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Author: MalaccaSecurities   |   Latest post: Fri, 30 Sep 2022, 9:15 AM

 

Mplus Market Pulse - 30 Sept 2022

Author: MalaccaSecurities   |  Publish date: Fri, 30 Sep 2022, 9:15 AM


Breaking below 1,400

Market Review

Malaysia:. The FBM KLCI (-0.3%) reversed all its intraday gains and extended its losing streak as sentiment turned sour in the second half of the trading session yesterday. The lower liners also stayed downbeat, while the utilities sector (-0.8%) underperformed its sectorial peers.

Global markets:. Wall Street was grappled with volatility as the Dow (-1.5%) sank after the strong personal consumption and weekly jobless claims data reinforced the US Federal Reserve aggressive stance on future rate hikes. The European stock markets also turned downbeat, but Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI declined below the key 1,400 level as increasing concerns over global recession permeated the local bourse. As Wall Street wiped out its gains from the previous session, we reckon that the local sentiment may remain fragile as investors will adopt a wait-and-see approach amid the rising macroeconomic pressure. Nevertheless, we expect mild buying support on index heavyweights for 3Q window dressing activities and the key index may be supported above 1,400. Commodities wise, crude oil is traded around the USD88 per barrel mark as market anticipated an output cut by OPEC+, while the CPO hovered above RM3,300.

Sector focus:. We expect heavyweights to trade mildly higher for the session on the back of 3Q window dressing activities. Meanwhile, investors may favour the energy sector as crude oil price remains firm around USD88. Besides, sectors such as solar, healthcare, and telecommunication may be in focus ahead of Budget 2023.

FBMKLCI Technical Outlook

The FBM KLCI fell below the 1,400 psychological level, logging its seventh straight daily decline. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI continues to stay oversold. Next support is located at 1,360-1,375, while the resistance is pegged along 1,430-1,450.

Company Brief

Gadang Holdings Bhd’s wholly-owned unit Gadang Engineering (M) Sdn Bhd has secured a contract from the Public Works Department worth RM188.8m. The contract is for a project known as Institut Perubatan Forensik Negara (IPFN), Hospital Kuala Lumpur shall commence upon site possession on 12th December 2022 and shall be completed on 6th October 2026. (The Star)

Gamuda Bhd’s 4QFY22 net profit increased 19.9% YoY to RM255.2m, on the back of improved earnings in the construction and property divisions. Revenue for the quarter leapt 123.7% YoY to RM1.87bn. (The Edge)

AEON Credit Service (M) Bhd's 2QFY23 net profit improved marginally by 1.6% YoY to RM75.7m, as stronger revenue was largely offset by higher impairment losses on financing receivables of RM150.0m. Revenue for the quarter grew 6.6% YoY to RM399.2m. (The Edge)

Heng Huat Resources Bhd received a notice of mandatory takeover offer at 37.7 sen per share and 29.7 sen per warrant from two substantial shareholders — its managing director Datuk H'ng Choon Seng and Goh Boon Leong. Their shares plus those held by parties acting in concert, are all housed under GH Consortium Sdn Bhd, which currently controls a 48.1% stake, or 359.3m shares. (The Edge)

UEM Edgenta Bhd is investing RM13.5m for a 60.0% equity interest in a facilities management services business in Riyadh, Saudi Arabia. The group wholly owned unit, Edgenta Arabia Ltd, is buying the stake in MEEM for Facilities Management Company (MEEM) from Mohammed Ibrahim Al-Subeaei and His Sons Investment Company (MASIC). MASIC will continue to own the remaining 40% stake in MEEM. (The Edge)

KNM Group Bhd has bagged an engineering, procurement, construction and commissioning contract worth RM25.7m from Petronas Gas Bhd (PetGas). The job involves packed bed modification for special scheme inspection at PetGas' Santong gas processing plant in Dungun, Terengganu for 2 years. (The Edge)

Apex Equity Holdings Bhd shareholders have rejected the proposal of a general mandate for issuance and allotment of new shares during the group’s extraordinary general meeting (EGM) on 29th September 2022. Shareholders also blocked the resolution for payment of directors’ fees to non-executive directors who were appointed after the group’s annual general meeting in June 2022 and a proposed alteration of the company’s existing memorandum and articles of association. (The Edge)

