Sharing from my relationship manager

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WHAT DC JITTERS?; LOOK BEYOND USUAL TECH PLAYS; MRDIY COMEBACK'S REAL?; MAXIS INTO SOLAR; GLOVES COMEBACK NOT AS EASY; O&G SERVICE PROVIDERS ALRIGHT; MIXED RESULTS SEASON...

*MY MKT:* *WHAT DC JITTERS?..* Understand the near-term jitters but judging by how things are panning out, long term thesis is *intact* as *ECOWORLD* can attest to following its *3rd land deal* in under a year, latest being with *MICROSOFT worth RM690mil.* Also *comforting* to know MICROSOFT’s planning to *develop/operate DC* on acquired land, further *proof* that MY’s DC space remains *resilient.* Further, this came on back of *AirTrunk’s plan* to develop *2nd DC in Johor* which is good for likes of *SUNCON, IJM & GAM.* True enough, *SUNCON* delivered *strong 4Q* thanks to *DC projects* & in *our call (>50 clients)* with mgmt., it’s clear that its *5 DC projects* have potential to be *upsized* with 1-2 full-sized conversions by *1Q25 worth c.RM2bn.* Meanwhile, mkt doesn’t seem to ascribe *much value to YTLP’s* DC ventures as *take-up* for 80MW balance needs to pick up *meaningfully + enough details* to justify further rerating.

While focus been on PROPERTY & CONSTRUCTION players, uncertainty from the noise gives us opportunity to *look* beyond the *usual DC/tech angle.* For instance, Trump’s tariff on *US Med Tech* market, though tough to quantify and is a *concern* for most Med Tech companies which have *manufacturing plants in Mexico & China,* should be taken *POSITIVELY by Msian* players as we could be *alternative hub* and likely *+VE mid-long* run for *PENTAMASTER & GREATECH.* At WESTERN DIGITAL analyst day, was highlighted that *NAND demand* to grow at *mid to high teens* rate *longer-term* though subdued *PC/Smartphone demand* in near term, could mean *NEUTRAL near-term* for *NOTIONVTEC & DUFU* but overall *+VE in longer run* as enterprise *storage* to drive overall *HDD demand* on AI storage.

As we’re constructive on *private consumption,* *MRDIY* still gives best *exposure* to this theme esp. having fallen *c.20% ytd*c.75% upside* with attractive *P/E of only 16.7x vs global peer’s 34x.* But feedback so far point to *fears of weak 4Q24* results as funds were scarred by *weak* release of its *3Q in Nov* which is understandable. Yes, earnings in *short term* could be dragged by *declining SSSG/automated* warehouse issues, but with more *store rollouts,* strong consumer *sentiment,* steady *gross margins* & *KKV’s contribution* should only help delivery of strong *3-yr EPS CAGR of 24%.* This on top of its plans to grow into *untapped* areas ie East Msia/Coast which is why, its *decline* really looks *overdone* plus *4Q* is when bulk of discount *incentives are booked,* which means 4Q should be *better QoQ.*

*Mixed results* so far at least for big ones. *MAXIS’ inline* with Prem’s/consensus as guidance for FY25 is similar to his estimates except for capex where he includes 5G capex. Interestingly, MAXIS like TIME has *ventured into solar panels* as a new revenue stream to increase customer retention. Obviously, *HARTALEGA* made waves with its disappointing *post briefing* updates as sales vol. could be *weaker QoQ* in March due to *frontloading in previous qtr* and *difficulty* in raising ASP despite US/China spat. But share price’s slight *rebound* following selloff shows there’s *trading angle* to this though caveat is, *cost pass through* ability isn’t as easy as *pre-pandemic.* O&G, while *DIALOG* gave a scare, *PERDANA/DAYANG* delivered an overall *strong 2024* though still fell short of *expectations* given *slower final qtr (monsoon)* but more importantly, now *Petronas’* outlook’s *addressed,* jobs & earnings for *services* sector will only *improve.*

*RECENT FLOWS: Results season flows have been better as we net bought of late though foreign funds cont. to sell. Heavy buying flows on names like MAY, MISC & MRDIY. Overall, mixed results so far.*

$DUFU / 7233 (DUFU TECHNOLOGY CORP. BERHAD)
$HARTA / 5168 (HARTALEGA HOLDINGS BERHAD)
$ECOWLD / 8206 (ECO WORLD DEVELOPMENT GROUP BERHAD)