Broker: UOB Kay Hian Securities (M) Sdn. Bhd.
Date of Report: 2 July 2025

Malaysia Stock Market Outlook July 2025: Alpha Picks, Sector Trends, and Top Investment Opportunities

Market Overview: Positive Momentum Driven by US Trade Optimism

Malaysia’s equity markets continued their positive trend in June 2025, with the FBMKLCI posting a 1.6% gain. Notably, UOB Kay Hian’s Alpha Picks portfolio outperformed the benchmark with a robust 4.9% return. The market is buoyed by the anticipation of market-friendly US-Malaysia trade deals, strong order flows in the semiconductor space, and resilient domestic infrastructure plays. The strategic focus for July 2025 centers on sectors benefiting from trade diversion, onshoring, and mega infrastructure investments.
Key July Alpha Picks:

• Coraza Integrated Technologies
• Duopharma Biotech
• Eco World Development Group
• Gamuda
• Hume Cement Industries
• IJM Corporation
• Inari Amertron
• My E.G. Services

FBMKLCI & Sector Performance: Who’s Leading and Lagging?

June 2025 Sector Winners:

• Telecommunications: +4.5%
• Plantation: +4.0%
• Construction: +3.4%
• Ports (Non-KLCI): +18.7%
• Renewable Energy: +6.3%

Sector Losers:

• Automobiles: -4.9%
• Healthcare: -1.4%
• Consumer: -1.2%
• Glove Manufacturing: -12.1%
• Insurance: -5.1%
• Manufacturing: -1.8%

Top Movers (Stocks):

• Tenaga Nasional: RM14.90 (+3.6%)
• Malayan Banking: RM9.72 (+0.2%)
• Gamuda: RM4.97 (+3.8%)
• Sime Darby Property: RM1.54 (+6.9%)
• UEM Sunrise: RM0.76 (+6.3%)

Alpha Picks Portfolio: Performance and Key Metrics

Coraza Integrated Technology: Riding the Semiconductor Wave

• Outstanding orderbook at RM80 million, up over 10% quarter-on-quarter, driven by semiconductor industry demand.
• Capacity expansion: New plant (P5-Lot No. 2778) commenced in 4Q24; another factory (P3-Lot 2773 & Lot 2776, 83,000 sq ft) set to start operations in 4Q25.
• Strong year-on-year revenue growth across four quarters reflects sustainable momentum.
• Target Price: RM0.66 (25x 2026F PE, 25% discount to sector mean).
• Share Price Catalysts: Strong earnings from key customers, new customer wins, milder-than-expected tariff impacts.
• Timeline: 6-9 months

Duopharma Biotech: Government Contracts and Margin Upside

• Secured RM222m per annum in government contracts, underpinning 2025 revenue growth forecast at 15.4%.
• Potential new insulin contract pending after April expiry.
• Gross margin projected to improve by 3ppt to 40.1% in 2025, thanks to lower active pharmaceutical ingredient (API) costs, which comprise 50-60% of COGS.
• 1Q25 core net profit surged 70% qoq, 67.8% yoy (RM25.6m), beating consensus.
• Target Price: RM1.46 (14.7x PE, pre-pandemic average mean).
• Share Price Catalyst: Quarterly earnings momentum and government insulin contract renewal.
• Timeline: 2H25

Eco World Development Group: Strong Sales and Landbank Expansion

• Achieved RM1.06b sales in Mar-May 2025 (+14% yoy); 7MFY25 sales at RM3.0b (70% of full-year forecast).
• Commercial segment up 123% yoy; residential township sales up 79% yoy, especially homes >RM650,000.
• Net gearing expected to remain elevated pending land acquisitions and JV funding, but strong cash flow from mature projects supports dividends.
• Three major launches (EBP7, Eco Radiance, Eco Botanic 3) to drive FY26 sales.
• Target Price: RM2.39 (35% discount to RNAV of RM3.67, 1.4x FY26F P/B).
• Share Price Catalyst: Take-up from upcoming launches. Timeline: 2HFY25

Gamuda: Infrastructure Powerhouse with Global Reach

• Data centre project pipeline remains intact, with tenders valued at RM10-14b to be awarded in 2025.
• Orderbook at RM34.6b (3QFY25), expected to reach RM40-45b by end-2025; bull-case scenario exceeding RM50b.
• Property development segment targets RM6b sales in FY25 (+20% yoy), with strong contributions from local and Vietnam projects.
• Australia remains the largest overseas market, with RM25b in renewable project tenders over two years.
• Valuation: Forward PE of 17x, below KLCI ex-financials average of 22x.
• Target Price: RM5.55 (22.0x FY26F PE, 1.5SD above five-year mean).
• Share Price Catalysts: Finalisation of mega projects (Upper Padas Hydroplant, Australia renewables). Timeline: 2025

Hume Cement Industries: Penang LRT to Drive Demand

• Penang Light Rail Transit (LRT) project (RM13b) could start in the coming months, translating into RM2.0b-2.6b in cement demand.
• 9MFY25 DPS of 10 sen (net yield 3.5%), up from FY24’s 8 sen.
• Strategic review of non-core assets may enhance cash flow and boost future dividends.
• Target Price: RM4.05 (15x 2026F PE, below historical industry average).
• Share Price Catalyst: Kick-off of Penang LRT. Timeline: 1-2 quarters

