UOB Kay Hian
Date of Report: 4 September 2025
Malaysia Alpha Stock Picks for September 2025: Top Opportunities and Strategies for Investors

As global equity markets brace for the notorious “September effect,” UOB Kay Hian’s latest Malaysia Alpha Picks report delivers a balanced, catalyst-driven portfolio designed to weather volatility and seize emerging opportunities. Here’s a comprehensive review of the market trends, sectoral movements, and the rationale behind the broker’s top stock selections for September 2025.

Market Overview: August Performance and September Positioning

The FBMKLCI index posted a robust 4.1% rise in August 2025, outperforming many expectations, primarily due to a 5.6% month-on-month rally in heavyweight banking stocks. The Alpha Picks portfolio, however, returned a respectable but slightly lower 2.9%, with select names like Coraza (+7.6%), Gamuda (+7.3%), and RHB Bank (+6.7%) leading gains. In contrast, notable laggards included Inari (-3.8%) and Zetrix (-2.3%).

Sector-wise, automobiles (+21.7%), construction (+7.9%), and banking (+5.9%) were the month’s biggest gainers. Renewables (+10.0%) and the heavy engineering subsector of oil and gas (+6.1%) also shone outside the KLCI component stocks. The main losers were glove manufacturing (-15.5%), manufacturing (-4.3%), and select technology subsectors.

For September, the Alpha Picks portfolio has undergone a strategic reshuffle, favoring defensive names, laggards with improving fundamentals, opportunistic thematic plays, and stocks poised for sequential earnings growth. This is in response to both global headwinds (including US macro data softness and seasonal risk aversion) and domestic factors, such as uninspiring recent corporate earnings and subdued local consumption.

Alpha Picks Portfolio: September 2025 Edition

The refreshed Alpha Picks for September 2025 are:

• Alpha IVF
• Hume Cement Industries
• Inari Amertron
• IOI Properties Group
• Northeast Group
• PPB Group
• RHB Bank
• Zetrix AI

The new inclusions (Alpha IVF, IOI Properties, Northeast Group, and PPB) are supported by distinct catalysts and replace stocks like Coraza, Gamuda, Ecoworld, and IJM, which have seen strong runs and now trade at stretched valuations.

Key Recommendations Table

Detailed Company Analysis

Alpha IVF: Expanding Regional Footprint and Growth Engines

• Alpha IVF is set to benefit from growth in patient volume, especially from China, boosted by two new marketing offices and upcoming satellite clinics in Indonesia.
• The company is also launching four new IVF facilities across the Philippines and Malaysia.
• Its Alhaya facility in Malaysia broke even within its first month and posted RM3m PAT in its first year.
• China patient arrivals grew over 70% year-on-year, providing margin accretion.
• The stock is trading at 16x PE and offers a 4.4% yield, with a BUY call and a target price of RM0.35 based on 20x 2026F PE.
• Catalyst: Strong inpatient growth and regional IVF rollout, with a 3–6 month timeline.

Hume Cement Industries: Cement Demand to Surge on Infrastructure Projects

• Near-term demand is expected to be driven by the Johor Rapid Transit System (RTS) and Penang LRT, with a combined RM21–23b construction value.
• The Penang LRT alone could generate RM2.4–3.4b in cement demand, while the RM50b MRT3 will underpin long-term growth (RM7.5–10b cement demand estimated).
• Strong profits and cash flow have enabled a rising dividend outlook (FY25 DPS: 10 sen, FY26 expected: 12 sen, 3.7% yield).
• The stock is trading at 15x 2026F PE (below the 2011–13 sector average of 19x), with a BUY rating and RM4.38 target price.
• Catalyst: Penang LRT project commencement in 1–2 quarters.

Inari Amertron: Value Emerges Amid Cyclical Weakness

• Inari’s share price declined 35% year-to-date due to smartphone demand concerns, absorption of the Lumileds acquisition, and US-China trade tensions.
• Inari and San’an Optoelectronics will jointly acquire Lumileds International, expanding into automotive and specialty LED segments and diversifying the earnings base.
• Lumileds’ Penang operations present immediate synergies; the acquisition is expected to diversify customers and reduce cyclicality.
• BUY rating with RM2.36 target price, based on 30x FY26F PE. At 19.7x ex-cash FY26F PE (-1SD below seven-year forward mean), the risk-reward is attractive.
• Catalyst: Stronger earnings from main customers, new customer wins, and a milder impact from tariffs, with a 6–9 month timeline.

IOI Properties Group: Lower Rates and Industrial Sales to Drive Upside

• Declining Singapore Overnight Rate Average (SORA) reduces IOIPG’s effective interest rate from 4% to 2.5%, with a 50bp rate cut saving RM50m/year (8% of FY26 earnings).
• The phased launch of Marina View in Singapore is set for October 2025, with the company seeking a one-year ABSD deadline extension (likely to be approved).
• IOIPG targets a significant industrial land sale in 1HFY26, riding the wave of JS-SEZ demand (RM6.8b GDV in Johor).
• BUY with a target price of RM2.72 (45% RNAV discount), implying 0.6x FY26F P/B and 22.5x FY26F PE.
• Catalyst: Industrial land sale, Marina View launch, and further SORA declines in 2H25.

