Continuation of the positive trading tone

Market Review

Malaysia:. The FBM KLCI (+0.34%) traded higher after a 2-day consolidation mode with as buying interest was seen within the Banking and Industrial Products heavyweights. The sentiment turned more positive after PM launched the NETR yesterday. The Utilities sector was the main leading sector for the session.

Global markets:. The US stock markets ended higher for the 3rd consecutive session as buying support emerged within the technology stocks. Meanwhile, the Conference Board consumer sentiment came in at 106.1, which was below consensus at 116. The European and Asia stock markets were mostly up.

The Day Ahead

The FBM KLCI experienced a stronger trading activity accompanied by positive catalysts emerging from the domestic scene and higher trading value and volume overall. Also, with the positive performance on Wall Street overnight, we think the buying interest may spillover to the stocks on the local front, specifically within the technology sector. Meanwhile, the consumer sentiment index that was below consensus expectation could be pointing towards a cooling economy and the market hopes for the Fed to shift their stance towards a less hawkish tone. Commodities wise, the Brent crude oil crossed above USD85/bbl, while the CPO prices traded above RM3,900/MT.

Sector focus:. Given the trading activities were vibrant on Wall Street and on our local bourse, we think the follow through buying support will be seen within the Technology, Utilities, Property, Construction, and Industrial Products sectors led by the catalysts from the NETR and NIMP. Meanwhile, we like the Energy sector on the back of higher crude oil prices.

FBMKLCI Technical Outlook

The FBM KLCI experienced a 2-day consolidation breakout and firmly closed above the 1,450 level. Despite the MACD Histogram extended another negative bar, it is now forming a rounding bottom formation. Meanwhile, the RSI has continued to rise further above 50. The resistance is located around 1,460-1,470. Support is set around 1,430-1,440.

Company Brief

Public Bank Bhd's net profit rose 14% year-on-year to RM1.62bn for the second quarter ended June 30, 2023 (2QFY2023), from RM1.42bn a year earlier, driven by continued healthy loan and deposit growth, prudent cost management as well as stable asset quality. Public Bank also declared a dividend of 9 sen per share, to be paid on Sept 22. (The Edge)

RHB Bank Bhd’s net profit rose 28% to RM808.70m for 2QFY2023 from RM630.07m a year ago, driven by higher allowances for credit losses written back, partly offset by lower net funding income and higher operating expenses. RHB declared an interim dividend of 15 sen per share, amounting to RM642.95m which will be paid at a date to be determined later. (The Edge)

IHH Healthcare Bhd’s net profit dropped 50.7% to RM301.83m or 3.43 sen per share in 2QFY2023 from RM612.10m or 6.69 sen per share a year earlier. The healthcare provider said earnings were impacted by foreign exchange losses following the Turkish lira’s devaluation in June. In 2QFY2022, the group had seen a positive effect of RM294.6m from exceptional items. IHH declared an interim dividend of 3.5 sen per share, to be paid on Oct 27. Separately, IHH announced the appointment of Dr Prem Kumar Nair as its new chief executive officer, effective Oct 1. Prem Kumar is a physician and healthcare executive with over three and a half decades of experience in both public and private healthcare sectors. Meanwhile, Joe Sim has stepped down as IHH’s chief operating officer "to pursue other career opportunities". (The Edge)

Axiata Group Bhd's net loss widened to RM576.21m for 2QFY2023 from RM106.38m a year ago. The group attributed the wider loss to lower share of results from Celcom Axiata Bhd, which is no longer its wholly owned subsidiary after a merger with Digi.Com Bhd to form CelcomDigi Bhd, as well as its Nepalbased telecommunications operator Ncell Pte Ltd's non-cash impairment of assets and capital gains tax write-off following the unfavourable outcome from the bilateral investment treaty arbitration proceedings in June. These were, however, offset by a RM402m gain from the final closing adjustments to the Celcom-Digi merger. Axiata declared an interim dividend of 5 sen per share. (The Edge)

UMW Holdings Bhd's net profit jumped 183% year-on-year to RM303.55m for 2QFY2023 from RM107.19m a year ago, on higher contributions from all segments driven by sustained demand. (The Edge)

