Banks, construction, utilities sectors to drive 2025 earnings growth — CIMB Securities

• The earnings growth is driven by Madani government policies — the National Energy Transition Roadmap (NETR), Johor-Singapore Special Economic Zone (JS-SEZ), New Industrial Malaysia Plan 2030 — and strong foreign direct investments, including significant investments in data centres.

KUALA LUMPUR (Dec 18): CIMB Securities is positive on Malaysia’s equity market in 2025, underpinned by a third consecutive year of earnings growth at 8%, driven by banks, construction and utilities sectors.

It is forecasting the benchmark FBM KLCI to deliver strong earnings growth of 8% in 2025 versus an anticipated 12% in 2024 and actual 5% in 2023, marking a third consecutive year of growth. The earnings growth is driven by Madani government policies — the National Energy Transition Roadmap (NETR), Johor-Singapore Special Economic Zone (JS-SEZ), New Industrial Malaysia Plan 2030 — and strong foreign direct investments, including significant investments in data centres.

Additional catalysts include the potential implementation of “value-up” initiatives, strong domestic liquidity, a robust pipeline of initial public offerings and potential merger and acquisition activities, the research firm said in its strategy report on Tuesday.

"While the incoming Donald Trump administration’s threat of higher tariffs poses risks to global growth, selected sectors in Malaysia, such as rubber gloves, could stand to benefit," it added.

CIMB Securities has adjusted its end-2025 FBM KLCI target to 1,763 points, up from 1,608 points, to reflect the recent inclusion of new constituents while maintaining its end-2024 target at 1,635 points. Both targets are based on an unchanged target price-earnings (P/E) of 15.1 times, which is 0.5 standard deviation above the historical mean. The recent semi-annual review saw the inclusion of Gamuda Bhd (KL:GAMUDA) and 99 Speed Mart Retail Holdings Bhd (KL:99SMART) in the KLCI, replacing Genting Bhd (KL:GENTING) and Genting Malaysia Bhd (KL:GENM).

CIMB Securities' top five stock picks for the first quarter of 2025 are Hong Leong Bank BHd (KL:HLBANK), CelcomDigi Bhd (KL:CDB), Gamuda, Tenaga Nasional Bhd (KL:TENAGA) and Genting Malaysia.

Key events to watch in the second half of 2025 include the potential launch of the 13th Malaysia Plan in July, the Sabah state election before December 2025, and the Budget 2026 announcement in October 2025. These developments, along with improving clarity on global trade policies, are expected to support market confidence and present further opportunities for the Malaysian equity market.

The year so far

CIMB Securities noted that all except five sectors delivered positive returns in the first 11 months of 2024 (11M2024). The construction sector was the standout performer, driven by a surge in project announcements that boosted order books.

The utilities sector also recorded strong gains, supported by positive developments in data centres and the NETR. The property sector ranked as the third-best performer, benefiting from robust growth in data centre investments in Malaysia and the JS-SEZ.

It noted that the three worst-performing sectors in 11M2024 were technology, telecommunications and consumer.

"The technology sector faced challenges due to a slower-than-expected recovery in sales and the forex impact of the ringgit’s depreciation. The telco sector was negatively affected by delays in rolling out the second 5G network. The consumer sector struggled with weaker-than-expected consumer sentiment, boycott of certain Western brands over the Gaza conflict and a 56% increase in diesel prices in Peninsular Malaysia on June 10, 2024."

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