Northeast Group: Resilient Orderbook, Poised for Growth

• Orderbook remains solid at RM32m, with no major customer order revisions despite tariff uncertainties. Additional sizeable opportunities pending conversion.
• Focuses on photonics and telecommunications, with Malaysia’s limited US tariff exposure providing a cushion.
• Q3FY25 core net profit hit a record RM7.6m (+33% qoq, +123% yoy), bringing 9MFY25 core net profit to RM15.5m (+27%), beating expectations.
• Sequentially stronger quarters expected as restructuring, inventory adjustments, and product diversification pay off.
• BUY rating, with a target of RM0.93. Catalysts include stronger-than-expected customer earnings, new customer wins, and milder tariff impacts, with a 6–9 month timeline.

PPB Group: Downside Priced In, 2H25 Set for Recovery

• Despite a 24% share price drop since May, PPB trades at just 9x forward PE (1.5SD below five-year mean and lowest since 2008–09 GFC), making it the cheapest non-financial KLCI constituent.
• Core operations (1H25 EBIT +23% yoy) and Wilmar’s associate earnings are expected to boost 2H25 results.
• Potential Wilmar legal penalty (up to US\$729m) is estimated to cost PPB RM580m (RM0.42/share), but PPB’s RM3/share decline since May suggests most downside is priced in.
• Dividend payout is expected to remain intact (FY24: 42 sen), supported by RM1.7bn net cash.
• BUY rating, RM15.80 target price. Catalysts include sequential earnings growth, favorable Wilmar court outcome, and reduced KLCI exclusion risk (currently 34th by market cap).

RHB Bank: High Dividend Yield, Defensive Play

• Net credit cost rose slightly to 19bps in 2Q25 (RM76m set aside for US tariff risks), still within the 15–20bps guidance.
• Non-interest income rebounded sharply (+64% qoq, +42% yoy) as the group realized FVOCI gains from a yield decline.
• Strong CET1 ratio of 16% allows for capital management and a projected 65% full cash dividend payout ratio, equating to a 7% yield—one of the highest in the sector.
• Valuations are compelling at 0.80x P/B (sector average: 1.10x) with a comparable 10% ROE.
• BUY rating, target price RM7.30 (0.95x 2025F P/B, 9.5% ROE). Catalysts: stronger non-interest income, lower net credit cost, 2–3 month timeline.

Zetrix AI: Leading AI and Blockchain Integration in Malaysia

• Leading the Malaysia-China AI Innovation and Cooperation Centre, Zetrix is at the forefront of building foundational AI models and infrastructure, with revenue streams from data services, AI solutions, and cross-border data transactions.
• My Digital ID Superapp integrates multiple government databases and is being piloted by major agencies and businesses, with monetization through registration and recurring subscription fees.
• ZTrade, Zetrix’s cross-border trade facilitation with China’s customs, processes 15,000 transactions per month and is being integrated into Malaysia’s National Single Window.
• Zetrix expects RM650m in annual revenue from gas fees and service charges, with 4.5–5.0m Zetrix coin sales at US\$12 each (RM200–220m pre-tax profit forecast for 2024–25).
• BUY rating, RM1.52 target price (15x 2025F PE, -0.5SD below five-year mean). Catalysts: rollout of My Digital ID Superapp and World ID services, 2–3 quarters timeline.

Valuations Table

Portfolio and Sector Performance

• Alpha Picks delivered a 2.9% price-weighted return in August, compared to FBMKLCI’s 4.1%.
• Year-to-date (2024): FBMKLCI returned 12.9%, while Alpha Picks returned 27.1% (price-weighted), 19.1% (market cap-weighted), and 29.9% (equal-weighted).
• Sectors with August gains: Automobiles (+21.7%), Construction (+7.9%), Banking (+5.9%), Renewables (+10.0%), O&G – Heavy Engineering (+6.1%).
• Main laggards: Glove Manufacturing (-15.5%), Manufacturing (-4.3%), Tech – EMS (-14.5%).

Key Events and Economic Highlights

• 2Q25 results season saw more surprises overall.
• Major transactions included Mah Sing’s RM260m land purchase, Hartalega’s >RM100m tax bill, and Genting Malaysia’s RM2.2b restructuring of Empire Resorts.
• Petronas Chemicals reported a record net loss of RM1.08b in 2Q25.
• Yinson started operations of its largest FPSO, Agogo FPSO, under a 15-year US\$5b charter.
• Zetrix AI launched the world’s first Shariah large language model, Nur AI.
• Malaysia’s international reserves hit a 10-year high at US\$121.3b as of end-July.
• 2Q25 GDP growth was 4.4%, July exports rose 6.8% yoy, and the government cut renewable grid access charges by up to 40%.

Conclusion: A Defensive Yet Opportunistic Playbook

UOB Kay Hian’s Alpha Picks for September 2025 emphasize a strategic blend of defensive plays and catalyst-rich stocks, underpinned by rigorous valuation discipline and clear earnings visibility. Investors are encouraged to monitor these picks closely as the market navigates both external volatility and evolving domestic catalysts.