KUALA LUMPUR (March 18): Chinese companies are increasingly investing and trading in Malaysia and Southeast Asia to seek new markets, cut costs and reduce geopolitical risks, says HSBC. said.
Among other Southeast Asian countries, Malaysia currently offers a “distinct advantage” with average wages just 75% of China's, according to an HSBC strategy note. HSBC said Malaysian consumers will benefit from a wider selection and lower prices, while importers of Chinese products will also benefit.
Home improvement company MR DIY Group (M) Bhd “is benefiting from cost savings from imports from China and is profitable,” HSBC said. However, Malaysian medical glove makers have been “particularly hard hit”, with margins and profits being eroded by intense competition and oversupply, the report said.
HSBC has issued a “buy” call on Mr. DIY with a price target of RM2.06, valuing the company at 30 times future earnings, with a high return on equity and “consistently in the mid-teens.” 's free cash flow margin. , average annual revenue will increase by 14% from 2023 to 2026. The stock was last priced at RM1.51.
China has been Malaysia's largest trading partner since 2009, and Malaysia, which mainly exports electrical and electronic products, is China's largest trading partner in Southeast Asia after Vietnam. Malaysia also has advantages in semiconductor packaging, assembly and testing within the region.
Chinese semiconductor companies have partnered with Malaysian companies such as Inari Amertron Bhd on advanced chip packaging, while Xfusion Digital Technologies Co Ltd has partnered with NationGate Holdings Bhd to set up a production center for graphics processing unit servers in Penang.
Solar panel manufacturer Longi, the world's largest manufacturer of monocrystalline silicon, has established a subsidiary in Southeast Asia and is building three factories in Malaysia.
In a report on China's presence in Southeast Asia, HSBC said, “While China has a monopoly on electronics production, Malaysia, Thailand, Singapore, and now Vietnam are platforms for producing a variety of electronic components and components. “We provide the following,” he emphasized.
HSBC said Malaysia has a “strong foundation in solar module manufacturing and technology outsourcing” and production is increasing as manufacturers relocate from China to avoid Western sanctions. added.