Focusing On Malaysia GDP Data

Market Review

Malaysia: The FBM KLCI (+0.04%) closed slightly higher as the index was lifted by buying pressure within the Banking heavyweights. On the broader market, however, mostly were traded lower as trading activities were noticeably softer after the market rout last week, but the Financials (+0.36%) sector was one the best sectors.

Global markets: Wall Street ended notably higher led by Nasdaq with buying support were noticed in selected tech heavyweights like TSLA (+ 4.1%) as positive sentiment arise amid the better-the-expected retail sales data; allaying fears of recession in US. Meanwhile, both the European and Asia stock markets ended higher.

The Day Ahead

Most indices turned negative, except for the FBM KLCI, which managed to recover marginally at the end of the session due to buying support in banking heavyweights. Meanwhile, US stock markets ended strongly after assessing declining US CPI and PPI data earlier this week, coupled with stronger-than-expected retail sales. This optimism brushed off economic recession concerns and raised expectations that the Fed will cut rates by 25 basis points in the upcoming September FOMC meeting. We believe this buying support may also return to local stocks. In the commodity markets, Brent oil rebounded in light of better-than-expected economic data, while gold prices trended higher above the USD2,450 zone. The CPO prices are trending sideways around RM3,600-3,700.

Sectors Focus: With the positive setup in the US, we expect buying support to emerge within the local Technology sector. As we head into earnings season, we also favour the Construction, Property, Building Materials, and Utilities sectors, which are benefiting from data center and AI themes. Additionally, we believe banking stocks could trend higher ahead of the Malaysia GDP data, and the stronger ringgit is expected to benefit the Consumer sector.

FBMKLCI Technical Outlook

The FBM KLCI index ended flat at the 1,612 level. The technical readings on the key index were positive with the MACD histogram forming another positive bar and the RSI stayed above 50. The resistance is envisaged around 1,627-1,632 and the support is set at 1,592-1,597.

Company Brief

IJM Corp’s (IJM) proposed RM124m acquisition of a 44.83% stake in Pestech International (PESTECH) has been called off due to unmet conditions in the agreement. Despite this, Pestech’s joint venture with IJM for the KLIA aerotrain project remains unaffected. Pestech is now exploring alternative funding options amid financial challenges. (The Edge)

Datuk Shahriman Shamsudin, managing director of Sapura Resources Bhd (SAPRES), has been instructed to abstain from managing the group's aviation business to avoid a conflict of interest, as he is also involved with another aviation- related company Explorer Group Sdn Bhd. In response, Sapura Resources has formed a Board Aviation Management Committee to take over his duties. (The Edge)

Consumer financing firm RCE Capital Bhd's (RCECAP) net profit dropped 17.8% to RM30.3m in 1QFY2025 from RM36.9m a year earlier, mainly due to higher impairment losses on receivables. Revenue also declined by 5.8% to RM79.1m from RM84m in 1QFY2024, despite a slight increase in profit income. No dividend was declared for the quarter. (The Edge)

Integrated chemicals and lubricants distributor Samchem Holdings Bhd's (SAMCHEM) net profit for 2QFY2024 dropped 6.3% to RM5.06m from RM5.4m a year ago due to lower gross profit margins. Revenue grew 8% to RM298.43m from RM276.24m a year ago, on higher sales volume. The group declared a second interim dividend of 0.5 sen per share for the quarter. (The Edge)

S P Setia Bhd (SPSETIA) has initiated arbitration proceedings against Putrajaya Holdings Sdn Bhd, seeking RM69.53m in damages for breach of contract. The dispute arises from a 2002 development agreement involving lands in Putrajaya, where Setia Putrajaya Development Sdn Bhd, a 60% joint venture, claims to have suffered losses due to PJH's breach. (The Edge)

Dialog Group Bhd (DIALOG) reported a 9% increase in net profit to RM138.4m for 4QFY2024 from RM126.8m a year earlier, driven by higher upstream production. Quarterly revenue rose 17.4% year-on-year to RM810.1m from RM690m. The group declared a final dividend of 2.8 sen, bringing the total FY2024 payout to 4.3 sen. (The Edge)

Keyfield International Bhd (KEYFIELD) more than doubled its net profit to RM70.04m in 2QFY2024 compared to RM30.16m over the same period a year earlier. Adjusted net profit would be RM77.1m, excluding non-cash and non-recurring expenses. Revenue surged 87% year-on-year to RM198.98m from RM106.56m. The company declared a second interim dividend of 3 sen per share, payable on Sept 13, 2024. (The Edge)

Duopharma Biotech Bhd (DPHARMA) reported a 33.1% increase in net profit to RM16.69m in 2QFY2024, from RM12.54m a year ago. Revenue rose 30.3% to a record RM218.32m from RM167.52m in 2QFY2023, mainly from strong performance in the prescription market. The company declared a first interim dividend of one sen per share for FY2024, up from 0.5 sen in 2QFY2023, payable on September 12. (The Edge)

Boustead Heavy Industries Corp Bhd (BHIC) said that its 51%-owned joint venture, BHIC AeroServices Sdn Bhd (BHICAS), has received a RM378m contract from the Malaysian Ministry of Defence to support and maintain the Royal Malaysian Air Force's EC725 helicopters. The contract, effective from the date of LOA acceptance and signing, is set for five years. A formal contract will be finalised later. (The Edge)

Sunway Real Estate Investment Trust (SUNREIT) reported an 11.3% increase in net property income (NPI) to RM129.3m in 2QFY2024, from RM116.2m a year ago, driven by an enlarged property portfolio and improved retail and hotel segment performance. Quarterly revenue rose 5.4% to RM175.6m, while net profit more than doubled to RM145.1m due to a fair value gain from the acquisition of six hypermarkets. For 1HFY2024, NPI increased by 2.1% to RM259.8m, and the REIT declared a distribution per unit of 4.66 sen, up slightly from 4.62 sen last year. (The Edge)

Consumer credit company ELK-Desa Resources Bhd (ELKDESA) reported a 4% decline in net profit to RM8.14m for the first quarter ended June 30, 2024 (1QFY2025), from RM8.5m a year ago. Revenue grew 17% to RM45.88m, driven by increased contributions from its hire purchase and furniture segments. No dividend was declared for the quarter. (The Edge)

Source: Mplus Research - 16 Aug 2024