Accumulation Could Emerge In The Tech Sector

Market Review

Malaysia: Following the Positive Performance on Wall Street, the FBM KLCI (+0.29%) Ended Positive, Supported by Heavyweights Like MAXIS and CIMB. In the Broader Market, the Technology (+0.64%) Sector Gained the Most, Led by GREATEC (+6.0 Sen) and UWC (+11.0 Sen), While the Property (-0.65%) Sector Declined the Most.

Global Markets: The US Market Ended Mixed With Both the S&P500 and Nasdaq Closing Higher as Alphabet Shares Jump on Earnings Beat. Meanwhile, the European Market Closed Lower, While the Asian Market Ended Mixed as Investors Are Trading Cautiously Ahead of the US Presidential Election and FOMC Meeting.

The Day Ahead

Sentiment on the local front turned positive, with both the FBM KLCI and FBM Small Cap edging higher as buying interest gradually built up. However, in the US, Wall Street ended mixed ahead of the upcoming US Presidential Election, FOMC meeting next week, and investors are awaiting quarterly results from major technology giants such as Apple, Microsoft, Amazon, and Meta Platforms. This week, key economic data to watch include the US core PCE, US jobs data, US GDP, and China’s manufacturing PMI. In the commodities market, Brent crude oil declined further amid weaker demand from China and easing tensions in the Middle East, while gold prices continued to rally towards an all-time high around USD2,770, and CPO prices surged above the RM4,600 level.

Sector Focus: Given that Alphabet beat earnings expectations, coupled with Frontken’s stronger earnings release, we believe buying support may spill over to stocks on the local front, particularly in the Technology sector. Meanwhile, the weakening bias of the ringgit could lift sentiment for export-oriented stocks. Also, we anticipate that the O&G sector may stay muted due to softer Brent oil prices, but Plantation and Gold-related stocks could trend positively as CPO and gold continue in their upcycle.

FBMKLCI Technical Outlook

The FBM KLCI index rebounded above the 1,610 level. The technical readings on the key index, however are negative, with the MACD histogram remained negative, and the RSI trended below 50. The resistance is envisaged around 1,630-1,635, and the support is set at 1,595-1,600.

Company Briefs

Symphony Life Bhd’s (SYMLIFE) former chief financial officer Ng Ying Yiing and former group adviser Datuk David Goh were charged at the Sessions Court in Shah Alam for using RM2.57m in company funds to purchase shares in Cycle and Carriage Bintang Bhd (CCB), without board approval. This was done from the period of June 28, 2021 and June 30, 2024, according to the charge sheet. The pair were charged under Section 218 of the Companies Act 2016 together with Section 34 of the Penal Code. However, the Industrial Court separately said that Symphony Life's CEO Chin Jit Pying authorised the purchase, according to a judgement dated Oct 24 over Ng's successful claim of unlawful dismissal following the incident. (The Edge)

Frontken Corp Bhd (FRONTKN) net profit surged 32% in its latest quarter ended September, as strong demand for its products drove revenue and utilisation higher at its Taiwan facility. The group, which is involved in the provision of services for semiconductor industries, saw net profit of RM35.32m in the third quarter of its financial year ending Dec 31, 2024 (3QFY2024), its best ever, up from RM26.75m a year ago. Quarterly revenue also rose 8.08% to a record RM144.31m, from RM133.52m in 3QFY2023. No dividend was declared for the quarter. (The Edge)

Unisem (M) Bhd’s (UNISEM) net profit grew 48% year-on-year (y-o-y) and 60% quarter-on-quarter (q-o-q) in the quarter ended Sept 30, 2024 (3QFY2024), which it attributed to higher sales volume and foreign exchange gains. The semiconductor device manufacturer recorded RM26.75m in net profit for the quarter, compared with RM18.01m in 3QFY2023 and RM16.76m in 2QFY2024. Revenue grew 15% y-o-y to RM409.74m, its highest since the last semiconductor upcycle in 4QFY2022. It declared a dividend of 2 sen per share for the quarter payable on Dec 20, bringing 9MFY2024 dividend to 6 sen per share, unchanged from a year ago. (The Edge)

