Market Review

The FBMKLCI rallied +0.7% yesterday and reached its highest level in three years, with 20 out of the 30 index constituents posting gains. One of the reasons behind the rally could be due to Malaysia's 1Q GDP growth of 4.2%, which exceeds consensus estimates. Among the top gainers in the constituents are Press Metal (+3.7%), Axiata (+2.1%), and TNB (+1.4%). Across the broader market, all sectors saw positive gains with construction (+2.5%), telecommunications & media (+1.5%) and industrial products & services (+1.5%) leading the charge. Market sentiment remained upbeat, reflected by 840 gainers surpassing 460 losers.

Economics

Malaysia: Air passenger traffic up 19.5% y-o-y, increasing to 7.9m in April 2024

Malaysia's air passenger traffic rose 19.5% year-on-year to 7.9m in April 2024, and 8% month-on-month from March 2024, driven by domestic travel during the Hari Raya Aidilfitri period. Domestic traffic accounted for 49.8% of April's total, while international traffic saw a 1.9% month-on-month increase. Cumulative air passenger traffic from January to April 2024 reached 30.5m, up 17% from the same period in 2023, with international traffic growing by 39.4% to 15.8m passengers. MAVCOM anticipates further acceleration in international travel due to visa exemptions for tourists from China and India. (Bernama)

Malaysia: Trade up 12.1% to RM221.7bn, exports rebound 9.1% to RM114.7bn in April

In April 2024, Malaysia's trade surged by 12.1% year-on-year to RM221.7bn, marking the fourth consecutive month of growth. Exports rebounded by 9.1% to RM114.7bn, driven by increased exports of machinery, chemicals, crude petroleum, palm oil products, and iron and steel. Imports rose by 15.6% to RM107.0bn, mainly due to strong imports of intermediate goods for manufacturing. The first four months of 2024 saw record-high trade values, with a trade surplus of RM41.8bn, although April's figures were lower compared to March 2024 due to reduced trade with key partners. Exports to free trade agreement partners increased by 4.4% to RM78.0bn. (Bernama)

China’s: Banks keep lending rate unchanged after PBOC hold

Chinese banks maintained their benchmark lending rates unchanged following the central bank's decision to hold key loan rates. Despite a robust industrial sector, China's economic recovery faces challenges from weak domestic demand, especially amidst a persistent property downturn. The People's Bank of China's decision to roll over maturing loans without rate cuts indicates support for economic recovery without yuan pressure, with potential future measures including rate cuts or cash injections to stimulate demand and aid fiscal support. Recent measures also include special sovereign bond sales and policies to support the property sector by providing cheap funding for state-owned companies and easing mortgage requirements. (Bloomberg)

China’s: EV Makers taking longer to pay bills amid rising stress

Chinese electric car makers like Nio Inc. and Xpeng Inc. are facing prolonged payment cycles to suppliers, indicating heightened stress in China's competitive auto market. While Tesla Inc. maintains a stable payment period of around 101 days, smaller EV manufacturers are struggling due to sluggish economic growth, subdued consumer sentiment, and intense price competition since the phase-out of national EV subsidies in 2022. Delayed payments are affecting auto-parts suppliers, potentially leading to a messy consolidation in the EV sector as suppliers face bankruptcy and production issues for automakers downstream. (Bloomberg)

Companies

Automotive: Malaysia's new vehicle sales up 21% in April - MAA

Malaysia's vehicle sales surged 21% in April 2024 to 57,991 units compared to the previous year, despite an 18% drop from March 2024 due to the Hari Raya holidays. Passenger vehicle sales rose 25% year-on- year, while commercial vehicle sales fell 9%. Total sales for the first four months of 2024 increased by 8% to 260,236 units. Production in April 2024 increased by 38% year-on-year, with a total of 56,895 vehicles produced. (The Star)

SunCon (5309): Secures RM1.72bn in new orders for 1Q24

In the first quarter of FY24, Sunway Construction Group Bhd (SunCon) secured RM1.7bn in new orders, over half of its annual target. The company made significant strides in data center projects with RM808m in contracts and plans to expand in advanced technology facilities and regional markets. (The Star)

Teladan (4847): To launch projects with RM1.2bn GDV

Teladan Group Bhd plans to launch properties with a total gross development value (GDV) of RM1.2bn in FY24, including its first project in the Klang Valley and other projects in Melaka. In Q1 2024, Teladan achieved property sales of RM75.7m and launched developments worth RM47.6m in GDV. (The Star)

KAB (0270): To expand its energy solutions and customer base

Kinergy Advancement Bhd (KAB) plans to expand its energy solutions and customer base, focusing on replenishing its order book and exploring opportunities in neighboring ASEAN countries. In Q1 2024, KAB's net profit doubled to RM5.0m, driven by the strong performance of its sustainable energy segment (SES), which generated revenue of RM19.9m. (The Star)

Sunview (0262): Partners with Yashil Energiya to explore RE business in Uzbekistan

Sunview Group Bhd has partnered with Uzbekistan-based Yashil Energiya to explore renewable energy opportunities in Uzbekistan. Under the agreement, Sunview's subsidiary, Fabulous Sunview Sdn Bhd, will invest in and manage engineering, procurement, construction, and commissioning for renewable energy projects, while Yashil Energiya will purchase the generated electricity. This partnership supports Uzbekistan's goal to produce 40% of its electricity from renewable sources by 2030 and marks a significant step in Sunview's global expansion. (The Edge)

MAHB‘s (5014): Passenger traffic hit 11m in April, 7.6% higher month-on-month

In April 2024, Malaysia Airports Holdings Bhd (MAHB) saw a 7.6% increase in passenger traffic, reaching 11m passengers compared to 10.2m in March. Domestic travel surged by 15% during the Aidilfitri and school holiday period, with over 3.7m domestic travelers recorded. Key airports like Kuala Lumpur International Airport (KUL) led with a 20% increase in passengers, while Penang and Langkawi airports also saw significant rises. International traffic remained steady at 3.9m passengers, accounting for 51% of total traffic. Istanbul Sabiha Gökçen International Airport reported 3.4m passengers, driven by a 21% rise in domestic travel. (The Edge)

Source: Mercury Securities Research - 21 May 2024