Time For Profit Taking Activities

Market Review

Malaysia: The FBMKLCI (-0.14%) ended lower, due to the dull overnight performance on Wall Street while investors await a fresh catalyst from the upcoming corporate earnings. On the broader market, the Utilities sector (+1.01%) was the leading sector, while by the Industrial Products & Services sector (-0.66%) fell.

Global markets: Wall Street closed lower as investors are taking profit after the US 1Q GDP data came in below expectations, while the PCE data came in above expectations, suggesting a drop is economic activity and persistent inflation. Both the European and Asian stock markets ended lower.

The Day Ahead

The FBM KLCI snapped a 6-day winning streak as mild profit taking activities were noticed in Industrial heavyweights, which affected the sentiment of the broader market. Over in the US, selling pressure picked up led by META, coupled with softer- than-expected 1Q US GDP data, that came in at 1.6%, below consensus. We expect the profit taking activities may extend on the local front and could capped the upside opportunity at least for the near term. Nevertheless, we remain positive following the KL20 summit, coupled with the announcement on EPF account 3, where it might provide a boost towards the consumption activities going forward. On the commodity markets, Brent oil traded sideways along USD88, while gold price had a slight rebound above USD2330 and the CPO traded below RM3,900.

Sectors focus: Still, the KL20 summit is a fresh catalyst for investors to position themselves within the Technology sector, as it may craft Malaysia into a chip powerhouse for the SEA region. Besides, we favour the Construction, Property, Utilities, Solar and Building Material segments on the back of the revival of the mega infrastructure projects and newsflow picked up on Forest City, as well as the stronger demand for renewable energy under NETR.

FBMKLCI Technical Outlook

The FBM KLCI index ended lower after a strong rally. The technical readings on the key index were positive, with the MACD Histogram extending another positive bar, while the RSI maintains above 50. The resistance is envisaged around 1,585-1,590 and the support is set at 1,550-1,555.

Company Brief

AirAsia X Bhd (AAX), which will be taking over Capital A Bhd's aviation business, has announced the mechanics of its plan. It will first undertake an internal reorganisation that involves the setting up of a new company (NewCo) that will take over the listing status of AAX. The NewCo will then acquire Capital A's aviation business — AAB and AirAsia Aviation Group Ltd (AAAGL) — for RM6.8bn. Pending the acquisitions, the NewCo will issue free warrants on the basis of one warrant for every two NewCo shares held with an exercise price to be determined later, before it undertakes a RM1bn private placement, with a placement size to be determined by the issue price to be set later. After the issuance of warrants and placement, the NewCo intends to undertake a reduction of its share capital to eliminate accumulated losses of RM3.27bn. Over at Capital A, the group plans to distribute RM2.2bn worth of the NewCo shares it is getting to its existing shareholders, based on their respective shareholdings in the group. (The Edge)

ViTrox Corp Bhd saw its net profit nearly halved for the financial quarter ended March 31, 2024 (1QFY2024), primarily due to unfavourable product mix and higher research and development (R&D) expenditures. Net profit fell 47.8% year-on-year to RM17.23m from RM33m, while revenue declined 10.3% to RM119.61m from RM133.33m. The latest figures mark the fifth consecutive quarter of year-on-year decline for the group. (The Edge)

Pavilion Real Estate Investment Trust (PavREIT) reported that its first quarter net property income (NPI) jumped 33.2% year-on-year to RM136.02m from RM102.1m, thanks to contribution from its newly acquired mall, Pavilion Bukit Jalil, as well as higher occupancy rates and higher revenue rent from its other retail malls. Gross revenue climbed 39.7% to RM218.52m from RM156.41m. PavREIT declared a distribution of 2.48 sen per unit for 1QFY2024, to be paid with its distribution for the quarter ending June 30, 2024 (2QFY2024). (The Edge)

Luxchem Corp Bhd’s net profit for 1QFY2024 surged over 54% to RM11.56m from RM7.5m a year earlier. Revenue rose 19.8% to RM183.15m versus RM152.83m a year ago as driven by its trading and manufacturing segments. (The Edge)

Chin Teck Plantations Bhd’s net profit surged sevenfold to RM20.8m for the financial quarter ended Feb 29, 2024 (2QFY2024), from RM2.92m a year earlier, thanks to higher palm oil production as well as lower operating and administrative expenses. Quarterly revenue increased by 11.1% year-on-year to RM51.26m from RM46.14m, on higher sales volume of fresh fruit bunches (FFB), crude palm oil (CPO) and palm kernels (PK). For 6MFY2024, net profit increased by 49.3% to RM42.13m from RM28.22m, while revenue climbed 4.9% to RM114.44m from RM109.1m. (The Edge)

MKH Oil Palm (East Kalimantan) Bhd (MKHOP) reported RM16.02m net profit on the back of RM86.05m revenue for 2QFY2024, ahead of its listing on Bursa Malaysia’s Main Market on April 30 with an initial public offering (IPO) price of 62 sen per share. On a quarter-on-quarter (q-o-q) basis, MKHOP’s earnings jumped 44.39% from RM11.09m in the preceding quarter, as revenue increased 4.55% from RM83.3m, due to higher average prices of crude palm oil (CPO) and palm kernel (PK) realised. (The Edge)

TAS Offshore Bhd’s net profit leapt by nine-fold year-on-year to RM6.06m for the financial quarter ended Feb 29, 2024 (3QFY2024) from RM654,000 a year earlier due to more vessels delivered. Revenue jumped 522.6% year-on-year to RM34.55m from RM5.55m. The company declared an interim dividend of one sen per share for FY2024, payable on June 18. The counter charted a new eight-year high of 70 sen during Thursday’s trading session, before settling at 67.5 sen. Year-to-date, the counter has gained 27 sen or 66.7%. (The Edge)

Inta Bina Group Bhd has secured a contract worth RM224.8m from Tropicana Metropark Sdn Bhd to develop a 38-storey business serviced apartment in Subang Jaya. The job scope includes the construction of 30 floors of business serviced apartments comprising 553 units, and eight podium floors — six floors of parking, one floor for residents' facilities, and one floor of business space. Construction is slated to commence on May 2 and is expected to last 34 months. (The Edge)

Heineken Malaysia Bhd announced that it has nominated Martijn Rene van Keulen as its new managing director (MD). Martijn, currently MD of Heineken Myanmar, will succeed Roland Bala, who is set to step down from his role as Heineken Malaysia MD on July 1 after over five and half months in the role. Roland will assume the MD post at Multi Bintang Indonesia — an Indonesia-based brewer that is also part of the Heineken group. (The Edge)

Pantech Group Holdings Bhd is considering to list two wholly-owned subsidiaries — Pantech Stainless & Alloy Industries Sdn Bhd and Pantech Steel Industries Sdn Bhd — on the Main Market of Bursa Malaysia via a special purpose vehicle (SPV). Plans for this are still at the preliminary stage and extensive preparatory work needs to be carried out, Pantech said in a bourse filing. Pantech Stainless & Alloy specialises in producing high quality stainless steel welded pipes and butt-weld fittings, while Pantech Steel manufactures carbon steel butt welded fittings, pipe fittings and high frequency induction long bends for the oil and gas industry, marine and shipyard, petrochemical and power plant. (The Edge)

Infoline Tec Group Bhd has proposed to transfer its listing from the ACE Market to the Main Market of Bursa Malaysia. The company, which was listed on July 13, 2022, said it saw an aggregated consolidated profit after tax (PAT) of RM38.26m over the past three financial years. The proposal is expected to be completed by the second half of 2024. (The Edge)

Source: Mplus Research - 26 Apr 2024