Hiap Teck Venture Bhd’s 4QFY22 net profit dropped 59.5% YoY to RM24.5m, amid lower profit margins for its downstream operating subsidiaries as a result of the higher cost of goods sold and the write-down of inventories to net realisable value. Revenue for the quarter, however, jumped 134.5% YoY to RM386.5m A first and final dividend of 1.0 sen per share was proposed. (The Edge)

OpenSys (M) Bhd obtained its shareholders' approval to transfer the group's listing from the ACE Market to the Main Market of Bursa Malaysia Securities at an extraordinary general meeting on 29th September 2022. This exercise will enhance the group's reputation and increase its recognition and acceptance among investors. (The Edge)

Poh Huat Resources Holdings Bhd’s 3QFY22 net profit rose 64.2% YoY to RM22.0m, boosted by strong turnover growth in its domestic operations. Revenue for the quarter climbed 9.2% YoY to RM166.5m. A second interim dividend of 2.0 sen per share, payable on 28th October 2022 was declared. (The Edge)

MISC Bhd’s wholly owned Singapore-based maritime transport operator, AET has signed a Memorandum of Understanding with Thailand's national energy company PTT for the construction of 2 Aframax oil tankers that will be powered by green ammonia. AET will select a suitable shipyard and the 2 tankers are to be delivered to PTT for long-term charters in 4Q25 and 4Q26 respectively. (The Edge)

Barakah Offshore Petroleum Bhd and its subsidiary have withdrawn their appeal against the High Court decision dismissing their RM1.02bn claim against Petronas Nasional Bhd (Petronas). (The Edge)

Chailease Berjaya Credit Sdn Bhd (CBC), a joint venture between Taiwan-based Chailease Holding Co Ltd and Berjaya Corp Bhd, is planning a RM1.00bn bond sale as it expands its financing operations for new motorcycles. (The Edge)

Scientex Bhd's 4QFY22 net profit slipped 12.4% YoY to RM125.0m, hit by higher tax and interest expenses amid margin compression in its property segment. Revenue for the quarter, however, rose 14.5% YoY to RM1.11bn. A final dividend of 5.0 sen per share, payable on 9th January 2023 was declared. (The Edge)

 

Source: Mplus Research - 30 Sept 2022

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Kim Loong Resources Bhd - Softer quarters ahead

Author: MalaccaSecurities   |  Publish date: Thu, 29 Sep 2022, 9:01 AM


Summary

  • Kim Loong Resources Bhd’s (KIMLOONG) 2QFY23 net profit gained 37.4% YoY to RM49.7m, mainly driven by the higher average prices of CPO and FFB. Revenue for the quarter climbed 40.8% YoY to RM564.4m. A single tier interim dividend of 5.0 sen per share, payable on 15th November 2022 was declared.
  • For 1HFY23, cumulative net profit grew 37.8% YoY to RM88.9m. The reported earnings accounted to 54.3% of our full year net profit forecast of RM163.8m and 51.4% of consensus forecast of RM173.0m. We expect softer quarters ahead as the normalisation of CPO prices have accelerated in recent months and there were no signs of recovery as yet.
  • As of 2QFY23, KIMLOONG total planted area stood at 15,939-ha (unchanged from 1QFY23). During the quarter, KIMLOONG continues to maintain a healthy tree profile (Immature: 17%, Young Mature: 8%, Prime Mature: 29%, Old Mature: 19% and Pre replanting: 27%). We gather that no re-planting activities took place during the quarter as KIMLOONG aims to leverage onto the elevated CPO prices.
  • In 2QFY23, KIMLOONG’s FFB production fell 9.9% YoY to 63,330 tonnes, but CPO production climbed 5.5% YoY to 84,114 tonnes. Meanwhile, CPO extraction rate stood at 20.8%; continues to outperform Malaysia’s average CPO extraction rate of 19.8% over the same period highlighting the group’s production efficiency.
  • We made no changes to our FFB production assumption of 280,000MT (1HFY23 numbers makes up to 44.4% of our assumption) as we enter into the seasonally high production cycle months. Optimal productivity, however, will be challenging amid the acute labour shortages as only 12.0% of the registered 400,000 foreign workers for all economic sectors have entered into Malaysia since January 2022.
  • In view of the slowdown in demand, we expect CPO prices to remain below RM4,000/MT for the remainder of the year. The rising inventory level that climbed to 2.1m tonnes in August 2022; highest in two years and the change in Indonesia’s policy to boost their CPO export may continue to pile pressure on the recent depressed CPO prices.

