smooth traffic flow of visitors heading to Batu Caves during the Thaipusam celebration.

“Therefore, the public can use alternative routes recommended by the police, which will be updated through the Gombak police’s social media platform.

“On Jan 13, the transport minister announced free rides for Rapid Bus and (KTM) Komuter services for visitors to Batu Caves from Jan 24 to Jan 25.

“Visitors planning to attend Batu Caves are advised to use the provided public transportation. Road users are also advised to use alternative routes to avoid traffic congestion during this celebration,” he told reporters.

He also said the Batu Caves area was a no-fly zone for drones, hence those intending to operate drones in the area must obtain prior approval from the Civil Aviation Authority of Malaysia (CAAM).

Hussein warned that legal action would be taken against those who fail to comply with regulations.

“If we look at past records, there haven’t been any serious incidents during the Thaipusam celebration except for records indicating that some people’s belongings were lost, and the like.

“Therefore, we advise visitors to take precautionary measures such as parking at designated areas, ensuring that parked vehicles are locked, and not leaving keys in the vehicles to prevent incidents such as theft or the loss of belongings.

“Visitors are also advised to always wear face masks in crowded and narrow spaces. Cooperate and comply with police instructions, plan your journey in advance, and use alternative routes to facilitate travel,” he added.He also said police will set up several static points for the public to access police services, either to report any incidents or to seek assistance.

These static points are easily visible and can be seen from a distance, he said, in addition to the traffic policemen on the roads.

Road closure information will be displayed on electronic billboards from the Batu Caves roundabout towards Gombak starting today as well as on the official Facebook page of the Gombak district police.

Japan’s Nikkei Scales 34-Year Peak On Wall Street Record

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January 22, 2024

Japan’s Nikkei share average rallied to a fresh 34-year peak on Monday as the U.S. S&P 500’s record-high close on Friday buoyed investor sentiment, despite continued signs of overheating in the Asian market.

After opening sharply higher, the Nikkei fell back a bit in the morning session before rising as much as 1.69% to 36,571.80, a level not seen since February 1990, in late trade. It closed the day 1.62% higher at 36,546.95.

The rally was extremely broad-based, with 207 of the index’s 225 components advancing, versus 17 decliners and one that was flat. Also, every Nikkei sector gained with real estate and technology being the top performers.

On Friday, the S&P 500 posted its first record-high close in two years, as AI fever drove big gains for chip shares and other heavyweight tech stocks, with server maker Super Micro Computer (NASDAQ:SMCI) lifting its profit forecast.

In Japan, AI-focused startup investor SoftBank (TYO:9984) Group gained 2.41%, while chip-testing equipment maker Advantest, which counts Nvidia (NASDAQ:NVDA) among its customers, climbed 3.52%.

The Nikkei’s 9.2% advance so far this year has put it head and shoulders above developed market rivals, many of which are in negative territory.

However, analysts have been warning of a potential pullback as technical indicators suggest the market has overheated. The relative strength index (RSI), for example, sits at 76.2, well above the 70 level that signals overbought conditions.

Japanese shares have had an additional tailwind this year from receding bets for an imminent end of Bank of Japan stimulus, particularly after the devastating New Year’s Day quake on the country’s west coast. The central bank announces policy on Tuesday.

The Nikkei generally rallies on a weaker yen, as it makes Japanese exports more competitive and boosts the value of overseas revenue. However, an ostensibly yen-boosting hawkish BOJ shift won’t necessarily hurt the Nikkei rally, according to OANDA strategist Kelvin Wong.

“The Nikkei 225 is much more following the U.S. stock benchmarks now, rather than the dollar-yen rate,” Wong said.

“Even if the BOJ signals it’s starting to shift away from negative interest policy tomorrow, I think that could be a positive for the Nikkei, because it gives market participants confidence that Japan is not going to slip back into deflation.”

Although the Nikkei looks due for a short-term pullback, the uptrend remains intact, and a test of 37,000 is likely in coming weeks, Wong said. – Reuters

TalentCorp, PERHEBAT: ‘Veteran MyWIRA’ To Pave The Way For Retired ATM

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January 22, 2024

In a groundbreaking collaboration aimed at ensuring a dignified retirement for Malaysian Armed Forces (ATM) veterans, Talent Corporation Malaysia Berhad (TalentCorp) has partnered with the Ex-Servicemen Affairs Corporation (PERHEBAT) to introduce the ‘Veteran MyWIRA’ initiative. The launch event, held in Penang, witnessed the convergence of over 650 guests, including PERHEBAT ATM trainees, veterans, and industry leaders.

This unprecedented initiative represents the first-time collaboration between the Ministry of Human Resources, through its agency TalentCorp, and PERHEBAT under the Ministry of Defence.

The ‘Veteran MyWIRA’ initiative focuses on industry-driven skilling and employment within the private sector, with a pilot program set to commence in collaboration with Micron Memory Malaysia Sdn. Bhd., a leading player in Malaysia’s semiconductor ecosystem.

Minister of Human Resources, YB Steven Sim Chee Keong, emphasiSed that the ‘Veteran MyWIRA’ initiative aligns with the principles of decent work within the framework of the MADANI economy. He highlighted its harmony with the three fundamental pillars of the ministry: strengthening worker welfare, improving skills, and enhancing workforce productivity.

“Our ATM veterans possess valuable expertise with specific, immediately applicable skills required in sectors such as E&E and aeronautics,” remarked Minister Steven Sim. “Their structured lifestyles in the military have instilled in them a high degree of discipline, professionalism, and commitment – qualities highly sought after by employers.”

The Deputy Minister of Defence, YB Adly bin Zahari, underscored the importance of cross-ministerial initiatives, stating, “Veteran MyWIRA can make a meaningful impact on the lives of retired servicemen and women, empowering them to navigate the challenges of retirement with dignity and resilience.”

