Shifting The Focus To Earnings Season

Market Review

Malaysia: While the interest rate spread between the US and Malaysia reduced, easing the pressure on the ringgit, the FBMKLCI (-0.13%) closed on a negative tone as selected Banking heavyweights, namely MAYBANK (-8.0 sen) and PBBANK (-1.0 sen) closed lower, contributed to the weaker sentiment on the local bourse.

Global markets: The Wall Street hit fresh highs, climbing alongside US Treasury yield lifted by the positive sentiment after Donald Trump claiming victory in the US Presidential Election and the Fed reduced the interest rate by 25 bps. Meanwhile, the European markets closed lower, while Asian markets ended on a mixed note.

The Day Ahead

Last Friday, the Malaysian ringgit strengthened slightly as the FOMC meeting concluded with a 25 bps rate cut, while the KLCI ended softer. Meanwhile, Wall Street closed on a positive note, reaching new highs after Donald Trump’s second presidential win. Looking ahead, traders will closely monitor inflation and retail sales data, which could dictate the outcome in upcoming FOMC meetings; the probability of a 25 bps cut in the December FOMC has declined to 84.9% (from 64.9%). In the commodity markets, Brent oil prices fell below USD73 per barrel as fears of prolonged supply disruptions from a hurricane in the US Gulf of Mexico eased. Meanwhile, gold prices retreated to around USD2,684, and CPO surged above the RM5,100 level.

Sector Focus: Despite the slight rebound in the ringgit, we believe Technology stocks could gain momentum, tracking the US move, but the upside may be limited in due to PIE’s earnings. We also favour stocks within the Shipping industry as AGX experienced a breakout last week. In view of the strong rally in CPO prices, we suggest that investors to focus on the Plantation sector heading into earnings season and 1Q25. Also, selected Construction and Building Materials stocks are expected to post stronger earnings, supported by ongoing data center investments.

FBMKLCI Technical Outlook

The FBM KLCI index closed lower towards the 1,621 level. However, the technical readings on the key index were mixed, with the MACD histogram formed positive bars, but the RSI trended below 50. The resistance is envisaged around 1,636-1,641, and the support is set at 1,601-1,606.

Company Briefs

Maxis Bhd’s (MAXIS) net profit grew by 28% for the three months ended Sept 30, 2024 (3QFY2024), helped by a larger subscriber base, coupled with a drop in staff costs after earlier lay-offs. Quarterly net profit came in at RM366m, compared with RM207m a year ago, while revenue was up 5.5% to RM2.58bn. Maxis declared a third interim dividend of four sen per share, payable on Dec 23, bringing the total to 12 sen for the nine-month period ended Sept 30, 2024 (9MFY2024). The telco paid out 16 sen per share in FY2023. The company maintained its full-year guidance for a 'low' single-digit increase in service revenue, 'low' single-digit growth in earnings before interest, taxes, depreciation and amortisation (Ebitda), and for capital expenditure to remain under RM1bn. (The Edge)

99 Speed Mart Retail Holdings Bhd’s (99SMART) net profit dipped 3.5% to RM107.16m in the third quarter ended Sept 30, 2024 (3QFY2024) from RM111.06m a year ago, dragged by higher administrative and other operating spending. This included one-off special staff bonuses and initial public offering listing expenses totalling RM23.2m. Excluding the one-off expenses, 99 Speed Mart said in a statement its normalised net profit increased 13.2% to RM126m in 3QFY2024 from RM111.27m in 3QFY2023. Revenue for the current quarter rose 8.8% to RM2.55bn from RM2.34bn in the previous year, primarily driven by the expansion of the store network which saw a net addition of 51 new outlets. No dividend was declared for the quarter. (The Edge)

Carlsberg Brewery Malaysia Bhd (CARLSBG) said its net profit increased 19.8% in the third quarter from a year earlier, bolstered by better performance in Malaysia. Net profit for the three months ended Sept 30, 2024 (3QFY2024) rose to RM90.96m from RM75.94m in 3QFY2023. Revenue for the quarter grew 8.3% to RM555.93m versus RM513.44m in 3QFY2023, as topline from Malaysia grew 14.2% to RM413.6m, underpinned by higher sales volume and selling prices. Revenue from Singapore, however, fell 6% to RM142.4m, dragged by unfavourable premium and channel mix. The brewer declared a third interim dividend of 23 sen per share for a total distribution of RM70.32m, higher than the 19 sen per share it paid in the comparable period last year. The latest payout raised its year-to-date dividend to 65 sen per share, versus 62 sen per share in the same period last year. (The Edge)

Westports Holdings Bhd’s (WPRTS) net profit for the third quarter ended Sept 30, 2024 (3QFY2024) rose 19.5% to RM233.1m, up from RM195m a year earlier, driven by a rise in container volumes. Revenue for the quarter improved 5.6% to RM572.57m, compared with RM542.31m in the same period last year. The port operator did not declare any dividend for the quarter as it is focusing on reinvesting in expansion projects. (The Edge)

