Auto Sector: Steering Through Challenges

The Malaysian automotive sector is rated as NEUTRAL for 2025. Key concerns include tapering Total Industry Volume (TIV) growth, fuel subsidy rationalization, and intensified competition in the electric vehicle (EV) market. However, strong backlogs for Original Equipment Manufacturers (OEMs) and attractive new model launches provide a silver lining.

Sime Darby (Buy)

• Market Cap: MYR 15,880 million
• Target Price: MYR 2.64
• Key Highlights: Strong UMW contribution and Perodua’s resilience offer a buffer against industrial and motor segment slowdowns.
• Dividend Yield: 4.2%
• Risks: Challenging economic outlook in China.

Bermaz Auto (Buy)

• Market Cap: MYR 2,409 million
• Target Price: MYR 2.42
• Key Highlights: Attractive dividend yield of over 9%. The launch of Kia Sportage and new EV models are expected to cushion Mazda’s sales challenges.
• Dividend Yield: 10.5%

MBM Resources (Hold)

• Market Cap: MYR 2,486 million
• Target Price: MYR 6.25
• Key Highlights: Solid earnings but constrained by capacity bottlenecks and market competition.
• Dividend Yield: 9.7%

Tan Chong Motor (Sell)

• Market Cap: MYR 303 million
• Target Price: MYR 0.39
• Key Challenges: Struggling financials with negative earnings projections.

Banking Sector: Stability Ahead

The banking sector remains POSITIVE, driven by stable net interest margins (NIMs), benign credit costs, and a projected 5.5% loan growth for 2025. This sector is poised to benefit from the Johor-Singapore Special Economic Zone (JSSEZ) and increased business lending in Sarawak.

Public Bank (Buy)

• Market Cap: MYR 89,483 million
• Target Price: MYR 5.20
• Key Strengths: Robust management and MYR 1.5 billion management overlays to keep credit costs low.
• Dividend Yield: 4.6%

CIMB Group (Buy)

• Market Cap: MYR 86,953 million
• Target Price: MYR 9.20
• Key Highlights: Strong contributions from Indonesia and Singapore, with potential upside from CIMB Thai’s turnaround.
• Dividend Yield: 5.8%

AMMB Holdings (Buy)

• Market Cap: MYR 18,489 million
• Target Price: MYR 6.30
• Key Highlights: Proactive funding cost management and focus on business banking operations are expected to drive growth.
• Dividend Yield: 4.9%

Consumer Sector: Optimism Amid Rising Spending Power

The consumer sector outlook is POSITIVE, with an expected core earnings growth of 16% in 2025. This growth is spurred by civil service salary hikes, minimum wage increases, and strengthened disposable income.

AEON Co. (Buy)

• Market Cap: MYR 2,078 million
• Target Price: MYR 1.95
• Key Strengths: Mass-market offerings targeting B40 and M40 income groups, with a strong boost expected from increased consumer spending.
• Dividend Yield: 2.7%

MR D.I.Y. Group (Buy)

• Market Cap: MYR 17,125 million
• Target Price: MYR 2.35
• Key Highlights: Positioned to benefit from strong consumer demand and increased sales volume.
• Dividend Yield: 1.8%

Farm Fresh (Buy)

• Market Cap: MYR 3,375 million
• Target Price: MYR 2.05
• Key Highlights: Expected revenue uplift from higher consumer spending, with a focus on staples.
• Dividend Yield: 0.8%

Technology Sector: Strategic Selectivity

The technology sector holds a nuanced outlook. While the software and electronic manufacturing services (EMS) segments are POSITIVE, the semiconductor segment faces challenges, resulting in an overall NEUTRAL rating.

Frontken Corp. (Buy)

• Market Cap: MYR 6,708 million
• Target Price: MYR 4.95
• Key Strengths: Strong growth trajectory due to resilient Taiwan demand and recovery in Singapore semicon volumes.

V.S. Industry (Buy)

• Market Cap: MYR 4,142 million
• Target Price: MYR 1.28
• Key Strengths: Positioned to capitalize on trade relocation opportunities with robust customer trust and quality.

MYEG Services (Buy)

• Market Cap: MYR 7,079 million
• Target Price: MYR 1.68
• Key Highlights: Strong momentum from high-margin decentralized finance ventures.