The ‘Veteran MyWIRA’ initiative aims to address the socio-economic well-being of ATM veterans by providing industry-driven skilling and facilitating their seamless transition into the private sector. Leveraging the unique skill sets of veterans to fill job vacancies in high-demand sectors such as E&E and aeronautics, the initiative seeks to empower veterans to contribute significantly to the nation’s economy, improve employability, and enhance their overall quality of life.

TalentCorp’s Group CEO, Thomas Mathew highlighted that ‘Veteran MyWIRA’ leverages on TalentCorp’s existing initiatives, including mynext TVET and Future Skills Talent Council, in collaboration with industry stakeholders. The structured approach involves profiling and upskilling ATM veterans to ensure their meaningful contribution to the workforce.

The pilot program with Micron, set to begin in March 2024, will provide on-the-job training for selected ATM veterans, offering them employment opportunities. Concurrently, TalentCorp has partnered with state training centres, offering 500 job openings initially and holding the potential for significant expansion in response to industry demand.

The ‘Veteran MyWIRA’ initiative embodies the collaborative spirit between government agencies and the private sector, signifying a crucial step towards creating sustainable post-retirement careers for ATM veterans.

Nickel Price Crash Seen Heightens Indonesia’s Grip On Supply

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January 22, 2024

A prolonged slump in nickel prices is stress-testing producers worldwide, raising the prospect of sweeping mine closures that will deepen Indonesia’s dominance of global supply.

The metal used in stainless steel and electric-vehicle batteries is down more than 40% from a year ago amid a growing global glut. That’s piling pressure on higher-cost operations and could pose the greatest risk to new projects outside Indonesia.

So far, the main casualties are in Australia. On Monday, billionaire Andrew Forrest’s nickel producer Wyloo Metals Pty Ltd said it’s shutting down mines and BHP Group Ltd said it’s partly closing a processing plant. BHP had warned last week on prospects for its nickel business, while First Quantum Minerals Ltd suspended a mine.

But production in Indonesia — which already accounts for half of global supply — may prove more resistant to output cuts. The Southeast Asian nation has emerged as a global nickel hub after billions of dollars of investment in efficient plants that benefit from inexpensive labour, cheap power and readily available raw materials.

“Indonesian projects are more flexible in absorbing the impacts of lower nickel prices,” said Allan Ray Restauro, an analyst at BloombergNEF. That means overall global supply will keep rising despite output curbs elsewhere, he said.

Low prices

The flood of new supply from Indonesia in the past two years has overwhelmed demand at a time when metals markets are under pressure from a sputtering global economy. For nickel, softer demand growth from the EV sector is also a headwind, and prices have recently traded near US$16,000 (RM75,432) a tonne, close to their lowest level since 2021.

Mallee Resources Ltd’s Avebury mine in Tasmania, and a project by IGO Ltd are also at risk, according to BloombergNEF. Calls to the two firms were not immediately answered.

Parts of BHP’s Kambalda concentrator will be suspended from June because they can no longer receive ore supply from Wyloo’s halted mines, BHP said. The world’s biggest miner is reviewing its Nickel West business, and last week warned it may be forced to write down the value of the assets.

First Quantum said it would suspend its Ravensthorpe nickel facility in Western Australia and cut a third of its workforce.

Citigroup Inc sees nickel falling to US$15,500 a tonne in the next three months. The bank recently slashed its forecast for average prices this quarter to US$16,000 a tonne, from US$18,000 a tonne.

To be sure, Indonesia has its own uncertainties. A December accident that killed 21 people has triggered calls in the country for tighter regulation of the nickel industry ahead of a presidential election next month. One of the three candidates to become vice president criticised how the incumbent government has managed the sector during a televised debate on Sunday.

Testing times

The announcements by BHP and First Quantum add to other signs of stress. Glencore said in September that it will only keep funding the struggling Koniambo Nickel mine until next month. Nickel plants in the French territory of New Caledonia are seen at risk of closure, the French government said last year.

“A lot of supply is still coming in from Indonesia, and we will need nickel prices to go lower to constrain supply growth in Indonesia,” said Nikhil Shah, principal analyst for base metals at CRU Group.

Nickel’s woes reflect the dynamics of other battery-materials markets, which have seen prices sink after surprisingly strong growth in supply. Demand for nickel and cobalt have suffered too as EV makers adopt types of batteries that don’t use either of them.

Despite the potential for further cuts in mine supply, the market will remain in surplus this year, given higher primary nickel output coming from Indonesia and China, said Jason Sappor, senior analyst at S&P Global Commodity Insights.

“We expect nickel prices to remain subdued this year,” Sappor said. – Bloomberg

Embark On An Imperial Celebration At Pavilion REIT Malls: Welcoming The Year Of The Dragon With Grandeur

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January 22, 2024

As the vibrant Year of the Rabbit gracefully concludes, Pavilion REIT Malls anticipates the majestic arrival of the Year of the Dragon with exuberant celebrations across its renowned malls, heralding a year filled with fortune, prosperity, and robust well-being in 2024!

‘Dragon Dynasty’ Unleashed at Pavilion Kuala Lumpur

Pavilion Kuala Lumpur, with its penchant for imperial grandeur, orchestrates the ‘Dragon Dynasty’ Chinese New Year revelries, extending until 25 February 2024.

The centerpiece of this festive spectacle boasts two resplendent golden dragons, custodians of the precious oriental pearl, gracefully descending from auspicious clouds into Pavilion KL’s Centre Court, bestowing blessings of wealth, good luck, and happiness upon the mall. Elements inspired by mystical mountain tops pay homage to Chinese folklore, creating a lush and immersive experience.