PIE Industrial Bhd (PIE) reported a 56.7% drop in net profit for the third quarter, primarily due to lower revenue from electronic manufacturing activities, coupled with foreign exchange losses, and higher administrative and distribution expenses. The group’s net profit for the third quarter ended Sept 30, 2024 (3QFY2024) was RM8.84m, compared to RM20.39m in the same period last year. Revenue for 3QFY2024 declined by 18.71% to RM244.5m from RM300.8m previously. The group did not declare any dividend for the quarter under review. (The Edge)

Duopharma Biotech Bhd (DPHARMA) said its net profit increased 73.9% to RM15.59m in the third quarter ended Sept 30, 2024 (3QFY2024) from RM8.97m a year ago, on higher revenue. Revenue for the quarter rose 23.3% to RM208.73m from RM169.24m in 3QFY2023, driven by higher sales across key sectors, particularly the public health segment. No dividend was declared for the quarter. (The Edge)

Home appliance distributor Milux Corp Bhd (MILUX) received an unconditional mandatory takeover offer from ABS Capital Sdn Bhd to acquire all the remaining shares it does not own, at 43.2 sen per share. The takeover offer was triggered after ABS entered into eight share purchase agreements to acquire a 63.88% stake in Milux from executive vice chairman Datuk Wira Ling Kah Chok and seven other shareholders, at 43.2 sen per share, totalling RM64.9m, according to a notice issued on behalf of ABS by Maybank Investment Bank. According to the notice, ABS is 55% owned by a company linked to Exsim Group’s Lim brothers — Aik Hoe and Aik Kiat. The remaining 45% stake is held by Mak Wai Hoong. Following the acquisition, Ling will cede control of Milux to ABS, who is obligated to extend the unconditional mandatory takeover offer to buy all remaining shares in Milux at 43.2 sen per share in cash. ABS, however, intends to maintain Milux’s listing status on Bursa Malaysia. (The Edge)

Oil and gas services provider Steel Hawk Bhd (HAWK) has secured a subcontract from Petra Energy Bhd (PENERGY) to provide offshore living quarters maintenance and repair services for EPOMS offshore facilities in Sarawak. The three-year subcontract, awarded on a call-out basis, has no fixed contract value. The contract includes an option to extend for two additional years, on a one-year plus one-year basis, it said. The contract was awarded to Steel Hawk’s wholly owned subsidiary, Steel Hawk Engineering Sdn Bhd, by Petra Energy’s unit, Petra Resources Sdn Bhd. (The Edge)

Construction and property development outfit Fajarbaru Builder Group Bhd (FAJAR) has pulled out from participating in the affordable housing development in Putrajaya dubbed Residensi Cemara, which is estimated to have a gross development value of RM192m. No reason was given. Fajarbaru said Perbadanan Putrajaya has accepted its wholly owned subsidiary Fajarbaru Land (M) Sdn Bhd's withdrawal as the developer for the proposed development. (The Edge)

JF Technology Bhd (JFTECH) is acquiring stakes in Singapore-based companies for a combined value of about RM26m, in a bid to expand its business and market reach globally. The integrated circuit maker is buying all stakes in Singapore-based Transcend Target Companies — consisting of Transcend Technologies (S) Pte Ltd and Transcend Tech Asia Pacific Pte Ltd (TTAP) — for S$6m (RM19.91m). TTAP also owns a 95.5% stake in Transcend Technologies Inc Philippines. In a separate filing, JF Tech said it is also buying an 80% stake in front-end wafer testing Q3 Probe Pte Ltd from Spire Manufacturing Inc, which is incorporated in the US but based in Singapore, for US$1.36m (RM5.96m). The proposed acquisitions will come with a profit guarantee. (The Edge)

Sarawak Cable Bhd (SCABLE) said trading in its shares will be suspended from Nov 18, ahead of the court hearing of an application to place the company under judicial management (JM). The suspension, which would include the transfer of shares, will be lifted if the court does not grant the JM order at the hearing on Nov 20. "Otherwise, the trading suspension and transfer suspension will remain until the expiry of the JM order as may be granted by the Kuala Lumpur High Court," it said. Sarawak Cable noted that all trades conducted prior to the trading suspension on Nov 18 will continue to be cleared and settled. (The Edge)

REDtone Digital Bhd (REDTONE) has ceased to be a substantial shareholder of HeiTech Padu Bhd (HTPADU) after disposing of a 1.01% stake in the open market. According to a bourse filing, the stake, comprising 1.12m shares, was disposed of on Thursday. The sale price was not disclosed. Following this sale, REDtone is left with 5.49m shares or a 4.93% stake in HeiTech Padu. Tycoon Tan Sri Vincent Tan's Berjaya Group Bhd has a deemed interest in HeiTech Padu via REDtone. (The Edge)

Renewable energy producer Cypark Resources Bhd (CYPARK) announced its chief financial officer (CFO) Vinie Chong Pui Ling has resigned, just three months after her appointment on Aug 15. The company said Chong is stepping down to “pursue other interests”. Chong’s last day with the company will be Dec 31, 2024. (The Edge)

Source: Mplus Research - 11 Nov 2024