Comprehensive Malaysia Market Analysis and Stock Recommendations Broker Name: UOB Kay Hian Date of Report: January 6, 2025 Overview of Malaysia’s Market Outlook for 1H25 UOB Kay Hian’s latest report highlights a cautiously optimistic outlook for Malaysian equities in the first half of 2025. The market is expected to rely heavily on domestic-driven liquidity and investment themes such as Iskandar 2.0, data center rollouts, renewable energy initiatives, and blockchain-based opportunities. Despite external uncertainties, including high US treasury yields and global trade policy concerns, Malaysia’s favorable domestic policies, foreign direct investment (FDI) trends, and corporate earnings growth (FBMKLCI: 8.4%) are set to sustain positive momentum. Key Themes and Investment Strategies Iskandar 2.0: Significant developments in this economic corridor are expected to drive growth for property developers and infrastructure companies. Data Center Rollouts: Opportunities in Johor and other regions continue to attract attention. Renewable Energy: Investments in solar and hydro power are pivotal to Malaysia’s Green Agenda. Blockchain Opportunities: Monetization potential is immense, with use cases in NationalID, WorldID, and Pan-Asian platforms like ZTrade and e-CNY. Wage Hikes and Domestic Consumption: Wage increases are expected to favor consumer discretionary sectors. FBMKLCI Target for 2025 The FBMKLCI is projected to reach 1,800 by the end of 2025, representing a valuation of 15.3x earnings or -0.75 standard deviations (SD) to the historical mean price-to-earnings (PE) ratio. The current FBMKLCI stands at 1,629, reflecting significant room for growth as the year progresses. Top Picks for 1H25: Detailed Company Analysis Hong Leong Bank (Ticker: HLBK MK) Recommendation: BUY Target Price: RM23.60 Current Price: RM20.50 Hong Leong Bank is set to benefit from robust earnings growth of 8.8% in 2025. Its net profit is expected to rise from RM4,552 million in 2024 to RM4,951 million in 2025, with an attractive PE ratio of 8.6x. Additionally, the bank offers a dividend yield of 3.8%, with a solid return on equity (ROE) of 11.8%, underlining its financial stability and growth potential. Inari Amertron (Ticker: INRI MK) Recommendation: BUY Target Price: RM3.40 Current Price: RM2.98 Inari Amertron stands out for its strategic expansion into advanced packaging and AI-related technologies. Its net profit is projected to grow to RM332 million in 2025. With a PE ratio of 34.0x and a dividend yield of 3.4%, Inari remains a compelling investment choice for tech-focused investors. IOI Properties Group (Ticker: IOIPG MK) Recommendation: BUY Target Price: RM2.95 Current Price: RM2.22 IOI Properties is well-positioned to capitalize on the ongoing property boom, with net profit projections of RM648 million by 2025. Its PE ratio of 18.8x and dividend yield of 2.2% make it a stable pick for property investors. My EG Services (Ticker: MYEG MK) Recommendation: BUY Target Price: RM1.46 Current Price: RM0.985 MYEG is expected to deliver significant growth, driven by its blockchain and e-government services. Its net profit is projected to reach RM722 million in 2025, with a dividend yield of 2.7% and an impressive ROE of 25.9%. Pekat Group (Ticker: PEKAT MK) Recommendation: BUY Target Price: RM1.19 Current Price: RM1.04 Pekat Group is a key player in Malaysia’s renewable energy sector. With a net profit forecast of RM31 million in 2025 and a PE ratio of 21.7x, Pekat is poised to benefit from the Green Agenda and rising investments in solar energy. Press Metal Aluminium (Ticker: PMAH MK) Recommendation: BUY Target Price: RM7.00 Current Price: RM4.85 Press Metal Aluminium is expected to gain from rising industrial metal demand, with net profits projected to grow to RM2,065 million by 2025. Its PE ratio of 19.2x and dividend yield of 1.2% underline its growth prospects. RGB International (Ticker: RGB MK) Recommendation: BUY Target Price: RM0.66 Current Price: RM0.41 RGB International is a standout performer in the gaming sector, with net profits expected to surge to RM209 million by 2025. Its PE ratio of 5.2x and dividend yield of 10.0% make it a compelling investment. VS Industry (Ticker: VSI MK) Recommendation: BUY Target Price: RM1.50 Current Price: RM1.17 VS Industry is poised to benefit from the recovery in the global semiconductor cycle. Its net profit is forecasted to grow to RM331 million in 2025, with a dividend yield of 1.4% and a PE ratio of 13.9x. Sector Ratings and Performance UOB Kay Hian emphasizes an OVERWEIGHT stance on the building materials, construction, property, and technology sectors. These sectors are expected to deliver superior returns, driven by domestic catalysts and improving fundamentals. Meanwhile, a MARKET WEIGHT stance is maintained for other sectors such as banking, healthcare, and oil & gas.