In a delightful encore from the previous year, Pavilion KL collaborates with Lancôme to infuse beauty into the festive celebration. Lancôme transforms the Pavilion Crystal Fountain and Main Entrance in harmony with their ‘Make Your Legend Bloom’ theme, seamlessly blending tradition with modern elegance through blossoming spring flowers, dragon motifs, and oriental lanterns.

Shoppers can venture into the Lancôme Dragon Tunnel, explore limited edition Chinese New Year products, and partake in exclusive podium activities.

A captivating Lancôme setup, featuring synchroniSed 3D screens at Pavilion KL and Fahrenheit88, showcases the Lancôme Dragon and iconic products until 31 Jan 2024.

Elevating the experience, shoppers can scan a QR code for a special augmented reality filter, bringing the Lancôme Dragon to life.

This Chinese New Year promises a rich tapestry of entertainment and cultural experiences. Shoppers can revel in vibrant performances, Prosperity Dragon Mascot walkabouts, and special appearances by the God of Prosperity.

The Main Entrance hosts acrobatic lion dance and dragon dance performances, a stunning violin performance by The Music Professionals Academy of Performing Arts, and a ‘New Year’ resonance by Taylor’s International School.

Parents are invited to the KL Junior Fashion Show by A-List Academy, featuring children donned in Chinese New Year outfits from brands like Parkson Elite, ANTA, Skechers, Rookie, and Guess Kids.

Throughout the campaign, Centre Court offers cultural immersion experiences, allowing shoppers to choose from imperial showpieces to Chinoiserie-inspired style costumes by Gisselle Liu.

Various booths from tenants like YuYan Tea, Taimal Herbs, Herbal Farmer, Koun na Neko, and Gisselle Liu provide ample opportunities for festive shopping and gifting. Visitors can also write a wish for the new year and toss it into the Prosperity Wishing Tree at Centre Court, believing that wishes caught on branches will come true.

An Astro pop-up at Connection from January 16 to February 4, 2024, offers shoppers the chance to meet Astro celebrities, engage in weekend activities hosted by Astro Radio DJs, and win #HappyDragons Chinese New Year Angpow and premium merchandise.

Exciting gifts await those who spend this Chinese New Year! A minimum spend of RM300 in a single receipt garners shoppers Pavilion KL’s exclusive Prosperity Ang Pow Packets.

Maybank cardholders can reap additional rewards, with exclusive Prosperity Ang Pow Packets, an oriental mug from YuYan Tea, and a Poh Kong Gold Coin for minimum spends of RM200, RM1,500, and RM3,000 in a single receipt, respectively.

Embark on a regal celebration, as Pavilion REIT Malls sets the stage for a Year of the Dragon brimming with opulence, festivity, and boundless possibilities.

Inari To Benefit From AI, New Cycle and China Expansion: Kenanga

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January 22, 2024

Inari Amertron Bhd’s (Inari) is likely to gain from the rising global chip demand due to artificial intelligence (AI), upcoming replacement cycle, and expansion in the Chinese market, according to Kenanga Research.

Kenanga maintained its TP of RM4.17 based on an unchanged FY25F PER of 32x.

“Our valuation reflects a 10% premium on peer’s forward mean, justified by the company’s superior net margins of more than 20% compared to its peers of single digit.

“Our TP imputes a 5% premium to reflect its 4-star ESG rating as appraised by us,” it said in its Company Update today (Jan 22).

The research house said the country’s leading outsourced semiconductor assembly and test (OSAT) services provider will benefit from global chip demand that is buoyed by the AI supremacy race among mega-tech names.

“We expect the prominent US smart phone maker to unveil a major AI technology breakthrough during its upcoming smartphone launches in 2024 and 2025.

“(This is due to) its current virtual assistant, ‘Siri,’ is starting to feel outdated as compared with the generative AI features of products from peers such as Microsoft, OpenAI and Google.

“The trend towards AI-powered smart phones has also manifested itself in positive reviews for recently launched Samsung Galaxy S24 featuring a slew of innovative AI features,” it said.

Kenanga said another catalyst for Inari is the likely positive demand outlook for smartphones as it is the moving into a replacement cycle.

“Replacement cycle is especially significant as the shipment of the US-branded smartphone has been consolidating over the past eight quarters, and a rebound is anticipated in 2024.

“The potential upswing could be rapid, considering the consolidation in the overall smartphone market has depleted inventories, suggesting limited downside risks.

“Consequently, the supply chain may need to respond swiftly and scale up production if the smartphone market performs even slightly better than expected,” it added.

The research house added Inari’s radio frequency (RF) segment is expected to show quarter-on-quarter (QoQ) improvement in the December quarter (2QFY24) after addressing inefficiencies in the previous quarter.

It also said the firm’s strategy of ‘China for China; Penang for the West’ positions the group to benefit from the smartphone upcycle in both regions.

“Inari is riding on the smartphone market in China via its Semiconductor International Corporation JV (YSIC JV) expansion in Yiwu.

The 54.5% owned YSIC-JV expansion, featuring a 500,000 sq ft plant in Yiwu, set to be operational by mid-2024 positions the group to tap into the China smartphone market with an ambitious goal of achieving 1 billion yuan in revenue and listing status within three years.

Kenanga likes Inari for it being the closest proxy to 5G adoption, being highly responsive to the market demand with the roll-out of new technologies, and its significant expansion in China, capitalising on the aggressive push for semiconductor self-sufficiency.

The risks to Kenanga’s call include a soft global smartphone market, new offerings not well-received by key customers, supply-chain disruptions, and delays in its expansion in China.

The EPF in an environment of interest rate hikes

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January 22, 2024

By Jason Loh Seong Wei Head of Social, Law & Human Rights at EMIR Research, an independent think tank focussed on strategic policy recommendations based on rigorous research

On the optimistic side, EPF’s expected dividend declaration for financial year (FY) 2023 could range between 5.7% to 6.7% – higher than the 5.35% in 2022. Narrowing the range, a ballpark figure could be 5.95% or 6.15% (based on historical trend estimates – see Chart 1).

