Spurred by Madani Economy framework

Market Review

Malaysia:. The FBM KLCI (+0.1%) registered its sixth consecutive session of gains following the launch of Madani Economy framework. The lower liners also advanced, while the telecommunications & media sector (+1.0%) outperformed the mixed sectorial peers.

Global markets:. Wall Street retreated as the Dow (-0.2%) snapped a 13-day winning run after the CBOE Volatility Index spiked to the highest level since May on speculation that Bank of Japan may tolerate higher domestic bond yields. The European stock markets advanced, while Asia stockmarkets closed mixed.

The Day Ahead

The local bourse remained upbeat following the launch of Madani Economy framework and the NETR to boost the Malaysian economy. We gather that several initiatives such as allowing the trading of smaller size lots and fractional shares as well as enabling automatic transitions for companies listed on the ACE Market to the Main Market will boost trading interest within Bursa Malaysia. Meanwhile, the lower liners will continue to enjoy rotational play on the back of the calmer market conditions. Elsewhere, we expect some profit taking to emerge on the local bourse, mirroring the weakness on Wall Street overnight. Commodities wise, the Brent crude oil recovered above USD84/bbl, while the CPO slipped below RM4,000/MT.

Sector focus:. We reckon that the cash and credit handouts under the Madani economic policy may provide some booster towards the consumer products & services sector. The property development sector will be spurred by RM5.00bn of loan schemes to facilitate first-home purchases. Meanwhile, the launch of National Energy Transition Roadmap (NETR) may drive trading interest within the renewable energy-related stocks.

FBMKLCI Technical Outlook

The FBM KLCI managed to recover all its intraday losses to close mildly higher yesterday. Technical indicators remained positive as the MACD Histogram extended another positive bar, while the RSI lingered in the overbought territory. Next resistances are located along 1,460-1,480, while the support is pegged around 1,420-1,440.

Company Brief

Bursa Malaysia Securities Bhd has granted Capital A Bhd an extension of three months up to 7th October 2023, to submit its regularisation plan to the regulatory authorities. To recap, Capital A fell into the PN17 list of Bursa Securities, a categorisation for distressed entities, in January 2022. (The Star)

Malaysia Building Society Bhd (MBSB) has received shareholders’ approval to buy Malaysian Industrial Development Finance Berhad (MIDF) from Permodalan Nasional Bhd (PNB) for RM1.01bn that will be satisfied via the issuance of 1.05 bn MBSB shares at 96.52 sen per share. Following the proposed acquisition which is expected to be completed in August 2023, MIDF will become a wholly owned subsidiary of MBSB, and PNB will emerge as a substantial shareholder of MBSB with an equity stake of 12.8%. Meanwhile, the Employees Provident Fund's (EPF) shareholdings in MBSB will be reduced from 65.9% to 57.5%. (The Edge)

Tenaga Nasional Bhd (TNB) expects to invest around RM2.00bn in floating solar photovoltaic (PV) projects, at the launch of the National Energy Transition Roadmap. TNB is working on 2 floating solar projects near its hydro dam sites, namely the 650MW Sungai Perak power station, and the 400MW Kenyir power station in Terengganu. (The Edge)

Enovix Corp, a Nasdaq-listed advanced silicon battery company, announced it has entered into a master service agreement (MSA) with ACE Market-listed YBS International Bhd. The agreement secures USD70.0m (RM318.2m) of non-dilutive funding to support Enovix’s Fab2 site at the Penang Science Park and its first Gen2 high-volume manufacturing line. (The Edge)

Analabs Resources Bhd has acquired shares in lender RHB Bank Bhd for RM16.6m, exceeding 5.0% of Analabs’ audited consolidated net assets as at endApril 2022. It did not disclose the number of shares acquired. The acquisition was carried out with the intention of deriving dividend income and for potential capital gains. The shares were acquired in the open market at prevailing prices. (The Edge)

Shares of piling and engineering firm Top Builders Capital Bhd will be delisted from the Main Market of Bursa Malaysia on 8th August 2023. Nevertheless, the Practice Note 17 (PN17) company has until 3rd August 2023 to request an appeal of the delisting to Bursa Securities. (The Edge)

Westports Holdings Bhd's 2QFY23 net profit rose 20.0% YoY to RM194.8m, mainly due to the reduction in fuel cost. Revenue for the quarter added 6.2% YoY to RM542.6m. A first interim dividend of 8.19 sen per share, payable on 22nd August 2023 was declared. (The Edge)

Nestlé (Malaysia) Bhd’s 2QFy23 net profit grew 6.6% YoY to RM180.9m, mainly attributed to the group’s higher sales and its continuous focus on internal efficiencies amidst sustained pressure on commodity prices. Revenue for the quarter rose 6.8% YoY to RM1.75bn. An interim dividend of 70.0 sen per share, payable on 5th October 2023 was declared. (The Edge)

Pavilion Real Estate Investment Trust’s (Pavilion REIT) 2QFY23 net property income (NPI) rose 21.5% YoY to RM101.0m, supported by income from the REIT's new property, Pavilion Bukit Jalil, in addition to higher occupancy rate in and higher revenue rent from existing retail malls. Revenue for the quarter grew 17.0% YoY to RM160.0m. An interim income distribution per unit (DPU) of 76.0 sen comprising 73.0 sen taxable and 3.0 sen non-taxable, payable on 4th September 2023 was declared. (The Edge)

Lotte Chemical Titan Holding Bhd’s 2QFY23 net loss widened to -RM313.5m vs. a net loss of -RM145.9m recorded in the previous corresponding quarter, as it recorded lower margin spread amid weakened market demand due to the volatile external demand and higher cost of operation. Revenue for the quarter dropped 34.0% YoY to RM1.86bn. (The Edge)

CTOS Digital Bhd’s 2QFY23 net profit fell 6.0% YoY to RM21.1m, due to higher selling and marketing expenses, higher administrative expenses, higher finance costs and higher tax expense as well as lower other income. Revenue for the quarter, however, increased 33.8% YoY to RM62.2m. (The Edge)

Unisem (M) Bhd’s 2QFY23 net profit plunged 88.4% YoY to RM23.9m, due to lower sales volume on softer market demand. Revenue fell 18.4% YoY to RM378.7m. A second interim dividend of 2.0 sen per share payable on 25th August 2023 was declared. (The Edge)

Kossan Rubber Industries Bhd’s 2QFY23 net loss stood at -RM3.3m vs. a net profit of RM46.0m recorded in the previous corresponding quarter, as its gloves division made losses amid lower contributions from its gloves and clean-room divisions. Revenue for the quarter dropped 34.3% YoY to RM387.5m. (The Edge)

ViTrox Corp Bhd's 2QFY23 net profit dropped 26.7% YoY to RM37.7m, as revenue shrank amid still languishing customer demand. Revenue for the quarter dropped 21.1% YoY to RM149.4m. (The Edge)

Texchem Resources Bhd’s 2QFY23 net loss stood at -RM6.3m vs. a net profit of RM6.7m recorded in the previous corresponding quarter, impacted by the global market uncertainties and higher inflation, as well as higher tax expenses. Revenue for the quarter dropped 20.2% YoY to RM240.5m. (The Edge)

Source: Mplus Research - 28 Jul 2023