Nvidia Unable To Impress The Market

Market Review

Malaysia: The FBM KLCI (+1.39%) closed higher, boosted by buying pressure in banking heavyweights such as CIMB (+45.0 sen) and PBBANK (+12.0 sen), supported by positive sentiment from strong earnings reports and Malaysia's upgrade by several foreign brokers.

Global markets: Wall Street closed lower, weighed down by Nasdaq despite NVIDIA posted better-than-expected set of earnings. Meanwhile, European stock markets ended higher, while Asian stock markets closed mixed as investors traded cautiously following Australia’s higher-than-expected inflation data.

The Day Ahead

The local stock exchange saw mixed activity, with buying interest concentrated in blue chips and the banking sector, while investors offloaded small-cap shares, leading to negative market breadth. Despite NVIDIA's better-than-expected results, the stock traded lower in post-market sessions, suggesting that the AI-driven rally may be reaching lofty valuations and could face exhaustion in the near term. Key economic data releases this week include (i) preliminary US GDP (Thu), (ii) unemployment claims (Thu), and (iii) core PCE data (Fri). In the commodity market, Brent oil declined for the second session due to a smaller-than-expected drop in US inventories last week, while gold prices remained above USD2,500. CPO prices hovered just below RM3,900.

Sector Focus: Given NVIDIA's post-market decline, we anticipate selling pressure may build within local technology stocks, especially in light of the stronger ringgit. Meanwhile, foreign funds are expected to continue focusing on blue chips and liquid banking stocks in the near term. Additionally, the stronger ringgit could benefit the Consumer sector, as evidenced by Farm Fresh Berhad's positive earnings report.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher towards the 1,675 level. The technical readings on the key index were positive with the MACD histogram forming another positive bar and the RSI trended above 50. The resistance is envisaged around 1,690-1,695 and the support is set at 1,660-1,655.

Company Brief

Malayan Banking Bhd’s (MAYBANK) net profit for the second quarter ended June 30, 2024 (2QFY2024) rose 8.2% to RM2.53bn from RM2.34bn in the same period a year earlier, thanks to lower provisions and tax expenses. It also declared an interim cash dividend of 29 sen per share, amounting to a total distribution of RM3.5bn, to be paid at a date to be determined later. (The Edge)

KLCCP Stapled Group Bhd (KLCC) said its 2QFY2024 net profit rose 5.67% to RM191.06m from RM180.8m a year ago, on the back of commendable performances from all businesses, especially the retail and hotel segments. The group — comprising KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust — said revenue for the quarter grew 4.72% to RM413.25m from RM394.63m. It declared a dividend of 9.2 sen per stapled security — comprising 2.46 sen for KLCC Property and 6.74 sen (taxable) for KLCC REIT — payable Sept 30. (The Edge)

Sunway Bhd (SUNWAY) posted a net profit of RM270.47m for 2QFY2024, up 80.4% from RM149.43m a year earlier, on stronger operating performance across all business segments, coupled with a gain of RM62.4m from the redemption of an investment and share of gain of RM27m from the newly acquired investment properties of an associate. Revenue for the quarter rose 7.6% to RM1.58bn from RM1.47bn a year earlier, on better performance from all business segments except the construction segment. Sunway declared a first interim dividend of 2 sen per share for the financial year ending Dec 31, 2024 (FY2024), payable on Oct 10, and a preferential dividend of 5.25% per year (based on the issue price of RM1) per irredeemable convertible preference share in respect of the financial period from Jan 1 to June 30, 2024. (The Edge)

Axiata Group Bhd (AXIATA) returned to the black in 2QFY2024 with a net profit of RM134.9m, compared with a net loss of RM576.22m a year earlier, contributed by strong performance from all operating companies except Link Net and Dialog, higher share of results of associates and lower foreign exchange losses, offset by higher net finance cost and taxation. Revenue for the quarter came in at RM5.76bn, up 2.9% from RM5.59bn a year earlier. The group declared a dividend of five sen per share. The entitlement and payment date of the dividend will be announced in due course. (The Edge)

Malakoff Corp Bhd (MALAKOF) posted a net profit of RM93.6m for 2QFY2024, compared to a net loss of RM318.7m a year ago, on the back of higher earnings contributions from two Johor-based power plants amid reduced coal costs, coupled with a compensation received for compulsory land acquisition. Quarterly revenue fell 2.4% to RM2.31bn from RM2.37bn due to reduced energy payments from the two power plant firms, Tanjung Bin Power Sdn Bhd and Tanjung Bin Energy Sdn Bhd, in line with a decline in applicable coal prices. Malakoff declared an interim dividend of 2.23 sen per share, up from 1.5 sen per share a year ago, payable on Oct 25. (The Edge)

DRB-Hicom Bhd (DRBHCOM) posted a net loss of RM17.08m in 2QFY2024 against a net profit of RM33.71m a year ago, mainly due to weaker financial performance in Proton Holdings Bhd and losses from Pos Malaysia Bhd following reduced revenue in its international business. Revenue for the quarter dropped 5.6% to RM3.76bn from RM3.98bn. (The Edge)

Medium-haul low-cost carrier AirAsia X Bhd (AAX) reported a 13% fall in net profit for 2QFY2024 to RM4.82m from RM5.54m a year earlier, on lesser travels due to the traditionally weaker travel season. AAX's quarterly revenue rose 30.5% to RM669.14m in 2QFY2024, from RM512.91m in 2QFY2023, on higher ticket sales and ancillary revenue. (The Edge)

