POLICY changes and initiatives introduced by Malaysia's 2022 federal budget are set to bring about clear benefits to the automotive, plantation and technology industries, according to Maybank Kim Eng (Maybank KE).

The research house has reiterated its "positive" stance on all three sectors despite the possibility of a one-off potential 4-5 percentage point reduction in 2022 earnings growth forecasts due to the impending Cukai Makmur (CM) corporate tax levy.

In its report dated Oct 31, Maybank KE highlighted the automotive sector as a "clear winner" in Budget 2022 as it believes extensions and granting of tax exemptions for electric vehicles (EVs) are set to spur both sales and EV infrastructure investments for automotive stocks. It highlights the automotive sector as a "clear winner" in Budget 2022 as these benefits far outweigh the CM tax effect, in the research house's view.

Car distributor Bermaz Auto and trading conglomerate Sime Darby are some of Maybank KE's top "buy" picks among the automotive stocks under its coverage. The research house also highlights Yinson as a key beneficiary via its investments in EV-related companies ChargEV, Oyika and Moovita.

Maybank KE also believes small and mid-cap stocks in the plantation sector - especially Peninsular Malaysia growers such as Boustead Plantations - will stand to benefit from an increased threshold for the crude palm oil (CPO) windfall profit tax structure.

The research house notes that these plantation stocks are also spared the CM levy, and expects them to report higher FY2022 earnings per share. KLK and Sarawak Oil Palms are also among the research house's top picks in this field.

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Lastly, the research house remains positive on the medium-to-long potential of Malaysia's technology sector, given a potential 2.7 billion ringgit (S$878.8 million) investment outlay for the continuous broad-based development of the country's electronics and engineering (E&E) ecosystem.

Top "buy" tech picks include Inari, which is involved in the outsourced semiconductor assembly and test business, as well as automated testing equipment specialist ViTrox.

"We are particularly upbeat about policies pertaining to human capital investments in key E&E production hubs such as Batu Kawan and Bayan Lepas in Penang, as well as various R&D (research and development) and automation incentives," stated analysts of Maybank KE.

"While these expansionary supply-side policies will do little to ease skilled-labour bottlenecks in the near term, we remain upbeat on its medium-to-long potential in supporting (tech) industry players as they seek to augment capacity and ride the ongoing industry upcycle over the next 2-3 years," they added.

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