Valuation & Recommendation

  • Although the reported earnings came within expectations, we trimmed our earnings forecast by 7.2% and 12.9% to RM152.0m and RM108.8m for FY23f and FY24f after adjusting for weaker CPO price assumption to average at RM3,500/MT for FY23f (RM4,500/MT) and FY24f (RM3,500/MT).
  • We maintained BUY on KIMLOONG, but with a lower target price of RM1.89. Our target price is derived by pegging a target PER of 12.0x to its revised FY23f EPS of 15.7 sen. The ascribed target PER is in line with the mid-sized planters average at around 11.5-13.5x.
  • Risks to our recommendation include fluctuations in CPO prices. The volatility of CPO prices is subject to weather conditions, demand (mainly from both China and India) and supply (from both Malaysia and Indonesia). The supply of soybeans could also affect CPO prices as both products are regarded as substitutes.

Source: Mplus Research - 29 Sept 2022

Labels: KMLOONG
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Central Global Bhd - Market leader in industrial tapes and label stocks

Author: MalaccaSecurities   |  Publish date: Thu, 29 Sep 2022, 9:00 AM


  • CGB will be leveraging on the rising demand for adhesive tapes as the group is already operating a maximum capacity and looks to ramp up their production by 3.5x to 70.0m sqm of tapes p.a.
  • Turnaround in FY22f is largely on the cards, backed by the construction segment’s outstanding orderbook of RM410.1m, while FY23f will gain further strength from their on-going manufacturing segment expansion plans.
  • CGB could justify by pegging its FY23f EPS of 14.3 sen to P/E of 9.0x, arriving at a fair value of RM1.29.

Key highlights

  • Market leader in industrial tapes and label stocks. With 50 years of operational experience, CGB evolved into a one-stop solution provider for crepe paper masking. Based on FY21 revenue of RM60.1m from the manufacturing segment, CGB commands approximately 60.0% market share of the masking tape business in Malaysia. Their products are also sold to international markets mainly in the East Asia & South East Asia regions.
  • Ramping up production capacity. CGB will be undertaking an expansion of their current operations by relocating their operations from Perai to Sungai Petani, Kedah. The addition of new machineries would bump their production capacity to 70.0m sqm of tapes p.a. (from 20.0m sqm of tapes p.a.).
  • Backed by sturdy orderbook. To-date, CGB is supported by more than a handful of local construction contracts with combined outstanding value of RM410.1m. This represents a healthy orderbook-to-cover ratio of 8.7x against FY21 construction revenue of RM46.9m will provide strong earnings visibility over the next 3 years.

Source: Mplus Research - 29 Sept 2022

Labels: CGB
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Mplus Market Pulse - 29 Sept 2022

Author: MalaccaSecurities   |  Publish date: Thu, 29 Sep 2022, 8:59 AM


Poised for a rebound

Market Review

Malaysia:. There was no reprieve for the FBM KLCI (-0.6%) and it marked its sixth straight session of losses after more than half of the key index components faltered. The lower liners were also downbeat with all the 13 major sectors painted in red with the energy sector (-2.5%) underperformed.

Global markets:. Wall Street staged a strong rebound overnight as the Dow (+1.9%) rallied, following a surprise intervention from the Bank of England in the bond market as the US treasury yields retreated from a 12-year high. The European stock markets also rebounded, but Asia stock markets finished mostly in red.

