Focusing On Earnings And Window Dressing

Market Review

Malaysia: The FBMKLCI (-0.26%) Extended Its Losses to Close at 1598.18, Dragged Down by Key Heavyweights Like MAYBANK and TENAGA. In the Broader Market, the Construction (+0.92%) Sector Gained the Most, While Utilities (-0.65%) Saw the Largest Decline Led by PBA and MALAKOF.

Global Markets: The US Market Ended Flat Prior to NVIDIA’s Results, While Focus Was on the Rising Geopolitical Tensions. Meanwhile, the European Market Closed Lower Following the Escalating Tension Between Ukraine-Russia, While the Asian Market Closed Mixed as China Keeps Its Lending Rates Steady.

The Day Ahead

The FBMKLCI Failed to Hold Above the 1,600 Mark for the Second Consecutive Day, Closing Lower at 1,598.18, Weighed Down by Banking Heavyweights. In the US, Wall Street Ended on a Muted Note, and US Futures Remained Flat Following NVIDIA’s Earnings Announcement as the Revenue Forecast Fell Short of Expectations, Suggesting That Its Rapid Growth May be Nearing Its Limits. Meanwhile, Traders Will Continue to Monitor Several Key Events Like the (i) US Existing Home Sales, (ii) Initial Jobless Claims, and (iii) Eurozone Consumer Confidence Index. In the Commodities Market, Brent Crude Oil Traded Along USD73. Gold Prices Surged Past the USD2,600 Mark, While CPO Prices Retreated Further Below the RM4,800 Psychological Level.

Sector Focus: As the Year-end Holiday Season Approaches, We Remain Bullish on the Tourism and Aviation Industries, Supported by the Momentum in AAX and CAPITALA. The Escalation of the Ukraine-Russia Conflict May Create Opportunities in Goldrelated Stocks, While a Stronger USD, Coupled With Potential Tariffs From the Trump Administration, Continues to Favour Export-oriented Sectors Such as Technology and Gloves. Additionally, We Are Optimistic About the Construction, Property, and Building Materials Sectors, Which May Experience Earnings Momentum Growth Driven by Data Center Investments Earlier This Year.

FBMKLCI Technical Outlook

The FBM KLCI index failed to be supported above the 1,600 psychological mark. All the technical readings were negative, with the MACD Histogram closing on the negative territory while the RSI is trending below 50. The resistance is envisaged around 1,613-1,618, and the support is set at 1,578-1,583.

Company Briefs

Petronas Chemicals Group Bhd (PCHEM) sank into the red for the first time ever since its listing more than a decade ago in the third quarter ended Sept 30, 2024 (3QFY2024). Net loss for 3QFY2024 was RM789m versus a net profit of RM424m in the same quarter a year earlier, dragged by unrealised foreign exchange loss totalling RM1.1bn. Quarterly revenue was up 18% to RM7.99bn from RM6.78bn on higher sales volume and product prices. No dividend was declared for the quarter. (The Edge)

Sime Darby Property Bhd’s (SIMEPROP) net profit for 3QFY2024 fell 12% to RM128.26m from RM144.92m on higher administration expenses. Meanwhile, revenue was up 4% to RM1.09bn from RM1.05bn previously on strong sales. No dividend was declared for the quarter. (The Edge)

SD Guthrie Bhd (SDG), formerly known as Sime Darby Plantation Bhd, saw its net profit for 3QFY2024 fell 36.75% to RM766m from RM1.21bn due to the absence of a gain on land disposal, despite higher crude palm oil (CPO) prices. Quarterly revenue rose 10.33% to RM5.27bn compared with RM4.77bn on the higher CPO prices. No dividend was declared for the quarter. (The Edge)

Perdana Petroleum Bhd’s (PERDANA) net profit jumped threefold for 3QFY2024 to RM75.8m from RM22.75m a year earlier thanks to better charter rates, vessel utilisation and forex gain. Quarterly revenue rose 22.45% to RM127.25m from RM103.92m on higher vessel utilisation. No dividend was declared for the quarter. (The Edge)

Sports Toto Bhd’s (SPTOTO) net profit for the first quarter ended Sept 30, 2024 (1QFY2025) fell 31.3% to RM41.33m from RM60.17m a year ago, dragged by lower lottery sales as well as lower sales performance and forex loss impact. Quarterly revenue fell 9.5% to RM1.44bn from RM1.59bn. The group declared a first interim dividend of two sen per share, payable on Jan 17, 2025. (The Edge)

Hap Seng Plantations Holdings Bhd’s (HSPLANT) net profit for 3QFY2024 rose 46% to RM55.43m — its highest in nearly three years — from RM37.85m a year ago, boosted by strong palm oil prices and lower operating expenses. Quarterly revenue climbed 7.7% to RM177.26m from RM164.56m. No dividend was declared for the quarter. (The Edge)

RCE Capital Bhd’s (RCECAP) net profit for the second quarter ended Sept 30, 2024 (2QFY2024) dropped 27.25% to RM27.83m from RM38.25m a year ago, as its revenue slipped 8.4% to RM80.41m as the group prioritised better credit quality disbursement for sustainable financing growth. The group declared a first interim dividend of 3 sen per share, payable on Dec 31. (The Edge)

