Traders May Focus On Aviation Stocks

Market Review

Malaysia: The FBMKLCI (+0.36%) Ended on a Positive Note to Close Higher at 1603.15 Pts, Driven by Heavyweights Like IHH and PETDAG. In the Broader Market, the Utilities (+1.84%) Sector Gained the Most While the Construction (-1.62%) Sector Saw the Largest Decline Due to Profit-taking Activities.

Global Markets: Wall Street Advanced Following Trump’s Comment to Impose Extra Levies on China, Mexico and Canada. Meanwhile, the European Market Ended Lower, Dragged by Automotive Stocks, While the Asian Market Ended Mixed as Investors Are Assessing Key Economic Data Ahead.

The Day Ahead

The FBMKLCI Closed Above the 1,600 Psychological Level, Following the Semi-annual Review Cut-off Period. Meanwhile, Wall Street Ended on a Positive Note Following Trump’s Protectionist Remarks About Imposing Extra Tariffs on Chinese Imports as Well as All Products From Mexico and Canada. This Week, Traders Will Monitor Several Key Economic Events, Including: (i) the FOMC Meeting Minutes, (ii) US Core PCE Data, (iii) US Q3 GDP, and (iv) China’s Manufacturing PMI. In the Commodities Market, Brent Crude Oil Retreated Below USD73 Level, While Gold Prices Declined Below the USD2,700 Mark as Geopolitical Tensions Faded With Potential Ceasefire Talks. Meanwhile, CPO Prices Rebounded, Closing Above the RM4,700 Level as Speculation Grew That Indonesia May Raise Its Export Taxes and Levies.

Sector Focus: Given Escalating Trade Tensions Between the US and China, Coupled With a Stronger USD, We Opine That Export-oriented Sectors Like Gloves and Technology May Benefit. Meanwhile, the Rebound in CPO Price Could Lift the Sentiment Within the Plantation Sector. As the Festive Seasons Approaches, Coupled With the Stronger Earnings From AIRPORT Due to Higher Passenger Volumes, We Like Stocks Within the Aviation, Hospitality and Consumer Sectors.

FBMKLCI Technical Outlook

While the FBM KLCI regained traction above the 1,600 psychological mark, it is still trading below all the MAs line. The technical readings were negative, with the MACD Histogram closing in the negative territory, while the RSI is trending below 50. The resistance is envisaged around 1,618-1,623, and the support is set at 1,583-1,588.

Company Briefs

Penang Development Corporation (PDC) has rejected an RM818m bid by a tripartite consortium led by IJM Corporation Bhd (IJM) to develop the Batu Kawan Industrial Park 2 in Penang, Free Malaysia Today (FMT) reported. The offer was rejected and the state-owned development agency did not provide a reason, FMT said, citing an unidentified source. During the pre-qualification process, seven interested parties were shortlisted but only the IJM-led consortium submitted a bid, the news portal reported. “The RM818m was the highest bid, surpassing the RM780m reserve price for the land,” the source was quoted as saying by FMT. “It was also RM179m higher than a previously cancelled direct deal.” When contacted by The Edge, IJM declined to comment on the matter. (The Edge)

Malayan Banking Bhd (MAYBANK), the country’s largest bank by assets, reported that its net profit rose 7.6% to RM2.54bn for the three months ended Sept 30, 2024 (3QFY2024), from RM2.36bn a year earlier, as non-interest income growth offset a decline in net interest income. Year-on-year, net interest income slipped 1.9%, while income from Islamic banking rose 12%. Non-interest income, such as fees and commissions, was up 7.5%. The group has maintained its target to achieve a headline key performance indicator of a return on equity of 11% for FY2024. The return on equity was 11.1% in 3QFY2024 for the bank with over RM1 trillion in assets. No dividend was declared for the quarter. (The Edge)

Sunway Bhd (SUNWAY) posted a net profit of RM376.08m for 3QFY2024, up from RM180.3m a year ago, on stronger operating performance across its core businesses. Quarterly revenue rose 31.8% to RM2.03bn from RM1.54bn a year earlier, on better performance from all segments except quarry. No dividend declared for the quarter. (The Edge)

IOI Corp Bhd’s (IOICORP) net profit jumped 133.8% year-on-year to RM710.7m in the first quarter ended Sept 30, 2024 (1QFY2025) from RM304m in 1QFY2024, primarily driven by foreign exchange translation gains from its US dollar-denominated borrowings following the strengthening of the ringgit against the greenback, and fair value adjustments on its biological assets and derivative financial instruments. Revenue climbed 21.4% to RM2.67bn from RM2.2bn. (The Edge)

YTL Corp Bhd’s (YTL)’s net profit fell by more than a third in the first quarter ended Sept 30, 2024 to RM333.7m from RM521.73m a year ago, as contributions from its utilities business, represented by its 55.57% stake in YTL Power International Bhd (YTLPOWR) declined. No dividend was declared during the quarter. The decline in YTL’s net profit was despite a 3.36% increase in its quarterly revenue to RM7.77bn, from RM7.52bn. YTL Power’s net profit for the quarter stood at RM470.6m compared with RM847.91m a year ago, despite the company registering higher revenue of RM5.68bn, from RM5.45bn. No dividend was declared for the quarter. (The Edge)