The Day Ahead

The FBM KLCI slid alongside with the regional peers as persistent negative sentiment prevailed and pulled the key index below the 1-year low. However, we believe the local bourse should see decent buying interest after a sharp rally on Wall Street overnight as the surprise policy pivot by the Bank of England should lift the regional sentiment. Commodities wise, the crude oil above USD89 per barrel, rebounding from its recent downtrend move as the market anticipated a rebound in consumer demand following a mild pullback in the USD. Meanwhile, the CPO price trended lower to hover along RM3,200.

Sector focus:. We believe the market should see recovery today and the technology stocks may be the leader for the session. Meanwhile, the rebound in crude oil price may boost the energy sector higher. Also, we expect traders to focus on the upcoming Budget 2023, positioning in the market ahead of the event; we like the healthcare, automation, automotive, telco and solar industries.

FBMKLCI Technical Outlook

The FBM KLCI crossed below its 52-week low at 1,410 after a 5-day losing streak. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI is oversold. We believe it could be due for a technical rebound, next resistance is at 1,450-1,460, while the support is at 1,380-1,400.

Company Brief

Central Global Bhd’s (CGB) 70.0%-owned subsidiary, RYRT International Sdn Bhd, has secured a sub-contract works from a third-party main contractor, Pembinaan Urusmesra Sdn Bhd, worth RM183.3m. The contract also included the supply of plant, machinery, labour and materials required for the construction and completion of a project known as Projek Jalan Semawang Ke Tanjung Kuala Gum Gum, Sandakan, Sabah. The project shall commence on 14th October 2022 and is estimated to be completed by 13th October 2025. (The Star)

Ageson Bhd's 99.0%-owned subsidiary Solidvest Properties Sdn Bhd has entered into a memorandum of understanding with Koperasi Belia Nasional Bhd (Kobena) to sell a 9.3-ac tract of land in Gombak, Selangor, for a consideration of RM35.0m cash. The estimated gross development value of the project is RM85.2m while the estimated gross development cost is RM41.2m, which will be jointly financed by Solidvest's collaboration partner, ShuangLing Holdings Ltd. The proposed project is expected to commence with 3 months from the date of approval to be obtained by Solidvest and will take about 2 years for completion. (The Star)

Uchi Technologies Bhd's wholly owned subsidiary Uchi Optoelectronic (M) Sdn Bhd has entered into an agreement with XFS Sdn Bhd to dispose of a tract of leasehold land measuring about 12,999.5-sqm, including a factory building and structure in Seberang Perai Tengah on Penang Island for RM19.0m. The disposal is expected to result in an estimated gain of RM9.6m. (The Star)

Caely Holdings Bhd’s new board of directors has officially apologised for the group’s “false announcements” made in June 2922 about the board appointment and withdrawal of Datuk Jovian Mandagie and Sandraruben Neelamagham. Caely confirmed there were no relevant appointment or withdrawal documents signed by the duo in regard to their purported appointments, following the outcome of recent internal inspection of the group’s documentation. (The Edge)

Scientex Packaging (Ayer Keroh) Bhd’s 4QFY22 net profit rose 27.8% YoY to RM11.4m, helped by higher domestic sales. Revenue for the quarter grew 43.5% YoY to RM191.8m. (The Edge)

Kim Loong Resources Bhd’s 2QFY23 net profit grew 37.4% YoY to RM49.7m, on the back of higher palm oil prices. Revenue for the quarter rose 40.8% YoY to RM564.4m. (The Edge)

Trading in the shares and warrants of Heng Huat Resources Group Bhd will be halted on 29th September 2022, pending the release of a material announcement. (The Edge)

PPB Group Bhd’s property division unveiled the Megah Rise Mall, a new community-centric neighbourhood mall in Petaling Jaya. Megah Rise at Taman Megah comprise four-level retail space will have about 100 outlets, totalling 142,000 sqf of net lettable area, and is slated to open to the public in December 2022. (The Edge)

K-One Technology Bhd has secured approval from the Health Ministry’s Medical Device Authority (MDA) to market silicone adhesive tapes primarily used for wound care dressing. The K-One group will sell the silicone adhesive tapes in Malaysia as an authorised representative of Wuhan Huawei Technology Co Ltd, which is the manufacturer based in China. (The Edge)