Chart 1

Source: EMIR Research – based on EPF data compilation

Experts are forecasting EPF paying out the highest ever dividend, i.e., at RM60 billion (and above), which surpasses the current record-high of RM56.72 billion for 2021 (“Experts say EPF’s total dividend payout may be highest ever”, Business Times, January 4, 2024).

EPF’s investment performance for the first nine months of 2023 alone saw RM47.86 billion in cumulative income, representing an increase of 33% compared to the RM36.04 billion recorded in the same period in 2022 (see, “EPF records RM47.86 billion total investment income for 9m 2023”, EPF Media Desk, Corporate Affairs Department, EPF, November 16, 2023).

Furthermore, under the Madani/unity government, no more special or “one-off” EPF withdrawals are permitted – which should allow for the conservation of the assets allocated for investment. By extension, this allows for a higher dividend and payout (ringgit as investment for ringgit as return).

EPF has maintained an average annual fund ratio of over 80% for investments in the domestic market from 2019 to 2023.

The buoyant expectation also comes at a time of positive real interest rates in the second half (2H) of FY 2023, i.e., where inflation (trending below 3%) is now lower than the official and market interest rates.

Contrast this with foreign destinations such as the UK – which comprises approximately half of EPF’s overseas assets under management (AUM) – where negative real interest rates persisted for longer (vindicating the Prime Minister’s clarion call last year for repatriation and re-balancing towards domestic investments) combined with downward pressure on the exchange rate.

EPF’s total assets are reported to stand at RM1.1 trillion as of September 2023 (2H FY 2023) – of which 62.3% represented domestic investments whilst 37.7% were overseas. The ratio is expected to widen in line with the Prime Minister’s call and vision for EPF to increase and enhance its domestic investments to 70% in the coming years.

EPF’s financial performance for the first three quarters of FY 2023 is expected to have been sustained in the fourth quarter (Q4), especially on the back of the equity market as listed companies continue with the momentum of recovery amidst the challenging external backdrop of geo-political and geo-economic dynamics such as the on-going conflict in Ukraine with lagged supply-chain implications and the interest rate hikes in the US.

The federal funds rate (FFR) hikes were meant as counter-measure to the USD volatility and inflationary pressures – thought also to emanate, to an extent, from expansion of the money supply. What’s clear/definitive is that the NAIRU (non-accelerating inflation rate of unemployment) hypothesis where there’s a trade-off between employment and inflation has been debunked (as anticipated in EMIR Research article, “Interest rate hikes lands the poor further into poverty”, October 4, 2022).

Instead, demand in the US is a consequent factor resulting from higher wages, anticipatory pricing by employers, expansion in money supply due to increase in borrowings, and not least sellers’ inflation aka “greedflation” – in response to the antecedent cause of inflation, i.e., supply-chain shocks/disruptions.

Although equities contribute less at 42% compared to fixed-income at 47% in the assets invested for Q3 FY 2023 which is a 5% difference, the former yielded a return of 63% compared to the 32% by the latter, representing a 31% difference or nearly twice the amount. This is six times (6x) higher than the difference in the percentage invested.

According to a report by RHB Research (December 15, 2023), the “improved performance of some of the stocks on Bursa Malaysia in the second half of 2023 was driven by sectors such as power, construction and properties” (“Market Recap: Bursa Malaysia’s biggest winners and losers in 2023”, The Edge Markets, January 4, 2024) of which EPF holds a significant share, overall.

For example, EPF owns 15.63% of shares in power utility monopoly company TNB (“EPF purchases 0.17% stake in TNB for RM98 mil”, The Edge Markets, September 8, 2023).

In terms of the construction and property sector, EPF owns 36.21% (as of 2020) of MRCB (Malaysian Resources Corporation Bhd).

It also owns 65.87% in the Malaysia Building Society Berhad (MBSB) and 41.94% in RHB Bank Bhd. Bank Negara’s Overnight Policy Rate (OPR) hikes – which peaked at 3.00% – have provided some breathing space from the compression pressure vis-à-vis the net interest margin (NIM) for the banking sector. Banks’ share price enjoyed strong buying support in the earlier second half of the year (2H FY 2023) – but admittedly they became somewhat subdued as can be seen in the sell off towards the latter 2H FY 2023.

In EMIR Research article, “EPF in a low interest rate environment” (February 24, 2022), it’s highlighted that EPF’s then expected dividend declaration (conventional) for FY 2021 of about 5.2% to 6% was “… set against the wider backdrop of a generally low interest rate environment globally …”. It’s argued that “… there’s simply no correlation between higher returns and higher rate of interest at all (when considering investment decisions)”.

As such, the correlation between higher returns would be other than the level of the interest rate, which can only be referred to EPF’s prudential judgment and assessment of its investment strategies and practices as embodied in the Strategic Asset Allocation (SAA) framework and decision-making algorithm (which are reviewed and if need be adjusted once every three years, taking into account prevailing market conditions and evolving dynamics such as changes to (a) regulatory requirements, (b) accounting policies and practices, (c) institutional constraints, etc.).

According to EPF Chief Investment Officer (CIO) Rohaya Mohammad Yusof, the SAA aims at optimising long-term investment returns within tolerable risk limits.

She added that, “[e]ach asset class plays a role in ensuring that … EPF delivers on its investment objectives, with [f]ixed [i]ncome [i]nstruments anchoring the overall [portfolios] and preserving members’ savings by providing a stable stream of income via interest payments”.

The “low-risk” (profile – as EPF’s own preferred term) or “risk-free” nature of sovereign debt means that the movement of interest rates as manipulated by the central bank in representing the benchmark rate across the term maturity spectrum in the financial markets doesn’t alter or affect the role that fixed income play as anchor of the overall investment assets.