General insurer LPI Capital Bhd’s (LPI) net profit rose 27% in the third quarter ended Sept 30, 2024 (3QFY2024) from a year earlier, thanks to higher investment returns and lower reinsurance expenses. Net profit for 3QFY2024 stood at RM123.94m. Revenue for the quarter, however, was barely higher year-on-year at RM499.83m, amid a drag from currency translation of its Singapore operations following the ringgit's appreciation. No dividend was declared for the quarter. (The Edge)

Infoline Tec Group Bhd (INFOTEC) reported a 54.6% increase in net profit for the third quarter, driven by strong contributions from its managed IT services segment and the successful delivery of key IT infrastructure and cybersecurity projects. Net profit for the three months ended Sept 30, 2024 (3QFY2024) was RM8.04m, compared to RM5.2m in the same period a year earlier, as revenue surged 86.8% to RM30.45m from RM16.3m. This is Infoline’s highest quarterly earnings since its debut on the ACE Market in July 2022. The group also declared an interim single-tier tax-exempt dividend of 0.79 sen per share to be paid on Nov 28. (The Edge)

Integrated logistics solutions provider Tasco Bhd (TASCO) flagged a challenging operating environment ahead after its net profit fell 48.7% to RM8.13m for its second financial quarter ended Sept 30, 2024 (2QFY2025) from RM15.85m a year earlier, on the back of lower contribution from its supply chain solutions (SCS) division within the international business solution (IBS) segment. Quarterly revenue, however, rose 8.1% to RM295.69m from RM273.63m on 2QFY2024, driven by its IBS segment. No dividend was declared for the quarter. (The Edge)

Telekom Malaysia Bhd (TM) has appointed Ahmad Fairus Rahim as its new group chief financial officer, effective Nov 1. Ahmad Fairus, 45, is succeeding Razidan Ghazalli, 61, who retired on the expiration of his contract after nearly five years in the role. Ahmad Fairus has over 20 years of experience delivering high-quality commercial finance and accounting support within the telecommunications industry, TM said. (The Edge)

Kumpulan Kitacon Bhd (KITACON), via its wholly-owned Kitacon Sdn Bhd, has secured a contract worth RM131.9m to build terraced houses in Bandar Puncak Alam, Ijok, Selangor, for Tropicana Alam Sdn Bhd, a unit of Tropicana Corp Bhd (TROP). Under the 24-month contract that will begin on Nov 1, it will build 449 units of 20'x70' double-storey terraced house, 31 units of 22'x70' double-storey terraced house, and two power substations. (The Edge)

Chin Teck Plantations Bhd (CHINTEK) on Tuesday said its fourth quarter net profit surged 64.32% from the year before, thanks to higher sales volume and average selling prices (ASP) of fresh fruit bunches (FFB), crude palm oil (CPO) and palm kernel. Net profit for the three months ended Aug 31, 2024 (4QFY2024) was RM22.53m as compared to RM13.71m in 4QFY2023, according to its filing. Earnings per share rose to 24.66 sen from 15.01 sen. Revenue for the quarter jumped 69.09% to RM83.77m from RM49.54m in the same quarter last year. The group said that it anticipates the current trend in the ASP of CPO to persist. (The Edge)

Technology company Techna-X Bhd (TECHNAX) said it is unable to release its annual report for the financial period ended June 30, 2024 to Bursa Securities and shareholders by Thursday (Oct 31). It did not disclose the reason why. Techna-X said pursuant to Bursa Securities' Main Market listings requirements, trading in its securities will be suspended if the company fails to issue the annual report 2024 within five market days, that is, Nov 7. (The Edge)

Source: Mplus Research - 30 Oct 2024