MY Morning Wrap | Optimism and concerns duel as Corporate Malaysia reports 2Q earnings
Good morning mooers! Here are things you need to know about today's market:
●U.S. stocks dipped after the July FOMC minutes showed Fed saw "significant" inflation risk
●Optimism and concerns duel as Corporate Malaysia reports 2Q earnings
●Quarterly GDP growth likely within market consensus
●Stocks to watch: Malaysia Airports , S P Setia
-moomoo News MY
Wall Street Summary
Stocks dipped, and government-bond yields reached a 15-year high after the July 26 Federal Reserve policy meeting minutes showed central bankers are divided on inflation control.
The $S&P 500 Index (.SPX.US)$ fell 0.8%. $Dow Jones Industrial Average (.DJI.US)$ dropped about 181 points, or 0.5%. The $Nasdaq Composite Index (.IXIC.US)$ fell 1.1%. All three indexes are down 2.2% or more so far in August.
The 10-year Treasury yield settled Wednesday at 4.258%, its highest close since June 2008, from 4.220% a day earlier.
Breaking News
Optimism and concerns duel as Corporate Malaysia reports 2Q earnings
Ahead of corporations announcing their second-quarter (2Q) earnings, analysts have mixed expectations, as some are optimistic about a steady performance, and others projecting continued weakness from the preceding quarter. Rakuten Trade Sdn Bhd head of research Kenny Yee expects 2Q earnings to be little different from the previous preceding quarter, as there were no significant changes within the current economic environment. “Usually, in 2Q, there will be not much excitement, and I think [2Q earnings] will be maintained [from the previous quarter]. Overall this year, we are still expecting some decent earnings growth for corporates,” Yee said. While 2Q earnings may provide some hints as to how corporates may perform in the second half of the year, analysts do not expect the impact on market sentiment to be as pronounced for the rest of the year.
Ahead of corporations announcing their second-quarter (2Q) earnings, analysts have mixed expectations, as some are optimistic about a steady performance, and others projecting continued weakness from the preceding quarter. Rakuten Trade Sdn Bhd head of research Kenny Yee expects 2Q earnings to be little different from the previous preceding quarter, as there were no significant changes within the current economic environment. “Usually, in 2Q, there will be not much excitement, and I think [2Q earnings] will be maintained [from the previous quarter]. Overall this year, we are still expecting some decent earnings growth for corporates,” Yee said. While 2Q earnings may provide some hints as to how corporates may perform in the second half of the year, analysts do not expect the impact on market sentiment to be as pronounced for the rest of the year.
Quarterly GDP growth likely within market consensus
Signs are pointing to a lower gross domestic product (GDP) number for the second quarter of this year (2Q23) but the economy is expected to be supported by domestic consumption, according to economists. The improvement in the labour market, as reflected by the decline in the unemployment rate to 3.4% in June from 3.6% in January, would also offer a substantial buffer to offset the cyclical weakness in external demand, they said. “We estimate economic growth to slow to 3% year-on-year (y-o-y) in 2Q23 from 5.6% in 1Q23 and 7.1% in 4Q22.““Economic data has been sending mixed signals throughout 2Q23, suggesting that the economy is on a slowing mode from the previous year which was buoyed by cash stimulus and the Covid-19 pandemic economic reopening effects,” he added. A Bloomberg poll of economists showed a median 2Q23 GDP growth forecast of 3.6%.
Stocks to Watch
$AIRPORT (5014.MY)$ : Malaysia Airports Holdings Bhd has terminated the RM742.95 million contract awarded to Pestech International Bhd to undertake the new automated people mover (APM) or aerotrain project at the Kuala Lumpur International Airport (KLIA). MAHB said its wholly-owned unit Malaysia Airports (Sepang) Sdn Bhd (MA Sepang) issued the notice of termination to Pestech International Bhd’s wholly-owned subsidiary Pestech Technology Sdn Bhd (PTSB). MAHB said the termination was due to PTSB’s non-performance, compromising significant project milestones and risking delays to deliver the project within the required deadline. Separately, Pestech said it will seek legal redress after being terminated as the contractor for the automated people mover project.
