Comprehensive Analysis of Malaysian Companies: January 2025
Comprehensive Analysis of Malaysian Companies: January 2025
Date of Report: January 2, 2025
Broker: CGS International
Overview of the Market
December 2024 was a strong month for the Malaysian stock market, as the KLCI rebounded by 3.0% month-on-month (mom), closing the year with an impressive 12.9% year-on-year (yoy) gain, the highest annual performance since 2010. Despite foreign investors being net sellers for the third consecutive month, local institutional investors offset these outflows, with sectors like Technology, Healthcare, and Utilities leading December’s gains.
Highlighted Companies: In-Depth Analysis and Recommendations
Gamuda
Rating: Add
Target Price (TP): RM5.71
Current Price: RM4.74
Gamuda’s forward CY25F price-to-earnings (P/E) ratio of 19.5x is supported by an impressive two-year EPS compound annual growth rate (CAGR) of 21%. Year-to-date (YTD) contract wins have amounted to RM9 billion, and the company’s order book is estimated at RM30–35 billion by the end of CY24F, compared to RM25 billion at September 2024. The company’s outlook is further strengthened by expectations of recovering construction margins and robust domestic contract flows.
Hong Leong Bank
Rating: Add
Target Price (TP): RM31.40
Current Price: RM20.56
Hong Leong Bank (HLB) is touted as one of the best performers in asset quality within the banking sector. The bank is projected to experience better loan growth and an improvement in net interest margin (NIM) in FY24–25F. HLB has set a target to increase its return on equity (ROE) from 11.8% in FY6/23 to over 12.5% by FY6/26F.
Sime Darby Berhad
Rating: Add
Target Price (TP): RM3.60
Current Price: RM2.36
Sime Darby is seen as a laggard in capturing the benefits of buoyant private consumption. The company is an overlooked beneficiary of local currency appreciation and trades at a modest 8.7x 2025F P/E while offering an attractive yield of 5.7%.
Telekom Malaysia
Rating: Add
Target Price (TP): RM8.60
Current Price: RM6.77
Telekom Malaysia (TM) stands out for its expansive fiber network, which is well-positioned to capitalize on increasing data consumption across retail, enterprise, and wholesale segments. With a robust ROE of 17% and a forward P/E of 13.5x for FY25F, TM offers an attractive dividend yield of approximately 4%.
Tenaga Nasional
Rating: Add
Target Price (TP): RM19.10
Current Price: RM14.76
Tenaga Nasional (TNB) is a pivotal player in Malaysia’s Net Energy Transition Roadmap (NETR). The company has been identified as a central beneficiary of grid upgrades necessary for energy transition. The base electricity tariff is set to increase by 14% from July 2025, which is expected to provide a significant rerating catalyst for the stock. TNB has already demonstrated strong performance, with further gains anticipated as the market adjusts expectations for higher capital expenditure (capex).
Sectoral Performances
The standout sectors for December 2024 were Technology (+11.1% mom), Healthcare (+10.5% mom), and Utilities (+8.6% mom). Construction also performed strongly, gaining 60.7% yoy in 2024, followed by Utilities (+38.3% yoy) and Property (+31.5% yoy). On the other end, Telecom (-4.4% yoy) and Consumer (-0.8% yoy) were among the weakest sectors for the year.
Top Gainers and Movers in December 2024
- Supermax: +58.3% mom, driven by expectations surrounding its nitrile glove plant in the US and favorable tariff developments.
- YTL Power: +30.0% mom, benefiting from positive regulatory outcomes and progress in its data center park projects.
- YTL Corporation: +28.4% mom, buoyed by the performance of its subsidiary YTL Power.
- Pentamaster: +24.2% mom, following strong automotive recovery and robust orderbook wins in its medical segment.
- SKP Resources: +21.4% mom, due to solid 2QFY25 results and diversification of its sales mix.
Conclusion
December 2024 marked a strong finish for the Malaysian equity market, with key sectors and companies showing resilience and growth potential. With the KLCI achieving its highest annual gain since 2010, the market outlook for 2025 remains optimistic, particularly for companies like YTL Power, Tenaga Nasional, and Gamuda, which are positioned to benefit from structural growth trends and favorable policy developments.
