Momentum is building up

Market Review

Malaysia:. The FBM KLCI (+0.4%) marched higher for the third straight session, driven by gains in more than two-thirds of the key index components on last Friday. The lower liners, however, were downbeat, while the broader market ended mixed with the construction sector (+1.4%) outperformed.

Global markets:. Wall Street continued its winning run as the Dow (+1.8%) after the consumer sentiment index fell to 58.4 in May 2022; the lowest since August 2011 may result in potentially slower tightening from the US Federal Reserve. Both the European and Asia stock markets also extended their gains.

The Day Ahead

The FBM KLCI rose in tandem with the regional peers on the back of continuous bargain hunting activities. As Wall Street saw a recovery overnight, we expect to see improving trading activities on the local front, especially the technology sector with Nasdaq trading above 12,000. Nevertheless, we expect traders to remain cautious going into final 2 days of the reporting season. On a sidenote, the FBM KLCI semi-annual review will be announced on 2nd June 2022. Commodities wise, the crude oil is traded around USD119, while CPO is priced around RM6,300.

Sector focus:. Following the recovery in Nasdaq, we believe buying interest should emerge in the technology sector. Meanwhile, the recovery-themed sector should gain traction, including consumer, REITs or utilities stocks amid continuous economic reopening activities following the upliftment of international borders. Also, on commodity related, we believe O&G may still be in focus on the back of firmer Brent oil price.

FBMKLCI Technical Outlook

The FBM KLCI extended gains to close at session’s high and above its daily EMA9 level. Technical indicators, however remained mixed as the Histogram extended a positive bar, while the RSI hovered below the 50 level. The next support level is located at 1,500-1,530, while the resistance is pegged along 1,530-1,540.

Company Brief

Petronas Chemicals Group Bhd’s (PetChem) 1QFY22 net profit grew 42.1% YoY to RM2.08bn, on the back of higher product prices and strong demand. Revenue for the quarter increased 41.9% YoY to RM6.63bn. (The Star)

Hap Seng Consolidated Bhd’s 1QFY22 net profit improved 29.4% YoY to RM156.3m, thanks to growth recorded in most segments. Revenue for the quarter increased 28.1% YoY to RM1.64bn. A first interim dividend of 10.0 sen per share, payable on 23rd June 2022 was declared. (The Star)

British American Tobacco (Malaysia) Bhd's (BAT Malaysia) 1QFY22 net profit fell 17.1% YoY to RM52.3m, as Omicron variant have affected purchasing habits, persistently high illicit cigarette incidence and other seasonal factors. Revenue for the quarter declined 7.9% YoY to RM521.6m. (The Edge)

Affin Bank Bhd’s 1QFY22 net profit jumped 107.0% YoY to RM142.7m, on the back of improved net interest income (NII) and Islamic banking income. Revenue for the quarter, however, fell 1.6% YoY to RM528.8m. (The Edge)

PMB Technology Bhd’s 1QFY22 net profit surged 727.6% YoY to RM54.9m, due to improved contribution from its metallic silicon plant. Revenue for the quarter improved 86.6% YoY to RM302.0m. (The Edge)

Keck Seng (Malaysia) Bhd’s 1QFY22 net profit soared 233.0% YoY to RM36.1m, on improved revenue. Revenue for the quarter added 61.7% YoY to RM407.4m. A dividend of 5.0 sen per share was proposed. (The Edge)

Bintulu Port Holdings Bhd's 1QFY22 net profit grew 66.2% YoY to RM41.1m, amid improved performance of port and bulking service business. Revenue for the quarter increased 7.2% YoY to RM198.1m. (The Edge)

Formosa Prosonic Industries Bhd’s 1QFY22 net profit increased 2.6% YoY to RM21.1m, on improved sales. Revenue for the quarter climbed 21.0% YoY to RM252.1m. (The Edge)

Paramount Corp Bhd's 1QFY22 net profit jumped 119.2% YoY to RM5.0m, on stronger contribution from its property division amid fewer operational disruptions following the reopening of the economy as the country transitions into endemicity. Revenue for the quarter grew 10.7% YoY to RM168.1m. (The Edge)

Malayan Flour Mills Bhd’s 1QFY22 net profit reduced 51.0% YoY to RM20.3m, hit by lower profits from flour and grain trading segment. Revenue for the quarter, however, rose 18.5% YoY to RM634.9m. (The Edge)

