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Mplus Market Pulse - 29 Aug 2023

Publish date: Tue, 29 Aug 2023, 09:04 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

All materials published here are prepared by Malacca Securities. For latest offers on Malacca Securities trading products and news, please refer to: https://www.mplusonline.com.my

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Positive bias tone on the local bourse

Market Review

Malaysia: The FBM KLCI (-0.02%) traded flat for another session, but the investors were focusing on the small cap, the FBM Small Cap rose 1.10%. Besides, traders continued their positive views on the special financial hub news last week and buying interest was noticed within the Property and Construction sectors.

Global markets: Wall Street ended mostly higher ahead of several important key data such as the consumer confidence, core PCE as well as jobs data. Meanwhile, the US Treasury were down for the session. Both the European and Asia markets close positively.

The Day Ahead

The FBM KLCI traded in a narrow range for the past two trading days, while investors were focusing on the small cap stocks. Meanwhile, we believe the buying interest may spillover to our stock markets given the positive performance on Wall Street overnight. Also, with the special financial hub news being announced last week, we expect the trading interest to stay vibrant at least for the near term. Nevertheless, traders should take note of the several key economic data this week that may shape the tone of the Federal Reserve going forward. Commodities wise, the Brent crude oil steadied above USD84/bbl, while the CPO prices continued to stay above RM3,900/MT.

Sector focus: As Wall Street turned positive, we expect buying support to be seen within fundamentally solid technology stocks. Meanwhile, the special financial hub news is likely to spur further trading activities within the Property, Construction, Industrial Products and Utilities sectors as well as the building material segment. Also, the firmer oil price may build optimism within the Energy sector.

FBMKLCI Technical Outlook

The FBM KLCI formed another narrow candle above the SMA200 level. The technical readings on the key index are still positive bias with the MACD Histogram forming a rounding bottom pattern, while the RSI is hovering above 50. The FBM KLCI’s resistance is envisaged around 1,450-1,460 and the support is located around 1,430-1,435.

Company Brief

Petronas Dagangan Bhd (PetDag) reported a 16% increase in its net profit for 2QFY2023 to RM275.71m or 27.80 sen per share, from RM237.68m or 23.90 sen per share a year ago supported by higher volume, mainly driven by resilient domestic demand and international travel. The performance was further boosted by improved margin for the commercial segment driven by stability in prices’ trend for jet A1 and diesel. PetDag declared an interim dividend of 18 sen per share for 2QFY2023, higher than the 11 sen declared a year ago. (The Edge)

Malakoff Corp Bhd registered a net loss of RM318.73m or 6.52 sen per share for 2QFY2023 compared with a net profit of RM119.15m or 2.44 sen per share a year earlier. The group said the significant decline in earnings was mainly due to substantial negative fuel margins of RM556.2m and RM14.9m at Tanjung Bin Power Sdn Bhd (TBP) and Tanjung Bin Energy Sdn Bhd (TBE) coal plants, impacted by higher weighted average fuel costs. In addition, earnings were also dragged by a lower contribution from GB3 Sdn Bhd following the expiry of the power purchase agreement on Dec 30, 2022, higher operating insurance costs as well as lower share of profit from associates and joint ventures. Revenue increased by 2% to RM2.36bn from RM2.32bn in 2QFY2022, primarily due to a higher energy payment and capacity income from TBE given the higher applicable coal price and shorter duration of plant outage as well as higher energy payment from Segari Energy Ventures Sdn Bhd due to an increase in despatch factor. Notwithstanding the poor financial performance, Malakoff declared an interim dividend of 1.5 sen per share, to be paid on Oct 27. (The Edge)

FGV Holdings Bhd recorded a net loss of RM12.9m for 2QFY2023, versus a net profit of RM374.02m a year ago, due to lower crude palm oil (CPO) prices and the impairment loss of its Indonesian plantation assets. This is the plantation giant’s first quarterly net loss since 1QFY2021, when it posted a RM35.42m net loss. On the back of the lower CPO prices, FGV’s quarterly revenue declined 39.48% to RM4.49bn from RM7.43bn in 2QFY2022. (The Edge)

