Downward pressure uneased

Market Review

Malaysia:.. The FBM KLCI (-0.7%) extended its decline as concern persists over the  US debt ceiling, coupled with the uncertainties ahead of the 6 states elections. The  lower liners also trended lower, while the plantation sector (-2.2%) underperformed on the weaker CPO prices.

Global markets:.. Wall Street faltered as the Dow fell 0.4% on the persistent concern  over the US debt ceiling situation, whilst profit taking activities emerged on  technology shares. The European stockmarkets extended their decline, while Asia  stockmarkets closed mostly in red.

The Day Ahead

The FBM KLCI slumped for the second session along with regional markets as  investors took profit after the contraction in China’s factory activity dampened  hopes for global economic recovery. Investors may continue to watch the debate  for US debt ceiling while taking a cautious trading approach. At the same time, the  labour market tightness and stubbornly high recent inflation data may continue to  sap trading interest in the equities market. Commodities wise, the Brent crude oil  tumbled towards USD72, while the CPO price hovered above RM3,200. 

Sector focus:.. Investors may see further selling pressure in the energy sector amid  declining crude oil price. Besides, the technology sector may take cue from the  profit taking activities following the decline on Wall Street overnight. Meanwhile,  sectors such as telecommunications, utilities and REIT may be under the limelight,  being defensive in nature amid the on-going volatile market condition.

FBMKLCI Technical Outlook

The FBM KLCI drifted lower, breaching below its immediate support at 1,390. Technical indicators remained negative as the MACD indicators extended a negative bar, while the RSI hovered below 50. Next support is monitored at 1,370, while the resistance is set along 1,440-1,460.

Company Brief

PPB Group Bhd’s 1QFY23 net profit rose 24.5% YoY to RM377.5m, mainly  attributed to the turnaround of the grains and agribusiness segment, as well as film  exhibition and distribution that almost breakeven. Revenue for the quarter climbed  12.6% YoY to RM1.51bn. (The Star)

CIMB Group Holdings Bhd’s 1QFY23 net profit grew 15.3% YoY to RM1.64bn,  driven by sustained operating income growth, strong cost controls and a contained  level of provisions. Revenue for the quarter rose 5.5% YoY to RM5.00bn. (The Edge)

Hong Leong Bank Bhd’s 3QFY23 net profit grew 18.5% YoY to RM930.0m, thanks  to lower impairment losses and better contribution from 18.0%-owned Bank of  Chengdu. Revenue for the quarter added 3.6% YoY to RM1.40bn. (The Edge)

IHH Healthcare Bhd’s 1QFY23 net profit jumped 181.8% YoY to RM1.39bn, thanks  to a one-off gain from the sale of the group's medical education arm, International  Medical University (IMU) for RM1.35 bn. Revenue for the quarter added 23.6% YoY  to RM5.14bn. A special dividend of 9.6 sen per share following the divestment of  IMU, paayble on 30th June 2023 was declared. (The Edge)

Capital A Bhd’s 1QFY23 net profit stood at RM57.1m vs. a net loss of -RM903.8m,  driven by a share of profit of RM13.5m from associates, as opposed to a share of  loss of -RM143.1m previously and recognised foreign exchange gain of -RM44.8m vs. a forex loss of RM52.7m. Revenue for the quarter jumped 174.7% YoY to  RM2.23bn. (The Edge)

Leong Hup International Bhd’s (LHI) 1QFY23 net profit rose 8.7% YoY to RM22.1m,  on higher contribution from its feedmill segment and a rise in other income. Revenue for the quarter rose 5.2% YoY to RM2.20bn. (The Edge)

Guan Chong Bhd's 1QFY23 net profit fell 55.4% YoY to RM23.8m, attributed to  reduced margins and higher finance costs. Revenue for the quarter declined 2.5% YoY to RM1.13 bn. (The Edge)

Syarikat Takaful Malaysia Keluarga Bhd's (Takaful Malaysia) 1QFY23 net profit  rose 21.1% YoY to RM93.4m, thanks to higher income from fixed income  investment assets and lower fair value loss on investment assets. Revenue for the  quarter rose 18.4% YoY to RM757.4m. (The Edge)

Duopharma Biotech Bhd is likely to get another 6-month contract extension for the  new approved products list (APPL) to supply pharmaceutical or nonpharmaceutical products to government hospitals and clinics. The new contract  extension will be awarded at the end of June 2023, prior to the expiry of the  existing contract. Notably, the APPL contract contributes about 20.0% to the  group's revenue per year. (The Edge)

Bintulu Port Holdings Bhd's 1QFY23 net profit fell 45.3% YoY to RM22.5m, on the  back of higher expenditure. Revenue for the quarter dipped 5.0% YoY to  RM187.9m. A first interim dividend of 3.0 sen per share was proposed. (The Edge)

EG Industries Bhd’s 3QFY23 net profit increased 88.8% YoY to RM10.6m, on the  back of higher sales which was achieved despite forex losses and a higher interest  rate in the market. Revenue for the quarter rose 14.5% YoY to RM350.5m. (The  Edge

Ekovest Bhd’s 3QFY23 net loss widened to -RM15.9m, from a net loss of RM8.0m  recorded in the previous corresponding quarter, as interest expenses rose while it  booked a deferred tax expense of RM38.7m. Revenue for the quarter, howver, rose  31.8% YoY to RM220.2m. (The Edge)

Datasonic Group Bhd’s wholly-owned subsidiary, Datasonic Technologies Sdn Bhd  (DTSB) announced that it has received and accepted the Letter of Extension (LOE)  dated 29th May 2023 from the Home Ministry (KDN) for an additional contract  value of RM9.9m. The LOE is in regards to the comprehensive maintenance  services of card personalisation centres at the National Registration Department  for a period of 6 months commencing from 1st June 2023 to 30th November 2023.  (The Edge)

Samchem Holdings Bhd is in preliminary discussions with several companies to  expand its chemical businesses through mergers and acquisitions (M&As), as a  number of small and medium enterprises (SMEs) are looking to leave the industry. (The Edge)

Radium Development Bhd made a weak debut on the Main Market, slumping to a  close of 38.5 sen, or nearly a quarter lower than its initial public offering (IPO) price  of 50 sen, and underscoring softer investor interest in property stocks. Still,  subscribers to its IPO can take some comfort in an impending dividend as it declared a dividend of 1.0 sen per ordinary share, payable on 15th August 2023. (The Edge)

YNH Property Bhd independent and non-executive directors Ching Nye Mi @  Chieng Ngie Chay, 75, and Ding Ming Hea, 59, have resigned from the property  developer’s board, effective 31st May 2023. Ching and Ding have served the  company for over 12 years. However, the company did not disclose the reason  behind their resignations. Note that both of them are also the independent and  non-executive director of YNH’s sister company Rapid Synergy Bhd, its 2021’s  annual report showed. (The Edge)

Source: Mplus Research - 1 Jun 2023