KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
RHB Research has downgraded the Malaysian transportation sector from 'overweight' to 'neutral,' citing limited upside potential as key players, Malaysia Airports Holdings Bhd (MAHB) and Westports Holdings Bhd, reach their fair valuations.
Key Takeaways:
Downgrade Due to Valuation Concerns: The downgrade reflects RHB's view that stocks like MAHB and Westports have hit their fair valuations, limiting potential for further growth. MAHB saw a strong 74% year-on-year profit increase in the first half of FY2024 due to the recovery in international passenger traffic, but its share price is now close to its privatization offer price of RM11, suggesting limited upside.
Positive Outlook on Tasco Bhd: Despite a 25% year-on-year drop in Tasco Bhd’s core net profit for 1QFY2025 due to weaker contract logistics and air freight performance, RHB maintained a 'buy' call with a target price of RM1.15. The positive outlook is based on Tasco's diversified client base, business segments, and the integrated logistics services (ILS) tax incentive, which are expected to sustain its earnings.
Sector Challenges and Opportunities: The logistics sector continues to face challenges, including ocean freight capacity shortages expected to persist until the 'Golden Week' holiday period in early October. However, a strong peak season for air cargo is anticipated due to holiday demand, which could lead to capacity pressure and higher rates.
Westports Earnings Growth Moderated by Utilization Issues: While Westports' earnings rose 7.9% year-on-year in the first half of FY2024, lower yard utilization is expected to hinder optimal transshipment volumes, affecting future growth potential.
Overall, while there are positive signals within certain segments of the transportation sector, RHB sees limited growth potential for the sector as a whole, resulting in a 'neutral' stance.
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