Markets Ended Final Day Of August With A Bang

Market Review

Malaysia: The FBM KLCI (+1.53%) closed higher, boosted by buying pressure in utility heavyweights, namely TENAGA (+70.0 sen), which benefited from stronger earnings amid to increased electricity sales and a favourable ringgit environment. In the broader market, all sectors posted gains on the final day of August.

Global markets: Wall Street ended higher as consumer sentiment improved for the first time in 5 months, and core PCE data came in within expectations at 0.2% for July. Meanwhile, both European and Asian stock markets ended higher as US economic data eased recession fears.

The Day Ahead

The local exchange ended on a positive note, supported by window dressing activities on the final day of August. We observed a broad-based rebound following selling pressure linked to the yen carry trade incident in early August. Meanwhile, the US stock markets closed broadly higher in anticipation of a Fed interest rate cut in September, after the core PCE index met expectations at 0.2%. This week, investors will focus on manufacturing and jobs data, which should provide insights into the health of economic activities. In the commodity markets, Brent oil trended lower, dipping just below the USD77 level, while gold prices remained around USD2,500. CPO prices continued their rebound, approaching the RM4,000 mark.

Sector Focus: Still, we believe the broadly negative performance in the US technology stocks, coupled with the stronger ringgit environment may dampen the demand for local technology companies. On the other hand, the elevated ringgit could boost trading activity in sectors such as Consumer, Banking, Construction, and Building Materials. We also favour selected O&G players following their strong earnings results.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher towards the 1,678 level. Also, the technical readings on the key index were positive with the MACD histogram forming another positive bar and the RSI trended above 50. The resistance is envisaged around 1,693- 1,698 and the support is set at 1,658-1,663.

Company Brief

CIMB Group Holdings Bhd (CIMB), Malaysia’s second-largest bank by assets, posted an 11% increase in net profit for the second quarter ended June 30, 2024 (2QFY2024) to RM1.96bn from RM1.77bn in 2QFY2023, due to higher net interest income and non-interest income. Net interest income rose 2% year-on-year to RM2.81bn while non-interest income was 2% higher at RM1.56bn. CIMB proposed a cash dividend of 27 sen per share, comprising a special dividend of 7 sen per share and an interim dividend of 20 sen per share. (The Edge)

Malaysia Airports Holdings Bhd’s (AIRPORT) net profit for 2QFY2024 doubled to RM205.80m from RM102.53m a year earlier, thanks to higher contributions from associate and joint venture companies. Revenue rose 11.93% to RM1.38bn from RM1.23bn in 2QFY2023, driven by higher passenger volumes from new airline operations, resumption of airline routes, introduction of new services, the 30-day visa-free policy for Chinese and Indian travellers, delivery of new aircraft and the haj season. (The Edge)

Malaysian Resources Corp Bhd’s (MRCB) net profit for 2QFY2024 surged more than fourfold to RM51.18m from RM10.87m a year earlier, as contribution from its construction segment doubled. Revenue declined by 37.9% to RM372.16m from RM599.35m, due to reduced revenue contributions from the property development and investment segment, as well as lower revenue from the engineering, construction and environment division. (The Edge)

IGB Bhd (IGBB) reported that its net profit for 2QFY2024 fell 33% to RM75.2m from RM112m in 2QFY2023, mainly due to reduced contribution from its property development and construction segments, alongside lower foreign exchange gains. This was despite revenue inching up 4% to RM396.8m from RM382.2m on higher contributions from its retail, commercial and hotel segments. (The Edge)

Mah Sing Group Bhd’s (MAHSING) net profit for 2QFY2024 climbed to RM60.2m from RM50.5m a year earlier, driven by higher margins and lower net finance costs. Quarterly revenue, however, fell 10.2% y-o-y to RM578.4m from RM644.2m. (The Edge)

Tan Chong Motor Holdings Bhd (TCHONG) extended its streak of losses to the seventh straight quarter as sales fell amid intense competition in the automotive industry at home and abroad. Net losses ballooned to RM40.11m for 2QFY2024 from RM18.13m a year earlier. Revenue declined 12% to RM545.1m from RM619.2m. Tan Chong, which mainly assembles Nissan-branded vehicles in Malaysia, expects new launches over the next 24 months to help the company regain some of the marque’s lost ground. (The Edge)

