Capital markets executive summary | Fri 12 May 2023

Capital markets executive summary | Fri 12 May 2023

Mr DIY 1Q net profit jumps 27.13%

The figure increased from RM100.5m in 1Q2022 to RM127.77m in 1Q2023 due to lower freight costs. Revenue was up by 15.6% from RM905.16m to RM1.05b due to same-store sales growth and contribution from new stores. Malaysia contributed RM1.04b in revenue while Brunei accounted for RM11m. The company added 18.8% more stores to 1,125 leading to an 18.1% increase in transaction volume to 32.8m. It plans to add 180 new stores in 2023. The price adjustment exercise in 3Q2022 helped lift gross profit by 30.6% to RM463.3m with a profit margin of 44.3% or 5.1 percentage points higher. Earnings per share increased from 1.07 sen to 1.35 sen. The company announced a 1st interim dividend of 0.6 sen to be paid on 23 Jun. The counter closed at RM1.59.

Yinson’s Anna Nery FPSO achieves first oil

Yinson and Sumitomo had in Apr 2018 signed a memorandum of understanding to jointly pursue and collaborate in floating production storage offloading (FPSO) and floating storage offloading (FSO) projects worldwide. In Oct 2019, Petroleo Brasileiro SA (Petrobras) awarded the project to Yinson Production with Sumitomo having a 25% interest in the project. The FPSO vessel operates in the Marlim field in the eastern part of the Campos Basin, about 150km offshore Rio de Janeiro, Brazil. The success after 72 hours of testing marks the commencement of the FPSO’s 25-year charter until 2048. The counter closed at RM2.56.

Greatech Technology 1Q net profit fell 3.71%

The figure declined from RM28.93m or 2.31 sen per share in 1Q2022 to RM27.86m or 2.22 sen. The company blamed higher net foreign exchange loss of RM5.39m, net loss on impairment of contract assets and trade receivables of RM2.02m and larger employees’ compensation and long-term incentive plan expense of RM3.03m. However, revenue climbed 11.28% from RM102.16m to RM113.68m contributed by execution of eletromobility projects. Quarter-on-quarter, net profit plunged 24.35% from RM36.82m whereas revenue had a steeper fall of 32.76% from RM169.11m due to lower revenue from production line systems. The on-going projects have yet to hit the contracted billing milestones for revenue recognition in 1Q2023. The company’s growth outlook is supported by increased demand for renewable and clean energy, fleet vehicle decarbonisation and sustainability-related solutions. The company has allocated RM227m capital expenditure including for a new 4th factory in Batu Kawan Industrial Park with built-up space of 600k square feet. Its RM650m order book should last until 1H2024. The counter closed at RM4.23.

Malaysia’s total jobs rise 2.7%

The economy added 233,700 new jobs from 8.57m in 1Q2022 to 8.81m in 1Q2023. All economic sectors grew with manufacturing at the top with +3.8%, mining and quarrying +3.4% and agriculture +2.9%. Of the figure, filled jobs were also up 2.7% from 8.39m to 8.61m. The Department of Statistics said it was likely due to the easing of foreign workers hiring rules. Services had the most filled jobs while manufacturing and construction lagged. The semi-skilled category contributed the most to filled jobs with 5.39m or 62.6%, followed by skilled 2.15m or 24.9% and low skilled 1.08m or 12.5%. Job vacancies increased by 4.5% to 192,600 with manufacturing accounting for 55.9%, agriculture 16.5% and services 15.3%. In spite of worries about a global economic slowdown, Malaysian industries have continued to grow leading to more job opportunities.

Malaysia’s chip exports to the US plunged 31%

Despite the US importing 13.1% more chips in 1Q2023 valued at USD15.4b compared to USD13.6b in 1Q2022, Malaysia’s contribution fell from USD4.8b to USD3.3b, although the country remains the top source of semiconductors for the US with a 21% share. Taiwan was up 8.1% with a 14.2% share, Vietnam +63% with an 11% share, Thailand +90% with a 10% share and South Korea +21% with a 7% share. Apart from Malaysia, China and Japan also saw their chip exports to the US shrinking by 11% and 5% respectively. The most impressive growths were posted by India and Cambodia with 3,792% and 489% respectively. Future supply lines into the US should change with, amongst others, Taiwan Semiconductor Manufacturing Co’s Arizona facility with 2 chipmaking fabs, as the CHIPS and Science Act entice manufacturers to set up production in the US.