Previous Day Highlights

FBM KLCI climbed for the third consecutive days, underpinned by broad-based accumulation. The benchmark index was up 0.49% or 7.80 pts to close at 1,597.39. Majority of sectors were positive with utilities (+1.9%), property (+1.4%), and transportation (+1.3%), leading the gains; while losers were seen in energy (-0.4%), and plantation (-0.4%). Market breadth was positive with 657 gainers against 447 losers. Total volume stood at 4.48bn shares valued at RM3.12bn.

Major regional indices trended higher. HSI lifted 0.55%, to end at 18,578.30. SHCOMP elevated 1.16%, to close at 3,140.72. STI rose 0.31%, to close at 3,303.19. Meanwhile, Nikkei 225 was closed for Children's Day.

Wall Street resumed its uptrend amid hopes of a rate cut. The DJIA advanced 0.46%, to end at 38,852.27. Nasdaq surged 1.19%, to close at 16,349.25. S&P500 rose 1.03%, to finish at 5,180.74.

News For The Day

Seng Fong’s net profit jumps over threefold in 3Q

Seng Fong Holdings' 3QFY6/24 net profit jumped more than threefold to RM15.14m from RM4.05m YoY, thanks to higher sales volume and average selling prices. Quarterly revenue jumped 39.2% YoY to RM300.32m from RM215.72m. The company declared a third interim dividend of 1.5 sen per share, payable on June 19. Higher consumption of natural rubber due to the growth of the automotive industry, particularly electric vehicles in the US and China, Seng Fong said.-The Edge Markets

KKB Engineering secures contracts worth RM37.9m

KKB Engineering has secured two contracts worth a combined total of RM37.9m. KKB’s associate company Edisi Optima SB will build and maintain liquefied petroleum cylinders for Petronas Dagangan for one year. The contract is extendable for another year until 2026. KKB Engineering will also supply mild steel concrete line pipes and fittings to Perbena Emas SB, a wholly- owned subsidiary of Pansar. The contract is expected to be completed by 2Q25. -The Edge Markets

Favelle Favco wins four contracts worth RM39.2m

Favelle Favco has secured 4 contracts for the supply of offshore and tower cranes totalling RM39.2m. Two contracts for offshore cranes were awarded by Hilong Petroleum Offshore Engineering Ltd and CUEL Ltd. The Hilong job is to be delivered in 3Q24, while CUEL's is to be completed by the 1Q25. The other two contracts, which are for the supply of tower cranes, were awarded by Favco Heavy Industry (Changshu) Co Ltd and GA Caelli Holdings Trust. The first is expected to be delivered in 3Q24, and the second is to be completed in 2Q24. -The Edge Markets

The Edge cease to be substantial shareholders of Star Media

The Edge Communications SB and its owner Tan Sri Tong Kooi Ong have ceased to be substantial shareholders in Star Media Group following the latest share sale. Tong sold 1.45m shares on the open market last week, while The Edge sold 1.5m shares. The transaction price was not disclosed. The Edge is now left with 36m shares, or 4.87%, in Star Media. -The Edge Markets

Ho Hup disposes of Bukit Jalil land to Exsim for RM110m

Ho Hup Construction Co’s RM1bn mixed development project in Bukit Jalil will be suspended as it plans to sell the project's 3.09- acre land for RM110m cash to repay bank borrowings, refund existing end purchasers of the project's Sovo units, and pay consultants and the contractor. The disposal deal, inked between Ho Hup’s wholly-owned unit Bukit Jalil Development SB and Exsim Development SB’s wholly-owned subsidiary Exsim Persiaran Jalil SB. -The Edge Markets

Our Thoughts

Wall Street maintained its uptrend on hopes that the Federal Reserve will cut rates sooner rather than later. Sentiment was further boosted by Hamas’ acceptance an Egyptian-Qatari cease fire proposal against Israel. As such, the DJI Average gained 177 points while the Nasdaq jumped by 193 points with the US 10-year yield easing further to 4.487%. Over in Hong Kong, the HSI almost tested the 19,000 mark as sentiment was buoyed by strong Chinese travel data coupled with upgrades by Goldman Sachs, UBS and BNP Paribas. Back home, the FBM KLCI closed within touching distance of 1,600 mark and almost a 52-week high as buying in blue chips continues. The benchmark index has had an impressive performance since mid-April, adding 4% as foreign funds returned. Judging the prevailing uptrend, our 2024 target of 1,660 could be easily achievable as the local bourse remains reasonably priced currently at 15x CY24 PE vis-a vis the 16x average. In view of this, we believe funds into the Blue Chips will eventually cascade down to the smaller caps thus expect Round 2 from small cap companies to excel.

Source: Rakuten Research - 7 May 2024

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