MyEG Services Bhd’s (MYEG) net profit for 3QFY2024 increased 62.55% to RM195.05m from RM120m in the same quarter last year, as revenue for the quarter grew 27.8% to RM248.13m from RM194.12m driven by the fair value gain in its investment in HeiTech Padu Bhd (HTPADU) as a result of mark-to-market practice. No dividend was declared for the quarter. (The Edge)

Velesto Energy Bhd (VELESTO) is collaborating with Petronas, through the Malaysia Petroleum Management and the National Oilwell Varco LP, to explore the implementation of robotics and mechanised automation process for its drilling rig operations. (The Edge)

Sarawak Cable Bhd’s (SCABLE) trading is to resume on Thursday as Bursa Malaysia has filed an application to the High Court seeking clarifications on the legal implications of the court's appointment of an interim judicial manager. (The Edge)

Pos Malaysia Bhd (POS) recorded 49.6% higher net loss for 3QFY2024 to RM49.89m from RM33.34m in the same quarter a year earlier on lower postal and freight volume, and higher other and tax expenses. Revenue for 3QFY2024 was largely flat at RM458.96m compared with RM461.71m in 3QFY2023 on the postal and logistics segments' lower volume handled offset by the aviation segment’s higher number of in-flight meals served. No dividend was declared for the quarter. (The Edge)

UOA Development Bhd’s (UOADEV) net profit for 3QFY2024 dropped 5.2% to RM48.34m compared with RM50.86m a year ago, despite revenue rising 32% to RM141.36m from RM107.04m on higher progressive recognition of ongoing development projects. No dividend was declared for the quarter. (The Edge)

Amway (Malaysia) Holdings Bhd’s (AMWAY) net profit for 3QFY2024 dropped to RM32.9m from RM46.2m a year earlier, as revenue fell 10.1% to RM299.84m from RM333.5m amid softer consumer demand for health and wellness products and home appliances. The group declared a third interim dividend of five sen per share, payable on Dec 18. (The Edge)

Formosa Prosonic Industries Bhd (FPI) incurred a net loss of RM18.1m for the third quarter ended Sept 30, 2024 (3QFY2024) — its first losses since 2015 — versus a net profit of RM48.87m in 3QFY2023 on forex loss and lower revenue of RM200.65m compared with RM234.46m in the corresponding quarter. No dividend was recommended for the quarter. (The Edge)

Hextar Industries Bhd’s (HEXIND) net profit for 3QFY2024 dropped 12.59% to RM11.47m from RM13.12m in the same quarter a year earlier, on impairment loss and higher administrative expenses. This was despite quarterly revenue rising 13.98% to RM285.71m versus RM250.68m previously, thanks to the consolidation of newly acquired subsidiaries. No dividend was declared for the quarter. (The Edge)

Thong Guan Industries Bhd’s (TGUAN) net profit for 3QFY2024 shrank nearly onethird to RM15m from RM21.9m a year ago, dragged by lower contribution from its plastic packaging products' segment. Quarterly revenue rose 3.77% at RM329.34m from RM317.38m last year. No dividend was declared for the quarter. (The Edge)

Kawan Food Bhd’s (KAWAN) net profit for 3QFY2024 fell 87.5% to RM960,000 from RM7.69m in the same quarter last year, dragged by unrealised forex losses and a higher tax charge. Revenue, however, rose 12.2% to RM88.9m from RM79.2m in 3QFY2023, mainly contributed by its export markets. It declared a second interim dividend of 2.8 sen per share, payable on Dec 20. (The Edge)

RHB Bank Bhd (RHBBANK) said the Kuala Lumpur High Court has sided with Tokio Marine Life Insurance Malaysia Bhd in the dispute over their bancassurance business, ruling the insurer’s right to first refusal is still in effect. Accompanying this declaration, the court ordered RHB to set out the bancassurance terms offered by the best bid within seven days to Tokio Marine. The court also ordered Tokio Marine to confirm within a fortnight after receiving RHB’s affidavit whether they are matching those terms. (The Edge)

Sapura Energy Bhd (SAPNRG) has secured a contract to provide pan-Malaysia services, involving offshore maintenance, construction, and modification as well as hook-up and commissioning services, from Petronas Carigali Sdn Bhd. The contract's tenure is five years, but its value is not specified as it is a call-out contract with agreed unit rates. (The Edge)

Reservoir Link Energy Bhd’s (RL) unit has been appointed as a panel contractor for integrated well continuity services by national oil-and-gas company Petroliam Nasional Bhd (Petronas). The potential value of the services was not disclosed. (The Edge)

IFCA MSC Bhd (IFCAMSC) is targeting RM440m in new sales over the next three years mainly through new customers arising from its property management system solutions, optimising pricing and growing its distributors programme. About RM170m of the sales is expected to come from new large property owners via its new property management system solutions — “PropertyX”. (The Edge)

Zelan Bhd’s (ZELAN) chief executive officer Mohd Ariff Abd Samat has resigned from the post three months after his appointment “to pursue other career opportunities”. The 42-year-old was appointed CEO in August, filling the post that had then been vacant for over a year after the company terminated his predecessor Hazimi Baharum’s contract in June last year. (The Edge)

Source: Mplus Research - 21 Nov 2024