Hong Leong Bank Bhd chairman Tan Sri Quek Leng Chan has announced that Malaysia remains susceptible to global developments and external shocks as inflation and higher interest rates are expected to dominate the global and domestic landscapes. Central banks around the world are expected to normalise and tighten monetary policy to tamp down inflation amid high energy and food prices. (The Edge)

Tenaga Nasional Bhd (TNB) expects the green electricity tariff (GET) quota to increase and be awarded on a yearly basis in 2023. This is due to the high demand in 2022 as all quotas generated through hydro and large scale solar programmes have been taken up in just a few months. (The Edge)

S P Setia Bhd and Tenaga Nasional Bhd (TNB) have kick-started their green initiative partnership with the installation of solar panels at S P Setia's corporate headquarters in Setia Alam, Shah Alam, at a commencement signing ceremony on Wednesday. This is the first phase of S P Setia's green initiative in partnership with TNB. (The Edge)

Malayan Banking Bhd (Maybank) will fully migrate to a more secure authentication method via Secure2u by June 2023, from SMS one-time password (OTP), to heighten online banking security. This is in line with Bank Negara Malaysia’s steer for banks to migrate from SMS OTP to more secure authentication for online banking transactions.

Meanwhile, Maybank’s indirect 68.3%-owned subsidiary Etiqa Life and General Assurance Philippines Inc (Etiqa Philippines) will form an insurance distribution partnership with the Philippine Bank of Communications (PBCOM) under an exclusive partnership that will allow PBCOM to distribute Etiqa’s life and non-life insurance products to PBCOM clients. (The Edge)

CIMB Group Holdings Bhd has established baseline “Scope 3” financed emissions in its Malaysia and Indonesia businesses as part of its environmental transition plans, enabling it to achieve its net zero overall greenhouse gas emissions target by 2050. (The Edge)

Betamek Bhd, which is slated to be listed on Bursa Malaysia’s ACE Market on 26th October 2022, aims to raise RM33.8m from its initial public offering exercise. Under the listing exercise, Betamek is issuing 67.5m new shares, representing 15.0% of the enlarged share capital at an issue price of 50 sen per share. (The Edge)

 

Source: Mplus Research - 29 Sept 2022

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Mplus Market Pulse - 28 Sept 2022

Author: MalaccaSecurities   |  Publish date: Wed, 28 Sep 2022, 9:07 AM


Finding a footing

Market Review

Malaysia:. The FBM KLCI (-0.2%) erased all its intraday gains as quick profit taking activities sent the key index lower for the fifth straight session yesterday. The small cap and ACE markets rebounded, but the construction (-1.2%) and financial services sectors (-0.84%) underperformed.

Global markets:. Wall Street reversed all its intraday gains as the Dow (-0.4%) extended its slide after the strong new home sales and consumer confidence data suggests that the economy is able to withstand further monetary tightening. The European stock markets closed mostly lower, but Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI slipped for another session as the key index succumbed to selling pressure in selected banking heavyweights. However, we believe the local bourse is poised for mild recovery as bargain hunting activities emerged in the previous session. Nevertheless, any rebound may be capped by as investors may stay cautious ahead of the potential recession worries. Commodities wise, the crude oil price staged a rebound, trading above USD86 per barrel on concerns Hurricane Ian could disrupt production in the Gulf of Mexico, while the CPO price stayed above RM3,500.

Sector focus:. The technology sector may see some recovery as Nasdaq rebounded overnight. Besides, traders may favour the energy counters in view of a higher crude oil price triggered by production concerns due to Hurricane Ian. Investors could also shift their focus to Budget 2023, we like the healthcare and solar related sectors.

FBMKLCI Technical Outlook

The FBM KLCI closed around the 52-week low at 1,410 on a last minute selldown. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI continued to stay below 30. Support is located around 1,410, followed by 1,400. Meanwhile, resistance is set at 1,430-1,450.

