PETALING JAYA: The clear sector winners for Budget 2020 are technology and property, according to most analysts.
Kenanga Research said Budget 2020 turned out to be mostly positive for corporate Malaysia as most measures announced were business and people friendly.
It said technology gains because of generous grant incentives for digitalisation of small and medium enterprises (SMEs) operations coupled with the 10-year tax exemptions for selected electrical and electronics (E&E) companies, incentive for adoption of e-wallet and extended period of capital allowances for automation initiatives; while property gains because of the introduction of rent-to-own financing scheme and lowering of the threshold on unsold stocks of high-rise property for foreign ownership from RM1 million to RM600,000.
“We see banks benefiting too from measures to support SMEs and the property sector. We make no changes to earnings forecasts and but raised our sector call on property from neutral to overweight as prices of many stocks in the sector have fallen well below their respective target prices,“ said Kenanga in a note today.
CGS-CIMB deemed Budget 2020 to be mildly positive for market as there are more positive surprises than negatives, against its expectation.
“We project the Budget measures to be neutral to KLCI earnings but mildly positive for future corporate earnings.”
It said the technology sector is a key winner due to special tax allowances and views that this will encourage semiconductor companies to reinvest profits and allow Malaysian players to better compete globally.
“Technology companies in our coverage recorded higher effective tax rates in recent years as they have exhausted the reinvestment allowance. As such, the proposed tax incentives are positive for technology players, though partly offset by the higher minimum wage in cities. Key winners we have identified are Malaysian Pacific Industries Bhd, Pentamaster Corp Bhd and GHL Systems Bhd.”
It believes the lower minimum threshold for foreign property purchase will help to address some of the existing property overhang, though the impact may not be significant.
“The lower threshold price for foreign buyers could potentially benefit mass market developers focusing on the affordable product range such as LBS Bina Group Bhd and Mah Sing Group Bhd,” said CGS-CIMB.
Other sector winners compiled from various research houses also include consumer (due to measures to boost employment, VMY2020, Bantuan Sara Hidup goodies), automotive (fuel targeted subsidy programme and plans to reduce tolls), plantations (B20 biodiesel for transport measures) , construction and VMY2020 plays like aviation, healthcare and REITs.
Possible losers are number forecast operators (due to less draw days), banks (digital banking framework heightens competition for loans), manufacturing or services sectors (exposed to higher minimum wage in major cities).