Whereas “[e]quities enhance returns for the portfolio by adding value to members’ savings with returns that surpass the inflation rate. Real estate and [i]nfrastructure assets serve as a hedge against inflation by providing rental income and capital appreciation”.

The money market funds (MMFs) serve to cater “for … EPF’s day-to-day operations such as investments, withdrawals, and operational expenses”.

Under its SAA for 2023, EPF earmarked RM97 billion or 83% of its annual total fund allocation for domestic investments.

The OPR hikes would have led to higher interest income payments to EPF (albeit under conditions of a worryingly higher debt service charge/DSC of 15.9% or RM46.1 billion, as of 2023) – as the single main holder of the Malaysian Government Securities (MGS) bonds (at 24.2% as end of September 2022) – for each tranche of fresh issuance. At the same time, EPF was able to capitalise on the decline of benchmark yields (which is inversely related to the bond price), e.g., in Q1 FY 2023, when off-loading (pre-existing issues) on the secondary market.

In the US, increase in interest payments represents indirect deficit spending by the federal government (Treasury) as the income received is injected into the economy by the federal (e.g., Social Security, Medicare) and state agencies – double deficit spending in the lending and redemption. This explains why the increase in the federal funds rate (FFR) has hardly resulted in a deflationary impact that’s consistent with rising unemployment (NAIRU debunked). Those who were bent on a hard-landing didn’t get their wish unless the Fed does a Paul Volcker, whereas there’s no certainty that a soft-landing compatible with a 2% target inflation rate is realistically achievable.

EPF isn’t in a position to simulate a similar role in deficit spending via the (bond) interest payments received together with the principal redemption which would be partially re-invested for the refinancing or roll-over of existing sovereign debt (RM135.3 billion for principal repayments by the Ministry of Finance/MOF), especially where the balance is now towards long(er) term bonds, i.e., MGS and GII (versus short-term, i.e., Malaysian Treasury Bills/MTBs).

On the other side of the fiscal policy equation, refinancing in coordination with MOF is a critical strategy by EPF to ensure that its asset class in fixed-income security (under the SAA) remains the overall anchor – even as the government embarks on fiscal consolidation under the Medium-Term Fiscal Framework (MTFF).

According to MOF, “[The government] aims to manage refinancing risk by reducing the issuance of short-term papers and increasing the issuance of medium- and long-term instruments as the pricing spread between the maturities narrowed” (p. 138, Section 4 – Debt Management, Fiscal Outlook 2024, MOF).

But EPF plays a crucial and pivotal role in the equity market with its direct and indirect ownership of listed companies, including government-linked companies (GLCs). By extension, EPF is well-poised to stimulate the economy directly in the form of secondary and indirect fiscal injection through, e.g., the bank loans for EPF-owned companies that’re initially created as deposits operating under the legal framework of monetary policy of the central bank and, by ultimate extension, the government.

The Prime Minister’s vision for greater domestic investments by the EPF (see, EMIR Research article, “The PM’s call to EPF to increase its domestic investments”, May 12, 2023) augurs well for the latter’s role in indirect fiscal injection complementing and supplementing the government’s deficit spending (e.g., Budget 2024). It’ll also provide greater scope for increased corporate tax revenue (intake) to counter-balance the move towards fiscal consolidation.

At the same time, the government could seek to widen the tax base as regards capital gains tax (CGT) on listed companies (with the possibility of excluding ACE and LEAP companies or companies that’re ten years and below, for example) to equalise the fiscal space with non-listed companies with either the same charge of 10% or slightly higher at between 12% to 15% or otherwise introduce a tiered or progressive structure in lieu of a flat rate.

However, EPF shares in both non-listed and listed companies should be permanently exempted from CGT together with foreign-sourced income (FSI) as are the dividends for unit trusts (exemption on CGT is effective from January 1, 2024 to December 31, 2028 whilst exemption on FSI is from January 1, 2024 until December 31, 2026) as announced by former CEO of EPF and now Finance Minister II Datuk Seri Amir Hamzah Azizan only recently (“Govt exempts CGT, FSI taxes on unit trusts”, The Star, January 16, 2024).

Additionally, the government should strongly consider introducing a tiered and progressive taxation structure for mid-tier companies (MTCs) and large local companies (LLCs) and multinational companies (MNCs). Again, this is to create a more level fiscal playing field with the small and medium-sized enterprises (SMEs). It’d also counter-balance the reduction in corporate tax for the same category of companies (i.e., the former) as part of the ongoing effort to increase our domestic competitiveness alongside continuously enhancing our attraction as a foreign direct investment (FDI) destination and in line with the move towards a global minimum tax (GMT) of 15%.

Lastly, it’s urged that EPF seriously consider adopting and integrating the Input-Output-Outcome-Impact (IOOI) framework (which EMIR Research has been advocating) into its SAA.

Your Zodiac Outlook For 2024

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Business Today Editorial

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January 22, 2024

Well renowned Feng Shui expert, Master Ken gave his predictions for those born in their respective zodiac sign and what they will encounter in the year of the Wood Dragon.

Rat Horoscope 2024: Seizing Opportunities Amidst Challenges

For those born under the Rat sign, the General Star forecasts enhanced control, creativity, and charisma in 2024. Embrace bigger tasks with a positive spirit, ensuring timely completion for recognition and subsequent elevation in both status and financial gains. The Tai-Ji Noblemen will act as confident guides during challenging moments, offering intervention in crises.

The Golden Chest serves as an additional avenue for monetising talents and abilities, potentially leading to profits from investments, joint ventures, or supplementary income through side gigs. Exercise caution during high-contact activities involving heights and earth movements due to the influence of the White Tiger, which signifies potential physical harm.