Company Brief

MyNews Holdings Bhd’s 3QFY22 net loss narrowed to RM1.5m, from a net loss of RM14.9m recorded in the previous corresponding quarter, as the number of outlets increased to 573 (from 515 last year). Revenue for the quarter jumped 81.3% YoY to RM170.2m. (The Star)

VS Industry Bhd’s 4QFY22 net profit fell 16.7% YoY to RM34.6m, following a RM25.8 m one-off impairment on investment in an associate. Revenue for the quarter, however, rose 6.7% YoY to RM1.00bn. A fourth interim dividend of 0.4 sen per share, payable on 28th October 2022, subject to shareholders’ approval at the forthcoming annual general meeting was declared. (The Star)

Konsortium Transnasional Bhd (KTB) has proposed to dispose of its express bus business, as part of the group’s plan to regularise its financial condition to address its PN17 status. The group is disposing of wholly-owned Park May Bhd to Nadicorp Holdings Sdn Bhd for a nominal sum of RM1, as prospects of the express bus business remains uncertain. (The Edge)

Ivory Properties Group Bhd’s third subsidiary, Ivory Meadows Sdn Bhd (IMSB) has defaulted on a loan payment, this time for a sum of RM39.0m to Malayan Banking Bhd (Maybank), which was raised to part finance the purchase of land for a project. The company, together with IMSB, is seeking Maybank’s indulgence to consider the extension of time for the commencement of principal repayment, and thus allow IMSB sufficient time to launch the project to generate cash flow. (The Edge)

Rubberex Corp (M) Bhd’s shares will be traded under the new name of Hextar Healthcare Bhd from 29th September 2022. Rubberex had on 14th September 2022 received its shareholders’ nod for the group’s diversification into the healthcare business and changed its name to Hextar Healthcare following the group’s acquisition of test kits manufacturer Reszon Diagnostics International Sdn Bhd for RM180.0m. (The Edge)

PT Resources Holdings Bhd, which trading volume ballooned to 179.0m shares on its maiden trading day, announced that its 1QFY23 net profit expanded 61.0% YoY to RM7.5m, amid higher demand for frozen seafood products. Revenue for the quarter grew 55.6% YoY to RM115.3m. (The Edge)

LB Aluminium Bhd’s 1QFY23 net profit surged 311.5% YoY to RM12.5m, mainly due to better performance in its aluminum segment. Revenue for the quarter jumped 98.2% YoY to RM227.1m. (The Edge)

Poh Kong Holdings Bhd posted a net profit of RM29.84 m for the fourth quarter ended July 31, 2022 (4QFY22), compared to a net loss of RM13.26 m a year earlier, on the back of a nearly four-fold rise in revenue. The jewellery retailer registered an earnings per share of 7.27 sen, against a loss per share of 3.23 sen previously, its Bursa Malaysia filing showed. Quarterly revenue rose 384.29% to RM414.66 m, from RM85.62 m in 4QFY21, as the group leveraged on a rising demand for gold jewellery and gold investment products, which came with the rebound of the economy. (The Edge)

Apollo Food Holdings Bhd’s 1QFY23 net profit surged 26.5x YoY to RM4.6m, thanks to post-pandemic sales recovery. Revenue for the quarter rose 42.2% YoY to RM55.5m. (The Edge)

Cosmos Technology International Bhd has reported that the shares offered to the Malaysian public under its initial public offering have been oversubscribed by 58.0x. A total of 8,328 applications were received from the Malaysian public for 756.7m shares, or a value of RM264.9m. A total of 4,350 applications for 286.3m new shares were received for the Bumiputera portion, which represents an oversubscription rate of 43.7x. (The Edge)

Yinson Holdings Bhd has made a lodgement with the Securities Commission Malaysia for the establishment of a perpetual sukuk wakalah programme of up to RM1.00bn. The sukuk wakalah programme has a perpetual programme tenure, which provides the group with flexibility to issue subordinated perpetual Islamic notes from time to time. Proceeds from the issuance will be used for Yinson’s capital expenditure, refinancing of existing or future borrowings, working capital, and other general corporate purposes. (The Edge)

 

Source: Mplus Research - 28 Sept 2022

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Mplus Market Pulse - 27 Sept 2022

Author: MalaccaSecurities   |  Publish date: Tue, 27 Sep 2022, 9:05 AM


Sentiment still dour

Market Review

Malaysia:. The FBM KLCI (-0.8%) extended its slide at the start of the trading week with more than two-thirds of the key index components decline. The lower liners extended their pullback and once again, all the 13 major sectors on the broader market were painted in red; the energy sector (-4.3%) taking the worst hit.