$SPSETIA-PA (8664PA.MY)$ : S P Setia Bhd's net profit declined 46% for the second quarter ended June 30, 2023 (2QFY2023) as increased finance costs and foreign exhange losses offset the group’s higher gross profit. The group said earnings fell to RM43.06 million or 1.06 sen per share in 2QFY2023, from RM80.09 million or 1.97 sen per share a year ago, as finance costs rose 57% to RM94.1 million from RM60.01 million over the same period.
Globally, the emphasis on and recognition of ESG (environmental, social and governance) factors have grown significantly in recent years, leading to increased demand for transparency on ESG by companies.
$SAM (9822.MY)$ :Sam Engineering & Equipment Bhd’s net profit fell 12.73% to RM20.53 million or 3.79 sen per share for the first quarter ended June 30, 2023 (1QFY2024), from RM23.53 million or 4.35 sen per share a year ago, as lower gross profit was further impacted by impairment losses as well as higher operating and finance costs. Revenue for the quarter also decreased by 13.02% to RM307.89 million, from RM353.97 million a year before, given the lower contribution from the equipment segment, dragged by lower sales and higher interest expense, but mitigated by an increase in revenue contribution from the aerospace segment amid an increase in sales and government grant received.
$VELESTO (5243.MY)$ : Velesto Energy Bhd’s units were awarded a US$6.1 million (RM28.3 million) contract for the group’s jack-up rig Velesto Naga 2 from Jadestone Energy (Malaysia) Pte Ltd, and another on-demand job to provide a hydraulic workover unit (HWU) for ExxonMobil Exploration and Production Malaysia Inc.
$MHB (5186.MY)$ : Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) registered a net loss of RM388.7 million for 2QFY2023, versus a net profit of RM21.97 million a year earlier, dragged by the group’s additional cost provisions for ongoing projects. MHB, which is controlled by Petroliam Nasional Bhd (Petronas), however, saw its revenue jump over two times to RM1.06 billion from RM400.63 million a year ago, mainly due to higher revenue from the heavy engineering segment.
$SEG (9792.MY)$ : SEG International Bhd’s (SEGi) net profit tumbled 80% to RM2.39 million for 2QFY2023 from RM11.94 million a year ago, as higher expenses and finance costs further impacted lower gross profit. Quarterly revenue fell 11.08% to RM47.49 million from RM53.41 million from the year-ago period. It said the decline in revenue and profits were mainly due to the large graduating batches of postgraduate foreign students enrolled with SEGi institutions in the previous financial years.
$AWANTEC (5204.MY)$ : AwanBiru Technology Bhd (Awantec) said Bursa Securities has rejected the company’s application for a further extension of time to submit its regularisation plan to the relevant authorities. The rejection was because the company has not demonstrated to the satisfaction of Bursa Securities any material development towards the finalisation and submission of the regularisation plan, said the ICT software service provider. Awantec (formerly known as Prestariang Bhd) was required to submit a regularisation plan after being classified as an affected listed issuer in January 2021, following the termination of the membership of its wholly-owned unit Prestariang Systems Sdn Bhd in the Microsoft Partner Network by Microsoft.
$PWF (7134.MY)$ : PWF Corp Bhd, whose share price has risen by 69% over the past one year, has proposed a bonus issue of up to 74.46 million shares on the basis of one bonus share for every three existing shares. The entitlement date for the bonus issue will be determined later, said the Penang-based poultry player. For illustration purposes, based on the five-day volume weighted average market price of PWF Corp shares up to the latest practicable date of 74.09 sen, the theoretical ex-bonus share price will be approximately 55.57 sen.
$SENDAI (5205.MY)$ : Eversendai Corp Bhd said it had secured RM188 million worth of projects in Saudi Arabia and India for structural steel works. The company, however, did not reveal the parties that awarded these jobs to it.
$SEACERA (7073.MY)$ : Seacera Group Bhd will no longer be a Practice Note 17 (PN17) company from Thursday (Aug 17). Seacera said the uplifting of the PN17 status came after the bourse regulator, in a letter on Wednesday (Aug 16), granted the group a waiver from having to submit a regularisation plan. The group had applied for the upliftment in April. Seacera, which is principally engaged in the manufacturing and trading of ceramic tiles, fell into PN17 status in April 2019 after it defaulted on a payment of principal and profits to AmBank Islamic Bhd. The group’s total facilities outstanding with AmBank were RM22.15 million at the time.
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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