Strengthening USD Will Be Key Focus

Market Review

Malaysia: The FBMKLCI (-0.42%) ended on a negative tone at 1587.49 pts, as banking heavyweights dragged down the local index. In the broader market, the Construction (+0.63%) sector gained the most, led by IJM and KERJAYA, while the Technology (-1.56%) sector saw the largest decline.

Global markets: Wall Street was closed due to the Thanksgiving holiday. Meanwhile, the European market closed higher, while the Asian market mostly rise as investors assessed South Korea’s surprise interest rate cut.

The Day Ahead

The FBMKLCI reversed into the negative territory, retreating below the psychological 1,600 mark. Meanwhile, US markets were closed for the Thanksgiving holiday. Recent PCE data indicates an uptick, while Trump’s administration imposing trade tariffs could be exerting pressure on the inflation pressure going forward, these factors could reinforce the case for a gradual interest rate cut cycle by the Federal Reserve moving forward, translating to limited upside move on the stock markets. This week, traders will continue monitoring key economic events like (i) Eurozone CPI, (ii) Chicago PMI, and (iii) China’s Manufacturing PMI. In the commodities market, both the Brent crude oil and gold prices, as they steadied around the USD72 and USD2,600 levels. Meanwhile, CPO prices rebounded above the RM4,900 level as buying interest picked up ahead of the monthly data releases in early December.

Sector Focus: Given the rebound in CPO prices, coupled with the recent strong earnings by certain plantation counters, we foresee trading opportunities ahead of the Plantation sector. We believe the recent earnings have been dented by forex losses due to strengthening of ringgit in 3Q24, however, there would be a reversal trade going forward if the ringgit continues to weaken in 4Q24. Notably, the USDMYR trend has depreciated by approximately 7.5% from end-Sep, thus traders may look into Technology and Gloves.

FBMKLCI Technical Outlook

The FBMKLCI is hovering below the 1,600 level, and all the MAs line. The MACD Histogram, however has turned positive, but RSI is still trending below 50, indicating that the momentum is mixed at this juncture. The resistance is envisaged around 1,612-1,617, and the support is set at 1,577-1,582.

Company Briefs

Tenaga Nasional Bhd’s (TENAGA) net profit rose 85% to RM1.58bn in the third quarter ended Sept 30, 2024 (3QFY2024) from RM856.2m last year, thanks to hefty foreign exchange gains. It booked a forex gain of RM1.12bn compared to a net forex gain of barely RM4.6m in 3QFY2023. Quarterly revenue grew 6.6% to RM14.35bn against RM13.47bn, driven by a rise in electricity sales. (The Edge)

CIMB Group Holdings Bhd (CIMB), Malaysia’s second-largest bank by assets, saw its net profit for 3QFY2024 rise nearly 10% to RM2.03bn from RM1.85bn a year earlier, thanks to healthy growth in both net interest income (NII) and non-interest income (NOII). Year-on-year, NII edged up 1.8%, while net fees and commission income grew 9.2%, and other NOII surged 28%. Revenue grew to RM5.74bn, from RM5.3bn. (The Edge)

Alliance Bank Malaysia Bhd’s (ABMB) net profit increased marginally by 2.5% yearon-year to RM189.91m in the second quarter ended Sept 30, 2024 (2QFY2025) from RM185.33m, driven by revenue growth which was offset by higher allowances for expected credit losses and operating expenses. Quarterly revenue grew 14.7% to a record high of RM605.65m from RM528.10m, thanks to higher interest income from loans and other operating income. It declared a first interim dividend of 9.50 sen per share for the latest quarter, compared with 10.85 sen per share in 2QFY2024. The dividend will be paid on Dec 30. (The Edge)

Hong Leong Financial Group Bhd (HLFG), the financial services flagship of tycoon Tan Sri Quek Leng Chan, saw its net profit rise 14% year-on-year to RM847.67m for the three months ended Sept 30, 2024 (1QFY2025), from RM741.65m a year earlier, driven by the banking and insurance businesses. Quarterly revenue rose to RM1.89bn from RM1.58bn a year ago. Hong Leong Bank Bhd’s (HLBANK) net profit rose 5.8% to RM1.09bn in 1QFY2025 from RM1.03bn last year, thanks to a rise in both net interest income and non-interest income. Revenue grew to RM1.6bn, from RM1.39bn. (The Edge)

Axiata Group Bhd (AXIATA), the country’s largest telecommunications company by revenue, returned to the black with a net profit of RM976.67m in 3QFY2024, against a net loss of RM797.41m a year ago, as currency gains and other one-off items offset a decline in operating income. The company booked forex gains on financing totalling RM1.03bn and another RM306.10m from early redemption of debt. Revenue was RM5.32bn, a 5.3% decline when compared to RM5.62bn, which the company attributed to depreciation of the Indonesian rupiah and Bangladeshi taka against the ringgit. (The Edge)

IHH Healthcare Bhd’s (IHH) net profit for 3QFY2024 was flat at RM534m, compared with RM532m in 3QFY2023. Quarterly revenue dipped 3% to RM5.6bn from RM5.8bn last year. This was because the company, which operates in Türkiye, needed to adjust its financial statements to account for the decreasing purchasing power of the Turkish lira due to the high inflation there by applying a specific accounting standard (MFRS 129). This resulted in IHH’s net profit in the corresponding quarter in 2023 being inflated by RM224m, as there was a net increase in purchasing power from the net monetary position of the group’s operations in Türkiye. (The Edge)

