All Eyes On Nvidia

Market Review

Malaysia: The FBM KLCI (+0.81%) closed higher, boosted by buying pressure in banking heavyweights such as PBBANK (+17.0 sen) and MAYBANK (+16.0 sen), after PBBANK’s strong earnings report and an upgrade for Malaysia by Nomura. Meanwhile, the Telco and Media sector was the leading sector for the session.

Global markets: Wall Street ended flat as traders awaited NVIDIA’s upcoming earnings for indications on whether the AI-driven rally that has fuelled the bull market has further upside. The European stock markets ended higher, while Asian stock markets closed mixed.

The Day Ahead

The trading tone on the local front was mixed, with traders focusing on blue-chip stocks while avoiding small caps and lower liners. In the US, Wall Street ended slightly higher as consumer sentiment continued to improve in August, rising to 103.3 from 101.9 in July. However, gains were limited as investors remained cautious ahead of Nvidia’s earnings report. This week, investors will closely monitor key economic data, including (i) preliminary US GDP (Thu), (ii) unemployment claims (Thu), and (iii) core PCE data (Fri). In the commodity market, Brent oil declined by more than 2.3%, despite ongoing Middle East tensions and concerns over the oil fields shutdown in Libya. Gold prices remained above USD2,500, supported by expectations of an interest rate downcycle going forward, while CPO prices closed above RM3,900, driven by Indonesia’s plans for biodiesel policies.

Sector Focus: Despite the positive trading sentiment in the US, we believe local investors will focus on the ringgit's strength and earnings releases from INARI to gauge trading activity in the technology sector. The stronger ringgit environment is expected to benefit the Consumer, Construction, Banking, and Building Material sectors. Additionally, we anticipate bargain hunting in O&G stocks following the strong earnings releases.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher towards the 1,652 level. However, the technical readings on the key index were with the MACD histogram forming another positive bar and the RSI trended above 50. The resistance is envisaged around 1,667-1,672 and the support is set at 1,632-1,637.

Company Brief

Property developer S P Setia Bhd (SPSETIA) says it has initiated legal action against its former senior management and a former director of the group, over alleged breaches of duties linked to the purchase of lands in Kota Kinabalu, Sabah, and the sale of units under the group’s Aeropod project. The group’s former deputy president and chief operating officer Datuk Wong Tuck Wai, currently CEO of IJM Land Bhd; its former executive vice president Datuk Kow Choong Ming; and its former president cum CEO and director Datuk Khor Chap Jen were among 11 defendants named in the suit. (The Edge)

Dialog Group Bhd (DIALOG) is selling its 60% stake in its Saudi Arabian joint venture, Dialog Jubail Supply Base Company Ltd (DJSB), for 47.5m Saudi riyals (RM55m) to its JV partner, Sedres Trading & Maritime Services Co Ltd. Sedres currently holds the remaining 40% stake in DJSB, which is primarily engaged in providing logistics services for a supply base and the trading of base oil in Saudi Arabia. (The Edge)

Malakoff Corp Bhd’s (MALAKOF) wholly-owned subsidiary Prai Power Sdn Bhd has received a one-year extension to its power purchase agreement (PPA) from Tenaga Nasional Bhd (TENAGA). The PPA extension will commence on Sept 1, 2024, and expires on Aug 31, 2025. (The Edge)

A consortium led by utility construction and tower fabrication company Rohas Tecnic Bhd (ROHAS) has won a RM123m contract from Gamuda Bhd (GAMUDA) to provide fabrication and installation works under Package 2 of the Sg Rasau water treatment plant project in Selangor. Rohas said the Rohas-Euco Industries Bhd (REI)- One Ocean Environment Sdn Bhd (OOESB) consortium — comprising REI, a wholly- owned subsidiary of Rohas, and OOESB — last Friday accepted a letter of award issued by Gamuda M&E Sdn Bhd, a subsidiary of Gamuda for the proposed job. The consortium was established to bid for and undertake the execution of the Sungai Rasau Package 2 project. (The Edge)

Varia Bhd (VARIA), previously known as Stella Holdings Bhd, has secured a RM410.3m flood mitigation project in Segamat, Johor. The company’s wholly-owned Pembinaan Teguh Maju Sdn Bhd has been appointed by Kator Construction Sdn Bhd as a sub-contractor for the Sungai Muar Phase 3 Package 1 flood mitigation plan. (The Edge)

Public Bank Bhd’s (PBBANK) net profit rose 10% in the second quarter ended June 30, 2024 (2QFY2024) to RM1.78bn from RM1.62bn in the same period a year earlier, thanks to higher net interest income and non-interest income. The country’s third largest bank by assets also declared a first interim dividend of 10 sen per share, amounting to RM1.94bn, payable on September 23. (The Edge)

RHB Bank Bhd’s (RHBBANK) net profit fell by 11% in 2QFY2024 to RM722.31m compared with RM808.70m over the same period last year, dragged by provisions. The bank also declared a cash dividend of 15 sen per share, to be paid at a date to be determined later. (The Edge)

