Sideways Ranging Mode

Market Review

Malaysia: The FBM KLCI (-0.27%) closed lower as investors were trading cautiously due to worries over economic and financial developments due to the recent USChina meeting. On the broader market, the Utilities sector (+0.72%) rose carried by YTL-related stocks, while the Telco & Media sector (-1.25%) fell.

Global markets: Wall Street ended higher for the third straight week as the recent slowdown in inflationary pressure indicated by CPI and PPI data supported the overall markets sentiment. Meanwhile, the Asian markets ended lower as investors were digesting the outcome of the US-China meeting and the Alibaba shares plunge.

The Day Ahead

For the week, the FBM KLCI closed higher by 1.07% as amid inflow of foreign funds coupled with the spillover buying support from Wall Street. The softer-than-expected inflation data has boosted the US stock markets for the third week straight. This week, we believe traders will be focusing on the FOMC meeting minutes, to find more clues on the interest rate direction. Other data such as unemployment claims as well as manufacturing and services PMI on Friday will be monitored. For the local market, traders may trade cautiously amid the ongoing corporate reporting season. On the commodity markets, the Brent oil prices rebounded above USD80/bbl as OPEC+ may consider additional steps to support prices by cutting production.

Sector focus: From the technical readings of the broader market, we noticed buying support was seen within the Utilities, Property and Transportation & Logistics sectors and follow through buying interest could be seen this week. Meanwhile, the O&G sector may rebound following the spike in Brent oil prices. Besides, we still like the Construction, Building Material, and Consumer sectors in anticipation of better earnings momentum for 3QCY23.

FBMKLCI Technical Outlook

The FBM KLCI ended lower for the second session. The technical readings on the key index are mixed, with the MACD Histogram hovering near the zero level, while the RSI maintained above 50. The resistance is pegged around 1,470-1,480 and the support is at 1,440-1,455.

Company Brief

Affin Bank Bhd posted a net profit of RM100.45m for the third quarter ended Sept 30, 2023 (3QFY2023), compared with RM872.37m a year ago. The big earnings contraction was mainly because the previous year had recorded a one-off gain of RM1.06bn from the divestment of its asset management business. It is worth noting that the hefty divestment gain lifted the banking group from a net loss from continuing operations amounting RM193.5m to a net profit of RM872.37m in 3QFY2022. The group’s net loss at the time was weighed down by allowances for credit impairment losses of RM233.54m. The allowances for credit losses were much lower in 3QFY2023, at RM26.42m. Nonetheless, the banking group pointed out in its latest quarter result release that its earnings were impacted by net interest margin compression due to elevated cost of funds. Interest expenses climbed 83% or RM231.6m to RM510.3m from RM278.7m in 3QFY2022. Consequently, its net interest income shrunk to RM169.4m from RM266.48m a year ago. (The Edge)

Hong Leong Industries Bhd saw its net profit for the first quarter ended Sept 30, 2023 (1QFY2024) rise 7.07% to RM87.67m from RM81.88m in the same period last year (1QFY2023).The improvement in bottom line was driven by a favourable sales mix of higher margin motorcycle models, according to the company, whose subsidiaries are involved in manufacturing, assembly and sales of motorcycles and scooters, the production and sales of ceramic tiles and cement fibreboard, and the distribution and trading of marine-related products. Its quarterly revenue fell 5.49% to RM835.88m from RM884.45m, mainly due to lower sales of motorcycles on weaker demand and credit tightening in motorcycle financing. It declared a single interim dividend of 20 sen per share, to be paid on Dec 21. (The Edge)

Tin miner and metal producer Malaysia Smelting Corp Bhd swung back to the black in the third quarter ended Sept 30, 2023 (3QFY2023), with a net profit of RM11.82m compared with a net loss of RM31.32m a year earlier. This was mainly due to higher average tin price of RM123,800 per tonne in the current quarter versus RM104,700 per tonne in 3Q2022 and higher sales quantity of refined tin. There was also a oneoff provision for legal case settlement of RM4.7m in the current quarter. Revenue for 3QFY2023 rose 5.8% to RM364.02m from RM344.13m a year earlier. (The Edge)

Crescendo Corp Bhd has announced its third land disposal in Pulai, Johor Bahru — this time involving three vacant pieces of land measuring 2.62m sq ft for RM315.17m, cash. The buyer is Microsoft Payments (M) Sdn Bhd. Crescendo had earlier this month announced the disposal of two parcels of land for RM117.02m, and another nine parcels for RM111m — both near the vicinity of the latest proposed land for sale. Gross proceeds from all three transactions totalled RM543.19m, compared with the RM69.4m that Crescendo spent to acquire, finance and develop the plots. (The Edge)

