CelcomDigi to Drive Profit Growth in Malaysia’s Telecoms Sector

by Faiz Riziq | Jan 8, 2025 | Ekonomi, Perniagaan & Korporat, Luar Negara, English & Other Country

The Malaysian telecoms sector is expected to see significant profit growth this year, with core net profit forecasted to rise by 26%, compared to just 5% last year, according to analysts. This growth is attributed to improvements in earnings before interest, taxes, depreciation, and amortisation (EBITDA), expected to grow by 3% in 2023 and 4% in 2024.

CelcomDigi Leads the Charge

CelcomDigi Bhd is anticipated to lead the sector’s growth, with its net profit projected to surge by 50% this year. This increase is driven by the company’s successful merger synergies, aligned with its RM8 billion net present value synergy guidance.

CelcomDigi’s contribution to sectorial earnings is further amplified through Axiata Group Bhd’s associate income line. Analysts at Maybank Investment Bank Research (Maybank IB Research) have identified CelcomDigi as their top pick, with a “buy” recommendation and a target price of RM4.50 per share.

Challenges Persist Despite Growth

Despite the positive outlook for CelcomDigi, the overall telecoms sector faces ongoing challenges:

1. Regulatory Uncertainty: Concerns surrounding Malaysia’s second 5G network remain unresolved, adding capital expenditure risks for mobile operators.
2. Intense Competition: Elevated competition in the fixed broadband market continues to pressure profits.

These risks have already influenced share prices for mobile telcos, with Maybank IB Research maintaining a “neutral” stance on the sector.

Other Key Players

Maybank IB Research also issued “buy” ratings for:

• Axiata Group Bhd: Anticipating earnings recovery and improved balance sheet strength.
• Telekom Malaysia Bhd (TM): Recognised for cost optimisation efforts and potential gains from its data-centre ventures.

Both TM and TIME Dotcom Bhd (TDC) remain strong in fixed broadband subscriber acquisitions, but intense competition could erode average revenue per user (ARPU), potentially reducing net profit forecasts for TM by 19% and TDC by 9%.

The Future of Malaysia’s Telecom Industry

The telecoms sector is likely to face sustained challenges as competition intensifies and regulatory demands grow. Revenue stagnation may push telcos to focus on cost optimisation and mergers to preserve earnings.

Companies positioned to optimise costs include:

• TM: With potential savings in high staff costs.
• Axiata: By managing holding company and finance costs.
• CelcomDigi: By realising further merger synergies.

Conclusion

While the sector faces a challenging landscape, CelcomDigi’s strong performance and potential from data-centre ventures provide some optimism. However, navigating competition, regulatory uncertainties, and cost pressures will be critical for the long-term success of Malaysia’s telecom players.

Private Hospitals in Malaysia Show Strong Growth in 2024

by Faiz Riziq | Jan 8, 2025 | Ekonomi, Perniagaan & Korporat, Luar Negara, English & Other Country

Private hospitals in Malaysia are experiencing strong growth, with operators expected to see double-digit earnings increases this year, according to BIMB Securities Research. This growth is driven by higher numbers of inpatient and outpatient visits, as well as a steady recovery in hospital admissions. Demand for private healthcare remains strong, fueled by both local and international patients.

Highlights of 2024 Performance

In the first nine months of 2024, major hospital groups IHH Healthcare Bhd and KPJ Healthcare Bhd reported significant growth in both revenue and earnings. Key factors contributing to this growth include:

1. Health Tourism: Although it currently contributes less than 15% of revenue for these companies, health tourism is growing. This is supported by:
   • Modernised facilities
   • Increased digital healthcare adoption
   • Rising chronic disease cases
   • Higher healthcare spending by Malaysians, which now averages RM2,022 per person annually, a 17% increase from 2020.
2. Chronic and Specialised Care: The demand for medications and treatments for chronic conditions is increasing, boosting pharmaceutical demand. Companies like Pharmaniaga Bhd are advancing with innovations such as Wosulin, a recombinant human insulin.

Industry Outlook

BIMB Securities Research maintains an “overweight” rating for the private healthcare sector due to its positive outlook. Key factors include:

• Expansion of hospital capacity
• Increased demand for elective surgeries
• Growth in health tourism revenue
• A rising ageing population

The research house has issued a “buy” recommendation for IHH Healthcare, with a target price of RM8.60 per share, citing strong activity and growth potential. For KPJ Healthcare, it suggests a “hold” call with a target price of RM2.52, as current market expectations are already reflected in its valuation.

Impact of Inflation

Inflation has had minimal impact on private hospital demand. Healthcare providers are passing on rising costs to consumers, with middle- and high-income groups continuing to drive demand.

• Healthcare Costs:
  • Malaysia’s health consumer price index has steadily risen, driven by:
    • Advanced medical technologies
    • Ageing population
    • Demand for quality care
• Stable Inflation:
  • Medical products and equipment costs remain stable, with inflation below 2% in recent months.
  • Health services inflation has risen by around 4% since mid-2024 due to growing demand, averaging 0.6% annually since 2017.