Supermax Corp Bhd (SUPERMX) suffered its largest quarterly net loss of RM127.93m for its fourth quarter ended June 30, 2024 (4QFY2024), hit by a write down of high price inventory at an overseas subsidiary amounting to RM72.85m. Quarterly revenue fell 19.3% year-on-year to RM179.64m from RM222.6m, due to low selling prices while the market is still recovering from the demand and supply imbalance due to an oversupply of gloves in the past. (The Edge)

IOI Properties Group Bhd’s (IOIPG) 4QFY2024 net profit jumped more than five times in 4QFY2024 from a year earlier thanks largely to a revaluation gain. Net profit was RM1.55bn, compared to RM235.37m over the same period a year earlier. Revenue for the quarter, meanwhile, rose 17.4% year-on-year to RM782.61m from RM666.46m, helped by improved performance across all segments. IOI Properties also declared a dividend per share of five sen, the same as last year, payable Nov 1. (The Edge)

Separately, the group announced that it has declined the offer to purchase Singapore commercial property Shenton House from its chief executive officer and major shareholder Lee Yeow Seng. However, subsidiaries of IOI Properties have been appointed to be the sole project manager and property manager for the redevelopment of the commercial property. Shenton House was acquired by Lee’s private vehicle Shenton 101 Pte Ltd in a tender for S$538m (RM1.9bn). It was the sole bidder. (The Edge)

Farm Fresh Bhd’s (FFB) net profit grew fourfold to nearly RM26m in the first quarter ended June 30, 2024 (1QFY2025), from RM6.37m or 0.34 sen per share a year ago, as significantly higher sales were bolstered by decreased costs. Profits were also boosted by contributions from its Inside Scoop and Sin Wah ice cream outlets, as well as improving margins from its Australian operations. Revenue rose 30% to RM241.7m from RM185.46m a year ago. (The Edge)

QL Resources Bhd’s (QL) net profit rose 16% in 1QFY2025 from a year earlier mainly led by its convenience store chain business. Net profit was RM107.43m compared with RM92.81m a year ago. Revenue for the quarter increased 1.3% year-on-year to RM1.62bn from RM1.6bn. (The Edge)

IJM Corp Bhd’s (IJM) net profit for 1QFY2025 fell 13.68% to RM86.88m from RM100.64m a year earlier, dragged mainly by unrealised foreign exchange and fair value losses. Quarterly revenue rose 14.56% to RM1.4bn from RM1.23bn. (The Edge)

Citaglobal Bhd (CITAGLB), which is involved in the civil engineering and construction, telecommunications, oil and gas, power generation and manufacturing sectors, plans to team up with Tree Technologies Sdn Bhd, a privately held homegrown electric vehicle maker, to jointly develop a parcel of leasehold industrial land in Gebeng Industrial Estate, Pahang, into an industrial park with green elements. The group did not disclose the estimated gross development value of the proposed industrial park project. It has entered into a binding term sheet with Tree Technologies for the proposed joint venture based on an equity shareholding of 65% for Citaglobal and 35% for Tree Technologies. (The Edge)

Axis Real Estate Investment Trust (AXREIT), which mainly focuses on industrial assets, has proposed to acquire two adjoining pieces of land together with buildings near Port Klang for RM158.64m. The acquisition, Axis REIT said, will be funded by its existing bank financing. The REIT's trustee, RHB Trustees Bhd, has entered into agreements to buy the assets located in the Pulau Indah Industrial Park from Malconrep Depot (M) Sdn Bhd and Dayang Mewah Sdn Bhd. (The Edge)Dagang NeXchange Bhd (DNEX) has been awarded a one-year contract extension by the government to manage the National Single Window (NSW) for Trade Facilitation system. With this, DNeX through its wholly-owned subsidiary Dagang Net Technologies Sdn Bhd will continue its role as operator of the system until Aug 31, 2025. It has held the position since the system's inception in 2009. (The Edge)

Digital solutions provider Pertama Digital Bhd (PERTAMA) is looking to acquire a privately held system integration services and technical consultancy services provider, Kridentia Tech Sdn Bhd, in an all-shares deal. It did not disclose the transaction value. The group has entered into a memorandum of understanding with Kridentia Holdings Sdn Bhd for the proposed acquisition of its 59%-owned unit Kridentia Tech. Kridentia is owned by Datuk Abdul Rashid Mohd Ghani and Kwek Keng Chye, who in turn collectively hold the remaining 41% of Kridentia Tech. (The Edge)

Sentoria Group Bhd (SNTORIA) confirmed on Wednesday the departure of its chief executive officer Datuk Loh Yuen Tuck from the company. It also maintains that it does not accept Loh's constructive dismissal claim, saying it was Loh who repudiated his own service contract. Sentoria acknowledged the ongoing dispute between the company and Loh as it announced that Loh "considers himself to have been terminated due to constructive dismissal which we do not accept and take issue" with. The announcement confirmed Loh's departure from Sentoria in a report by The Edge Malaysia weekly titled "Sentoria CEO departs on constructive dismissal, adding new twist to feud", that was published for the week of Aug 19-25. The report, quoting Loh, wrote that Loh had resigned due to constructive dismissal. (The Edge)

SkyWorld Development Bhd (SKYWLD) will pay Perbadanan PR1MA Malaysia (PR1MA) RM32.17m for the development rights to build 491 affordable housing units in Brickfields. SkyWorld, through its wholly-owned subsidiary Aspirasi Cekap Sdn Bhd (ACSB), received a letter of acceptance (LOA) from PR1MA on Wednesday to undertake the project. A joint development agreement will be inked between ACSB and PR1MA within 60 calendar days from the LOA or another date set by PR1MA. (The Edge)

Source: Mplus Research - 29 Aug 2024