In the winter months of November and December 2024, vigilance is advised against water accidents and open seas. Avoid physical confrontations, as the presence of the Sky Warrior signals potential challenges in this regard. Seize opportunities wisely, and the Year of the Wood Dragon holds promises of financial gains and personal growth for the Rat sign.

Ox Horoscope 2024: A Prosperous Journey with Caution

The Year of the Wood Dragon brings prosperity for those born under the Ox sign. Tai-Yi Noblemen promise elevation, especially for those in civil service, with anticipated promotions. The auspicious influence of Eight Seats signifies progress in various aspects, including health and relationships. Jade Hall leads to favorable conditions, and aligning with the Fortune Virtue can transform experiences into wealth.

To maximize the Prosperity Star, meticulous planning and consistent efforts throughout the year are crucial. However, with impending good fortune, be wary of jealousy and gossip. The Crossing Star may introduce competition, manageable with tact. Communication and relationships may face interruptions due to the Broken Star, emphasizing the importance of dedicating time to family and friends.

Female Ox individuals should remain cautious of the Drapes Star, associated with unfortunate events, while male Ox individuals may encounter challenges from females, warranting diplomatic approaches. Navigate the year wisely, and 2024 holds the promise of significant achievements and overall prosperity for the Ox sign.

Tiger Horoscope 2024: Embracing Change with Vigor

In 2024, the Sky Horse brings dynamic energy to support Tigers, signifying a year of movement and change. Success hinges on embracing and proactively managing disruptions in both personal and professional spheres. Travel, role changes, and adaptability are key themes for Tigers, activating the Sky Horse’s influence and leading to meritorious rewards.

However, alongside these changes, be mindful of the emotional impact brought by Sky Cry. Guard against sentiments that may hinder progress and focus on staying engaged in positive activities. Caution is advised in August, with Sky Dog presenting hidden threats. The Suspended Guest warns against heights and rope-related activities during this period.

By navigating change with resilience and prudence, Tigers can harness the favorable energy of the Sky Horse for a rewarding and transformative 2024.

Rabbit Horoscope 2024: Navigating Challenges with Resourcefulness

In 2024, Rabbits may face challenges, but resilience and strategic partnerships can pave the way for a successful year. While positive stars are absent, seeking assistance from compatible signs such as Pigs, Goats, and Dogs can enhance financial luck, work opportunities, and relationships.

Pigs bring financial prosperity and beneficial connections, making them valuable partners. Goats possess divine luck, and collaboration with them can provide essential support. Building alliances and borrowing others’ luck are highlighted as effective strategies for Rabbits.

However, challenges may arise with the Sickness Charm, impacting mental health through negativity and pessimism. Staying calm and addressing issues methodically is crucial. The influence of Goat Blade may lead to feelings of victimization, but resilience is encouraged, as these challenges are temporary.

Caution is advised with the Six Harms, as unknowingly creating enemies with the Grand Duke of the year may have repercussions. Managing interactions with those born in Dog and Rooster years is recommended. By navigating challenges with resourcefulness and maintaining positive alliances, Rabbits can overcome obstacles and emerge stronger in 2024.

Dragon Horoscope 2024: Embracing Leadership Amid Challenges

The year 2024 brings both challenges and opportunities for Dragons. As the Grand Duke, Dragons are thrust into a leadership role, necessitating adaptability and courage. It’s crucial to confront fears and resist distractions, as the Golden Carriage signifies fleeting opportunities that require decisive actions for financial and professional benefits.

The Duke Arrival indicates that others will closely observe Dragon’s moves, providing a chance to shine. Leveraging wisdom and the Elegant Seal, Dragons can showcase leadership skills and achieve remarkable feats. However, the Hidden Corpse warns of past secrets resurfacing, emphasizing the importance of resolving unresolved matters.

Sword Edge signifies stiff competition and potential unfair practices, urging Dragons to exercise caution. September 2024 poses risks of mishaps, especially injuries caused by impact. Additionally, vigilance while driving in unfamiliar territories between 7 pm and 9 pm throughout the year is advised.

In navigating these challenges, Dragons have the potential for positive outcomes by maintaining a positive outlook, addressing unresolved issues, and staying vigilant against potential pitfalls.

Snake Horoscope 2024: Seizing Opportunities Amidst Positivity

For Snakes, the year 2024 heralds the arrival of the influential Sun Star, a Yang energy capable of resolving seemingly insurmountable issues. This auspicious star opens doors to tackle lingering problems, from debts to relationships, offering a chance at success and even improving health conditions.

The Sky Happiness star promises joyous celebrations and happy occasions throughout the year, enhancing family bonds and personal life satisfaction. Snakes are encouraged to sharpen their expertise with the support of the Academic Star, ensuring sharpness and precision for a fulfilling year.

However, caution is advised with the presence of the Bad Energy Star, which may lead to doubts and regrets, clouding judgment. Remaining open to opportunities and avoiding excessive suspicion is crucial. Additionally, the Robbery Star signals potential financial losses if opportunities are overlooked. Snakes can counteract this influence by embracing kindness, attracting positive outcomes in return.

Horse Horoscope 2024: Navigating Challenges with Divine Intervention

Horses, in 2024, find solace in the presence of the Relief God, offering divine intervention against potential disasters and the ability to turn negative circumstances into positive outcomes. The Sky Relief Star provides support for conditions that have already occurred, like job layoffs, presenting potential job offers for a rebound.

However, caution is advised with the Blood Knife Star, signaling potential cuts or surgery for Horses. Regular health check-ups, including dental examinations or blood donations, can help prevent such issues. The Funeral Door Star indicates sensitivity to negative energy, advising avoidance of dark and inactive places. Extra caution is warranted in September in mountainous areas and in December at open seas due to the Calamity Star’s presence.

