Extended pullback

Market Review

Malaysia:. The FBM KLCI (-0.8%) extended its decline as selling pressure escalated in the second half of the trading session with more than two-thirds of the key index components closed in red. The lower liners, however, edged higher, while the broader market ended mixed with the technology sector (+0.7%) outperformed.

Global markets:. Wall Street turned downbeat as the Dow (-0.9%) fell as market sentiment turned cautious ahead of the US Federal Reserve meeting at Jackson Hole this week to re-iterate their resolve to curb the stubbornly high inflation rate. Both the European and Asia stock markets also ended mostly weaker.

The Day Ahead

The FBM KLCI drifted lower last Friday in tandem with most of the regional markets as persistent selling pressure were noticed following the elevated inflation data in the European region. With the global investors reassessing the risks of interest rate hikes by the US Feds moving forward, growth stocks may see some selling pressure. Nevertheless, we believe traders on the local bourse may remain cautiously optimistic amid the earnings season, while monitoring Malaysia’s inflation rate that will be released this Friday. Commodities wise, the crude oil hovered around USD96, while the CPO is priced above RM4,000.

Sector focus:. The technology sector may see a pullback following a slump in Nasdaq overnight. Meanwhile, investors may turn their focus to stocks with solid earnings prospects such as selected consumer, banking, and REITs. The telecommunication stocks may see some buying interest as our finance minister has commented there will be no extensions for telcos to sign up with DNB for 5G.

FBMKLCI Technical Outlook

The FBM KLCI ended lower for the third consecutive session, falling below its daily EMA9 level. Technical indicators, however, remained positive as the MACD Histogram extended a positive bar, while the RSI hovered above 50. The resistance is pegged along 1,530-1,560, while the support is set around 1,460-1,480

Company Brief

Sapura Energy Bhd’s subsidiaries, Sapura Drilling T-19 Ltd, Sapura Drilling T-20 Ltd and Sapura Drilling Setia Ltd, will be disposing of three drilling rigs to NKD Maritime Ltd for US$8.2m (RM35.1m) in cash. The disposal is part of the company’s focus on long-term sustainability and to improve its liquidity position, streamline its operating model and provide greater flexibility for strategic growth. Proceeds from the disposal will be utilised for the group’s working capital subject to multi currency facilities’ conditions. (The Star)

Carlsberg Brewery Malaysia Bhd's 2QFY22 net profit jumped 139.5% YoY to RM89.0, contributed by higher profits in both Malaysia and Singapore when the group’s Malaysia operations last year were suspended for 75 days from 12th May 2021 until 15th August 2021. Revenue for the quarter added 64.4% YoY to RM574.2m. A second interim dividend of 22.0 sen per share, payable on 15th September 2022 was declared. (The Star)

Pharmaniaga Bhd's 2QFY22 net profit plunged 94.7% YoY to RM722,000, due to lower sales from its non-concession segment due to the timing of orders from MOH on products under the tender business and lower revenue in other segments including Indonesia businesses as a result of the festive season. Revenue for the quarter fell 35.3% YoY to RM761.1m. A second interim dividend of 0.5 sen per share, payable on 4th October 2022 was declared. (The Star)

Sentral REIT's 2QFY22 net property income slipped 3.8% YoY to RM27.9m, on lower revenue from QB2-HSBC, Wisma Technip, QB3-BMW and Menara Shell. Revenue for the quarter fell 3.0% YoY to RM36.5m. An interim gross distribution per unit of 3.4 sen, payable on 30th September 2022 was declared. (The Edge)

AirAsia X Bhd’s (AAX) 4QFY22 net loss stood at RM652.5m, on the back of revenue of RM107.2m. There were no comparison figures as the group changed their financial year end to 30th June. (The Edge)

Inari Amertron Bhd's 4QFY22 net profit slipped 2.4% YoY to RM86.2m, as raw material supply constraints led to lower loading volume in its optoelectronics and generic business segments and higher provision of deferred taxation. Revenue for the quarter fell 7.0% YoY to RM336.2m. A fourth interim dividend of 2.2 sen, payable on 6th October 2022 was declared. (The Edge)

Hong Leong Industries Bhd's 4QFY22 net profit rose 82.4% YoY to RM72.7m, on higher motorcycle sales after supply chain disruptions gradually recovered. Revenue for the quarter grew 67.6% YoY to RM777.1m. (The Edge)

FGV Holdings Bhd announced that no non-compliance was identified based on the Fair Labor Association's forced labour practice benchmarks while no evidence of child labour was found in the company's operations. (The Edge)

TCS Group Holdings Bhd has secured a RM108.4m contract for the construction of Moxy Putrajaya Hotel. The group won the contract from IOI City Hotel Sdn Bhd to complete one block of the 19-storey hotel. (The Edge)

Advancecon Holdings Bhd has obtained a 4-year extension from the Energy Commission to the 21-year power purchase agreement with Tenaga Nasional Bhd (TNB) that it was awarded for the development of a large scale solar photovoltaic plant of 26.0-MW in Kuala Langat. (The Edge)

Source: Mplus Research - 22 Aug 2022