Challenges and Opportunities

While the growth in private healthcare aligns with global trends, affordability remains a concern. Efforts to balance high-quality care with reasonable costs will be critical for sustaining demand. Malaysia’s private healthcare sector is poised for continued growth, supported by strong fundamentals, technological advancements, and a growing focus on patient-centered care.

Visit Malaysia 2026: A Grand Launch to Revitalize Tourism

by Faiz Riziq | Jan 7, 2025 | Ekonomi, Perniagaan & Korporat, Luar Negara, English & Other Country

Malaysia is gearing up to showcase its vibrant culture and natural beauty to the world with the launch of the Visit Malaysia 2026 (VM2026) campaign. The event unveiled a logo, mascot, theme song, and even aircraft liveries, setting the stage for what promises to be a landmark year for the country’s tourism industry.

Prime Minister Datuk Seri Anwar Ibrahim expressed his hopes that VM2026 would establish Malaysia as a premier global travel destination. “The theme song, Surreal Experiences, reflects the inclusiveness of VM2026, highlighting the unique strengths of every district and state across the peninsula, Sabah, and Sarawak,” he said during the launch at the MAB Engineering Complex, Kuala Lumpur International Airport.

Driving Tourism with Meaningful and Sustainable Experiences

Tourism, Arts, and Culture Minister Datuk Seri Tiong King Sing emphasized the campaign’s focus on two critical pillars: high-yield tourism and sustainability.

“To achieve these goals, we’ve developed three main strategies,” said Tiong:

1. Boosting tourist arrivals by encouraging longer stays through enhanced cultural and ecotourism offerings.
2. Empowering local communities and upgrading infrastructure.
3. Promoting niche tourism experiences to encourage higher spending and create unique travel memories.

A Symbol of Conservation and Collaboration

The Malayan sun bear, an endangered species, has been chosen as the official icon of VM2026, symbolizing Malaysia’s commitment to wildlife conservation.

The campaign also gained significant momentum through partnerships with major industry players. Key collaborators include Malaysia Airlines, AirAsia, Batik Air, Huawei, Mastercard, Marriott International, and more. Aircraft liveries showcasing the VM2026 logo were unveiled on Malaysia Airlines, Batik Air, and AirAsia planes, further amplifying the campaign’s visibility.

Building Up to the Big Year

In the lead-up to 2026, the Malaysia Sarong Music Run 2025 will take place on February 8 at the PETRONAS Twin Towers, Kuala Lumpur. This event is expected to draw over 20,000 participants, celebrating Malaysia’s culture in a lively and interactive setting.

With its commitment to inclusivity, sustainability, and innovation, VM2026 is poised to captivate global audiences and redefine the travel experience in Malaysia.

Johor Businesses Struggle with New Minimum Wage Increase Amid Post-Pandemic Challenges

by Faiz Riziq | Jan 7, 2025 | Ekonomi, Perniagaan & Korporat, Luar Negara, English & Other Country

Johor’s businesses are facing tough times, with orders falling by at least half compared to pre-pandemic levels, as they grapple with the proposed minimum wage hike to RM1,700 per month.

The South Johor Foundry and Engineering Industries Association president, Lim Kok Kiong, has called on the government to delay implementing the increase, originally set for February 1. Lim explained that many businesses anticipated economic recovery after the lifting of Covid-19 restrictions and invested in new machinery in preparation for growth. However, orders have yet to return to pre-pandemic levels, even after more than three years.

The manufacturing sector, including industries like plastics, electronics, and metal parts, relies heavily on foreign labor—making up as much as 80% of the workforce in some cases. While the association supports better wages for workers, Lim stated, “It is not the right time for this increase.” He highlighted that many local workers already earn over RM1,700 in basic pay but that employers also bear the costs of accommodation, meals, and transportation for foreign workers, pushing their monthly expenses to over RM2,000 per worker.

Training Challenges and Workforce Turnover

Johor Baru Traders and Hawkers Association president Roland Lim voiced similar concerns, stating that a minimum wage of RM1,700 for unskilled workers is unfair to employers. He noted that many new foreign workers lack the skills or experience needed for their roles, requiring significant investment in training.

“Business owners spend time and money training them, but many workers struggle to adapt. Some threaten to quit or complain to their agents if reprimanded for mistakes,” said Roland. He added that by the time these workers are fully trained, their two-year permits often expire, forcing them to return to their home countries.

Roland proposed extending foreign worker permits to three to five years to address this issue. “At this rate, Malaysia is becoming a ‘training ground’ for skilled workers who then contribute to their home or other countries’ economies,” he said.

A Snowball Effect on Costs

Business groups fear that raising the minimum wage will create a domino effect, increasing the cost of goods and services. “This increase will add more pressure on businesses already struggling with rising expenses,” said Roland.

The Johor Baru Traders and Hawkers Association plans to bring these concerns to the Human Resources Ministry, urging reconsideration of the wage hike.

Government’s Position

The wage increase to RM1,700 per month was announced by Prime Minister Datuk Seri Anwar Ibrahim during Budget 2025. Employers with fewer than five employees have been granted a six-month grace period, with the new rate taking effect on August 1 for these businesses.

While the intention behind the minimum wage hike is to improve workers’ livelihoods, businesses in Johor argue that timing is crucial. For now, they hope for a balanced approach that addresses both workers’ needs and the economic realities faced by employers.