Key Indices
Top Stories
Sector Update | Banking
- Nature-related exposure is material: 54% of RM816b commercial loans have high ecosystem dependency, while 36% have high environmental pressure. Our assessment suggests CIMB Group and Public Bank show relatively developed readiness, while Malayan Banking benefits from lower exposure and peers remain at varying stages. Near-term earnings impact should be limited, but regulation is the key medium-term catalyst to embed nature into borrower assessment. Maintain OVERWEIGHT.
Sector Update | Plantation
- Budget 2027 is expected to be mildly expansionary, balancing growth priorities with fiscal discipline. Key priorities should centre on strengthening economic fundamentals, rebuilding fiscal headroom, easing cost-of-living pressures, reinforcing social safety nets and accelerating high-value manufacturing. With GE16 increasingly coming into focus, we expect a more rakyat-friendly tilt to support household disposable income. While largely market-neutral, consumer, construction, property and power & utilities could benefit from domestic spending, while technology remains a structural beneficiary of Malaysia’s digitalisation and industrial upgrading.
What’s Inside
Company Update | Tenaga Nasional (TNB MK/HOLD/RM13.10/Target: RM14.60)
- Tenaga articulated its opinion that the RM120m-150m subsidy is a one-off and that the AFA mechanism remains intact. The government is currently re-assessing the AFA structure and will come up with a final decision for 2027. We believe the government may revert to previous ICPT tiered practices, where commercial and industrial users will bear full AFA surcharges/rebates while domestic users will fall back under a government subsidy scheme. Maintain HOLD with a DCF-based target price of RM14.60.
Market Spotlight
- Despite selling pressure, the FBMKLCI added 16.56pt to close at 1,683.50 yesterday on the back of rejuvenated buying interest.
- US stocks were mixed after the close on Tuesday, as gains in the basic materials, consumer goods and healthcare sectors led shares higher while losses in the telecommunications, financials and oil & gas sectors led shares lower.
Tehnical Analysis
FBMKLCI, FCPO & FKLI Index Outlook
Traders’ Corner
Pos Malaysia | POSM MK
- Trading Buy Range: RM0.275-0.28
PRG Holdings | PRG MK
- Trading Buy Range: RM0.10-0.11
Supercomnet Technologies | SCT MK
- Trading Buy Range: RM0.53-0.535
Top Stories
Sector Update | Banking
- Nature-related exposure is material: 54% of RM816b commercial loans have high ecosystem dependency, while 36% have high environmental pressure. Our assessment suggests CIMB Group and Public Bank show relatively developed readiness, while Malayan Banking benefits from lower exposure and peers remain at varying stages. Near-term earnings impact should be limited, but regulation is the key medium-term catalyst to embed nature into borrower assessment. Maintain OVERWEIGHT.
Sector Update | Plantation
- Budget 2027 is expected to be mildly expansionary, balancing growth priorities with fiscal discipline. Key priorities should centre on strengthening economic fundamentals, rebuilding fiscal headroom, easing cost-of-living pressures, reinforcing social safety nets and accelerating high-value manufacturing. With GE16 increasingly coming into focus, we expect a more rakyat-friendly tilt to support household disposable income. While largely market-neutral, consumer, construction, property and power & utilities could benefit from domestic spending, while technology remains a structural beneficiary of Malaysia’s digitalisation and industrial upgrading.
What’s Inside
Company Update | Tenaga Nasional (TNB MK/HOLD/RM13.10/Target: RM14.60)
- Tenaga articulated its opinion that the RM120m-150m subsidy is a one-off and that the AFA mechanism remains intact. The government is currently re-assessing the AFA structure and will come up with a final decision for 2027. We believe the government may revert to previous ICPT tiered practices, where commercial and industrial users will bear full AFA surcharges/rebates while domestic users will fall back under a government subsidy scheme. Maintain HOLD with a DCF-based target price of RM14.60.
Market Spotlight
- Despite selling pressure, the FBMKLCI added 16.56pt to close at 1,683.50 yesterday on the back of rejuvenated buying interest.
- US stocks were mixed after the close on Tuesday, as gains in the basic materials, consumer goods and healthcare sectors led shares higher while losses in the telecommunications, financials and oil & gas sectors led shares lower.
Tehnical Analysis
FBMKLCI, FCPO & FKLI Index Outlook
Traders’ Corner
Pos Malaysia | POSM MK
- Trading Buy Range: RM0.275-0.28
PRG Holdings | PRG MK
- Trading Buy Range: RM0.10-0.11
Supercomnet Technologies | SCT MK
- Trading Buy Range: RM0.53-0.535
Key Indices
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
