Previous Day Highlights

The FBM KLCI closed flat due to profit-taking activities in the afternoon trading session. The benchmark index gained 0.06% or 0.84 points to close at 1,424.34. Gainers were led by PETDAG, NESTLE and KLK. Market breadth was neutral with 427 decliners against 412 advancers while 403 counters were unchanged. Total volume stood at 2.60bn shares valued at RM1.63bn.

Major regional indices closed mostly lower as sentiment remained cautious over the concerns of US debt default except for Nikkei 225 which climbed 0.84% to close at 30,093.59. Meanwhile, STI, SHCOMP and HSI dropped 1.25%, 0.21% and 2.09%, respectively, to end at 3,173.84, 3,284.23 and 19,560.57.

Wall Street closed sharply higher on optimism of a potential debt ceiling deal. The DJIA and S&P 500 jumped 1.24% and 1.19%, respectively to end at 33,420.77 and 4,158.77 whereas Nasdaq gained 1.28% to close at 12,500.57.

News For The Day

S P Setia achieves RM1.03b sales in 1Q

S P Setia achieved sales of RM1.03bn for 1QFY23, contributed largely by local sales from the central and southern region of the country, and is optimistic that it will achieve its annual sales target of RM4.2bn. The group achieved its 1QFY23 net profit of RM55.45m as opposed RM67.5m YoY. -The Edge Markets

VSTECS 1Q net profit rises 24% to RM14.85m

VSTECS’s 1QFY23 net profit increased 24.95% YoY to RM14.85m from RM11.88m mainly attributed to higher profit margin contribution from its enterprise systems and ICT services segments. Quarterly revenue grew 3.25% YoY to RM664.74m in 1QFY23 from RM643.76m. The group foresees that the demand for consumer products will continue to slow- The Edge Markets

Kobay’s 3QFY23 earnings hit by slowdown in E&E sector

Kobay Technology’s 3QFY6/23 net profit contracted 47.6% YoY to RM7.92m against RM15.11m, amid lower contributions from its manufacturing division. Revenue fell 26.4% YoY to RM73.63m versus RM100.07m due to lower contributions from its manufacturing division, offset by higher contributions from its property development divisions. -The Edge Markets

Main Market-bound DXN's 4Q net profit falls 20%

Main Market-bound DXN Holdings recorded a 20.2% YoY drop in its 4QFY2/23 net profit to RM55.17m compared to RM69.16m, owing to an impairment of PPE for facilities in Indonesia, a provision in a custom duty case, and a foreign exchange loss. DXN said revenue for the quarter rose 19.3% YoY to RM404.5m from RM339.35m.- The Edge Market

Pavilion REIT to raise RM720m from private placement

Pavilion REIT said it has fixed the issue price of the first tranche of its private placement exercise at RM1.22 per unit to raise approximately RM720m. Pavilion REIT said that it is the largest private placement ever recorded for Malaysian REITs. -The Edge Markets

Southern Steel's 3Q net profit falls 47% YoY

Southern Steel’s 3QFY6/23 net profit fell 47.12% YoY to RM1.66m from RM3.14m dragged by lower selling prices. Quarterly revenue, however, increased by 10.31% YoY to RM652.06m from RM591.12m supported by higher sales volume. Southern Steel warned that the demand for steel and selling prices are expected to remain uncertain in the months ahead.-The Edge Markets

Our Thoughts

Wall Street rebounded on optimism that a positive outcome from the US debt ceiling negotiation will be in place by the end of this week. As a result, the DJI Average jumped 409 points higher while the Nasdaq added 157 points despite the US 10-year yield closed higher at 3.572%. Meanwhile, Hong Kong equities slumped as traders remain sidelined with an eye on earnings from tech companies as well as stronger indication from China’s economic recovery. On the home front, the FBM KLCI closed marginally higher as sentiment remained restrained due to the lack of fresh catalysts. Interestingly, yesterday’s reasonable showing was mainly attributed to the solid showing from Plantation stocks despite the weakening crude palm oil (CPO) prices. As CPO futures continue to dampen, we may see some headwinds for the planters today as profit taking activities may emerge. Nonetheless, we reckon the index to hover within the 1,420-1,430 range today. As for the corporate results, we noticed it has been a mixed bag so far.

Source: Rakuten Research - 18 May 2023

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