MSM Malaysia Holdings Bhd’s 1QFY22 net loss stood at RM27.7m vs. a net profit of RM31.2m recorded in the previous corresponding quarter, on gross margin contraction that was being dragged by higher production costs amid higher raw sugar, freight and gas costs. Revenue for the quarter, however, climbed 15.7% YoY to RM595.9m. (The Edge)

Pestech International Bhd’s 3QFY22 net profit fell 54.5% YoY to RM6.5m, on lower contribution from the rail division as most active projects are at their tail end while new ones are just starting. Revenue for the quarter fell 16.3% YoY to RM192.6m. (The Edge)

Boustead Holdings Bhd’s 1QFY22 net profit soared 573.5% YoY to RM290.3m, boosted by a one-off gain from the disposal of plantation land of RM364.1m. Revenue for the quarter expanded 64.8% YoY to RM3.44bn. (The Edge)

Kretam Holdings Bhd's 1QFY22 net profit leapt 253.3% YoY to RM45.7m, with improvements in both the plantation and mill division. Revenue for the quarter increased 59.1% YoY to RM246.5m. (The Edge)

Chin Well Holdings Bhd’s 3QFY22 net profit soared by 274.0% YoY to RM63.4m, due to better profit margins that the fastener and wire products segments enjoyed during the quarter, as a result of higher average selling prices. Revenue for the quarter rose 23.9% YoY to RM167.6m. (The Edge)

Dagang NeXchange Bhd’s (DNeX) 3QFY22 net profit improved 17.7% YoY to RM51.6m, on higher contributions from across its business segments. Revenue for the quarter rose 8.3% YoY to RM382.6m. (The Edge)

Ahmad Zaki Resources Bhd’s (AZRB) 3QFY22 net loss narrowed to RM16.3m, from a net loss of RM26.8m recorded in the previous corresponding quarter, as its plantation division incurred lower pre-tax loss. Revenue for the quarter, however, declined 16.6% YoY to RM181.3m. (The Edge)

Bintai Kinden Corp Bhd’s 4QFY22 net profit stood at RM1.2m vs. a net loss of RM6.0m recorded in the previous corresponding quarter, on the back of higher revenue. Revenue for the quarter jumped 119.9% YoY to RM37.9m. (The Edge)

Axiata Group Bhd has reported that its president and group chief executive officer (CEO) Datuk Izzaddin Idris will step down from his role on 31st May 2022 after 1.5 years in the role, on the mutual cessation of his service contract with Axiata. Separately, The Employees Provident Fund (EPF) has announced that it voted against the proposed acquisition of a 66.0% stake in Indonesian cable and internet provider PT Link Net Tbk by Axiata. (The Edge)

CTOS Digital Bhd unit CTOS Data Systems Sdn Bhd, had received an approval letter from the Malaysian Investment Development Authority (MIDA) via Malaysia Digital Economy Corp Sdn Bhd (MDEC) on its transition to MSC Malaysia Status Services Incentive under Tax (Exemption) (No.10) Order 2018, Income Tax Act 1967, resulting in its earnings for the 2QFY22 to be boosted by an immediate reversal of approximately RM4.2 m in tax provision from FY21. (The Edge)

Kumpulan Wang Persaraan (Diperbadankan) on 25th May 2022 bought 22,900 shares in Power Root Bhd via the open market, upping its interest in the company to 28.5m shares. KWAP’s direct and indirect interest as at 26th May 2022 stood at 6.2% (25.5m shares) and 0.7% (2.9m shares) respectively. Meanwhile, Bursa Malaysia has reported that the proprietary day traders short selling and intraday short selling of Power Root shares have been suspended as the instant coffee maker's share price dropped more than 15.0 sen or 15.0% from the reference price, which refers to the stock's closing price of RM1.69 on 26th May 2022. (The Edge)

Cypark Resources Bhd chairman Tan Sri Razali Ismail has ceased to be a substantial shareholder of the company, following the disposal of 7.3m shares or a 1.2% equity stake since 24th May 2022. Razali disposed of the shares in 3 tranches comprising blocks of 4.8m, 2.0m and 0.5m shares for a total consideration of RM3.3m. About 2 weeks ago on 13th May 2022, he had also disposed of another block of 0.5m shares. (The Edge)

Source: Mplus Research - 30 May 2022