Nvidia May Dragged AI-theme

Market Review

Malaysia: The FBM KLCI (-1.29%) ended lower as profit-taking activities were seen in banking heavyweights like CIMB (-38.0 sen) and MAYBANK (-18.0 sen), in line with the mixed regional markets' performance. The REIT (+0.19%) sector was the best performer for the session.

Global markets: Wall Street closed mixed, weighed down by Nasdaq as investors started seeing limited upside for NVIDIA as growth slowed down. Also, investors stayed cautious ahead of key economic data later this Friday. Meanwhile, European stock markets ended higher, while Asian stock markets closed mixed.

The Day Ahead

Sentiment on the local front turned negative as profit-taking emerged after strong foreign fund buying in the banking sector, while small-cap stocks remained weak. In the US, Wall Street had a mixed session, the Dow reached new highs, while the S&P and Nasdaq were weighed down by NVIDIA, which fell despite exceeding expectations. US preliminary GDP came in at 3.0%, and unemployment claims slightly declined to 231k (previous reading: 233k). Investors are now closely watching the core PCE data set to be released later tonight. In the commodity markets, Brent oil rebounded after a two-day decline, driven by a suspension of exports from Libya, while gold prices remained above USD2,500, reflecting potential interest rate cuts by September. CPO prices also bounced back, trading above RM3,900 with a positive outlook in the near term.

Sector Focus: With NVIDIA's decline impacting the overall technology sector, we anticipate further selling pressure on local technology stocks, especially given the stronger ringgit environment. However, the stronger ringgit could benefit the Consumer sector, as evidenced by FFB and Spritzer's improved performance this quarter. Additionally, during the corporate earnings season, several Property, Construction, and selected O&G stocks showed growth in their results.

FBMKLCI Technical Outlook

The FBM KLCI index ended lower towards the 1,653 level. However, 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 1,668- 1,673 and the support is set at 1,633-1,653.

Company Brief

Tenaga Nasional Bhd's (TENAGA) net profit for the second quarter ended June 30, 2024 (2QFY2024) jumped more than fourfold to RM1.45bn from RM327.9m a year ago, as it recorded higher electricity sales, a favourable foreign exchange translation and lower net finance costs. Quarterly revenue grew 7.83% to RM14.4bn from RM13.3bn, driven by a 5.7% or RM745.8m increase in electricity sales. TNB proposed an interim single-tier dividend of 25 sen per share, higher than the 18 sen per share it declared a year earlier, with payment dates to be announced in due course. (The Edge)

Press Metal Aluminium Holdings Bhd’s (PMETAL) net profit surged 65% in 2QFY2024 to RM505.83m compared to RM305.79m over the same period a year earlier, thanks mainly to higher price sold and stronger US dollar that boosted export receipts. Revenue for the quarter rose 5.2% to RM3.95bn from RM3.76bn. The company has also declared an interim dividend of 1.75 sen per share, amounting to total payout of RM144.2m, payable on Sept 30. (The Edge)

IHH Healthcare Bhd’s (IHH) 2QFY2024 net profit more than doubled to RM623m from RM301m a year earlier, driven by strong operational performance and the positive impact of deferred tax credits. Revenue climbed 30.36% to RM6.09bn from RM4.67bn on sustained patient volume growth and taking on more acute, complex cases across all markets. IHH announced an interim dividend of 4.5 sen per share, which will be paid on Oct 30. (The Edge)

PPB Group Bhd's (PPB) 2QFY2024 net profit rose 52.32% year-on-year to RM308.92m from RM202.81m, thanks to higher contribution from Wilmar International Ltd. Revenue for the quarter was down 10.93% to RM1.32bn from RM1.48bn in 2QFY2023, following the absence of earnings contribution from its divested Indonesian flour operation. PPB has declared an interim dividend of 12 sen per share for the quarter, payable on Sept 26. (The Edge)

Gaming-to-plantation conglomerate Genting Bhd (GENTING) reported a 49% jump in its 2QFY2024 net profit, partly helped by other non-operating gain and a reduction in the share of losses. Net profit was RM239.66m, compared with RM160.55m for the same period a year earlier. Revenue rose 3% year-on-year to RM6.86bn from RM6.66bn due to contribution from the leisure and hospitality division. Genting declared an interim single-tier dividend of 6 sen per share, to be paid on Oct 11. (The Edge)

Genting Malaysia Bhd (GENM) saw its net profit rise 74.5% to RM82.24m for 2QFY2024 from RM47.12m a year earlier, driven by its leisure and hospitality business. Quarterly revenue rose 7.9% to RM2.67bn from RM2.47bn a year earlier, on higher revenue from the leisure and hospitality business. GENM declared an interim dividend of 6 sen per share, payable on Oct 7. (The Edge)

Oil and gas services provider Velesto Energy Bhd (VELESTO) reported a more than threefold year-on-year surge in its 2QFY2024 net profit, thanks to higher utilisation rates and an increase in average daily charter rates. Its net profit jumped to RM62.81m from RM17.40m, while revenue climbed 40.86% to RM393.43m from RM279.32m. The group declared an interim dividend of 0.25 sen per share, amounting to RM20.5m, payable on Nov 28, 2024. (The Edge)