Capital A Bhd posted a net profit of RM1.12bn for the second quarter ended June 30, 2023 (2QFY2023), compared with a net loss of RM931.22m a year earlier, thanks to strong recovery in demand from both domestic and international travel. The last time Capital A achieved a net profit of more than RM1bn was in 1QFY2018, when it reported RM1.14bn. This is the group's third straight quarterly profit and in line with the improvement in the overall performance of its aviation segment. The rise in earnings was helped by a gain of RM1.37bn from the remeasurement of an associate to subsidiary, Asia Aviation Public Company Ltd Group (AAV), in June. (The Edge)

PPB Group Bhd reported a 70.75% drop in net profit to RM202.81m for 2QFY2023, from RM693.41m a year earlier, dragged by lower contribution from its 18.8%- owned Singapore-listed Wilmar International Ltd. This is the group's lowest quarterly net profit since 2QFY2021, when it posted a net profit of RM183.47m. Revenue for the quarter slid 4.01% to RM1.48bn, from RM1.54bn a year earlier. The group declared an interim dividend of 12 sen per share, payable on Sept 22. (The Edge)

Southeast Asia largest aluminium smelter Press Metal Aluminium Holdings Bhd reported a 25% year-on-year decline in its net profit for 2QFY2023 amid a softening of metal selling prices, squeezing operating margins. Net profit for 2QFY2023 dropped to RM305.79m or 3.73 sen per share, from RM409.17m or 4.97 sen per share a year ago. Press Metal declared a second interim dividend of 1.75 sen, with an ex-date of Sept 15. (The Edge)

Berjaya Corp Bhd (BCorp) posted a net loss of RM79.33m in the fourth quarter ended June 30, 2023 (4QFY2023), against a net profit of RM48.63m a year ago, due to higher tax expenses. The tax expenses increased to RM77.99m from RM31.16m in 4QFY2022, according to the group's bourse filing on Tuesday. Quarterly revenue rose 8.9% to RM2.56bn from RM2.35bn, contributed by higher revenue due to improved performance from all business segments. (The Edge)

Inari Amertron Bhd, often regarded as one of the bellwethers for local semiconductor-linked stocks, reported a 23% decline in net profit for 4QFY2023 as an industry slowdown continued to weigh on revenue, coupled with higher energy costs. Net profit for 4QFY2023 fell to RM66.31m or 1.78 sen per share from RM86.22m or 2.33 sen per share, said the country’s leading outsourced semiconductor assembly and test (OSAT) services provider. The group declared its fourth interim dividend of 2 sen, with an entitlement date of Sept 15 and a payment date of Oct 6. Revenue for the quarter fell 11% to RM298.75m from RM336.18m a year ago due to “comparatively lower loading volume across all business segments”. (The Edge)

Glove maker Supermax Corp Bhd posted an annual net loss of RM149.45m for its financial year ended June 30, 2023 (FY2023), against an annual net profit of RM718.91m in FY2022, as earnings were weighed by lower sales and average selling price (ASP) for gloves, amid persistent oversupply in the market. Full-year revenue was RM821.86m, down 69.42% from RM2.69bn. The group reported a quarterly net loss of RM7.17m for 4QFY2023, marking the group’s third straight loss-making quarter — albeit with net loss narrowing from RM39.92m in 3QFY2023 and RM108.07m in 2QFY2023. The group made a net profit of RM19.53m in 4QFY2022. Quarterly revenue fell 25.6% to RM223.37m, from RM300.23m. (The Edge)

Agro-food producer QL Resources Bhd’s net profit rose 12.6% to RM92.81m in the first quarter ended June 30, 2023 (1QFY2024) from RM82.42m a year earlier, thanks to higher contributions from almost all segments except for its FamilyMart convenience store chain business. Quarterly revenue increased by 5.1% to RM1.6bn from RM1.52bn. (The Edge)

Alliance Bank Malaysia Bhd, which reported lower first quarter earnings on Tuesday, said pressure on net interest margin (NIM) will remain due to deposit pricing and competition. The group's net profit fell 29.04% to RM150.54m for 1QFY2024 from RM212.16m a year earlier, while revenue declined 1.65% to RM466.26mfrom RM474.07m. NIM came down to 2.43% from 2.57% previously. (The Edge)
 

Source: Mplus Research - 30 Aug 2023