IJM Corporation: Robust Orderbook and UK Expansion

• Strong earnings forecast for FY26-27, supported by new contracts (e.g., New Pantai Expressway extension, RM1.0b Nusantara housing project).
• Industrial and infrastructure projects remain key drivers; Penang LRT Segment 2 and Penang Airport on the radar.
• Expanding in the UK, focusing on quicker turnaround projects; recent Finsbury Circus acquisition aligns with strategy.
• Target Price: RM3.15 (2025F PE of 19.6x, near five-year mean).
• Share Price Catalyst: Award of major contracts. Timeline: 1-2 quarters

Inari Amertron: Semiconductor Resilience Amid Market Concerns

• Share price down 34% YTD due to concerns over smartphone demand and US-China trade tensions.
• RF segment maintains healthy 65-70% utilisation, supported by new affordable models and RF content per device.
• Venturing into advanced packaging platforms (flip-chip, chip-scale, 2.5D/3D stacked packaging) to target AI, server, and industrial markets.
• New products to be commercialized soon, leveraging Malaysia’s progressive policies and strong partner network.
• Target Price: RM2.36 (30.0x FY26F PE, at seven-year mean forward PE).
• Share Price Catalyst: Strong customer earnings, new client wins, manageable tariff impact. Timeline: 6-9 months

My E.G. Services: AI, Blockchain, and Cross-Border Solutions

• Leading China-ASEAN AI Lab initiative in Malaysia, to develop AI infrastructure and foundational models.
• My Digital ID Superapp in beta launch, integrating multiple government databases for Single Sign On (SSO) and commercial monetisation via registration and subscription fees.
• ZTrade cross-border trade facilitation with China’s customs is scaling, processing ~15,000 transactions/month, with annual revenue potential exceeding RM650m.
• Zetrix coin sales forecasted at 4.5-5.0m units for 2024-25 (average US\$12/coin), translating to RM200-220m pre-tax profit.
• Target Price: RM1.46 (15x 2025F PE, -0.5SD below five-year mean).
• Share Price Catalyst: Rollout of My Digital ID SuperApp and World ID services.

Utilities Sector Update: New Tariff Structure and Top Picks

• New electricity tariff structure in Peninsular Malaysia: Automatic Fuel Adjustment (AFA) replaces Imbalance Cost Pass Through (ICPT), with monthly adjustments up to 3 sen/kWh not requiring Cabinet approval.
• Promotes efficient electricity use; 70% of medium voltage users will see bill reductions, while inefficient users face higher costs.
• Data centers categorized as ultra-high voltage users will see tariffs rise by 15% (to 60 sen/kWh).
• Government Energy Efficient Incentive (EEI) for domestic and SME users to offset rising bills, with RM27b in subsidies over a decade.

• Tenaga: AFA neutral for earnings, but positive for cash flows, enabling potential dividend payout increases (current payout 40-60%).
• Malakoff: Poised to win two 1,400MW gas-fired power plants, boosting capacity by 40% and replacing expiring plants.
• Pekat: Positioned to benefit from solar demand growth, with strong orderbook and mainboard transfer planned by end-2025 (target price RM1.70, sector PE of 21x).

Renewable Energy: Solar Players and Upcoming Bidding Rounds

• New tariff may slow residential rooftop solar demand due to longer payback, but commercial/industrial (CRESS) opportunities brightening as tariffs for data centers rise.
• Upcoming Large Scale Solar Phase 6 (LSS6) bidding in 2H25 (2GW capacity), plus separate battery energy storage (BESS) rounds in 3Q25 (400MW/1,600MWj).
• Total solar PV capacity expected to surpass 6.5GW by 2026; EPCC opportunities estimated at RM13b-16b over five years.
• EPCC margins to improve with lower panel prices.

Kerjaya Prospek Group: Expanding Property Footprint

• Announced three new land acquisitions in Puchong (total RM112.8m) and a JV in Penang (Tanjung Bungah, 4.5 acres, RM117.0m consideration).
• Potential gross development value (GDV) for four projects estimated at RM1.8b, timelines pending transaction completion.
• Target Price: RM2.31 (2026F PE of 12.7x, +0.5SD to five-year mean).

Traders’ Corner: Technical Picks

• AME Elite Consortium: Technical BUY, target price RM1.79 (potential 12.6% return), support RM1.49, stop-loss RM1.48. Bullish momentum expected.
• UEM Sunrise: Technical BUY, target price RM0.945 (potential 25.2% return), support RM0.69, stop-loss RM0.685. Positive MACD signals.

Conclusion: Strategic Positioning Amid Trade and Infrastructure Tailwinds

Malaysia’s equity market outlook for July 2025 remains constructive, underpinned by optimism over US trade relations, robust infrastructure spending, and sector-specific catalysts in semiconductors, property, cement, and renewable energy. Investors should focus on the highlighted Alpha Picks for exposure to these themes, balancing cyclical growth stories with resilient domestic plays. The new electricity tariff regime also creates new winners in utilities and renewables, while technical indicators flag near-term trading opportunities in select counters.