Bogged down by geopolitical tension

Market Review

Malaysia: The FBM KLCI (-0.8%) was bogged down along with regional peers by the escalating geopolitical tension between Russia and Ukraine yesterday. The lower liners retreated, while the broader market closed mostly lower, with the exception of the plantation (+1.9%) and energy (+1.8%) sectors.

Global markets: Wall Street recovered from their intraday lows to finish higher and the Dow (+0.3%) halted a 5-day losing streak on easing concerns over the geopolitical developments between Russia and Ukraine, while US may release more strategic oil reserves depending on the fallout of the condition. Both the European and Asia stockmarkets, however, ended closed negative.

The Day Ahead

Taking cues from the global markets and the ongoing geopolitical tension, the FBM KLCI traded lower. However, as the investors and traders brushed off the concerns over the Ukraine-Russia tension, we believe bargain hunting activities may return to the local market and lookout for oversold stocks for trading opportunities; do note that foreign funds are still net buyers in the market. Meanwhile, safe-haven related sector such as gold are likely to take a setback for today amid extended trading movements yesterday. Also, both the CPO and crude oil have traded in a euphoria mode and that may attract traders to take profit.

Sector focus: We expect selective profit taking activities to emerge on the energy and plantation sectors as the Brent oil and CPO traded off the intraday high position. Meanwhile, we expect the metal related sector to trend positively in view of the elevated aluminium and rising steel prices. Besides, we opine the media sector may gain traction following Media Prima’s result few days back.

FBMKLCI Technical Outlook

The FBM KLCI reversed its gains in the previous session and fell below the daily EMA9 level, breaching below the immediate support level at 1,580. Technical indicators remained mixed as the Histogram is negative, while RSI is slightly above 50. Resistance is set around 1,600-1,620, while the next support is located at 1,570.

Company Brief

Sime Darby Property Bhd’s 4QFY21 net profit stood at RM72.2m, against a net loss of RM56.6m recorded in the previous corresponding quarter, underpinned by strong sales achievement. Revenue for the quarter rose 4.8% YoY to RM739.4m. (The Star)

Petron Malaysia Refining & Marketing Bhd’s (Petron) 4QFY21 net profit improved 44.1% YoY to RM60.5m, due to improved sales volume and higher prices as domestic demand grew. Revenue for the quarter jumped 96.0% YoY to RM2.96bn. (The Star)

Advancecon Holdings Bhd’s associate Advancecon (Sarawak) Sdn Bhd has secured an RM18.7m contract from Petrofac Engineering Services (Malaysia) Sdn Bhd. Advancecon Sarawak is appointed as the subcontractor to provide earthworks, site preparation and other related services for the Bintulu Additional Gas Sales Facilities 2 (BAGSF2) of Petronas Carigali Sdn Bhd in Sarawak. The project is expected to commence works in February 2022 and be completed within 5 months. (The Star)

Genting Bhd’s 4QFY21 net loss stood at RM129.8m vs. a net profit of RM25.0m reported in the previous corresponding quarter, on higher depreciation and net finance costs arising mainly from Resorts World Las Vegas’ commencement of operations. Revenue for the quarter, however, improved 58.7% YoY to RM4.84bn. A first and final interim dividend of 11.0 sen per share, payable on 8th April 2022 was declared. (The Edge)

Genting Malaysia Bhd’s (GENM) 4QFY21 net profit stood at RM174.1m vs. a net loss of RM240.9m recorded in the previous corresponding quarter, boosted by the re-opening of local economic activities. Revenue for the quarter climbed 81.5% YoY to RM1.89bn. A special dividend of 9.0 sen per share, payable on 31st March 2022 was declared. (The Edge)

Petronas Chemicals Group Bhd’s (PetChem) 4QFY21 net profit leapt 342.1% YoY to RM2.06bn, driven by a surge in petrochemical prices. Revenue for the quarter rose 81.8% YoY to RM6.98bn. A second interim dividend of 23.0 sen per share, payable on 25th March 2022 was declared. (The Edge)

Hap Seng Consolidated Bhd’s 4QFY21 net profit fell 14.6% YoY to RM300.5m, mainly due to a reversal of certain deferred tax assets. Revenue for the quarter, however, rose 7.0% YoY to RM1.84bn. (The Edge)

Maxis Bhd’s 4QFY21 net profit fell 9.4% YoY to RM289.0m, due to higher depreciation and amortisation charges. Revenue for the quarter, however, improved 8.4% YoY to RM2.45bn. A fourth interim dividend of 4.0 sen per share and special interim dividend of 1.0 sen per share, both payable on 31st March 2022 was declared. (The Edge)

MISC Bhd’s wholly-owned unit MISC Capital Two (Labuan) Ltd has lodged with the Securities Commission Malaysia the relevant information and documents in respect of the issuance of its Global Medium Term Notes (GMTN) programme of up to US$3.00bn (about RM12.57bn) in nominal value. The GMTN programme would provide the group the flexibility to raise medium-term to long-term funding to meet its business funding requirements as and when required. (The Edge)

IJM Corp Bhd’s 3QFY22 net profit dropped 32.7% YoY to RM98.4m, largely due to lower revenue contribution from its construction and property development segments. Revenue for the quarter fell 11.8% YoY to RM1.27bn. (The Edge)

Pentamaster Corp Bhd’s 4QFY21 net profit fell 11.0% YoY to RM19.7m, on higher operating costs. Revenue for the quarterly, however, grew 11.1% YoY to RM122.5m. A final single-tier dividend of 2.0 sen per share was proposed. (The Edge)

QL Resources Bhd’s 4QFY21 net profit declined 21.7% YoY to RM59.8m, due to compressed margins in its marine product manufacturing (MPM) and integrated livestock farming (ILF) segments. Revenue for the quarter, however, grew 26.1% YoY to RM1.40bn. (The Edge)

Sarawak Oil Palms Bhd’s 4QFY21 net profit soared 10.0x YoY to RM208.4m, underpinned by higher average realised prices of palm products sold. Revenue for the quarter grew 65.6% YoY to RM1.39bn. (The Edge)

Tenaga Nasional Bhd’s (TNB) 4QFY21 net profit fell 27.6% YoY to RM877.8m, as the group contended with higher tax expenses and unfavourable foreign exchange rates, while operating expenses jumped due to higher fuel prices. Revenue for the quarter, however, improved 52.4% YoY to RM15.74bn. A final dividend of 18.0 sen per share was proposed. (The Edge)

UOA Development Bhd’s 4QFY21 net profit jumped 182.8% YoY to RM98.9m, partly helped by an RM92.4m property revaluation surplus registered during the quarter. Revenue for the quarter, however, dropped 29.7% YoY to RM136.5m. A first and final dividend of 10.0 sen per share was proposed. (The Edge)

ViTrox Corp Bhd’s 4QFY21 net profit increased 44.5% YoY to RM46.1m, on higher sales, coupled with the favourable foreign exchange rate. Revenue for the quarter increased 16.2% YoY to RM185.8m. (The Edge)

Source: Mplus Research - 25 Feb 2022