NVDA Charged Towards New High

Market Review

Malaysia: The FBMKLCI (-0.60%) ended lower as the key index was dragged by profit taking in YTL-related counters, despite posting strong earnings suggesting that they may have missed investors’ expectations. On the broader market, the Technology sector (+0.50%) gained amid stronger earnings in selected index members.

Global markets: Wall Street closed higher led by NASDAQ after NVIDIA’s stellar earnings propelled the stock to break USD1,000 for the first time, which provided sanguine market prospects despite the potential rate cut delays from worrying inflationary pressure. Both the European and Asian stock market ended lower.

The Day Ahead

Overall, the Malaysia stock market has taken a healthy pullback following a series of buying support in the past few weeks. However, we expect bargain hunting activities to emerge this week as most of the corporate earnings will be releasing this week. On Wall Street, with better-than-expected consumer sentiment, and durable goods orders, buying interest persisted with Nasdaq headed to fresh all-time-high as traders were positive on the Technology sector. On the commodity markets, Brent oil rebounded off the USD81/bbl zone, ahead of the OPEC+ meeting on 1st June. Meanwhile, gold price consolidated, and the CPO price rangebound between RMM3,855-3,925 last week.

Sectors focus: In view of stronger sentiment in the Technology sector on Wall Street, coupled with the positive tone on data center and MNCs investments in Malaysia, we reckon buying interest to persist within the Technology sector on the local front. Meanwhile, we believe Property stocks could be due for further positive re-ratings catalyst coming from foreign direct investments. Also, we still like the Construction, Building Materials, and Solar sectors with optimism over the KL-SG HSR project as well as the ongoing execution of NETR and NIMP master plans.

FBMKLCI Technical Outlook

The FBM KLCI index slid below the 1,620 level. The technical readings on the key index were mildly positive with the MACD Histogram extending a less positive bar, while the RSI remains overbought. The resistance is envisaged around 1,635-1,640 and the support is set at 1,600-1,605.

Company Brief

Gamuda Bhd (GAMUDA) has secured two contracts worth a combined value of RM1.74b to build a hyperscale data centre for Sime Darby Property Bhd (SIMEPROP) at the latter’s Elmina Business Park. The first contract worth RM815m was awarded by Sime Darby Property (EBP Asset I) Sdn Bhd, a wholly-owned unit of Sime Darby Property to undertake the construction, completion, testing, and commissioning of a hyperscale data centre. The second contract worth RM928.6m is from Pearl Computing Malaysia for the fit-out, testing, and commissioning of mechanical, electrical, and plumbing works for the said data centre in Elmina Business Park 1A. (The Edge)

Property developer Scientex Bhd (SCIENTX) is acquiring land in Seberang Perai, Penang for RM462.50m to expand its land bank for future development. The plan is to develop the land measuring 708.5 acres (286.72 hectares) into a mixed-property development. However, the company noted that it is too early to estimate the potential gross development value of the land and other project details. (The Edge)

Silver Ridge Holdings Bhd’s (SRIDGE) 51%-owned subsidiary has secured a contract worth RM168.83m for construction works on the Melaka International Cruise Terminal. The contract from Melaka International Cruise Terminal Sdn Bhd to Total SR Web 3.0 Sdn Bhd includes the provision of piling, superstructure works and mechanical and engineering services. The job is expected to be completed over 15 months, commencing on May 24, 2024. (The Edge)

Separately, Silver Ridge said its group chief executive officer Lee Wei Chiek has resigned from his position due to a “personal matter” — just over one month after being appointed to the post. The 42-year-old was appointed as group CEO on April 1, along with a slew of other boardroom changes. (The Edge)

Construction outfit TRC Synergy Bhd (TRC) has secured a RM142.34m subcontract for the "proposed transformation" of a state legislative building. The group said its wholly owned subsidiary Trans Resources Corp Sdn Bhd (TRCSB) was awarded the subcontract to undertake architectural, structural and civil works at the building by Performing Arts Centre Consortium Sdn Bhd. Details of the project, including the identity of the building, were not disclosed in its exchange filing. (The Edge)

Favelle Favco Bhd (FAVCO) said it is spending A$39.8m (RM123.98m) to develop two units of single-storey logistic warehouses on its freehold land near Sydney, Australia. The crane manufacturer said it has entered into an agreement with Australian developer Dexus Property Services Pty Ltd, and Dexus Funds Management Ltd, for the construction as well as the construction financing and tenant sourcing. The warehouses will have a combined gross lettable area of 14,000 sq m on the 46,839.7 sq m land. (The Edge)

The children of prominent businessman Tan Sri Robert Tan Hua Choon have triggered an unconditional mandatory general offer (MGO) in Eurospan Holdings Bhd (EUROSP) after increasing their shareholdings in the loss-making furniture manufacturer to 71.8%. Eurospan disclosed that Robert’s son, Datuk Seri Tan Han Chuan, raised his stake from 14.22% to 67.14%. Robert is widely known for being the first Casio watches distributor in Malaysia, earning him the "Casio king" moniker. Han Chuan’s sister, Datin Tan Ching Ching owns a 4.69% stake, is deemed person acting in concert, giving the duo a collectiveshareholdings of 71.83%. After increasing his stake, Han Chuan is obliged to extend a mandatory takeover offer to acquire all the remaining shares of the company at RM1.70 per share. The offer is deemed unconditional as the duo controls over 50% of the voting shares in Eurospan. Nevertheless, Han Chuan intends to maintain Eurospan’s listing status on the Main Market of Bursa Malaysia. (The Edge)

