Key Indices
Top Stories
Strategy | 2Q26 Results Wrap: Positive Earnings Breadth With Constructive Outlook, But Downside Risks Are Building
- Earnings breadth improved in 2Q26, marked by more positive surprises and fewer disappointments, partly reflecting prudent cost assumptions adopted after the previous reporting season amid the Middle East conflict. We remain constructive on Malaysian equities, supported by a selective earnings recovery and thematic opportunities, but see rising 4Q26 risks from geopolitical tensions, persistently high costs, volatile foreign flows and profit-taking. We favour quality large-cap domestic leaders with resilient earnings and strong balance sheets, maintaining our end-26 FBMKLCI target of 1,760.
What’s Inside
Company Update | VSTECS (VST MK/BUY/RM1.67/Target: RM2.26)
VSTECS is disposing of its entire 40% ISATEC stake to Skyform for RM48.8m cash at a reasonable 8.7x PE vs 14.8x peer average. While this ceases ISATEC's RM5.6m associate earnings contribution, 94.2% of proceeds will fund working capital for VSTECS' faster-growing ICT distribution, enterprise systems and ICT services segments, potentially offsetting the loss on a recurring basis. We make no changes to our earnings forecast, pending completion of the deal. Maintain BUY with an unchanged target price of RM2.26.
Market Spotlight
- The FBMKLCI lost 25.34pt (-1.47%) to close at 1,700.54 yesterday due to the lack of fresh local leads and weak regional markets.
- US stocks were lower after the close on Tuesday, as losses in the industrials, consumer goods and basic materials sectors led shares lower.
Tehnical Analysis
FBMKLCI, FCPO & FKLI Index Outlook
Traders’ Corner
Dialog Group | DLG MK
- Trading Buy Range: RM2.06-2.07
Wasco | WSC MK
- Trading Buy Range: RM0.80-0.81
Life Water | LWSABAH MK
- Trading Buy Range: RM1.65-1.69
Top Stories
Strategy | 2Q26 Results Wrap: Positive Earnings Breadth With Constructive Outlook, But Downside Risks Are Building
- Earnings breadth improved in 2Q26, marked by more positive surprises and fewer disappointments, partly reflecting prudent cost assumptions adopted after the previous reporting season amid the Middle East conflict. We remain constructive on Malaysian equities, supported by a selective earnings recovery and thematic opportunities, but see rising 4Q26 risks from geopolitical tensions, persistently high costs, volatile foreign flows and profit-taking. We favour quality large-cap domestic leaders with resilient earnings and strong balance sheets, maintaining our end-26 FBMKLCI target of 1,760.
What’s Inside
Company Update | VSTECS (VST MK/BUY/RM1.67/Target: RM2.26)
VSTECS is disposing of its entire 40% ISATEC stake to Skyform for RM48.8m cash at a reasonable 8.7x PE vs 14.8x peer average. While this ceases ISATEC's RM5.6m associate earnings contribution, 94.2% of proceeds will fund working capital for VSTECS' faster-growing ICT distribution, enterprise systems and ICT services segments, potentially offsetting the loss on a recurring basis. We make no changes to our earnings forecast, pending completion of the deal. Maintain BUY with an unchanged target price of RM2.26.
Market Spotlight
- The FBMKLCI lost 25.34pt (-1.47%) to close at 1,700.54 yesterday due to the lack of fresh local leads and weak regional markets.
- US stocks were lower after the close on Tuesday, as losses in the industrials, consumer goods and basic materials sectors led shares lower.
Tehnical Analysis
FBMKLCI, FCPO & FKLI Index Outlook
Traders’ Corner
Dialog Group | DLG MK
- Trading Buy Range: RM2.06-2.07
Wasco | WSC MK
- Trading Buy Range: RM0.80-0.81
Life Water | LWSABAH MK
- Trading Buy Range: RM1.65-1.69
Key Indices
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
