MY Morning Wrap | KWAP Grows Fund Size to RM185bil, Targets RM200bil

Economic concerns weighed on stocks Tuesday, with major indexes wavering between small gains and losses for much of the day before finishing in the red. The $S&P 500 Index (.SPX.US)$ slipped by 0.4%, while the tech-heavy $Nasdaq Composite Index (.IXIC.US)$ edged 0.1% lower. The $Dow Jones Industrial Average (.DJI.US)$ fell by 0.6%, or about 196 points.

$TENAGA (5347.MY)$ : Tenaga Nasional Bhd's (TNB) earnings recovery remains intact despite its sluggish performance in the first half of 2023 (1H23). In tandem with economic recovery, as well as the increasing number of new data centres in Malaysia, the utility giant expects demand for electricity to grow over the immediate term. In addition, the stabilisation of coal prices is expected to alleviate its cost pressures. This optimism was conveyed to analysts at a recent briefing following the release of TNB’s financial results for the second quarter ended June 30, 2023 (2Q23).

$PPB (4065.MY)$ : PPB Group Bhd is cautious of potential renewal of geopolitical tension between Ukraine and Russia, along with unpredictable weather conditions that could choke grain and exert an impact on the performance of the group’s grains and agribusiness segment for the rest of the year. PBB’s managing director Lim Soon Huat emphasised that potential supply risks on the downside could increase cost pressures in procuring raw materials for the group.

$AIRPORT (5014.MY)$ : Malaysia Airports Holdings Bhd (MAHB) is expected to have a resilient and positive outlook based on the anticipated recovery of tourists from China and Turkiye, says RHB Research. In a note, the research house said it will continue to favour MAHB because of this, as China’s outbound numbers are showing good recovery signs. “Data has revealed China's international airlines have resumed their capacity at a steady pace. As of June 2023, the Malaysia-China capacity and passenger movements have recovered to 57% and 40% of pre-Covid-19 levels, respectively, marking significant improvements since the tourist giant reopened its borders,” it said.

$HARTA (5168.MY)$ : Hartalega Holdings Bhd said global demand for rubber gloves may only recover in the second half of next year at the earliest, which is still bracing for industry-wide headwinds caused by an acute oversupply. Hartalega CEO Kuan Mun Leong said utilisation rate of its production lines is currently hovering between the 40% and 50% level, given market demand for gloves remains “depressed”. With margin compression due to low average selling prices and utilisation rate, the group, which suffered a net loss for three consecutive quarters, does not expect a turnaround in its financial year ending March 31, 2024.

$DAYANG (5141.MY)$ : Dayang Enterprise Holdings Bhd's wholly-owned unit Dayang Enterprise Sdn Bhd has received a one-year and four-month extension to the company’s topside major maintenance services contract from Sarawak Shell Bhd and Sabah Shell Petroleum Co Ltd. The contract’s new extended period runs from Aug 20, 2023, until Dec 31, 2024. Dayang Enterprise did not place a value on the extension as it noted that it will be based on work orders issued by Sarawak Shell and Sabah Shell throughout the extended period.

$HEXIND (0161.MY)$ : Hextar Industries Bhd is to acquire a 100% equity interest in office supplies firm Pacific Office (M) Sdn Bhd for RM16.5 million. According to Hextar Industries managing director Benny Ang, Pacific Office has a database of more than 3,500 active customers, making it rich in business information for the group to tap into and to leverage on to move further ahead in the market. The deal is expected to be completed in the fourth quarter of this year.

$MAYBULK (5077.MY)$ : Malaysian Bulk Carriers Bhd (Maybulk) is to sell its Alam Kekal bulk carrier to Japan-based speciality financing services provider and equipment leasing group Tokyo Century Corp, for ¥4.43 billion (RM140.06 million). The price tag was derived based on the vessels' RM140.02 million market value as appraised by an independent valuer, as well as a RM112.22 million net book value as at end-December 2022. Maybulk expects a pro-forma net gain of RM23.6 million from the disposal.

$LIONIND (4235.MY)$ : Bursa Securities quizzed Lion Industries Corp Bhd on the group's proposed RM92.03 million land disposal, including the reason for its estimated expenses for the disposal at RM22.23 million (24% of the proceeds), and how Lion Industries arrived at its disposal consideration of the two parcels of land, measuring 26.787 acres in Kawasan Perindustrian Olak Lempit, Banting. Lion replied that no independent adviser had been appointed, but noted that the RM92.03 consideration takes into consideration the holding cost for these two pieces of land. Meanwhile, it noted that the RM22.23 million expenses arising from the disposal comprise the estimated expenses consisting professional fees, fees payable in relation to the subdivision of the lands, real property gains tax and estimated advances charges.