Review & Outlook

Blue chips rose on Tuesday, led by utility, banking and oil & gas heavyweights, lifted by the firmer regional tone on China's measures to stimulate the domestic stock market and economy. The FBM KLCI gained 10.38 points to close at 1,454.44, off an early low of 1,441.52 and high of 1,455.8, as gainers edged losers 535 to 504 on total trade of 4.02bn shares worth RM2.85bn.

Pending stronger leads or policy announcements on key infrastructure projects to sustain the strong run-up in the property and construction sectors, stocks should consolidate ahead of the Merdeka Day break, as investor attention may turn towards the key monthly U.S. jobs data to be released at the end of this week. Immediate index resistance remains at the recent 1,464 high and 1,470, with next hurdle from the 1,490/1,500 level, while immediate support stays at the recent low of 1,433, then 1420/ 1,400.

Axiata will need to climb above the 23.6%FR (RM2.64) convincingly to aim for stronger resistance from the 200-day ma (RM2.86), with next hurdle at the 50%FR (RM3.08), while RM2.40 and the 13/10/22 low (RM2.24) cushions downside. CelcomDigi need to decisively overcome the upper Bollinger band (RM4.49) to target the 138.2%FP (RM4.58), 150%FP (RM4.72) and 161.8%FP (RM4.85) ahead, with uptrend support from the 200-day ma (RM4.17) cushioning downside.

News Bites

• Businesses foresee an improving business situation in the 3Q23, with the confidence indicator turning positive to 0.7% from -3.1% in 2Q2023, said the Department of Statistics Malaysia.

• Malaysia sees as much as RM6bn worth of investments from now to 2040 to improve energy efficiency, as it aims to achieve an average of 21% energy savings by 2040.

• The Malaysian government will proceed with the establishment of the National Energy Council in order to facilitate the implementation of the National Energy Transition Roadmap.

• Tenaga Nasional Bhd intends to invest upwards of RM90.0bn over the next 6 years for its grid infrastructure, of which 40.0% will be channelled towards energy transition-related capital expenditure.

• The Perak State Development Corporation and Tenaga Nasional Bhd have inked a memorandum of understanding for the purpose of exploring the potential development of floating solar photovoltaic project across hydroelectric dams and reservoirs in Perak.

• Guan Chong Bhd is poised to increase its market share in Europe, as its recently-commissioned United Kingdom facility boosted its annual industrial chocolate capacity by 16.0% or 16.0k metric tonnes to 116.0k MT.

• Ireka Corporation Bhd has entered into an unincorporated joint venture agreement with E&H Energy Sdn Bhd to supply liquefied natural gas to potential buyers and users across Malaysia.

• Public Bank Bhd's net profit rose 14.0% YoY to RM1.6bn for the 2QFY23, driven by continued healthy loan and deposit growth, prudent cost management, as well as stable asset quality.

• IHH Healthcare Bhd's 2QFY23 net profit dropped 50.7% YoY to RM301.8mn due to foreign exchange losses following the Turkish lira's devaluation.

• Press Metal Aluminium Holdings Bhd reported a 25.0% YoY decline in its 2QFY23 net profit amid a softening of metal selling prices, squeezing operating margins.

• RHB Bank Bhd's net profit rose 28.0% YoY to RM808.7mn for the 2QFY23 driven by higher allowances for credit losses written back, partly offset by lower net funding income and higher operating expenses.

• Axiata Group Bhd's 2QFY23 net loss widened to RM576.2mn from RM106.4mn.

• Inari Amertron Bhd reported a 23.0% YoY decline in net profit to RM66.3mn for the 4QFY23 as an industry slowdown continued to weigh on revenue, coupled with higher energy costs.

• Pecca Group Bhd's 4QFY23 net profit improved 22.3% YoY to RM10.1mn while quarterly revenue rose 7.1% YoY to RM54.3mn, bolstered by higher sales of car seat covers and improved operational efficiency.

• TH Plantations Bhd's net profit shrank by 45.6% YoY to RM5.3mn for the 2QFY23 in tandem with lower revenue.

• China's largest banks are preparing to cut interest rates on existing mortgages and deposits while the government vowed to strengthen policy support and speed up government spending as the economy's recovery comes under strain.

• Job openings in the US dropped 338,000 to 8.827mn on the last day of July, the lowest level since March 2021, the Labor Department said in its monthly Job Openings and Labor Turnover Survey report.

Source: TA Research - 30 Aug 2023