KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
Earnings Slump Due to Market Oversupply
- Lynas Rare Earths Ltd reported a net income of A$5.9 million (US$3.7 million) for the six months ending Dec 31, far below analyst expectations of A$32.2 million.
- Shares fell as much as 5.8% in Sydney following the disappointing results.
- No interim dividend declared as the company navigates weak market conditions.
Why Did Profits Drop?
- Rare earth prices have fallen nearly 70% since their 2022 peak, due to China’s strong output and economic slowdown.
- Despite a 30% recovery since March 2024, prices remain volatile.
- Lynas faces cost pressures as it expands operations in Australia, Malaysia, and the U.S.
Market Outlook & Strategic Positioning
- CEO Amanda Lacaze sees current market challenges as short-term but acknowledges price weakness.
- Jefferies analysts highlight Lynas’ strategic positioning to benefit from any future price rebounds.
- The U.S. and Australia continue efforts to reduce reliance on China, but price declines have slowed new project development.
Summary:
- Lynas' profit collapsed 85% to A$5.9M due to weak rare earth prices.
- Stock fell 5.8% as market oversupply and China’s dominance weigh on earnings.
- Despite challenges, Lynas is expanding operations in Australia, Malaysia, and the U.S.
- Future success depends on price recovery and disciplined financial management.
Comments
Post a Comment