Healthy Consolidation Move In The Uptrend Phase

Market Review

Malaysia: The FBMKLCI (-0.33%) ended lower as profit activities kicked in after the Dow retraced from the 40,000 level, while the key index was dragged by KLK (-84.0 sen) after posting weaker earnings and a cautious guidance. Meanwhile, the Technology sector (+0.55%) was the leading sector.

Global markets: Wall Street closed lower after the release of the Fed’s May meeting minutes, which raises concerns over sticky inflation and the central bank rate cuts may be delayed further. Meanwhile, NVIDIA’s earnings had beaten expectations. Meanwhile, the European stock markets ended lower, while Asia ended mixed.

The Day Ahead

The profit taking activities gained momentum after hitting above the 1,620 level and the FBM KLCI snapped a 3-day winning streak. Meanwhile, in the US, the overall market sentiment turned negative after the Fed meeting minutes indicated that the inflationary pressure remained sticky and the market is pricing in that the Fed may stay hawkish over the near term. Following NVIDIA’s release of 1Q25 results, where it has beat analysts’ expectations; NVIDIA hit above USD1k in the post-market trading. On the commodity markets, Brent oil traded lower after the Fed’s minutes, while the gold price pulled back below the USD2,400 zone. For CPO, it trended on a volatile move and closed below the RM3,900 level.

Sectors focus: Despite Wall Street ending lower, the post-market positive vibe emerged from NVIDIA’s results, coupled with the US imposing higher tariffs on China products should provide decent buying support in the stock market and may bode well for the Technology and EMS sectors. Also, we opine that the Construction, Building Materials, Property, and Solar industries may trade higher in view of the potential revival of mega infra projects like the KL-SG HSR as well as optimism over the execution of NETR and NIMP master plans.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher, surpassing the 1,625 level. However, the technical readings on the key index were mixed with the MACD Histogram turned positive, while the RSI is overbought. The resistance is envisaged around 1,640-1,645 and the support is set at 1,600-1,605.

Company Brief

Pos Malaysia Bhd (POS) is selling its ship-chartering unit that mainly deals with bulk cargoes for RM123.21m as part of a move to shed non-core businesses. The proposed sale of PNSL Bhd to SWA Shipping Sdn Bhd will also settle outstanding intra-group trading debts and advances owed to Pos Malaysia. The disposal came at a time when the group announced another quarterly loss of RM19.69m for the first quarter ended March 31, 2024 (1QFY2024), though narrower by 29% from RM27.66m a year ago as growth in revenue from its postal services and aviation segments outpaced costs increases. The group has been loss making since FY2019. (The Edge)

Hartalega Holdings Bhd (HARTA) notched a turnaround in its final quarter, thanks partly to a provision reversal that also helped to bring the world’s second-largest glovemaker by volume back into the black for the year. Net profit for the three months ended March 31, 2024 (4QFY2024) totalled RM15.12m compared to a net loss of RM334.97m over the same period a year earlier. Revenue for the quarter climbed 2.4% year-on-year (y-o-y) to RM529.83m from RM517.55m thanks to higher average selling prices from currency movements. (The Edge)

Meanwhile, Kossan Rubber Industries Bhd (KOSSAN) has posted its third consecutive quarter of profits in the first quarter, thanks to higher sales volume and lower natural gas prices. Net profit for the three months ended on March 31, 2024 (1QFY2024) was RM31.45m compared to a net loss of RM24.25 in 1QFY2023. Revenue for the quarter climbed 14.4% year-on-year to RM451.63m from RM394.71m. (The Edge)

Hong Seng Consolidated Bhd's (HONGSENG) previously suspended plan to expand its glove business seems to be back on the table as the group eyes an alternate, albeit smaller, site for a synthetic rubber manufacturing plant in Kedah Rubber City. After talks with the dedicated rubber industrial park’s developer, the Northern Corridor Implementation Authority (NCIA), Hong Seng said the diversified group's prior sublease for a 102.6-acre industrial land for 60 years for RM44.69m is to be mutually terminated, subject to the group subleasing an alternate land measuring 10.42 acres from NCIA for 60 years for RM4.59m. (The Edge)

