Previous Day Highlights

The FBM KLCI continue to trend higher to close at an intra-day high, driven by accumulation on banking stocks. The benchmark index rose 0.79% or 11.17 points to close at 1,424.69. Gainers were led by KLK, TENAGA and PPB. However, market breadth was negative with 568 losers against 368 gainers while 399 remain unchanged. Total volume stood at 3.30bn shares valued at RM1.78bn.

Major regional markets closed mostly lower as investors were reluctant to make big moves while waiting for more clues from the FOMC. Nikkei 225 climbed 1.23% to close at 32,700.94 whereas STI and SHCOMP declined 0.40% and 0.11% respectively, to end at 3,265.14 and 3,164.16. Meanwhile, HSI tumbled 2.13% to close at 18,668.15.

US stocks ended in positive territory as investors eye for more earnings from mega cap and technology companies. The DJIA gained 0.52% to close at 35,411.24. S&P 500 and Nasdaq advanced 0.40% and 0.19% to end at 4,554.64 and 14,058.87 respectively.

News For The Day

United Plantations' 2Q earnings fall on lower revenue

United Plantations’ 2QFY12/23 net profit fell 13.87% YoY to RM159.02m from RM184.63m, on lower revenue. Quarterly revenue declined 32.96% YoY to RM470.07m, from RM701.26m, as both the plantation and refinery segments recorded lower revenues. The lower revenue in the plantation segment was due to lower crude palm oil (CPO) and palm kernel (PK) production and lower average prices. -The Edge Markets

IJM to acquire 44.83% stake in Pestech for RM124m

IJM Corporation has entered into a conditional subscription agreement for the proposed subscription of 44.83% stake in Pestech International for RM124m. IJM would be obligated to make a mandatory take-over offer for the remaining Pestech shares and warrants but the company does not intend to proceed with the obligation and would seek an exemption from the Securities Commission after Pestech obtained its shareholders’ approval. -The Star

UOA REIT's 2Q net profit drops 7%

UOA Real Estate Investment Trust's (UOA REIT) 2QFY12/23 net profit fell 7.24% YoY to RM13.98m versus RM15.07m, on higher borrowing costs and property operating expenses, the latter driven by increased electricity costs and repair and maintenance expenses. The rise in operating expenses offset marginal gains in quarterly revenue, which rose 0.39% YoY to RM28.67m from RM28.56m. -The Edge Markets

KIP REIT's 4Q net property income up 14%

KIP Real Estate Investment Trust's (REIT) 4QFY6/23 net property income grew 14.32% YoY to RM16.23m, from RM14.2m. Revenue for the quarter rose 16.5% YoY to RM22.39m, from RM19.22m, driven by higher gross revenue from its retail and industrial segments. Net profit declined 31.91% YoY to RM33.34m from RM48.96m. KIP REIT has proposed a final income distribution of 1.75 sen per unit, bringing the cumulative dividend for FY2023 to 6.2 sen.-The Edge Markets

JAG wins RM150m waste management services contract

JAG’s wholly owned subsidiary, Jaring Metal Industries SB has secured a total waste management services contract worth a total of RM150m from Infineon Technologies (M) SB. JMI will be providing total waste management services to Infineon, where JMI will manage all types of waste or by-products generated from Infineon's production activities, including scheduled waste, non-scheduled waste and critical scrap. The agreement is for a period of three years commencing Aug 1. -The Star

Our Thoughts

Wall Street continued with its upward trajectory sustained by the ample liquidity within the financial system from the previous QE while traders are betting of another widely expected 25bps hike in interest rate by the Fed. As such, the DJI Average added 183 points to close at another YTD high while the Nasdaq gained 26 points as the US 10-year yield edged higher at 3.878%. Meanwhile Hong Kong stocks slumped as sentiment was affected by potential liquidity crunch that will impact the property sector. As a result, the HSI lost 407 points further worsened by the sell-down from foreign funds. Back home, the FBM KLCI closed broadly higher as buying support from foreign funds continued particularly on the Banks. Nonetheless, we prefer to remain cautious ahead of the Fed decision on interest rate hence anticipate the index to hover within the 1,420- 1,430 range today. We reckon buying interest may channel to the Plantation and Oil & Gas stocks as prices of both commodities ended firmer. The CPO remains at around RM4,000/tonne while the Brent crude trended around USD83/barrel on tightening supply.

Source: Rakuten Research - 25 Jul 2023

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