Previous Day Highlights

The FBM KLCI pared losses due to late buying, nonetheless, the benchmark index ended in the red, losing 0.02% or 0.285% to end at 1,444.41 amid the regional sell down. Losers were led by NESTLE, KLK and PPB. Market breadth was negative with 547 gainers against 395 gainers while 411 counters were unchanged. Total volume stood at 3.72bn shares valued at RM2.66bn.

Major regional markets ended mostly lower. Nikkei225 slumped 2.05% to close at 31,624.28. HSI and SHCOMP dived 1.40% and 0.59% to end at 17,956.38 and 3,064.07. Meanwhile STI gained 0.29% to finish at 3,189.88.

Wall Street ended in positive territory on Friday. The DJIA gained 0.73% to finish at 34,346.90. Meanwhile S&P500 and Nasdaq added 0.67% and 0.94% to end at 4,405.71 and 13,590.65 respectively.

News For The Day

TNB posts Q2 net profit of RM328m

Tenaga Nasional (TNB) posted a 62% YoY drop in 2QFY23 earnings to RM327.9m due to negative fuel margins and foreign exchange translation losses. Electricity demand grew by 2% till end-June but operating profit for the quarter decreased by 28.9% or RM759.6m due to the lower imbalance cost passthrough mechanism under recovery recognised in the current quarter of RM2.86bn compared with RM6.3bn in the last corresponding quarter, offset by lower operating expenses of RM2.3bn.-The Star

PetGas registers quarterly earnings of RM485m

Petronas Gas’ (PetGas) posted a 2QFY23 net profit of RM485.4m up from RM396.5m YoY.The group declared a second interim dividend of 16 sen per share, going ex on Sept 11, 2023, and payable on Sept 22, 2023. The profit also improved due to lower exposure towards foreign exchange movements following early settlement of US-dollar lease liabilities for floating storage units at Sungai Udang as well as by the lower tax expense resulting from absence of the Prosperity Tax in the period. The Star

Berjaya Land back in the black after 3 straight years of losses

Berjaya Land (BLand) returned to the black with a FY6/23 net profit of RM148.8m on the back of higher revenue, after three consecutive years of losses. The group said most of its business segments reported improved performance in FY2023 after the resumption of international and domestic travel and further relaxation of the Covid-19 restrictions. - The Edge Markets

SKP Resources’ 1QFY3/24 net profit drops 42%

SKP Resources’ 1QFY3/24 net profit dropped 41.9% to RM21.6mdue to lower profit margin coupled with rising production costs. Given the challenging macroeconomic outlook, SKP Resources says it will remain vigilant with future order book received from customers and will continue its concerted efforts focused primarily on workforce and supply chain management as well as other cost optimisation measures.– The Edge Markets

LPI Capital net profit jumps 19.5% to RM64m in 2Q

LPI Capital's 2QFY23 net profit rose 19.5% YoY to RM63.9m. LPI has declared a first interim dividend of 26.0 sen per share amounting to RM103.6m. The LPI Group will continue its efforts to expand its insurance market shares, especially in the fire and miscellaneous accident insurance segments and will also seek new opportunities through the various government initiatives. - The Star

Our Thoughts

Wall Street closed higher after a volatile session, primarily due to bargain hunting activities following three days of selling. As a result, the DJI Average gained 247 points, while the S&P 500 and Nasdaq jumped by 29 and 127 points, respectively. Moving to Hong Kong, the HSI tumbled 256 points due to heavy selling across the region. Back home, the FBM KLCI managed to pare losses due to late buying. Nonetheless, the benchmark index ended in the red amid the regional sell-off. Despite the cautious sentiment, the support on the benchmark index stayed strong and we reckon the performance of FBM KLCI to remain steady given the cheap valuations. We expect bargain hunting activities to return today, with the FBM KLCI to trend within the range of 1,440- 1,450. However, we anticipate some headwinds for the plantation sector may continue following the decline in CPO futures to below RM4,000 per tonne. Meanwhile, we believe investors might pick up banking stocks at lower levels after Friday's selling.

Source: Rakuten Research - 28 Aug 2023

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