MY Morning Wrap | Latest Tax Reforms in Malaysia to Boost Innovation, Local Industries and Advanced Technology: BMI
Good morning mooers! Here are things you need to know about today's market:
●Nasdaq, S&P buoyed by Nvidia; Dow slips
●High expectations for corporate earnings
●Third-party access a win for energy sector
●Tax reforms help stimulate innovation, advanced technologies
●Stocks to watch: UEMS, DIALOG
-moomoo News MY
Wall Street Summary
US stocks were mixed, with the $Dow Jones Industrial Average(.DJI.US$ weighed down by weak manufacturing data, while the $S&P 500 Index(.SPX.US$ and $Nasdaq Composite Index(.IXIC.US$ got a boost from gains in $NVIDIA(NVDA.US$.
The $S&P 500 Index(.SPX.US$ added 0.1% to 5,283.40, while the tech-heavy $Nasdaq Composite Index(.IXIC.US$ gained 0.6% to 16,828.67. The $Dow Jones Industrial Average(.DJI.US$ slipped 0.3% to 38571.03
Breaking News
High expectations for corporate earnings
Corporate Malaysia experienced a mixed bag of results in the first quarter of 2024 (1Q24), prompting investors to sell off local shares and causing the FBM KLCI to drop below 1,600 points. As the final wave of corporate earnings reports came in and investors engaged in profit-taking, the benchmark index of Bursa Malaysia fell by 1.4% to 1,596.68 points in the last week of May. This downturn in the indice may be attributed to the fact that the first-quarter earnings season fell short of investors' high earnings expectations. Particularly, foreign investors turned net sellers for six consecutive days leading up to May 31, reflecting the subdued market sentiment. According to Kevin Khaw Khai Sheng, a research analyst at iFAST Capital, the FBM KLCI's aggregate earnings were 7.5% lower than the analysts' forecast compiled by Bloomberg.
Third-party access a win for energy sector
Affin Hwang Investment Bank Research (Affin Hwang) is optimistic about the upcoming implementation of third-party access (TPA) in Malaysia's electricity supply industry. However, Affin Hwang believes that the success of TPA hinges on factors such as wheeling charges and battery energy storage requirements. The Malaysian government plans to introduce TPA in September, enabling independent power producers (IPPs) to directly sell electricity to consumers, bypassing the need to purchase from Tenaga Nasional Bhd (TNB), the primary electricity utility in the country. However, IPPs will still need to rely on TNB's transmission lines. Affin Hwang emphasizes that the TPA will provide a new avenue for growth for IPPs and solar companies in Malaysia. It also notes that the TPA offers flexibility for these companies to seek higher returns and increase their generation capacity.
Tax reforms help stimulate innovation, advanced technologies
The tax reforms introduced in Malaysia's Budget 2024, aimed at stimulating domestic startups, clean energy investment, and modernizing tax administration, are expected to benefit innovative startup businesses, the green technology sector, and service-oriented companies. According to BMI, a Fitch solutions company, the budget's extensive tax reforms are designed to boost local industries and direct investment towards critical sectors such as advanced manufacturing. The initiatives include the reinvestment allowance (RA), tax incentives for electric vehicles (EVs), and the global services hub tax incentive.
Stocks to Watch
$MFCB(3069.MY$: Mega First Corp Bhd's 91.25%-owned Dons Sahong hydropower plant in Laos is expected to report better earnings in the upcoming quarters, driven by higher water levels, according to AmInvestment Bank Research (AmResearch). This improvement is further supported by the absence of maintenance expenses and the commissioning of the fifth turbine in the third quarter of 2024. AmResearch notes that following an engagement with Mega First, the equivalent availability factor (EAF) is currently at 92%, up from 79.3% in 1Q24. The EAF is expected to reach 100% before the end of June, according to the research firm.
$UEMS(5148.MY$: UEM Sunrise Bhd has formed a partnership with Logos Infrastructure Holdco Pte Ltd to investigate the possibility of creating a data center campus in Gerbang Nusajaya, Johor. The campus will be situated on a 74-acre site and will have the potential to generate up to 360MW of power.
$DIALOG(7277.MY$: Maybank Investment Bank (Maybank IB) Research predicts that Dialog Group Bhd's profit in financial year 2025 (FY25) will surpass the levels seen in FY20. The research firm has raised its net profit forecasts for FY25 and FY26 by 20% and 19%, respectively, to account for higher downstream segment revenue and profitability margins. Maybank IB Research has pointed out several positive indicators that will contribute to the expected profit increase. For example, Dialog's downstream operations are expected to be profitable starting from FY25. Additionally, the group has seen improvements in joint venture and associate contributions, with a projected heightened quarterly core net profit base of RM180mil to RM200mil in FY25.
$TEXCYCL(0089.MY$: Tex Cycle Technology (M) Bhd intends to raise as much as RM32.0mn through a private placement to finance the construction of an integrated scheduled waste management facility in Sabah.
$NESTLE(4707.MY$: Nestlé (Malaysia) Bhd has successfully planted 2.8 million trees through its Project RELeaf and the previously accomplished Project RiLeaf.
$SKPRES(7155.MY$: SKP Resources Bhd has reported a 53.0% year-on-year increase in its Q4 FY24 net profit to RM24.7mn, attributed to cost control measures and improved manufacturing operations.
$EKOVEST(8877.MY$: Ekovest Bhd has reported a 42.7% year-on-year decrease in its net profit for the third quarter of the financial year 2024 to RM11.1mn, despite still facing high finance costs.
Source: Dow Jones Newswires, Bursa Malaysia, The Malaysian Reserve, The Star, The EDGE
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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