MY Morning Wrap | Sunway REIT's 4QFY2023 NPI Drops 7.2% Due to Higher Doubtful Debt Provision and Increased ICPT Electricity Charges
Good morning mooers! Here are things you need to know about today's market:
●U.S. Stocks Dip Slightly as Investors Weigh Strong Economic Data and Corporate Earnings Against Fed Rate Cut Expectations
●Inflation to Remain Consumers' Top Concern in 2024, Capping Headroom for Gross Profit Margins to Expand
●Malaysia Has Clearest Net-Zero Path Among ASEAN Peers, Says Report
●Stocks to watch: Sunway REIT, SCIB
-moomoo News MY
Wall Street Summary
U.S. stocks were slightly lower on Tuesday as investors weighed strong economic data and corporate earnings against expectations of Federal Reserve rate cuts. The $S&P 500 Index(.SPX.US$ dipped just 0.06% to 4,924, while the $Dow Jones Industrial Average(.DJI.US$ rose 0.35% to 38,296, and the $Nasdaq Composite Index(.IXIC.US$ eased 64 points, or 0.4%, to 15,563. The overall move was a holding pattern ahead of another Federal Reserve announcement on interest rates. Earnings from Alphabet, Microsoft, and AMD came in shortly after the market closed and froze markets solid. Despite the Dow and S&P scoring their sixth record close this year on Monday, investors have a new raft of economic data and corporate earnings to trade on.
Breaking News
Inflation to Remain Consumers' Top Concern in 2024, Capping Headroom for Gross Profit Margins to Expand
Inflation will remain consumers' top concern in 2024, according to RHB Research, especially with the ongoing subsidy rationalisation measures and consumption taxes. Pending more clarity on the impact of subsidy rationalisation, investor sentiment on the consumer sector would remain muted, and RHB Research expects modest 2024 private-consumption growth of 3.3% YoY and a pick-up in inflation to 3.3%. Lacklustre sales volume growth is expected for most of the consumer companies under its coverage, and gross profit margins will have limited headroom to expand.
However, RHB Research believes that consumer spending will be supported by the stable employment market and continued government assistance given to the lower-income groups. While the current valuations of stocks have largely priced in the downside risks, RHB Research's base case does not assume that subsidy rationalisation will significantly dampen consumer spending. A targeted subsidy-rationalisation approach could benefit players like $NESTLE(4707.MY$, $MRDIY(5296.MY$, Farm Fresh Bhd, and Padini Holdings Bhd. RHB Research continues to like MR DIY for its value-for-money product offerings and sticky demand, DXN Holdings Bhd for its attractive valuation and exciting growth prospects, and both breweries for their undemanding valuations and circa 6% dividend yields, backed by the relatively inelastic demand for their products.
Malaysia Has Clearest Net-Zero Path Among ASEAN Peers, Says Report
Malaysia has the clearest net-zero path among its ASEAN peers, according to a report. Only Thailand and Indonesia have set goals to achieve carbon neutrality by 2050 and 2060, respectively, while most ASEAN countries have outlined a commitment to sustainable development and reducing greenhouse gas emissions. Malaysia's decision to abstain from constructing new coal power plants and accelerating the retirement of existing coal capacity aligns with global trends. The recently introduced National Energy Transition Roadmap (NETR) sets the framework for a higher degree of renewable energy investments, which would position Malaysia as a regional leader in green manufacturing within ASEAN. The report suggests that adherence to global standards such as the UNPRI or the SDGs would make Malaysia more attractive to investors seeking compliance with such investment practices, which have grown dramatically in recent years.
Stocks to Watch
$SUNREIT(5176.MY$: Sunway REIT's net property income (NPI) for the fourth quarter ended Dec 31, 2023 (4QFY2023) decreased by 7.2% to RM135.7 million from RM146.2 million a year earlier, primarily due to higher reversal of doubtful debt provision and the impact of increased Imbalance Cost Pass-Through (ICPT) electricity charges across all segments. However, revenue for the quarter increased by 2% to RM190.5 million from RM186.7 million, driven by the retail and hotel segments, buoyed by strong retail footfall, healthy retail sales, and higher tourist arrivals during festive seasons and school holidays. Sunway REIT declared a final income distribution of 4.68 sen per unit to be paid on Feb 29, bringing its total distribution per unit (DPU) for FY2023 to 9.3 sen.
