Bargain Hunting May Emerge

Market Review

Malaysia: The FBMKLCI (-0.47%) ended lower as the key index was dragged by profit taking in the YTL-related counters, amid the weak market sentiment from the poor overnight Wall Street performance. On a side note, the market turnover was close to RM7bn as general portfolio rebalancing activities were seen to end the month.

Global markets: Wall Street ended mixed as the market sentiment was dampened by weak manufacturing data and investors are eyeing the upcoming May payroll report to gauge the future interest rate direction. Both the European and Asian stock markets traded higher.

The Day Ahead

The FBM KLCI ended lower for the week below the 1,600 psychological level as profit taking activities emerged after digesting most of the corporate earnings. Meanwhile, the US stock markets closed mixed for the session amid soft manufacturing sector data, where ISM Manufacturing PMI came in below expectations. However, we think Nvidia’s projections are still intact given CEO Jensen Huang revealed that the company’s next-generation AI chip platform will be rolling out in 2026. On the commodity markets, Brent oil violated below USD80 as OPEC+ plans to return output after 3Q. The CPO price has charged higher above the RM4,050 level on the back of stronger demand coming from key buyer China due to its low inventories level.

Sectors focus: Given the Technology sector is trending strongly in the US, we expect buying support to emerge within the stocks on the local front within the Technology segments like the HDD, hardware suppliers and cyber security as the key investment theme will revolve around the data center, AI and cloud services in Malaysia. Besides, we opine that (i) Construction, (ii) Property, (iii), Building Materials and (iv) Utilities should benefit for the construction of data center going forward. Based on the latest corporate earnings, traders should focus on NATGATE, MASTEEL and MYCRON.

FBMKLCI Technical Outlook

The FBM KLCI index ended lower for the sixth session, dipping below the 1,600 level. The technical readings on the key index were negative with the MACD Histogram extending another negative bar, while the RSI dropped below 50. The resistance is envisaged around 1,610-1,615 and the support is set at 1,575-1,580.

Company Brief

CIMB Group Holdings Bhd's (CIMB) net profit rose 18% in the first quarter from a year earlier as both interest and non-interest income grew faster than costs and provisions. Net profit for the three months ended March 31, 2024 was RM1.94b compared with RM1.64b over the same period a year earlier. Net interest income grew 7.7% year-on-year to RM3.79b while non-interest income surged 24.5% to RM1.84b. No dividend was declared for the quarter. (The Edge)

Tenaga Nasional Bhd's (TENAGA) net profit fell 28.6% to RM715.7m in the first quarter ended March 31, 2024 from RM1b a year ago due to foreign exchange translation losses and higher tax expenses. Revenue rose 8% to RM13.64b from RM12.63b. No dividend was announced for the quarter. (The Edge)

Berjaya Corp Bhd's (BJCORP) latest quarterly net profit jumped over 200 times to a nine-year high, thanks largely to divestment and accounting gains. Net profit totalled RM694.58m for the third quarter ended March 31, 2024, compared with RM3.26m over the same period a year ago. Revenue climbed 11.24% year-on-year to RM2.78b from RM2.5b, led by higher property and lottery sales. No dividend was declared. (The Edge)

Two former directors of MMAG Holdings Bhd’s (MMAG) 95%-owned air cargo logistics unit, M Jets International Sdn Bhd (MJets), have been charged with dishonest misappropriation of property. MMAG notified the bourse of the matter after receiving a letter from the Malaysian Anti-Corruption Commission on Gunasekar Mariappan and Philip Phang Kin Ming being charged at the Shah Alam Sessions Court. According to the transportation and logistics firm, Gunasekar and Phang were slapped with seven charges under Section 403 of the Penal Code — concerning dishonest misappropriation of property — read together with Section 34 of the Act. (The Edge)

AME Elite Consortium Bhd (AME) is buying three parcels of freehold land, measuring 37.5 acres, in Kulai, Johor for RM106.17m to develop an industrial cluster. The acquisition was made through its wholly-owned subsidiary Golden Symphony Sdn Bhd, which entered into a sale and purchase agreement with Dahlia Utama Sdn Bhd, the owner of the palm oil estate. AME Elite said that the proposed acquisition, which is expected to be completed by the third quarter of this year, presents a strategic investment opportunity to increase its land bank. (The Edge)

Feytech Holdings Bhd (FEYTECH), an automotive seat manufacturer listed on May 21, proposes to acquire a plot of land measuring 9.76 acres for RM19.98m from DRB-Hicom Bhd (DRBHCOM)’s unit Proton City Development Corp Sdn Bhd (PCDC). Feytech said it has entered into a sale and purchase agreement with PCDC to acquire the freehold industrial land in Perak, to establish the group’s new manufacturing facility. “The proposed acquisition is in line with the group’s strategy to enhance production capacity for automotive seats and automotive cover in order to meet the growing demands of the automotive industry and allow for future expansion,” it said. (The Edge)

I-Bhd's (IBHD) first quarter net profit rose six-fold to RM4.07m from RM675,000 a year earlier, which the group attributed to its "strong financial management and strategic foresight". This is despite revenue for the quarter ended March 31, 2024 slipping 8.6% to RM40.63m from RM44.46m previously, said the developer of i-City in Shah Alam. The lower revenue was due to the property development segment’s revenue falling 53% to RM7.99m from RM17.09m a year earlier, amid clearance of existing inventory. The developer did not declare any dividend. (The Edge)

Sime Darby Plantation Bhd (SIMEPLT), said its first quarter net profit tripled from a year earlier, thanks to lower tax and strong downstream operations. Net profit for the three months ended March 31, 2024 was RM211m compared with RM69m over the same period a year earlier. Revenue rose 6.7% year-on-year to RM4.34b from RM4.07b No dividend was announced for the quarter. (The Edge)

Source: Mplus Research - 4 Jun 2024