Previous Day Highlights

The FBM KLCI tumbled to a 6-month low, in line with weak regional performance amid uncertainty over the US debt voting. The benchmark index fell by 0.70% or 9.79 points to close at 1,387.12. Losers were led by KLK, PETDAG and HLFG. Market breadth was negative with 521 losers against 360 gainers. Total volume stood at 3.54bn shares valued at RM5.25bn.

Key regional indices closed on a weak note due to jitters over the U.S. debt-ceiling vote and further dampened by a fall in China's manufacturing data. Nikkei 225 and HSI dived 1.41% and 1.94% to end at 30,887.88 and 18,234.27 respectively. SHCOMP and STI dipped 0.61% and 0.90%, respectively to close at 3,204.56 and 3,158.80.

Wall Street ended in negative territory as investors await the debt-ceiling vote. The DJIA lost 0.41% to end at 32,908.27 whereas Nasdaq and S&P500 declined 0.63% and 0.61% to close at 12,935.29 and 4,179.83.

News For The Day

CIMB's 1Q net profit up 15.3% to RM1.64bn

CIMB Group Holdings’ 1QFY23 net profit grew 15.27% YoY to RM1.64bn from RM1.43bn, driven by sustained operating income growth, strong cost controls and a contained level of provisions. Quarterly revenue rose 5.51% YoY to RM5bn from RM4.74bn, driven by non-interest income (NOII) which grew 24.3% YoY to RM1.48bn on improved investment, foreign exchange, and other income.-The Edge Markets

IHH Healthcare records bumper 1Q earnings

IHH Healthcare posted 1QFY23 net profit of RM1.39bn thanks to a one-off gain from the sale of the group's medical education arm, International Medical University for RM1.35bn. Revenue rose 24% YoY to RM5.14bn from RM4.16bn, as the group saw more patients from across its key markets. The group declared a special dividend of 9.6 sen per share, to be paid on June 30.– The Edge Markets

Guan Chong 1Q profit down 55% as margins fall

Guan Chong's 1QFY23 net profit fell 55.4% YoY to RM23.76m from RM53.27m attributed to reduced margins and higher finance costs. Operating profit dropped 25% YoY to RM56.44m. Finance costs more than doubled to RM26.46m, while its Singapore segment turned a loss.-The Star

Leong Hup’s 1Q net profit rises 8.7% to RM22m

Leong Hup’s 1QFY23 net profit rose 8.7% YoY to RM22.1m against RM20.4m on higher contribution from its feedmill segment and rise in other income. Revenue grew by 5.2% YoY to RM2.2bn from RM2.1bn from livestock and poultry-related products which increased by 4.1% YoY to RM1.19bn from RM1.15bn. -The Star

EG Industries 3Q net profit up 89% on higher sales

EG Industries posted an 88.75% YoY increase in its 3QFY6/23 net profit to RM10.58m from RM5.6m, on the back of higher sales which was achieved despite forex losses and a higher interest rate in the market. Quarterly revenue rose 14.53% YoY to RM350.47m from RM305.97m, mainly due to higher sales for consumer electronic products, 5G wireless access and photonics modular related products. -The Edge Markets

Kitacon’s subsidiary bags RM80.95m construction job

Kumpulan Kitacon’s wholly-owned subsidiary, Kitacon SB, has accepted a contract from Boustead Balau SB for the proposed construction and completion of 274 units of double-storey houses and other associated works in Semenyih, Selangor worth RM80.95m. -The Star

Our Thoughts

Wall Street declined as negotiation on the US debt ceiling seems to have hit a snag creating concerns that more time may be required before an agreement can be achieved. Nonetheless, many remain confident that a deal will be struck before the deadline. As a result, the DJI Average closed 134 points lower with the Nasdaq losing 82 points as the US 10-year yield ended lower at 3.646%. Over in Hong Kong, the HSI tumbled 361 points after reports that China’s manufacturing activities contracted igniting worries of its economic recovery. The HSI so far had declined by 19.6% YTD from its high in January. On the home front, the FBM KLCI dropped to a 6-month low after breaking its 1,390 support level amid a weak regional performance as selling intensified on both Plantation and Energy stocks. We reckon a swift rebound to happen otherwise the index may be stuck in a prolonged consolidation phase. Therefore, we expect the index to hover within the 1,390-1,400 range today and see the Banks as excellent value propositions.

Source: Rakuten Research - 1 Jun 2023

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