Global markets:. Wall Street stayed downbeat as the Dow (-1.1%) fell with the US Federal Reserve officials reiterated their aggressive stance on the interest rate direction to curb the stubbornly elevated inflation. The European stock markets ended mostly lower, while Asia stock markets remained in red.

The Day Ahead

The FBM KLCI tumbled as the plantation, telecommunication, and banking heavyweights continued its negative tone amid the persisted bearish sentiment on the global front. We observed that the 5-day foreign net selling stood at RM753.9m. With Wall Street sliding deeper into a bear market, we believe the local bourse is likely to witness heightened volatility on the back of worries over the global economic downturn. Commodities wise, both the crude oil and CPO price extended a downtrend move, hovering around USD84 and RM3,500 respectively. Meanwhile, gold price trended lower, trading around USD1,620 as investors headed for USD.

Sector focus:. The energy and plantation sectors could face further selldown as commodity prices extended a downward trending move. On the other hand, with ringgit skidded past RM4.60 against USD, we believe it should benefit the export oriented companies at least for the near term.

FBMKLCI Technical Outlook

The FBM KLCI booked a fourth-session decline as the key index moved closer to its 52-week low at 1,410. Technical indicators remained weak as the MACD Histogram extended a negative bar, while the RSI went below the oversold 30 level. The next support is located at 1,400-1,410, while resistance is set along 1,450-1,460.

Company Brief

Sapura Energy Resources Bhd’s 2QFY23 net loss narrowed to RM2.6m, from a net loss of RM1.51bn recorded in the previous corresponding quarter, mainly attributable to commercial settlements from certain contracts in engineering & construction (E&C), materialisation of additional claims in operations & maintenance (O&M), and improved rig utilisation and day rates in drilling business segment. Revenue for the quarter added 56.6% YoY to RM1.17bil from RM747.11mil a year earlier. (The Star)

LTKM Bhd has entered into sale and purchase agreements to dispose of its entire equity interest in six subsidiaries to Ladang Ternakan Kelang Sdn Bhd (LTKSB) for RM158.8m. Back in April 2022, the company proposed to dispose of its existing chicken egg production business to become an electronic manufacturing services provider. LTKM would acquire the entire equity interest in Local Assembly Sdn Bhd, which makes electronic, electrical and plastic injection moulded components, for RM336.0m, to be satisfied by RM100.0m in cash and the issuance of 393.3m new LTKM shares at 60 sen each. The company also proposed to undertake a special dividend cum capital repayment of RM1.11 per ordinary share in LTKM. (The Star)

Favelle Favco Bhd through several subsidiaries has received the purchase order (PO) or letter of intent with a combined value of RM130.8m. The PO received are from Marr Contracting Pty Ltd, OREC Engineering Holdings Pty Ltd, Lindores Construction Logistics Pty Ltd, Favco Heavy Industry (Changshu) Co Ltd, McDermott Middle East Inc and Zachry Industrial Inc. (The Star)

CIMB Group Holdings Bhd aims to extend RM30.00bn in financing to small and medium enterprise (SME) businesses via collaborations with credit guarantee agencies established by the government and Bank Negara Malaysia (BNM). The collaboration aims to mobilise financing, as well as guarantee schemes that will spur the acceleration of SME growth, as businesses continue to take advantage of post-pandemic opportunities, in tandem with the economic recovery momentum. (The Edge)

Computer Forms (Malaysia) Bhd has teamed up with Energy Absolute PCL to jointly produce and distribute electric vehicles (EVs) such as e-buses, e-cars, e trains, e-bikes and e-boats, as well as EV chargers in Malaysia. The partnership will allow the group to diversify into the EV industry, which is expected to provide a sustainable income stream, in addition to current income stream. (The Edge)