Greatech Technology Bhd’s (GREATEC) net profit for 3QFY2024 halved on foreign exchange losses, as it recorded a net profit of RM22.95m, down 50.8% from RM46.66m last year. Revenue for 3QFY2024 dropped 16.03% to RM188.79m from RM224.82m following the completion of certain projects, reduced industrial activity in the e-mobility sector and unfavourable project execution timing for the solar sector, it said. (The Edge)

Pharmaniaga Bhd (PHARMA) saw a turnaround in 3QFY2024 thanks to higher sales and the reversal of penalty charges from the government. Net profit was RM101.03m compared to a net loss of RM49.34m over the same quarter last year. The company did not elaborate on the penalty. Revenue for the quarter rose 16% year-on-year to RM1.03bn from RM885.49m. (The Edge)

Malaysia Airports Holdings Bhd’s (AIRPORT) net profit more than doubled to RM210.37m in 3QFY2024, from RM94.76m a year ago, fuelled by higher passenger volumes. Quarterly revenue rose 20% year-on-year to RM1.53bn from RM1.28bn, thanks to higher passenger numbers resulting from new airline operations, additional flight frequencies and the implementation of a 30-day visa-free policy for China and India travellers to Malaysia. No dividend was declared for the quarter under review. (The Edge)

Telekom Malaysia Bhd’s (TM) net profit for the third quarter ended Sept 30, 2024 (3QFY2024,) fell 13.6% year-on-year to RM465.04m from RM538.19m, following last year's recognition of tax credit from prior years’ losses. It incurred a tax and zakat expense of RM204m in 3QFY2024, as opposed to a tax credit of RM37.2m a year earlier. Profit before tax was higher at RM668.23m, marking a 32.3% year-onyear growth from RM505.02m. Lower finance costs also helped TM's PBT, with RM70.3m recorded in 3QFY2024, down 19.7% from RM87.5m. Quarterly revenue slid 1.2% to RM2.92bn from RM2.95bn. (The Edge)

Kuala Lumpur Kepong Bhd’s (KLK)’s net profit for the fourth quarter ended Sept 30, 2024 (4QFY2024) fell 94.18% to RM6.77m from RM116.31m in 4QFY2023, dragged by non-cash losses and an inventory write-down related to its investment in UK-listed speciality chemicals company, Synthomer Plc. Revenue slipped 1.7% to RM5.68bn from RM5.78bn. The losses and impairment at Synthomer, coupled with lower manufacturing and property development profits, pulled Batu Kawan Bhd (BKAWAN), which owns a 47% stake in KLK, into the red in the same quarter. It recorded a net loss of RM19.76m — its first in over two decades since 2001 — in 4QFY2024, as opposed to a net profit of RM52.75m in 4QFY2023. Revenue slipped 2% to RM5.88bn from RM6bn. (The Edge)

Leong Hup International Bhd’s (LHI) net profit inched up to RM135.02m in 3QFY2024 from RM132.96m a year earlie, as tax expenses fell 67.82% to RM16.15m from RM50.18m Quarterly revenue, however, fell 11.45% to RM2.23bn as compared to RM2.52bn on lower average selling price and sales volume of day-old chicks in Indonesia and Malaysia. (The Edge)

Tan Chong Motor Holdings Bhd (TCHONG) suffered its largest loss in a decade in 3QFY2024 due to higher foreign exchange loss, softer consumer sentiment and a competitive business landscape that hurt its vehicle sales. This marks its eighth consecutive quarter in the red since 4QFY2022. The group, which distributes Nissan vehicles in Malaysia, saw its net loss widen to RM90.28m from RM50.7m in 3QFY2023. Quarterly revenue fell 28.8% to RM462.66m from RM649.82m. (The Edge)

Property developer Matrix Concepts Holdings Bhd’s (MATRIX) net profit grew 5.29% to RM67.42m in the second quarter ended Sept 30, 2024 (2QFY2025) from RM64.03m a year ago, as gain on disposals more than offset a drop in revenue. Quarterly revenue, meanwhile, dropped 10.66% to RM321.04m from RM359.35m a year ago. It declared a second interim dividend of 2.75 sen per share, to be paid on Jan 9 next year. This brings its year-to-date dividend payout to 5.25 sen per share. Matrix has proposed a bonus issue of 625.67m shares on the basis of one new share for every two shares held. (The Edge)

Property developer Eastern & Oriental Bhd (E&O) has declared a special dividend of one sen, even as its net profit edged up from a year earlier. Net profit for 2QFY2025 was RM30.39m, up 2.2%, from RM29.73m last year, as higher revenue from the development projects more than offset an unrealised foreign exchange loss recorded in the period. Quarterly revenue rose 38% to RM171.03m from RM123.86m. (The Edge)

Source: Mplus Research - 27 Nov 2024