Return of volatility

Market Review

Malaysia:.. The FBM KLCI (+0.3%) edged higher to close a hair above the 1,500 level, driven by gains in plantations and banking heavyweights on last Friday. The lower liners, however, experienced some profit taking activities, while the broader market ended mixed with the plantation sector (+1.5%) outperformed.

Global markets:.. Wall Street took a beating as the Dow (-3.0%) sank after US Federal Reserve Chairman Jerome Powell re-iterated the hawkish stance on interest rate hikes to combat the inflation. The European stock markets also dived, but Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI extended gains to close marginally above the psychological 1,500 level on Friday, tracking the improved sentiment across regional markets last week. However, the local bourse may be headed for a widespread selloff, following a sharp decline on Wall Street overnight after the US Fed’s Chair reiterated its hawkish tone to tame inflation. We believe the US Fed’s interest rate decision going forward will continue to fuel market volatility. On the local front, investors may watch for Malaysia’s inflation rate at noon. Commodities wise, the crude oil price climbed above USD100, while the CPO traded above RM4,150.

Sector focus:.. Investors may avoid technology stocks amid resurgence in concerns over implications of higher interest rate on the global markets. Meanwhile, investors may be in favour the defensive sectors such as consumer stocks, REIT, building material, utilities and banking sectors to prepare for a volatile period.

FBMKLCI Technical Outlook

The FBM KLCI ended the week slightly positive after the key index swung above the key 1,500 level. Technical indicators, however, remained mixed as the MACD Histogram extended a negative bar, while the RSI hovered above 50. Resistance is pegged along 1,530,1,550, while the support is envisaged at 1,450-1,465:

Company Brief

Boustead Holdings Bhd’s 2QFY22 net profit stood at RM74.4m vs. a net loss of RM7.3m registered in the previous corresponding quarter, driven by better contributions from property to plantation segments. Revenue for the quarter increased 67.7% YoY to RM4.31bn. (The Star)

Cahya Mata Sarawak Bhd’s (CMS) 2QFY22 net profit fell 16.5% YoY to RM39.6m, mainly due to a higher unrealised foreign exchange loss of RM16.0m following strengthening of USD. Revenue for the quarter, however, increased 13.4% YoY to RM209.7m. (The Star)

Sarawak Oil Palms Bhd's 2QFY22 net profit grew 57.1% YoY to RM154.5m, mainly attributed to higher average realised prices of palm products sold. Revenue for the quarter increased 47.5% YoY to RM1.40bn. An interim single-tier dividend of 4.0 sen per share, payable on 6th October 2022 was declared. (The Star)

Malaysian Bulk Carriers Bhd’s (MBC) 2QFY22 net profit rose 90.5% YoY to RM61.1m, as the drybulk shipping markets remained relatively firm due to the shift in trading patterns as a result of the Ukraine-Russia conflict. Revenue for the quarter, however, fell 26.2% YoY to RM39.6m. (The Star)

Axiata Group Bhd’s 2QFY22 net loss stood at RM106.4m vs. a net profit of RM277.8m recorded in the previous corresponding quarter, due to significant foreign exchange (forex) losses contributed by mobile operations in Sri Lanka. Revenue for the quarter, however, grew 4.9% YoY to RM6.70bn. (The Edge)

Petronas Gas Bhd’s (PetGas) 2QFY22 net profit dropped 9.5% YoY to RM396.5m, due to the impact of unfavourable forex movement, and higher effective tax rate from the imposition of the prosperity tax. Revenue for the quarter, however, rose 8.7% YoY to RM1.50bn. A second interim single tier dividend of 16.0 sen per share, payable on 23rd September 2022 was declared. (The Edge)

Capital A Bhd’s 2QFY22 net loss widened to RM931.2m, compared with a net loss of RM580.1m recorded in the previous corresponding quarter, mainly due to share of loss from associates and foreign exchange losses. Revenue for the quarter, however, soared 276.7% YoY to RM1.47bn. (The Edge)

Bumi Armada Bhd's 2QFY22 net profit rose 33.2% YoY to RM186.3m, mainly due to higher revenue and favourable forex movements. Revenue for the quarter added 4.5% YoY to RM618.4m. (The Edge)

UMW Holdings Bhd’s 2QFY22 net profit stood at RM107.2m vs. a net loss of RM3.6m recoded in the previous corresponding quarter, driven by higher sales in all segments following the economic recovery under the National Recovery Plan. Revenue for the quarter climbed 52.6% YoY to RM3.70bn. (The Edge)

Greatech Technology Bhd’s 2QFY22 net profit dropped 34.4% YoY to RM25.2m, due to effects of prolonged supply chain constraints and cost escalation. Revenue for the quarter reduced 13.4% YoY to RM118.1m. (The Edge)

Supermax Corp Bhd's unit Supermax Healthcare Canada has announced a partnership with Minco Wholesale & Supply Inc. Under the agreement, Minco will be distributing products such as rubber gloves and masks, besides non-woven cotton medical products in North America. (The Edge)

Yong Tai Bhd's 4QFY22 net loss swelled to RM135.3m vs. a net loss of RM5.6m recorded in the previous corresponding quarter, mainly due to an impairment loss of RM113.1m. Revenue for the quarter, however, gained 47.5% YoY to RM46.2m. (The Edge) 

Caely Holdings Bhd has filed a lawsuit against its former managing director Chuah Chin Lai and his wife Fong Nyok Yoon to recover alleged misappropriated funds amounting to RM30.6m. Caely, together with its wholly-owned subsidiary Caely (M) Sdn Bhd, also sought exemplary damages from the duo for alleged breach of fiduciary duty during their tenure as directors in both companies. (The Edge)

Source: Mplus Research - 29 Aug 2022