Binastra Corp Bhd (BNASTRA), formerly known as Comintel Corp Bhd, has secured a RM155.01m contract for the redevelopment of a sewage treatment plant in Sri Hartamas. Its wholly-owned Binastra Builders Sdn Bhd received the letter of award on Thursday from Greenearth Landmark Sdn Bhd (GLSB) to design and build a membrane biological reactor (MBR)-type sewage treatment plant, which will have a capacity of 160,000 population equivalents. (The Edge) Tropicana Corp Bhd’s (TROP) earnings surged in 2QFY2024, boosted by a large unrealised gain of RM62.97m on quoted shares. A higher progress billing and lower finance cost following the group’s debt reduction initiatives also contributed to the jump in net profit to RM43.56m 2QFY2024 — its highest quarterly earnings since 4QFY2020 — from RM305,000 a year earlier. Revenue for the quarter, however, dropped 17.18% to RM384.7m from RM464.51m, mainly due to disposals of its investment properties, namely the St Joseph’s Institution International School in September 2023 and W Kuala Lumpur in January 2024, which resulted in a loss of revenue. The group was also hit by lower revenue from land disposals. (The Edge)

Kenanga Investment Bank Bhd (KENANGA) reported a 43.9% fall in 2QFY2024 net profit, immediately sending its shares to their lowest in more than six months. The stock fell as much as 15% or 18 sen to RM1, its lowest since Feb 7, 2024. The sharp decline in the share price also prompted a suspension of intraday short-selling activities on the stock. Kenanga’s share price closed at RM1.05, still down 13 sen or 11.02%, valuing the company at RM772.6m. Net profit for the quarter was RM9.37m compared with RM16.7m a year earlier due to impairment provisions on its fees receivables amounting to RM6.6m for the quarter. Quarterly revenue, however, rose 22.6% to RM243.13m from RM198.26m a year earlier, mainly due to higher brokerage fee income, and trading and investment income. (The Edge)

Capital A Bhd (CAPITALA) posted a much larger net loss for 2QFY2024, mainly due to higher foreign exchange losses and aircraft depreciation charges. Net loss widened to RM454.18m, marking its fourth consecutive quarter in the red. That compares to a net loss of RM91.55m in 1QFY2024 and net profit of RM646.28m in 2QFY2023. Quarterly revenue, however, rose 54% to RM4.86bn as compared to RM3.15bn a year ago, thanks to the strong recovery from domestic and international travel, which offset the higher fuel expenses and maintenance costs. Capital A is now aiming to exit the Practice Note 17 status by the first half of 2025, said its chief executive officer Tan Sri Tony Fernandes. (The Edge)

Hong Leong Financial Group Bhd (HLFG), the financial services arm of tycoon Tan Sri Quek Leng Chan, saw its net profit for the fourth quarter ended June 30, 2024 (4QFY2024) rise by 21% to RM806.09m, compared with RM663.91m over the same period last year, led by its banking unit. The company has also declared a final dividend of 36 sen per share, lifting total dividends by 5 sen to 54 sen per share for FY2024. HLFG derives most of its earnings from its listed commercial banking arm Hong Leong Bank Bhd (HLBANK). The company also runs investment banking and asset management under Hong Leong Capital Bhd (HLCAP) as well as insurance under unlisted HLA Holdings Sdn Bhd. (The Edge)

Hong Leong Bank’s (HLBANK) net profit for 4QFY2024 rose nearly 20% to RM1.03bn compared to RM864.68m over the same period a year earlier, thanks to higher operating income and provisions writeback. Quarterly revenue grew 13.31% to RM1.48bn compared to RM1.30bn recorded in 4QFY2023. A final dividend of 43 sen per share was also declared for the current quarter payable on a date to be determined later. That compares to 38 sen per share declared in the previous year’s corresponding quarter. Net profit at Hong Leong Capital more than quadrupled to RM36.76m from RM8.06m thanks to a surge in income from stockbroking as well as a one-off surge in fees from private mandates and it declared a final single tier dividend of 22 sen per share. (The Edge)

Axiata Group Bhd (AXIATA) is offering up to US$200m (RM864.75m) to buy back outstanding medium-term notes (MTNs) issued by its wholly-owned subsidiary Axiata SPV5 (Labuan) Ltd, which are due in 2050. The group had initiated an invitation to eligible holders of its outstanding US$1bn MTNs, which are listed on the Singapore Exchange. The bought-back notes will be retired and cancelled. (The Edge)

Berjaya Corp Bhd (BJCORP) widened its 4QFY2024 net loss to RM147.84m from RM79.33m in 4QFY2023, primarily due to weaker results from its retail, property and hospitality segments, though this was partly offset by a strong performance in its services segment. Group revenue dipped 3.76% to RM2.46bn from RM2.56bn, mainly due to lower contributions from the retail and property segments. (The Edge)

The High Court in Shah Alam has ruled in favour of Hartalega Holdings Bhd (HARTA) in its lawsuit against Dr Danaraj Nadarajah, declaring that the former executive director had committed a breach of his fiduciary duties and his contract of employment. The court also found that Danaraj had breached Section 317A of the Capital Markets and Services Act, which prohibits directors of a listed corporation from causing wrongful loss to the company, as well as Sections 213 and 218 of the Companies Act, which relates to the duties and responsibilities of directors, and the prohibition against improper use of the company's properties for self gain. Following the decision, Hartalega said it will lodge complaints to the Securities Commission of Malaysia (SC) and the Companies Commission of Malaysia (SSM) against Danaraj. (The Edge)

99 Speed Mart Retail Holdings Bhd (99SMART), which is set to list on the Main Market on Sept 9, announced that its initial public offering (IPO) has been oversubscribed by 3.04 times. It received 49,354 applications for 678.6m shares from the Malaysian public, compared to the 210m shares made available for the retail offering. (The Edge)

KIP Real Estate Investment Trust (KIPREIT), which primarily invests in retail properties, has proposed to acquire another four industrial properties in Cheras Jaya, Pulau Indah, Pasir Gudang in Johor, and Bintulu in Sarawak, for a total purchase price of RM98.3m. Pacific Trustees Bhd, acting as its trustee, has entered into four separate sale and purchase agreements (SPAs) for the acquisitions. (The Edge)

Source: Mplus Research - 30 Aug 2024