Hong Leong Bank (Ticker: HLBK MK) Recommendation: BUY Target Price: RM23.60 Current Price: RM20.50 Hong Leong Bank is set to benefit from robust earnings growth of 8.8% in 2025. Its net profit is expected to rise from RM4,552 million in 2024 to RM4,951 million in 2025, with an attractive PE ratio of 8.6x. Additionally, the bank offers a dividend yield of 3.8%, with a solid return on equity (ROE) of 11.8%, underlining its financial stability and growth potential.
Inari Amertron (Ticker: INRI MK) Recommendation: BUY Target Price: RM3.40 Current Price: RM2.98 Inari Amertron stands out for its strategic expansion into advanced packaging and AI-related technologies. Its net profit is projected to grow to RM332 million in 2025. With a PE ratio of 34.0x and a dividend yield of 3.4%, Inari remains a compelling investment choice for tech-focused investors.
IOI Properties Group (Ticker: IOIPG MK) Recommendation: BUY Target Price: RM2.95 Current Price: RM2.22 IOI Properties is well-positioned to capitalize on the ongoing property boom, with net profit projections of RM648 million by 2025. Its PE ratio of 18.8x and dividend yield of 2.2% make it a stable pick for property investors.
My EG Services (Ticker: MYEG MK) Recommendation: BUY Target Price: RM1.46 Current Price: RM0.985 MYEG is expected to deliver significant growth, driven by its blockchain and e-government services. Its net profit is projected to reach RM722 million in 2025, with a dividend yield of 2.7% and an impressive ROE of 25.9%.
Pekat Group (Ticker: PEKAT MK) Recommendation: BUY Target Price: RM1.19 Current Price: RM1.04 Pekat Group is a key player in Malaysia’s renewable energy sector. With a net profit forecast of RM31 million in 2025 and a PE ratio of 21.7x, Pekat is poised to benefit from the Green Agenda and rising investments in solar energy.
Press Metal Aluminium (Ticker: PMAH MK) Recommendation: BUY Target Price: RM7.00 Current Price: RM4.85 Press Metal Aluminium is expected to gain from rising industrial metal demand, with net profits projected to grow to RM2,065 million by 2025. Its PE ratio of 19.2x and dividend yield of 1.2% underline its growth prospects.
RGB International (Ticker: RGB MK) Recommendation: BUY Target Price: RM0.66 Current Price: RM0.41 RGB International is a standout performer in the gaming sector, with net profits expected to surge to RM209 million by 2025. Its PE ratio of 5.2x and dividend yield of 10.0% make it a compelling investment.
VS Industry (Ticker: VSI MK) Recommendation: BUY Target Price: RM1.50 Current Price: RM1.17 VS Industry is poised to benefit from the recovery in the global semiconductor cycle. Its net profit is forecasted to grow to RM331 million in 2025, with a dividend yield of 1.4% and a PE ratio of 13.9x.