FGV Holdings Bhd (FGV) has returned to the black with a net profit of RM86.38m in 2QFY2024 compared with a net loss of RM12.9m a year earlier, on higher profits in the plantation, and logistics and support divisions. This was partially offset by weaker performance in the sugar, and oils and fats divisions in the quarter under review. FGV also saw revenue for the quarter rise by 22.7% to RM5.52bn from RM4.49bn in 2QFY2023, driven by higher average crude palm oil price and sales volume. (The Edge)

MBSB Bhd (MBSB), the financial holding company of MBSB Bank Bhd and Malaysian Industrial Development Finance Bhd (MIDF), saw its net profit for 2QFY2024 drop 34.5% to RM54.83m, from RM83.7m a year earlier, on higher operating expenses and impairment allowances. Quarterly revenue, however, grew 35% to RM960.85m from RM711.53m in 2QFY2023, primarily due to increased financing income and contributions from MIDF integration. (The Edge)

Gas Malaysia Bhd’s (GASMSIA) 2QFY2024 net profit rose 12.5% to RM110m from RM97.8m a year earlier, driven by higher natural gas sales, tolling fees and joint venture contributions. Quarterly revenue, however, dipped 1.8% to RM1.98bn from RM2.02bn due to lower average natural gas selling prices. The group has proposed a first interim dividend of 6.31 sen per share, amounting to RM81m, to be paid on October 25. (The Edge)

Sime Darby Bhd (SIME) closed the financial year ended June 30, 2024 (FY2024) on a strong footing, with its net profit more than doubling to RM3.31bn from RM1.46bn in the previous year. This was largely due to a RM2bn gain from the disposal of Ramsay Sime Darby Health Care (RSDH) in December 2023. Revenue for FY2024 saw a 39% jump to RM67.13bn from RM48.29bn in FY2023. Sime Darby declared a second interim dividend of 10 sen per share for FY2024, payable on September 30. This brings the total dividend payout for FY2024 to 13 sen per share or RM886m. For 4QFY2024, however, Sime Darby saw its net profit fall 85.7% to RM89m from RM622m a year earlier, mainly due to one-off impairments and provisions at the motors division, losses at the motor’s operations in China, higher finance costs and deferred tax provisions Nevertheless, revenue for the quarter saw a 41.4% improvement to RM18.8bn from RM13.29bn a year earlier. (The Edge)

Inari Amertron Bhd’s (INARI) net profit for 4QFY2024 fell 17.54% to RM54.68m from RM66.31m a year earlier amid unfavourable forex movements, higher operating costs and early staging of new products. The weaker profit was despite revenue increasing by 11.5% to RM333.11m from RM298.75m, driven by higher loading volumes in the radio frequency (RF) and optoelectronics segments. The outsourced semiconductor assembly and test player declared a fourth interim dividend of 1.4 sen per share, to be paid on October 10. This brings the full-year dividend to 7.7 sen per share, lower than the 8.2 sen per share paid for FY2023. For FY2024, the group’s net profit decreased by 7.21% to RM300.19m from RM323.54m despite revenue rising 9.21% to RM1.48bn from RM1.35bn. (The Edge)

Malaysian Pacific Industries Bhd’s (MPI) saw its 4QFY2024 net profit surge nearly 11-fold to RM82.97m as compared to RM8.14m a year ago, thanks to higher revenue from its Asia and Europe market segments, as well as a reversal from its executive share scheme provision during the quarter. Revenue for the quarter was up by 10.45% to RM532.84m from RM482.43m in the same quarter a year earlier. For its full FY2024, net profit nearly tripled to RM164.40m, compared to RM61.33m in the same period last year, while revenue increased 2.45% to RM2.09bn from RM2.04bn in FY2023. (The Edge)

Padini Holdings Bhd’s (PADINI) net profit for 4QFY2024 dropped 54.09% to RM26.31m from RM57.31m, following a decline in gross profit margin amid rising staff costs and a dip in revenue. Revenue for 4QFY2024 fell 4.44% to RM455.17m from RM476.33m in 4QFY2023 due to lower outlet sales, with same store sales growth falling 10.7%. It declared a first interim dividend of 2.5 sen per share for FY2025 to be paid on September 27. The group paid an annual dividend of 11.5 sen per share to shareholders in both FY2024 and FY2023. For the full FY2024, the group’s net profit dropped 34.17% to RM146.6m from RM222.69m, although revenue rose 5.31% to RM1.92bn from RM1.82bn. Padini also proposed to undertake a bonus issue of up to 328.95m shares on the basis of one bonus share for every two existing shares held. (The Edge)

Berjaya Food Bhd (BJFOOD) swung into the red with a RM38.2m net loss in 4QFY2024, from a net profit of RM17.28m a year earlier, mainly due to the "current sentiment in relation to the conflict in the Middle East". Revenue more than halved to RM130.57m from RM271.75m a year ago. For the 12-month period, Berjaya Food posted a net loss of RM91.52m, from a net profit of RM103.4m a year earlier, due weaker consumer sentiment and a one-off loss on disposal, from the sale of its entire equity interest in Jollibean Foods Pte Ltd. (The Edge)

Source: Mplus Research - 28 Aug 2024