Furthermore, the Flying Chaste Star warns against unexpected expenses, discouraging pursuits of new business ventures, job switches, or investments in 2024. Horses are advised to tread carefully and prioritize stability during the year.

Goat’s Celestial Guidance in 2024: Navigating Harmony and Success

In the Year of the Dragon, Goats are under the favorable influence of the Moon Star, bringing numerous benefits. Seeking assistance from women, especially the elderly, prestigious, or knowledgeable, is advised. This energy promotes harmony, family bonds, and improved relationships for Goats, with the Moon Star offering successive rounds of inspiration throughout the year.

Remaining composed amid objections and doubts, Goats can tap into the Moon Star’s positive energy. Partnering with a Pig can further enhance support and endorsement for their endeavors. The Heavenly Yi Noble, a potent Noblemen star, adds to the cosmic support, particularly boosting success in career, business, and relationships.

Despite the positive influences, Goats are cautioned against potential pitfalls. The Hook Spirit may attempt to exploit their good fortune, luring them with promises of quick and massive returns. Vigilance is essential, as the Piercing Rope represents the risk of being figuratively strangled by overcommitting under pressure. Goats should navigate the year with discernment to ensure lasting success.

Strategic Patience and Alliances: A Guide for Monkeys in 2024

Monkeys are advised to exercise patience and strategic timing to maximize opportunities in 2024. The Three Stages Star signals progress in a sequential manner, emphasizing the importance of well-planned decisions, particularly in April and November.

The Triple Combination of Monkey with Dragon and Rat promises positive outcomes from collaborative efforts. Dragons can be instrumental in connecting with individuals of authority, while Rats offer valuable guidance and luck, especially in financial matters.

However, Monkeys should brace for potential drama in February and June. The Back Poking Star may stir animosity among colleagues, suppliers, and clients, with accusations and sacrifices in the air. Dragons stand ready to defend innocence in such situations. Monkeys are urged to stay within their parameters, as the Officer Charm may mete out punishments.

To navigate the year successfully, Monkeys are reminded to execute well-designed plans, avoid premature conclusions, and keep the influence of the Five Ghosts at bay. A judicious approach will be key to a harmonious and prosperous 2024.

Prosperity and Caution: A Stellar Outlook for Roosters in 2024

The Rooster sign in 2024 is poised for exceptional success with the Grand Duke Combination aligning with the Dragon. This powerful alliance promises recognition and generous rewards for hard work, making it an opportune time for Roosters to seek promotions, salary raises, or lucrative contracts.

The Peach Blossom Star further enhances Roosters’ appeal, making it an ideal period for singles to forge serious relationships or even tie the knot. Throughout the year, the Monthly Virtue Star provides immunity against potential crises, while the Earth Relief Star safeguards against physical harm.

However, challenges loom in the form of the Cascading Cloud Star, symbolizing enemies and deceit. Caution is advised, especially in September, to avoid possible work sabotage. While the Peach Blossom Star brings positive connections, Roosters must be wary of the Salty Pool Star, signifying indulgence and distractions. It’s crucial to resist seduction by appearances and maintain control over spending habits.

Navigating potential strains in friendships is vital, emphasizing the need for mindfulness throughout the year. With a balance of prosperity and caution, Roosters can ensure a successful and harmonious 2024.

National Treasure Star Shines Bright for Dogs in 2024

The Dog sign in 2024 welcomes the auspicious National Treasure Star, a recognition and rewards system that promises financial compensation or job promotion, particularly in large corporations, government offices, or civil service. For business owners and the self-employed, activating this star involves creating opportunities for their products, services, or special skills to gain widespread appreciation, potentially through viral exposure across mainstream and social media platforms.

Individuals engaged in performance, stage presence, digital influence, brand collaborations, and content provision stand to benefit significantly from the National Treasure Star. Those who have already gained recognition should prepare for interviews and media appearances, while others should actively work toward achieving visibility.

However, financial caution is advised as the Big Consumer Star suggests a likelihood of substantial spending. Dogs should invest carefully and remain vigilant against changes and obstacles posed by competitors. The Leopard Tail Star may induce an offensive mood, requiring Dogs to navigate challenges with resilience.

In terms of travel, April, August, and September may bring potential mishaps, prompting Dogs to exercise caution during mountainous or sea adventures and practice safe driving, especially at night. With strategic planning and financial prudence, Dogs can make the most of the National Treasure Star’s positive influence in 2024.

Pigs Triumph with Authority in 2024: Seize Opportunities Amid Challenges

The year 2024 marks a significant period for individuals born under the Pig sign, as they are bestowed with the influential Emperor Star. This brings forth privilege and authority, especially within structured organisations, where their words carry substantial weight and are taken seriously. Pigs are urged to embrace an active and bold approach, turning their talk into impactful actions, guided by the executor Dragon Virtue.

Despite the commanding position, Pigs need to navigate challenges represented by the Dark Sky Star, which may bring setbacks and dampen plans, particularly in May when colleagues and bosses could pose hurdles. The Brutal Defeat Star lurks, emphasizing the importance of attention to detail and avoiding small mistakes.

While the first half of the year allows for confident strides, Pigs should brace for potential stoppages and interruptions post-June. Projects may face funding cuts, and personal challenges may arise if too much focus is placed on work. March, July, and December emerge as favorable months, and Pigs are advised to stay grounded amidst their triumphs.

Sony Calls Of Merger With India’s Zee Entertainment

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January 22, 2024

Sony confirmed on Monday (Jan 22) it is pulling out of a US$10-billion merger agreed in 2021 of its Indian operations with local rival Zee Entertainment.

The collapse is a blow to both firms’ hopes of better competing with streaming rivals such as Disney, Amazon and Netflix in the booming entertainment market of 1.4 billion people.

The Japanese firm said in a statement that on Monday it “issued a notice terminating the definitive (merger) agreements” by the two companies and that “closing conditions … were not satisfied”.