Chin Teck Plantations Bhd (CHINTEK) declared a special dividend of 7 sen per share plus a first interim dividend of eight sen per share for the financial year ending Aug 31, 2025 (FY2025). Both dividends will be paid on Dec 27. The dividend announcement came prior to the conclusion of its first financial quarter ending Nov 30. It declared a total of 40 sen in dividends for FY2024. The plantation group was in a net cash position of about RM429.9m as at end-August, equivalent to RM4.70 per share based on an issued share capital of 91.4m shares. (The Edge)

Sime Darby Bhd's (SIME) net profit jumped 36% to RM800m in the first quarter ended Sept 30, 2024 (1QFY2025) from RM589m a year ago, mainly on profit contributions from the UMW division and gain on disposal of Malaysia Vision Valley land. Quarterly revenue rose 31% to RM18.26bn from RM13.98bn. (The Edge)

Gaming-to-plantation conglomerate Genting Bhd’s (GENTING) net profit fell 57% year-on-year to RM223.8m in 3QFY2024 from RM520.52m as it was hit by higher property, plant and equipment write-off totalling RM207.3m, as opposed to RM1.3m last year. Quarterly revenue fell 11.2% to RM6.54bn from RM7.37bn due to declining contributions from its leisure and hospitality division. The latest quarterly revenue was its lowest since 1QFY2023, when it logged revenue of RM5.82bn. (The Edge)

Genting’s 49.3% subsidiary, Genting Malaysia Bhd's (GENM), however, reported a net profit of RM569.16m, representing a near six-year high and an over threefold jump from RM177.41m. This was due to it recognising net unrealised forex gains of RM601.8m on its US-dollar denominated borrowings, as opposed to a forex loss of RM1.7m previously. Revenue was up a marginal 1.45% to RM2.75bn from RM2.7bn, on higher revenue from its leisure and hospitality businesses in the UK and Egypt. (The Edge)

PPB Group Bhd's (PPB) net profit fell 44.1% to RM208.12m in 3QFY2024 from RM372.55m a year earlier, largely due to lower contribution from its 18.8%-owned associate Wilmar International Ltd, as well as lower profit from its core business segments. Quarterly revenue dropped 7.5% to RM1.35bn from RM1.46bn, mainly due to the absence of contribution from its Indonesian flour operations which was divested in September 2023. (The Edge)

After four consecutive quarters of losses, Capital A Bhd (CAPITALA) posted a record-high net profit of RM1.64bn for 3QFY2024, as opposed to a net loss of RM102.75m a year ago, as the group recognised RM2.27bn in foreign exchange gains compared with a forex loss of RM93.92m in last year’s corresponding quarter. The hefty forex gains were due to the weakening of the US dollar against local currencies of the markets where the group operates during the quarter. Its quarterly revenue grew by 16.6% to RM4.93bn from RM4.23bn. (The Edge)

Berjaya Corp Bhd (BJCORP) posted a net loss of RM167.85m for the three months ended Sept 30, 2024 (1QFY2025) against a net profit of RM111.08m a year ago, dragged by its retail and services businesses. Quarterly revenue dropped 13.3% to RM2.23bn from RM2.57bn. (The Edge)

Supermax Corp Bhd (SUPERMX) extended its streak of losses to seven quarters with a net loss of RM64.6m in the three months ended Sept 30, 2024 (1QFY2025), compared with RM2.05m a year ago as a surge in operating expenses sank the glovemaker into the red, compounded by currency losses. Operating expenses were 77% higher, while the company also booked unrealised foreign exchange losses totalling RM45.6m. Revenue, however, rose 26% to RM224.65m from RM177.96m as demand picked up. However, Supermax said the company is still fulfilling lowpriced contracts until the end of 2024 and flagged challenges ranging from emerging competitors in Vietnam due to an acute labour shortage in Malaysia. (The Edge)

Farm Fresh Bhd's (FFB) net profit more than doubled to RM26.18m in the second quarter ended Sept 30, 2024 (2QFY2025) from RM12.79m a year ago, on decreased dairy raw material costs. Revenue climbed 26% to RM249.16m from RM198.3m, attributable to quarterly contributions from Sin Wah, higher Horeca (hotels, restaurants and cafes) and commercial UHT sales, coupled with the positive impact of new product launches. It declared an interim dividend of one sen per share, payable on Dec 27. (The Edge)

Icon Offshore Bhd, (ICON), which has proposed a name change to Lianson Fleet Group Bhd, posted a threefold jump in net profit to RM19.43m in 3QFY2024 from RM6.21m a year ago, on higher daily charter rates. This is despite utilisation dropping to 78% versus 86% due to unplanned maintenance. Revenue increased 20.66% to RM70.58m from RM58.49m. Its orderbook stood at RM300.9m for its OSV segment as at end-Sept this year, with long-term contracts representing 92% of its orderbook. (The Edge)

Globetronics Technology Bhd (GTRONIC) is partnering Canada-headquartered POET Technologies Inc on advanced manufacturing and testing of optical engines, designed for applications such as data centres and telecommunications. POET is a Nasdaq-listed design and development company offering integration solutions for electronic and photonic devices into a single multi-chip module using advanced wafer-level semiconductor manufacturing techniques and packaging methods. Under the partnership, Globetronics will focus on the assembly, packaging and testing of optical engines. On the other hand, POET will provide proprietary designs, critical materials and technical specifications. (The Edge)

Source: Mplus Research - 29 Nov 2024