Perak Transit Bhd has entered into 20-year agreements with Tenaga Nasional Bhd (TNB) and GSPARX Sdn Bhd to install solar photovoltaic (PV) energy generating system with total installed capacity of 422.0-kWp at the designated site of its subsidiaries. Under the deal, GSPARX will install the solar PV energy generating systems at Perak Transit's Terminal Meru Raya in Ipoh, Kampar Putra Sentral in Kampar, and at three petrol stations. Perak Transit, which also provides public bus services, said its subsidiaries will purchase and accept the energy generated, and make payments based on monthly billings issued by TNB. (The Edge)

Pertama Digital Bhd's China-based foreign directors have resigned from its board, following the sale of its textile business in China for RM70.0m in August 2022. Group managing director Pan Ding and executive director Pan Dong had resigned, effective 22nd September 2022, and did not have any disagreement with the board. (The Edge)

Astro Malaysia Holdings Bhd's group chief executive officer, Henry Tan Poh Hock will be retiring on 31st January 2023. Tan will continue to serve as adviser to strengthen Astro's content pipeline to serve the group's businesses and platforms. For its succession plan, current group chief operating officer Euan Daryl Smith will be appointed as group CEO-designate with immediate effect.

Separately, Astro’s 2QFY23 net profit increased 13.0% YoY to RM98.5m, mainly due to the lower net financing and depreciation costs. Revenue for the quarter, however, fell 13.1% YoY to RM921.1m. A second interim single-tier dividend of 1.0 sen per share, payable on 25th October 2022 was declared. (The Edge)

Genting Malaysia Bhd has announced 3 additional rides at its Genting SkyWorlds theme park are expected to be commissioned within 4Q22, as the casino and hotel operator plans investments in targeted events and promotions to drive leisure traffic to its hilltop resort in Pahang. (The Edge)

Sarawak Cable Bhd (SCable) has appointed Joseph Nixon S Lourdesamy as its acting chief executive officer, effective immediately. Joseph Nixon, 52, has more than 29 years of experience in finance, operations and management in various sectors including trading, manufacturing and construction and engineering, procurement, construction and commissioning projects. (The Edge)

Microlink Solutions Bhd has secured a 5-year contract worth RM48.6m from Koperasi Co-opbank Pertama Malaysia Bhd (CBP) for the upgrade of its existing MiBS core banking platform. Microlink Systems Sdn Bhd has accepted a letter of offer from CBP, which entails 2 years of implementation and 3 years of maintenance and support, commencing next month. (The Edge)

Catcha Digital Bhd has been granted another 6 months, which is up to 5th April 2023 by Bursa Securities to complete its proposed regularisation plan. Earlier, Bursa had approved Catcha Digital’s revised proposed regularisation plan about 19 months, after the Guidance Note 2 (GN2) company first proposed its acquisition of iMedia Asia Sdn Bhd in September 2020. (The Edge)

Paramount Corp Bhd is disposing of its remaining stake in education units Paramount Education Sdn Bhd (PESB), Sri KDU Klang Sdn Bhd (SKK) and Sri KDU Sdn Bhd (SK) to XCL Education Malaysia Sdn Bhd for RM120.0m cash. This will mark Paramount’s exit from the education business. (The Edge)

Omesti Bhd has bagged a 1-year contract from Telekom Malaysia Bhd (TM) valued at RM20.0m. The work contract comprises design, development, customisation, configuration, delivery, installation, integration, testing, commissioning and knowledge transfer for mobile services business support system. (The Edge)

Apex Equity Holdings Bhd’s 2 substantial shareholders; Fun Sheung Development Ltd (15.8% stake) and Yenson Investments Ltd (5.2% stake), have filed a lawsuit to stop the tabling of a resolution for the approval of a mandate to allot and issue new shares. The resolution, if approved by shareholders at an extraordinary general meeting (EGM) scheduled for 29th September 2022, will provide the company a general mandate to allot and issue shares pursuant to Sections 75 and 76 of the Companies Act 2016. (The Edge)

CTOS Digital Bhd further raised its equity interest in RAM Holdings Bhd to 57.7% after buying out MUFG Bank (Malaysia) Bhd’s 2.1% stake in the credit reporting firm for RM6.0m. The acquisition will be fully funded by bank financing. (The Edge)

 

Source: Mplus Research - 27 Sept 2022

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