Ringgit Strengthening Beneficiary To Be Focused

Market Review

Malaysia: The FBM KLCI closed down by 0.36%, pressured by selling in YTL-related counters. Meanwhile, regional markets were mixed as investors awaited further clues on potential rate cuts at the upcoming Jackson Hole meeting this Friday. The Utilities sector (-2.80%) was the most lagging sector for the session.

Global markets: Wall Street ended lower, with investors trading cautiously amid a lack of clear positive catalysts. European stock markets also closed lower, while Asian markets saw gains as investors digested the minutes from the Reserve Bank of Australia's latest meeting.

The Day Ahead

Stocks on the Bursa Exchange were mixed, with only a few sectors like Banking, REITs, and Healthcare trading higher. Meanwhile, on Wall Street, the Nasdaq and S&P 500 retraced, snapping an 8-day winning streak, while the Dow closed slightly lower due to profit-taking ahead of the Jackson Hole Conference this Friday. We believe overall sentiment may weaken for stocks that rallied significantly in 1H24, as the market might consider their valuations overstretched ahead of earnings releases. In the commodity markets, Brent oil declined further due to softer demand from China and fading geopolitical tensions, while gold prices remained above USD2,500 ahead of the FOMC meeting. CPO prices continued to trend sideways around RM3,700.

Sector Focus: With the slight pullback on Wall Street, profit-taking may extend to local Technology stocks. Additionally, the strong ringgit could dampen interest in local tech companies. However, attention may shift to the Consumer, Building Material, Construction, Property, Renewable Energy, and Shipping sectors, given expectations of steadier earnings ahead of corporate results. Besides, the Monkeypox situation may be monitored for potential trading opportunities within Healthcare stocks

FBMKLCI Technical Outlook

The FBM KLCI index ended lower towards the 1,642 level. However, the technical readings on the key index were positive with the MACD histogram forming another positive bar and the RSI continues to trend above 50. The resistance is envisaged around 1,657-1,662 and the support is set at 1,622-1,627.

Company Brief

Petronas Dagangan Bhd (PETDAG) posted a net profit of RM276.4m for the second quarter ended June 30, 2024, little changed from RM275.7m a year earlier, amid higher operating and tax expenses. Quarterly revenue rose 10.4% year-on-year to RM9.84b from RM8.91b, driven by a 5% increase in both sales volume and average selling prices. The group declared an interim dividend of 20 sen per share, to be paid on September 18. (The Edge)

Sentoria Group Bhd (SENTORIA) has denied former CEO Datuk Loh Yuen Tuck's claim of constructive dismissal, asserting that Loh breached his contract by not reporting for duty as requested. The company stated it will present its case in court if necessary, in response to a Bursa Malaysia query regarding a related article in The Edge Malaysia. (The Edge)

Tenaga Nasional Bhd (TENAGA) has received a new tax bill of RM1.39b from the Inland Revenue Board for the years 2020 and 2021. The utility giant said the latest notices are similar to those received in previous years, which are currently under court dispute. Based on legal advice, TNB believes the assessments are incorrect and intends to appeal the notices promptly. (The Edge)

Magma Group Bhd (MAGMA) said that its 75%-owned unit, Impiana Selo Tioman Resorts Sdn Bhd, is being sued by Marc Bovell Paul Desmidt and Erin Camille Desmidt for US$974,968 (RM4.59m). The plaintiffs allege a breach of a sale and purchase agreement for five parcels of land in Tioman, Pahang, claiming no progress in development and that the project will not proceed. (The Edge)

Star Media Group Bhd (STAR) reported a significant increase in net profit for 2QFY2024, rising to RM7.49m from RM791,000 a year earlier. This surge was driven by gains from its property development segment, which offset losses in its print business. Revenue for the quarter increased 27.76% year-on-year to RM74.13m from RM58.02m. No dividend was declared for the quarter. (The Edge)

Petronas Gas Bhd (PETGAS) has reappointed Datuk Adif Zulkifli as its non- independent, non-executive chairman, effective immediately. He replaces Adnan Zainol Abidin, who resigned due to management changes at Petroliam Nasional Bhd (Petronas). The group also reported a 3.4% decline in net profit to RM469m for the second quarter ended June 30, 2024, from RM485.4m a year earlier. Quarterly revenue inched up 0.7% year-on-year to RM1.65b from RM1.64b. It declared a second interim dividend of 16 sen, payable September 19. (The Edge)

Palm oil producer Johor Plantations Group Bhd (JPG), which went public last month, saw its net profit nearly quadruple in the second quarter, reaching RM49.74m compared to RM12.65m a year earlier. This surge was driven by higher prices and increased sales volume. Revenue rose 34.86% to RM360.91m from RM267.61 a year ago. The company declared its first interim dividend of 1.25 sen per share, payable on September 24. (The Edge)

Automotive parts manufacturer MCE Holdings Bhd (MCEHLDG) has secured RM52.13m in contracts from Proton Holdings Bhd to supply automotive electronic and mechatronic components. The five-year contracts, starting in the first quarter of FY2025, include parts like front reading lamps and rear reflectors. The estimated investment for the project is RM2.23m. (The Edge)

Willowglen MSC Bhd (WILLOW) has secured a RM42.84m contract from Singapore's Ministry of Education through its subsidiary, Willowglen Services Pte Ltd. The contract, starting on Aug 29, 2024, and ending on Feb 28, 2026, involves the design, supply and installation of security systems. (The Edge)

Petronas, Adnoc, and Storegga have signed an agreement to develop carbon capture and storage (CCS) facilities in the Penyu basin, offshore Malaysia. The project aims to achieve a CO2 capture and storage capacity of at least fivem tonnes per year by 2030. It will include studies on CO2 shipping, logistics, and advanced technologies like artificial intelligence to improve storage capacity. (The Edge)

South Malaysia Industries Bhd (SMI) has received a RM47m takeover offer from major shareholders Francis Leong and two Techbase Industries Bhd (TECHBASE) subsidiaries. They are offering 45 sen per share, an 11% premium over SMI's closing price of 40.5 sen on Monday. (The Edge)

Solarvest Holdings Bhd (SLVEST) and Agmo Holdings Bhd (AGMO) are partnering to develop digital products for the clean energy sector through a joint venture (JV). Solarvest will hold 70% of the JV, while Agmo will have 30%. The JV will focus on creating software, digital platforms, data analytics and technology integration services, with products like a renewable energy certificate platform, a home solar project management system and an electric vehicle platform. The development is expected to take six to 12 months. (The Edge)

Mechanical and electrical engineering company Kinergy Advancement Bhd's (KAB) net profit for the second quarter ended June 30, 2024 grew by 66% to RM5.57m from RM3.35m a year ago, driven by improved margins from its sustainable energy solutions segment. Quarterly revenue declined to RM41.8m from RM45m a year ago. No dividend was declared for the quarter. (The Edge)

AMMB Holdings Bhd (AMBANK) reported a 32.2% increase in net profit to RM500.2m for the first quarter ended June 30, 2024, compared with RM378.37m a year ago, driven by lower impairment charges and higher interest income. Net impairments dropped significantly to RM12.3m from RM190.4m, while net interest income rose by 6.4% to RM860.9m from RM808.7m. However, non-interest income fell by 19.2% due to lower trading gains and a one-off gain in the previous year. No dividend was declared for the quarter. (The Edge)

Source: Mplus Research - 21 Aug 2024