$SCIB(9237.MY$: Sarawak Consolidated Industries Bhd (SCIB) considers the RM21.62 million cash it plans to spend on five leasehold plots in Demak Laut Industrial Park in Kuching, Sarawak, as "fair and reasonable" based on the prices of comparable properties in the same location. However, it has no authority to respond on behalf of the department and the Sarawak state government regarding exempting the company from paying the fourth and fifth instalment payments for the land, which amounts to RM7.44 million or 34.4% of the total price tag, if the factory is completed within three years.
$IGBREIT(5227.MY$: IGB Real Estate Investment Trust's (IGB REIT) net property income (NPI) for the fourth quarter ended Dec 31, 2023 (4QFY2023) increased by 9.08% to RM115.24 million from RM105.64 million a year earlier, while revenue increased by 6.6% to RM158.47 million from RM148.71 million, thanks to higher rental income. Its sister company, IGB Commercial REIT, recorded an NPI of RM32.86 million for 4QFY2023, a 20.51% increase from the RM27.27 million recorded a year earlier, as revenue increased by 15.13% to RM56.92 million from RM49.44 million, driven by a higher average occupancy rate of properties. IGB REIT declared an income distribution per unit (DPU) of 2.7 sen, raising its total DPU for FY2023 to 10.47 sen, higher than the 9.86 sen declared for FY2022. IGB Commercial REIT announced an income DPU of 1.75 sen, bringing its total income distribution for FY2023 to 3.49 sen, slightly higher than the 3.42 sen declared for FY2022.
$CLMT(5180.MY$: CapitaLand Malaysia Trust (CLMT) reported a 54.4% increase in its net property income (NPI) for the fourth quarter ended Dec 31, 2023 (4QFY2023) to RM63.02 million from RM40.8 million a year ago, as revenue rose by 57.5% to RM108.51 million from RM68.9 million. It also announced a distribution per unit (DPU) of 2.24 sen for the July 1, 2023 to Dec 31, 2023 period, payable by March 2024, raising its total DPU for FY2023 to 4.17 sen, up from FY2022's 4.01 sen. Its NPI for FY2023 increased by 42.6% to RM217.4 million from FY2022's RM152.5 million, while annual gross revenue rose 43.4% to RM395.4 million from RM275.82 million a year earlier.
$UZMA(7250.MY$: Malaysian Energy Chemical & Services Sdn Bhd, a 70%-owned subsidiary of Uzma Bhd, has secured a contract from Hibiscus Oil & Gas Malaysia Ltd for the supply of chemicals and related services to the PM3 offshore fields in the Northeast Malay Basin, offshore Malaysia and Vietnam. The contract will be valid for a five-year period from Nov 16, 2023, to Nov 15, 2028, and involves the supply of integrated production, integrity, and water injection chemical and associated services. The value of the contract will be based on work orders issued by the client.
$MFLOUR(3662.MY$: The largest shareholders of Malayan Flour Mills Bhd (MFM) have increased their stakes in the company due to the mandatory conversion of redeemable convertible unsecured loan stocks (RCULS). MFM's executive deputy chairman cum managing director, Teh Wee Chye, converted a total of 98.57 million units of five-year 5% RCULS 2019/2024 into ordinary shares at a price of five sen apiece, amounting to RM49.28 million. This conversion raised Teh's stake in MFM to 23.11%. Datin Seri Azlin Arshad, the group's second-largest shareholder, also converted 24.87 million loan stocks at a total exercise price of RM12.43 million, increasing her stake in the company to 7.96%.
$SAMAIDEN(0223.MY$: Samaiden Group Bhd has obtained approval to construct and operate a seven-megawatt biomass power plant in Tangkak, Johor, with a net export capacity of six megawatts to be supplied to Tenaga Nasional Bhd (TNB). The approval follows the issuance of a Feed-in Tariff approval certificate to Samaiden Biomass Energy Sdn Bhd, the group's indirect wholly-owned subsidiary, by the Sustainable Energy Development Authority Malaysia in a letter dated Jan 22, 2024. The agreement to supply electricity to TNB will last for 21 years and is set to begin on Jan 22, 2027.
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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