Berjaya Construction Bhd, the construction arm of Berjaya Land Bhd, has secured a US$50m (RM234.2m) construction loan from Export-Import Bank of Malaysia Bhd for the construction of the Four Seasons Resort and Private Residences Okinawa (Four Seasons Okinawa) in Japan. Leading the signing was Seikou Okinawa Construction KK, a wholly-owned subsidiary of Berjaya Construction, acting as the primary contractor in collaboration with Japanese subcontractors. (The Edge)

Greatech Technology Bhd's third quarter net profit rose 13.9% to RM46.66m, from RM40.97m a year earlier, with the increase attributed to the higher revenue recognised from the production line system of e-mobility, life science and solar industries. The group, which manufactures equipment that are used to automate processes in production lines, said revenue for the quarter ended Sept 30, 2023 (3QFY2023) jumped 43.33% to RM224.82m from RM156.85m previously. (The Edge)

CelcomDigi Bhd's net profit rose 32.66% quarter-on-quarter (q-o-q) in the quarter ended Sept 30, 2023 (3QFY2023) to RM455.72m, from RM343.52m in 2QFY2023, helped by lower regulatory and network related costs and lower marketing spend. The improved q-o-q performance was despite a marginal 0.61% decline in revenue to RM3.1bn from RM3.12bn, on softer device sales and lower postpaid revenue, while prepaid and home and fibre revenues improved due to increased subscribers and data adoption. The group added 123,000 subscribers in the quarter, expanding its base to 20.6m, it said. It declared a third interim dividend of 3.3 sen per share, bringing total dividends for the financial year so far to 9.7 sen per share, compared with 9.1 sen for the same period last year. (The Edge)

Marco Holdings Bhd is acquiring the remaining 59.61% stake in watches and clock retailer Time Galerie (M) Sdn Bhd for RM37.55m cash from Giro Laksana Sdn Bhd and Lim Siew Sooi. The electronic products trading group bought its first 40.39% stake in Time Galerie back in December 2018, for a cash consideration of RM26.66m. Time Galerie has 56 retail outlets located in major shopping complexes and retail stores in the country, Marco said. Marco is acquiring a 4.96% stake from Lim, with the balance 54.65% from Giro Laksana, which is owned by Lai Yin Chun and Lim Meng Hang. (The Edge)

Tasco Bhd's net profit in the second quarter ended Sept 30, 2023 (2QFY2024) dropped 34.34% to RM15.85m from RM24.13m, largely due to the normalisation of freight rates. The logistics solutions provider said its quarterly revenue fell by 44.60% to RM273.63m, compared to RM493.95m, underpinned by lower revenue contribution from its international business segments. (The Edge)

Malaysian Genomics Resource Centre Bhd announced losses of RM617,754 from the buy-back and disposal of company shares, as well as trading of shares in listed companies SNS Network Technology Bhd and Reneuco Bhd in the seven months from Sept 2022 till March 2023. MGRC said it acquired 53.17m of its shares from Sept 5, 2022 till March 20, 2023 in the open market for RM39.873m — or an average of 75 sen per share. Within that same period, it disposed of the shares for RM39.303m or average of 73.92 sen per share. This resulted in a gross loss of RM570,299, it said. (The Edge)

ACE Market-listed SFP Tech Holdings Bhd saw its third quarter net profit rise 19.69% to RM11.03m, from RM9.22m a year earlier, mainly due to higher revenue and lower administrative expenses. Revenue for the quarter ended Sept 30, 2023 (3QFY2023) jumped 70.2% to RM37.46m, from RM22m in 3QFY2022, on the back of recurring orders for assembled mechanical systems products from existing customers, the group told Bursa Malaysia. Net profit for the first nine months of FY2023 climbed 30.17% to RM31.76m, from RM24.4m in the previous corresponding period, as ninemonth revenue surged 78.46% to RM108.51m from RM60.8m. (The Edge)

UEM Sunrise Bhd is selling 46.9 hectares (115.91 acres) of freehold land in Johor Bahru to Paragon Globe Bhd (PGB) for a total consideration of RM146.1m. The property developer said in a statement that its indirect wholly-owned units Nusajaya Rise Sdn Bhd (NRSB), Symphony Hills Sdn Bhd (SHSB) and Nusajaya Heights Sdn Bhd (NHSB), are selling the land to PGB’s wholly-owned unit PGB Landmark Sdn Bhd. UEM Sunrise said NRSB and SHSB executed five sale and purchase agreements (SPAs) with PGB Landmark on Friday pertaining to the divestment of 19.52ha of land in Mukim Tanjung Kupang. In addition, NRSB entered into two SPAs with PGB Landmark for the sale of another 26.42ha in Mukim Tanjung Kupang, while NHSB signed another SPA with PGB Landmark for the disposal of 0.96ha in Mukim Pulai. (The Edge)

Source: Mplus Research - 20 Nov 2023