Sharing market perspective from broker. Found it useful..

CHINA ROARING BUT MY STILL ATTRACTIVE; RINGGIT DOUBLED EDGED SWORD; FPSO STILL BRIGHT SPARK IN O&G SPACE; ASTRO TURNING AROUND?; PROFIT TAKING FLOWS...

*MY MKT:* *YES, CHINA IS EXCITING AGAIN BUT M’SIA REMAINS THE MARKET TO BE IN =)* In fact, there are many questions remain and execution is key for China esp. fiscally. The capital injections into SOE banks would help but as Michael (CH banks analyst) noted, he’s unsure which segments could *drive loan growth* as households may not be a driver unless *property transactions/consumer confidence* pick up materially. What’s more if demand’s weak, it won’t matter if corporates are given funds while banks may not dare to lend unless they’re absolved of blame for bad debts. Hence, focus on *MY domestic mkt.* though on flows, we see local insti funds are realizing profits.

Yes, ringgit’s strength is a double-edged sword ie. *good for importers but a bane for exporters.* Regardless, seasoned FMs we spoke to aren’t too worried as weaknesses seen in exporters are *short-term knee-jerk* effects. Take *VSI* for instance, stock was beaten down on weak USD as *ASP adjustments are done qtrly.* However, correction is an opportunity to collect instead as eventually, currency differences will be *passed on* while underlying demand for its clients’ *products are healthy.* *SIME’s* position is even *better.* Contrary to mkt. perception, SIME’s a *net beneficiary of RINGGIT gains* due to acquisition of *UMW.* Although *China/industrial* operations have ongoing challenges, thanks to *currency and full UMW* impact, its M’sia based *PBIT contribution will increase* from 24% in ’23 to *60% by ’25,* showing how *accretive UMW is.* Plus, *60% of component costs* are sourced abroad and currency *savings* from this alone flow *straight to EBIT.* All in, with China stimulus, SIME could win on *both* currency and China fronts.

Meanwhile, it’s *not getting better* for O&G services here till better clarity on issues like *Petros/Petronas* and of course, escalating *Mid East* conflict isn’t helping but at least, *FPSO segment* still looks lively. *MISC* looks likely to achieve *first oil for FPSO Mero-3* in the coming days and this a *huge catalyst for 4Q* earnings though this call comes with *caveat* as Petronas *will end 5 x legacy LNG* charters in 27-28 and replace them with charters for *2 x LNG from ‘27* onwards. Basically, it seems *most/all of MISC’s* maturing long term LNG charters with Petronas *will not be extended* for the long haul (20 yr) which Raymond thinks will be a *2-3% negative to earnings.* He’s not worried though as LNG charter *terminations were sort of expected* as other shipping companies can offer *better terms* to Petronas while MISC’s legacy vessels are also *not up to IMO* standards. BUT, MISC now has *orders for 10 x LNG ships* which should more than help *arrest the decline* in LNG earnings from *FY26 onwards* and yes, Mero 3 will be the *driver in FY25.*

Similarly, *YINSON’s* MQ & Atlanta FPSOs will achieve *first oil in Oct and Dec* respectively which is *music to investors’ ears* as this means cash *inflows* from charter hire. Recall, YINSON is a well-run company, in the *right space ie FPSO* and so, its management still wants to take advantage of the *growth* in this segment, but this has come at the *expense of gearing* which has ballooned. So, achieving first oil will boost both *operating cashflows and investors’ confidence* as daily charter hire is paid only when the assets are working.

Finally, *ASTRO,* yes ASTRO just had its *best quarter* in a while *(5 qtrs of decline)* on among other things, *favorable forex impact.* Out of the woods? Hard to say as *rising content costs and adex weakness* persist but encouragingly, bundling/upselling strategies have *driven ARPU* higher. All in, it requires patience when it comes to *ASTRO turnaround* as costs savings are taking *longer* to materialize but at least, the strengthening *ringgit helps* the c.35% USD-based costs, and so, *reinstatement of dividends* could be on the cards which is a rerating catalyst. Hopefully…

$VS / 6963 (V.S. INDUSTRY BERHAD) $SIME / 4197 (SIME DARBY BERHAD) $MISC / 3816 (MISC BERHAD) $YINSON / 7293 (YINSON HOLDINGS BERHAD) $ASTRO / 6399 (ASTRO MALAYSIA HOLDINGS BERHAD)