MY Morning Wrap | Tenaga Nasional Warns of Capacity Revenue Loss, Analysts Moderate Earnings Growth Forecasts

Moomoo News MY wrote a column · Mar 4 18:38

Good morning mooers! Here are things you need to know about today's market:

●US Stocks Slightly Lower as Investors Await Powell Testimony and Jobs Data

●Fewer Positive Earnings Surprises on Malaysia's Stock Exchange in Q4 2023

●One-Third of FBM KLCI Companies Miss Market Predictions as Malaysia's 2024 Earnings Growth Lags Behind Neighboring Countries

●Stocks to watch: TNB, Deleum

-moomoo News MY

MY Morning Wrap | Tenaga Nasional Warns of Capacity Revenue Loss, Analysts Moderate Earnings Growth Forecasts

Wall Street Summary

US stocks were slightly lower on Monday, following back-to-back all-time closing highs for the S&P 500 and Nasdaq, as investors awaited a busy week that features congressional testimony by Federal Reserve Chair Jerome Powell and all-important jobs data. The $Dow Jones Industrial Average(.DJI.US)$ fell 121 points, or 0.25%, while the $S&P 500 Index(.SPX.US)$ was down 5 points, or 0.12%. The $Nasdaq Composite Index(.IXIC.US)$ lost 0.41%, to trade at 16,207.

Breaking News

Fewer Positive Earnings Surprises on Malaysia's Stock Exchange in Q4 2023

According to a report by Kenanga Research, the FTSE Bursa Malaysia KLCI (FBM KLCI) component stocks reported fewer positive earnings surprises in Q4 2023 compared to three months ago due to a slowdown in consumer demand both locally and globally, as well as prolonged geopolitical tensions in the Middle East. However, it noted that the easing in operating costs and improved pricing power buoyed earnings of oil and gas support services providers, while technology players guided for an upbeat outlook for Q1 2024. Kenanga Research projected FBM KLCI earnings to grow at 16.3% in 2024, before moderating to 6.2% in 2025, and maintained its end-2024 FBM KLCI target of 1,605 points based on an unchanged 15x 2024 PER.

One-Third of FBM KLCI Companies Miss Market Predictions as Malaysia's 2024 Earnings Growth Lags Behind Neighboring Countries

Malaysia's recent fourth-quarter earnings season saw a "wide breadth of disappointments," as one-third of FBM KLCI companies missed market predictions, prompting some analysts to trim their 2024 forecasts. Despite the tweaks, at least five brokerages anticipate this year's corporate earnings to jump by mid to high-teens. However, AmInvestment Bank Research noted that Bloomberg's consensus 2024 FBM KLCI earnings growth is only 3.7% currently, dwarfed by neighbouring countries such as Indonesia, Vietnam, the Philippines, and Thailand. Meanwhile, UOB Kay Hian Research forecast a growth of 11.4% in 2024 for the FBM KLCI's earnings, while Kenanga Research raised its FBM KLCI earnings growth forecast for 2024 to 16.3% from 14.4%.

Stocks to Watch

$TENAGA(5347.MY)$: Tenaga Nasional Bhd (TNB) has warned that the prolonged outage of its Manjung 4 power plant may lead to capacity revenue loss of RM400 million ($95.6 million) this year, which has prompted analysts to moderate their earnings growth forecasts. In addition, its power generation unit may experience reduction in the capacity rate financing (CFR) for some of its other power plants leading to lower revenue, Tenaga told analysts at its earnings briefing.

$DELEUM(5132.MY)$: Deleum Bhd is seeking to acquire a 70% stake in valves company OSA Industries Indonesia (OSAII) for $7 million to strengthen its power and machinery business in Indonesia. The acquisition by its unit Deleum Services Sdn Bhd represents 70% of OSAII's total valuation of $10 million, subject to due diligence and finalization of definitive agreements. Deleum has entered into a heads of agreement with five parties, including OSAII and its shareholders Ong Siow Aik and OSA Industries Pte Ltd, to undertake due diligence on the acquisition target.

$GESHEN(7197.MY)$: Ge-Shen Corp Bhd, whose share price has surged 144% year-to-date, has proposed to acquire a 40% stake in electronics manufacturing services (EMS) firm Local Assembly Sdn Bhd for RM48 million in cash. The deal will be partially funded through proceeds from a private placement exercise. Ge-Shen plans to raise RM91.2 million through a private placement of 39.48 million placement shares or 30% of its enlarged share base to independent investors, to fund the acquisition.

$ECOFIRS(3557.MY)$: EcoFirst Consolidated Bhd has proposed to sell a piece of vacant land in Shah Alam to HCK Capital Group Bhd for RM34 million in cash, despite incurring a loss. The company said the proposed disposal would release the burden of monthly loan instalments of about RM1.35 million to its financier. The sale, although at a loss, "would be a great stress relief to the group's cash flow as compared to retaining the land for a potential loss-making development," it added. As of November 30, 2023, EcoFirst had total borrowings of RM268.54 million, while its cash and bank balances totalled RM9.52 million.

$HCK(7105.MY)$: EcoFirst Consolidated Bhd has proposed to sell a piece of vacant land in Shah Alam to HCK Capital Group Bhd for RM34 million in cash, despite incurring a loss. The company said the proposed disposal would release the burden of monthly loan instalments of about RM1.35 million to its financier. The sale, although at a loss, "would be a great stress relief to the group's cash flow as compared to retaining the land for a potential loss-making development," it added. As of November 30, 2023, EcoFirst had total borrowings of RM268.54 million, while its cash and bank balances totalled RM9.52 million.

$MASTEEL(5098.MY)$: Malaysia Steel Works (KL) Bhd (Masteel) has appointed Johor Corp Bhd (JCorp) president and CEO Datuk Syed Mohamed Syed Ibrahim as its independent and non-executive chairman. Syed Mohamed, 65, replaces Datuk Ikhwan Salim Sujak, 67, who retired at the end of his one-year term on Feb 28.

$SMRT(0117.MY)$: SMRT Holdings Bhd, listed on the ACE Market, has been awarded a project by Pito AxM Platform (PAPI) to deploy its managed ATM infrastructure solutions in the Philippines through its wholly-owned subsidiary N'osairis Technology Solutions Inc (NTSI). The value of the project was not disclosed, but it will take place over three years, with NTSI deploying its solutions at the designated ATM sites by the end of 2024.

$NYLEX(4944.MY)$: Bursa Malaysia Securities Bhd has granted Nylex Malaysia Bhd another six-month extension to address its Practice Note 17 (PN17) status after it failed to submit its regularisation plan, which led to the suspension of its shares on Feb 7. Nylex said the regularisation submission deadline has been pushed to July 26, after it missed its Jan 26 deadline. Despite granting the extension, Bursa Securities dismissed the company's appeal against the suspension of its shares.

Source: Dow Jones Newswires, Bursa Malaysia, The Malaysian Reserve, The Star, The EDGE

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