Sime Darby Property Bhd, having raised its sales target of RM2.3bn to RM2.7bn for the financial year ending Dec 31, 2023 (FY2023), is confident of achieving its goal, even if a further interest rate hike materialises in the coming months. Its managing director Datuk Azmir Merican’s confidence is based on its 1HFY2023 sales, which totalled RM1.5bn, representing 65% of its RM2.3bn sales target for FY2023. Meanwhile, for 2QFY2023, Sime Darby Property’s net profit fell 32% to RM71.07m, from RM104.99m a year earlier, on the back of higher share of loss from joint ventures. Revenue for the quarter rose to RM688.92m, from RM615.61m a year ago. Despite the lower earnings in the quarter under review, it declared an interim dividend of 1 sen per share, amounting to a payout of RM68m. (The Edge)

AirAsia X Bhd (AAX) posted its fourth consecutive quarterly net profit in 2QFY2023 amounting to RM5.54m, compared to a massive net loss of RM652.52m in the same period last year as quarterly revenue soared 379% on the back of a surge in international travel as borders reopened. (The Edge)

Mah Sing Group Bhd’s net profit increased by 17% to RM50.48m or 2.08 sen per share in 2QFY2023 from RM43.03m or 0.85 sen per share a year ago, on the back of higher property sales. The group achieved robust earnings in 2QFY2023, with a pre-tax profit of RM75m and a revenue of RM644.2m. (The Edge)

Malaysian Pacific Industries Bhd's (MPI) net profit plunged 89.9% to RM8.14m or 4.09 sen per share in the 4QFY23 from RM80.49m or 40.47 sen per share a year ago due to weak end-market electronics demand, elevated inventories and higher energy costs. (The Edge)

Technology, energy and IT company Dagang Nexchange Bhd (DNeX) reported a 70.4% drop in its net profit to RM47.51m for the April-June 2023 period, from RM160.59m in the corresponding three months in the previous year, as its tech business fell into a loss amid lower wafer shipments. (The Edge)

IOI Properties Group Bhd closed FY2023 with net profit doubling to RM1.39bn from RM686.74m in FY2022, thanks to a 26% increase in operating profit in its property investment portfolio and a fair value gain that contributed RM716.8m, while revenue was largely unchanged at RM2.59bn. The group said its stronger annual profit demonstrates its robustness in managing through economic fluctuations and business cycles as the value of its investment properties matures. It announced an interim dividend payout of 5 sen per share, higher than the 4 sen it announced for FY2022. The stronger yearly profit came despite a 19.52% drop in its final quarter’s net profit to RM235.37m from RM292.48m a year ago, mainly due to its property development segment's lower performance. (The Edge)

IJM Corp Bhd’s net profit for 1QFY2024 tripled to RM100.64m from RM33.4m in the corresponding quarter in FY2023, mainly due to higher foreign exchange (forex) gains recorded in the quarter, and as revenue grew. The group's quarterly revenue gained 14.3% to RM1.23bn in 1QFY2024 from RM1.07bn in 1QFY2023, driven by topline improvement across its businesses. (The Edge)

Oppstar Bhd, a homegrown integrated circuit (IC) designing firm, emphasised that its recent joint venture with a Chinese national does not involve any party that have been sanctioned from accessing US technology. The group chief executive officer Ng Meng Thai told The Edge that it is not experiencing any slowdown in customers’ enquiries, despite the ongoing slowdown in the semiconductor industry. (The Edge)

RGB International Bhd, whose shares fell in active trading on Monday has clarified that the group only undertakes the outright sale of gaming machines, and has no involvement or ownership in slot clubs in the country. The Penang-based gaming solutions provider also said that it "had not and will not condone any form of political funding". The group said it was responding to an article entitled RGB International Bhd Syarikat Judi Taja Hamzah, VIP, PN: CEO dan Tan Sri ditahan SPRM? published by Sabahkini2.com on Sunday. According to a report in Utusan Malaysia on Sunday, 13 individuals including an individual with the Tan Sri title were arrested by the MACC last Wednesday on suspicion of being involved in the ownership of companies that supplied gambling slot machines. They allegedly received funds from companies that were granted licences to operate slot machine activities in private clubs owned by the companies, with the funds used to finance campaigns during the 14th and 15th general elections and the recent state elections. (The Edge)

Source: Mplus Research - 29 Aug 2023

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