MSM Malaysia Holdings Bhd (MSM)’s unit has initiated a suit against Generali Insurance Malaysia Bhd claiming RM42.75m in damages over a rejected insurance claim. The sugar refiner’s wholly owned subsidiary MSM Sugar Refinery (Johor) Sdn Bhd said that its insurance claim filed in 2022 for the loss of profit arising from a boiler failure was rejected by Generali Insurance. The unit’s insurance claim was made under its machinery breakdown insurance policy and machinery breakdown loss of profit insurance policy with Generali Insurance. (The Edge)

Malayan Banking Bhd (MAYBANK), Malaysia’s biggest banking group by assets, say its net profit rose 9.8% for the first quarter from a year earlier, thanks to increases in both net interest income and non-interest income. Net profit for the three months ended March 31, 2024 (1QFY2024) was RM2.49b, compared with RM2.27b a year ago. Net interest income rose 4.5% year-on-year to RM5.24b. Non-interest income surged 78% to RM3.05b against 1QFY2023, largely due to accounting gains of RM995.5m in the form of mark-to-market gains on revaluation of financial liabilities at fair value. No dividend was announced as it usually announces dividends with its second and fourth-quarter results. (The Edge)

IOI Corp Bhd’s (IOICORP) net profit fell 38% in the third quarter from a year earlier largely due to currency loss and other paper losses. The country’s second-largest palm oil producer’s net profit for the three months ended March 31, 2024 (3QFY2024) was RM123.1m compared with RM197.4m over the same period a year earlier. Revenue for the quarter meanwhile slipped 7.4% year-on-year to RM2.46b from RM2.66b. The group did not declare any dividend for the quarter under review. (The Edge)

Hextar Global Bhd’s (HEXTAR) net profit for the three months ended March 31, 2024 (1QFY2024) jumped 40.75% year-on-year, due to higher contribution from its newly diversified durian trading business as well as its specialty chemicals segment on contracts awarded from the oil and gas sector. Net profit for the quarter came in at RM12.14m, compared to RM8.63m the previous year, as revenue surged 67.47% to RM232.27m from RM138.74m. No dividend was announced for the quarter. (The Edge)

Sports Toto Bhd’s (SPTOTO) earnings almost tripled in its third financial quarter ended March 31, 2024 (3QFY2024) on the back of improved performance by the group's principal subsidiary STM Lottery Sdn Bhd and luxury cars retailer HR Owen plc. Net profit for 3QFY2024 stood at RM68.45m compared with RM23.22m in the previous year's corresponding quarter. Revenue inched up 2.4% to RM1.69b from RM1.66b. It declared a third interim dividend of three sen per share, amounting to RM40.5m, payable on July 19. This brings the total dividend declared for FY2024 so far to eight sen per share, versus 6.5 sen for the same period in the previous year. (The Edge)

Tin smelting and mining outfit Malaysia Smelting Corp Bhd’s (MSC) net profit for the first quarter ended March 31, 2024 (1QFY2024) fell 48.5% to RM18.24m from RM35.41m a year earlier, mainly due to the absence of sale of refined tin from processed tin intermediates, sales of by-products, coupled with lower tin production. Revenue rose 6.6% to RM362.48m versus RM340.06m a year ago on the back of higher tin prices. No dividend was declared for 1QFY2024. (The Edge)

Prolintas Infra Business Trust (PLINTAS), which was just listed on the Main Market of Bursa Malaysia on March 25, returned to the black in the first quarter of 2024, thanks to the absence of a one-off deferred tax reversal. Net profit for the three months ended March 31, 2024 (1QFY2024) totalled RM2.09m compared to a net loss of RM81.78m over the same period a year earlier, said the Klang Valley’s highway operator. Revenue for the quarter more than doubled to RM76.53m versus RM32.64m a year ago, supported by higher toll collection amounting to RM75.4m. The trust did not declare any dividend for the quarter. (The Edge)

Malaysia Marine and Heavy Engineering Holdings Bhd’s (MHB) first quarter net profit almost tripled from a year earlier, thanks to higher revenue from ongoing projects as well as increase in dry-docking and repair activities. Net profit for the three months ended March 31, 2024 (1QFY2024) was RM10.42m compared to RM3.53m in 1QFY2023. Revenue almost doubled year-on-year to RM984.47m from RM496.23m. The company did not declare any dividend for the quarter under review. (The Edge)

Tan Chong Motor Holdings Bhd (TCHONG) posted a wider net loss of RM15.72m for the first quarter ended March 31, 2024 (1QFY2024) from RM5.07m a year ago. This is the sixth consecutive loss-making quarter for the automotive assembler and distributor which carries marques such as Nissan and Renault. The group cited softer consumer sentiments and a highly competitive business landscape in both the local and overseas markets for the continued loss. Quarterly revenue declined 9.06% to RM563.7m — its lowest since 3QFY2021 when it reported RM439.38m — from RM619.89m a year before. It declared an interim dividend of 1 sen per share during the quarter — the same amount it declared for FY2023. (The Edge)

Source: Mplus Research - 27 May 2024