Conglomerate Sunway Bhd (SUNWAY) reported a 21.6% year-on-year increase in its first-quarter net profit, driven mainly by stronger performance from the property development and healthcare segments. Its net profit for the quarter ended March 31, 2024 (1QFY2024) rise to RM172.23m or 2.27 sen per share from RM141.64m or 1.98 sen per share a year ago, fuelled by higher sales and progress billings from new and ongoing local development projects. Quarterly revenue grew 12.28% to RM1.42b from RM1.26b in 1QFY2023. (The Edge)

Hibiscus Petroleum Bhd's (HIBISCS) net profit climbed by 42.37% to RM101.81m in the third quarter ended March 31, 2024 (3QFY2024), from RM71.51m a year ago, driven by strong oil and condensate prices of over US$90 (RM421.68) per barrel. Revenue jumped more than 15% year-on-year (y-o-y) to RM603.5m from RM523.34m. For the quarter under review, the company declared a dividend of 2 sen per share, payable on July 19 — raising the total dividend for the nine months ended March 31, 2024 (9MFY2024) to 6 sen per share. (The Edge)

LBS Bina Group Bhd’s (LBS) net profit rose by a marginal 0.11% to RM30.53m in the first quarter ended March 31, 2024 (1QFY2024), from RM30.5m a year earlier, helped by increased contribution from its property development business. Quarterly revenue, however, was down 11.11% to RM342.09m from RM384.86m in 1QFY2023 amid lower contributions from both the property development, construction and trading segments. The latest quarterly revenue is the group's lowest since 3QFY2021, when it posted RM253.96m. (The Edge)

Affin Bank Bhd (AFFIN), the financial services arm of the Armed Forces Fund Board (LTAT), said on Tuesday its net profit down was 26% lower y-o-y in the first quarter, on lower net interest income and other income. Net profit for the three months ended March 31, 2024 (1QFY2024) stood at RM110.21m, compared with RM148.98m a year earlier. Net interest income fell 6.6% y-o-y to RM361.98m, while non-interest income surged 34% to RM142.56m. (The Edge)

Bank Islam Malaysia Bhd (BIMB), Malaysia's largest full-fledged Islamic bank, said its net profit increased 9.4% for the first quarter ended March 31, 2024 (1QFY2024) from a year earlier, mainly driven by higher net fund-based income and lower net allowances for impairment on financing. Net profit for 1QFY2024 stood at RM129.17m, or 5.70 sen per share, compared with RM118.09m, or 5.33 sen per share, a year ago, as quarterly revenue inched up 3.7% to RM1.14b from RM1.10b previously. (The Edge)

Petronas Dagangan Bhd's (PETDAG) net profit for the first quarter ended March 31, 2024 (1QFY2024) fell 25% y-o-y to RM226.04m, from RM301.84m previously, due mainly to higher product cost and operating expenditure. PetDag said revenue for the quarter rose to RM9.39b, from RM8.65b a year earlier. PetDag declared an interim dividend of 18 sen per share amounting to RM178.82m for the latest quarter. (The Edge) Sime Darby Property Bhd (SIMEPROP) reported that its first quarter net profit doubled year-on-year, as the property developer saw its quarterly revenue hit a record high on higher sales and successful project executions. The group's net profit for the three months ended March 31, 2024 (1QFY2024) jumped 103.7% to RM123.58m from RM60.67m in 1QFY2023, while revenue rose 42.81% to RM978.69m from RM685.33m. (The Edge)

Lagenda Properties Bhd (LAGENDA) said it is buying 855 acres of freehold land in Kuala Muda, Kedah for RM148.98m to capitalise on the demand for affordable housing. The group entered into a deal on Tuesday to buy the three plots of land from plantation company Hock Lean Rubber Estate Sdn Bhd to expand its land holdings and solidify the group’s position as a developer of affordable townships in Kedah. (The Edge)

Source: Mplus Research - 23 May 2024