Shifting The Focus To Earnings Season

Market Review

Malaysia: The FBM KLCI (+0.68%) closed notably higher as the index was lifted by buying pressure within the Industrial Products and Banking services heavyweights following the better-than-expected US economic data, coupled with the release of Malaysia GDP, rising at 5.9% YoY for 2Q24.

Global markets: Wall Street ended higher led by Nasdaq with buying support emerged within selected tech heavyweights like NVIDIA (+ 1.4%) as investors took positive cues from better-than-expected economic data and strong corporate earnings. Meanwhile, both the European and Asia stock markets ended higher.

The Day Ahead

All major indices on the local front ended on a positive note following Malaysia's GDP growth of 5.9% in 2Q24. However, the Telco & Media sub-index was the only one to close slightly lower for the session. In the US, Wall Street traded positively after evaluating the stable decline in inflation data (CPI and PPI), along with stronger retail sales and an increase in US consumer sentiment, which rose to 67.8 from 66.4 in July. We believe traders will continue to focus on the Fed, as there is potential for an interest rate cut next month, which could translate to positive trading sentiment in the US. In the commodity markets, Brent oil declined due to easing tensions in the Middle East, while gold prices surged to a new high above the USD2,500 mark. CPO prices, meanwhile, trended below RM3,700 for the session.

Sectors Focus: Given the positive environment in the US, we expect buying interest to emerge in the Technology sector locally, especially with improved sentiment in 2H24. Banking stocks, which rallied on Friday, are likely to continue their upward trend following the release of strong Malaysia GDP data. Additionally, we expect the Consumer and Shipping sectors to benefit from the stronger ringgit. Furthermore, we remain optimistic about the Construction, Property, Building Materials, and Utilities sectors ahead of the earnings season.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher towards the 1,623 level. The technical readings on the key index were positive with the MACD histogram forming another positive bar and the RSI stayed above 50. The resistance is envisaged around 1,638-1,643 and the support is set at 1,603-1,608.

Company Brief

CelcomDigi Bhd's (CDB) net profit rose 18% in the second quarter to RM406.02m, compared to RM342.52m a year earlier, driven by lower depreciation charges and tax incentives. Revenue slightly declined by 0.5% to RM3.11b from RM3.12b due to lower earnings from services and enterprise segments. The company declared a second interim dividend of 3.5 sen per share, bringing the year-to-date payout to 7 sen. (The Edge)

Genting Bhd (GENTING) said it is seeking legal advice following allegations by the Nevada gaming regulator that it failed to ban criminals from its Resorts World Las Vegas. The company stated that Resorts World Las Vegas LLC, its subsidiary, is actively communicating with the Nevada Gaming Control Board and is committed to resolving the issues and ensuring compliance with all regulations. (The Edge)

Insurer and reinsurer MNRB Holdings Bhd’s (MNRB) net profit for its first quarter ended June 30, 2024 surged 32.6% to RM92.2m from RM69.54m a year ago, driven by stronger reinsurance and general takaful businesses. Revenue slightly decreased by 0.5% to RM941.05m from RM945.35m a year ago, mainly due to a dip in its family takaful segment. No dividend was declared for the quarter. (The Edge)

Engineering supporting services provider SFP Tech Holdings Bhd's (SFPTECH) net profit for 2QFY2024 grew by 21.22% to RM12.89m from RM10.63m a year earlier, driven by higher orders in its engineering supporting services (ESS) segment. Revenue increased by 24.56% to RM45.39m from RM36.44m. This marks the company's highest quarterly net profit and revenue since its listing on the ACE Market in June 2022. No dividend was declared for the quarter. (The Edge)

SBC Corporation Bhd (SBCCORP) is selling a 2.2-acre land in Kuala Lumpur for RM36.6m to MEGX Holdings Sdn Bhd. The sale, through its subsidiary Kiara East Property Sdn Bhd, is aimed at generating cash flow for development projects. The group expects to record a consolidated gain of RM23.75m from the disposal in the financial year ending March 31, 2025. (The Edge)

Mi Technovation Bhd's (MI) net profit for the second quarter ended June 30, 2024 increased by 21.3% to RM27.6m from RM22.7m in the same period last year, supported by higher revenue. Revenue grew 51.3% year-on-year to RM127.2m from RM84.1m, with 56.6% coming from its semiconductor equipment business and 41.2% from its semiconductor material business. The company declared a first interim dividend of 2.5 sen per share. (The Edge)

Bumi Armada Bhd's (ARMADA) subsidiary, Bumi Armada Holdings Labuan Ltd, has secured syndicated facilities totalling up to US$400m (RM1.77b) to refinance a RM1.5b sukuk issued in 2014. The facilities include a US$135m conventional term loan and a US$265m Islamic Murabahah facility. The funds will be used to redeem the sukuk and its related liabilities. (The Edge)

Privately owned rail construction company Dhaya Maju Infrastructure (Asia) Sdn Bhd has agreed to acquire up to a 51% stake in electrical engineering firm Pestech International Bhd (PESTECH). This move follows IJM Corp Bhd's(IJM) decision to withdraw from acquiring a 44.83% stake in Pestech. Dhaya Maju will subscribe to at least 1.03b shares at 15.5 sen each, totalling approximately RM160.07m. (The Edge)

Petronas Chemicals (PCHEM) reported a 24% increase in net profit for the second quarter ended June 30, 2024, rising to RM777m from RM628m a year earlier, driven by higher sales volume and finance income. Revenue also grew 8.6% year-on-year to RM7.73b from RM7.11b. The company declared a first interim dividend of 10 sen per share, totalling RM800m, payable September 12. (The Edge)

Medical bed manufacturer LKL International Bhd (LKL) announced a partnership with Karl Group to explore and collaborate on hospital furniture manufacturing in the Philippines. Under the memorandum of understanding, LKL will provide technical expertise, technology, training, and assist with identifying investors and financial support. This partnership aims to expand LKL's business operations and enhance its market presence in the Philippines, addressing the growing demand for quality hospital furniture and healthcare solutions. (The Edge)

ITMAX System Bhd (ITMAX) has secured an additional RM539.46m order from Kuala Lumpur City Hall (DBKL) to install 5,000 more surveillance cameras and video signages in Kuala Lumpur. The contract, which spans 120 months, includes 12 months for installation and 108 months for service subscription. The start date will be determined based on an agreed work schedule. (The Edge)

Parkson Retail Asia Ltd (PRA), a 67.96%-owned subsidiary of Parkson Holdings Bhd (PARKSON), has applied to exit the Singapore Exchange (SGX) watch-list, as its average daily market capitalisation has surpassed the S$40m threshold. PRA, which was placed on the watch-list in December 2019 due to consecutive years of losses, has requested SGX approval to remove its watch-list status. Shareholders and potential investors have been advised to proceed with caution until the outcome is announced. (The Edge)

Lagenda Properties Bhd (LAGENDA) has appointed Loh Lai Pui as its new chief financial officer (CFO) effective Friday. Loh, with a degree in accounting and finance from Lancaster University and over 23 years of experience, previously served as CFO at property development and plantation company Ayer Holdings Bhd (AYER) for nearly three years. (The Edge)

Mohamed Rafe Mohamed Haneef, currently group CEO of MBSB Bhd (MBSB), will take over as CEO of MBSB Bank Bhd August 19, following Nor Azam M Taib's departure in June. Rafe, a Harvard graduate with extensive experience in banking, became MBSB group CEO last year after the merger with MIDF. (The Edge)

Source: Mplus Research - 19 Aug 2024