Previous Day Highlights

The FBM KLCI ended lower for the 4 consecutive days despite the positive GDP data. The benchmark index lost 0.16% or 2.26 points to close at 1,422.92. Losers were led by NESTLE, PPB and PETDAG. Market breadth was negative with 500 losers against 346 gainers while 417 counters were unchanged. Total volume stood at 2.74bn shares valued at RM1.78bn.

Key regional indices closed mostly lower due to continued concerns about the US debt ceiling except Nikkei 225 which inched 0.90% higher at 29,388.30. STI slipped 0.65% to end at 3,208.55. Meanwhile, HSI and SHCOMP fell by 0.59% and 1.12%, respectively to end at 19,627.24 and 3,272.36.

Wall Street ended in negative territory following the poor consumer sentiment report that reignites recession fears. The DJIA and S&P 500 erased 0.03% and 0.16%, respectively to end at 33,300.62 and 4,124.08 whereas Nasdaq lost 0.35% to close at 12,284.74.

News For The Day

SFP Tech’s 1Q net profit up 16.47%

SFP Tech Holdings' 1QFY23 net profit rose 16.47% YoY to RM10.1m from RM8.67m, underpinned by higher revenue in its mechanical assembly segment. The group said quarterly revenue had climbed 93.4% YoY to RM34.61m from RM17.9m, with the mechanical assembly segment accounting for approximately 74.45% of total revenue, mainly driven by sales of assembled mechanical systems to new customers from both Malaysia and Hong Kong. -The Edge Markets

Southern Cable clinches RM90.4m contract from TNB

Southern Cable Group has secured a RM90.4m contract to supply underground cables and conductors to utility giant Tenaga Nasional (TNB). The contract won by the group’s wholly-owned unit, Southern Cable SB, follows the addendum contract of more than RM30m secured last month. This boosts the cable and wire manufacturer’s total contact value to TNB to RM422.5m from RM332.1m previously. - The Edge Markets

Teladan Setia’s 1Q profit falls 12%

Teladan Setia Group’s 1QFY23 net profit fell 12.28% YoY to RM8.31m from RM9.47m, mainly due to higher administrative expenses. Revenue, in contrast, increased by 4.6% YoY to RM61.61m from RM58.98m, mainly derived from Taman Desa Bertam Phase 3A and 3B and Taman Bertam Heights Phase 1B, as well as the new launching of Taman Desa Bertam Phase 4A. This year, the group plans to launch properties with an accumulated gross development value (GDV) of RM1.1bn.-The Edge Markets

Kumpulan Kitacon secures RM101.5m contract

Kumpulan Kitacon’s wholly owned subsidiary, Kitacon SB, has secured a letter of award from GLM Emerald West (Rawang) SB for a construction contract worth RM101.5m. The company said the contract involves main building and infrastructure works for a residential project comprising two-storey terrace houses in Rawang, Selangor and is due for completion within 20 months from the commencement date.-The Star

Tomei’s 1Q earnings down by 25% on higher overheads

Tomei Consolidated saw its 1QFY23 net profit decline 24.75% YoY to RM11.87m from RM15.77m, dragged by higher operating overheads. Quarterly revenue increased marginally to RM237.73m from RM234.15m. Its retail segment posted RM193.71m revenue for the quarter, up 11% due to higher sales volume. -The Edge Markets

Our Thoughts

As Wall Street is facing a myriad of economic concerns, the latest to hog the limelight would be the US debt ceiling which many expect a blow-out by early June if it’s not raised. A latest check already indicated that the US total debt has surpassed the US$31.4 trillion ceiling now at US$31.7 trillion as negotiations will resume this week. As a result, trading on Wall Street has been cautious as the DJI Average eased 9 points while the Nasdaq declined by 44 points as the US 10-year yield inched slightly higher at 3.463%. In Hong Kong, sentiment was affected by the slowdown in China’s credit growth pointing towards a possible slowdown in economic activities going forward. Thus, the HSI lost 116 points to around the 19,600 level dragging its consolidation longer since the mid-April downtrend. Back home, the FBM KLCI ended in negative territory impacted by the weak regional performance. We were surprised by the persistent selling of banking stocks of late despite expectations of a solid performance from the sector this year. Therefore, we reckon banks should be ripe for some accumulation soon and anticipate the benchmark index to trend within the range of 1,420-1,430 for today.

Source: Rakuten Research - 15 May 2023

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