The merger was agreed in 2021, with Zee chief executive Punit Goenka saying the new outfit would be worth close to US$10 billion with annual revenues approaching US$2 billion.

But closing the deal has been problematic, most recently because Sony reportedly did not want Goenka – who is facing a regulatory probe – to run the combined entity.

In addition, Sony had become concerned about slumping profits at Zee since 2021, a source at the Japanese firm who declined to be named told AFP last week.

India’s entertainment market, worth tens of billions of dollars, is already one of the world’s biggest, while smartphone adoption is forecast to expand further in the coming years.

AFP

Berkshire Hathaway Appoints Jess Au As Head Of General Property For Asia

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January 22, 2024

Berkshire Hathaway Specialty Insurance (BHSI) today announced that Jess Au has joined the company as Head of General Property in Asia. Based in Singapore, she succeeds Ophelia Szeto who is retiring from the role after nearly a decade with the company.

“Jess takes the reins of our general property portfolio with more than 20 years of experience in Asia. I look forward to working with her as we continue to build and expand BHSI’s long-term relationships in the region,” said Marc Breuil, Regional President, Asia Middle East, BHSI. “I also want to thank Ophelia for her work and her dedication in establishing our commercial property presence in Asia and we wish her success in her next endeavors.”

Jess brings with her a wealth of technical experience and market knowledge across Asia. Before BHSI, Jess had a number of regional managing & underwriting roles in the Singapore market, where she was most recently Regional Property Facultative Lead. Jess graduated from the Nanyang Technological University (NTU Singapore) where she majored in Insurance.

In Asia, BHSI provides general property coverage for a wide range of classes, including manufacturing, infrastructure, and real estate, as well as stand-alone natural catastrophe coverage.

CGS-CIMB Not Alarmed By Genetec’s Share Price Fall, Says Outlook Remains Resilient

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January 22, 2024

CGS-CIMB is not too concerned over Genetec Technology Bhd’s recent share price fall, which it believed could be due to growing concerns over moderating electric vehicle (EV) demand.

“Genetec’s share price is down 14% over the past 1 week, triggered most recently by US-based car rental company Hertz scaling back on its EV fleet expansion.

“While there has been some news indicating softening EV demand globally since 4Q23, our recent checks with the management indicate that the outlook for the group’s EV and energy storage segments remains resilient,” it said in its Company Note on Friday (Jan 19).

It reiterated is ADD rating and a GGM-TP of RM3.60 (WACC: 9.5%; LTG: 6%).

“Genetec is trading at 14.0x CY25F P/E, a 44% discount to the average basket of local automation solution providers’ 25.2x. We keep our forecasts unchanged, pending a meeting with the management.

“We see the recent pullback in share price as a good accumulating opportunity, with catalysts from strong order wins from its EV and auto customers and demand surge for its battery energy storage systems (BESS) solutions.

CGS-CIMB said it ran a scenario analysis on the group’s various growth rate assumptions for its EV business for FY24 to FY25F and conclude that the current share price levels reflect a 30% annual decline in FY24 and 25F EV revenue, all else being equal.

“We think this is excessive considering Genetec’s sole EV customer has a healthy pipeline of new model launches, including the new mass-market EV model by 2024F which should continue to support decent order flows for the company.

“Management has also guided previously during its Nov 23 analyst briefing that it aims to obtain additional scope of works within its EV and auto segments, such as battery assembly and braking regenerative system production lines.”

Per the contract manufacturer of automated industrial equipment management’s guidance during the briefing, this could replenish an additional over RM200 million to its current orderbook by end-FY3/24F, it added.

The research house said the positive outlook in BESS remains intact.

“The management guided during the briefing that it has received purchase orders for 10MWh worth of BESS capacity for small-scale projects, likely to be rolled out by 2HFY24F.

“Genetec has also participated in tenders for the rollout of 705MWh worth of BESS capacity across various domestic projects, per management’s guidance, which could translate to a sizeable increase in its BESS orderbook size.

“Beyond this, management also identified over 4GWh worth of BESS capacity opportunity within the Southeast Asia and Middle East regions that it can participate in.

“We project the revenue mix from BESS could grow from 0% in FY23 to 30% by FY26F to the group, adding incrementally to overall group revenues,” it added.

Key risks of CGS-CIMB’s call are a rapid slowdown in the EV segment resulting in poor orderbook replenishment and ramp-up from its BESS solutions not materialising.

China’s Courier Industry Swelled To US$169.8 Billion In 2023

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January 22, 2024

China’s express delivery industry saw a robust expansion in 2023, driven by a surge in demand as the economic recovery gained further momentum, data from the State Post Bureau (SPB) showed.

Express courier firms nationwide handled 132.07 billion parcels in 2023, up 19.4 percent compared to the previous year. This figure has ranked first in the world for 10 consecutive years, according to the SPB.

The sector raked in total revenue of 1,207.4 billion yuan (about 169.8 billion U.S. dollars) during the period, up 14.3 percent year on year, according to the postal bureau.

In last December alone, China’s courier sector witnessed strong expansion, with 13.26 billion deliveries and 118.88 billion yuan in business revenue.

BNM’s Reserves Climbs Nearly US$2 Billion To US$115.1 Billion In Jan

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January 22, 2024

Bank Negara has released the first reserve status for 2024, with the international reserves climbing to USD115.1 billion as at 15 January 2024.

The last report of the international reserves situation by Bank Negara Malaysia was at USD113.5 billion as of 29 December 2023, the USD2 billion increase for January in quite significant.

BNM said the reserves level has taken into account the quarterly foreign exchange revaluation changes. The reserves position is sufficient to finance 5.4 months of imports of goods and services and is 1.0 times of the total short-term external debt.

Tune Protect Unveils Plans For Gen Z’s Starting From RM5

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