EA Technique (M) Bhd (EATECH) booked a net profit of RM94.65m or 7.14 sen per share for 2QFY2024, over 12 times the RM7.8m or 1.47 sen per share it made in 2QFY2023, primarily due to writebacks to other income. The writebacks are associated with the creditor scheme and one-off expenses from its Practice Note 17 (PN17) regularisation plan. This marks the eighth consecutive quarter in the black for the group, which seeks to exit the PN17 status by 1Q2025. (The Edge)

MSM Malaysia Holdings Bhd (MSM) has secured a deal to export grain sugar to China and targets to deliver 45,000 tonnes by the end of this year. While it did not disclose the value of the deal, MSM said China is one of the group's top five export destinations — alongside the Philippines, Singapore, Indonesia and Vietnam. MSM has a 100,000–200,000 tonne per annum target in the medium term for China, with available capacity headroom from MSM Johor refinery through an ongoing ramp-up programme. (The Edge)

Icon Offshore Bhd (ICON) has announced a slew of acquisitions totalling RM437.5m, to be paid in shares, that would more than double its fleet size. The proposed purchases include Yinson Holdings Bhd’s (YINSON) offshore marine business for RM160m. If all of the transactions are successful, Icon Offshore will immediately expand its fleet by an additional 40 maritime assets. The acquisitions involve four different companies in their entirety, substantial stakes of two other companies, and the remaining shares of two of its majority-owned subsidiaries. All of the proposed acquisitions will be paid through share issuance. (The Edge)

Pansar Bhd (PANSAR) has clinched an RM804.7m contract for the Kuching Urban Transportation System (KUTS) Blue-Line Package 2 in Sarawak. The contract was awarded to Pansar's wholly-owned Perbena Emas Sdn Bhd (PESB), in collaboration with China Road & Bridge Corporation (CBRC). The award came through a letter of acceptance from Sarawak Metro Sdn Bhd (SMSB), which is wholly-owned by Sarawak Economic Development Corp. The project entails construction of the infrastructure and associated works for the KUTS Blue Line that covers the stretch from Stutong to Hikmah Exchange. (The Edge)

Axis Real Estate Investment Trust (AXREIT) is proposing a private placement to raise up to RM454.99m for repayment of bank financing. The proposed placement involves up to 15.05% of its issued units, or 263m new units, to investors to be identified later. The proposed placement is in line with the board’s strategy to reduce Axis REIT’s financing ratio as part of prudent capital management. This will provide Axis REIT with sufficient financial headroom to continue pursuing future acquisitions of new properties and carry out development projects via bank financing, which is in line with its capital management and growth strategy. (The Edge)

TSH Resources Bhd (TSH) announced changes to its board and management, including the redesignation of its co-founder Datuk Kelvin Tan. Tan will take on the role of executive chairman from Sept 1. Currently the chairman and non-executive director, Tan is the elder brother of Tan Aik Sim, who will step down as managing director due to health reasons, and of executive director Tan Aik Kiong. TSH also named Velayuthan Tan Kim Song, or Vela Tan, as the director in charge of plantation operations. He was previously the chief executive officer and managing director of IJM Plantations Bhd, which was delisted in November 2021 following a takeover by Kuala Lumpur Kepong Bhd (KLK). (The Edge)

SkyWorld Development Bhd (SKYWLD) has proposed to jointly develop a property in Vietnam's Binh Duong Province, its second venture in that country. The group’s wholly-owned unit, SkyWorld Development (Vietnam) Company Ltd, has entered into a memorandum of understanding with SkyVenue Land Group Joint Stock Company, SkyBridge Company Ltd and the shareholders of SkyVenue to jointly develop the remaining plots of the Guocoland Commercial Complex project in Thuan An City. SkyBridge is a unit of SkyVenue, which has been duly registered to implement the project and has already secured the land use rights. (The Edge)

Pharmaniaga Bhd (PHARMA) announced on Friday the appointment of Zulkifli Jaafar as its managing director, effective Sept 1. A trained corporate lawyer, Zulkifli began his tenure with Pharmaniaga in 2021 as chairman of Idaman Pharma Manufacturing Sdn Bhd, a subsidiary of the group. He was subsequently appointed as Pharmaniaga's executive director in March 2022, before being promoted to deputy chief executive officer. In March this year, he was reappointed to his executive director role, taking over the role and functions of the executive committee that was subsequently disbanded. (The Edge)

Source: Mplus Research - 2 Sep 2024