Increasingly toppish

Market Review

Malaysia:. The FBM KLCI (+0.3%) registered its fourth day winning streak, boosted by gains in selected plantation and oil & gas heavyweights yesterday. The lower liners, however, staged a pullback, while the broader market ended mixed with the technology sector (-2.5%) underperformed on the back of profit taking activities.

Global markets:. Wall Street extended its decline as the Dow (-0.5%) slipped on geopolitical tension between Russia and Ukraine, coupled with the threat of rising oil prices that may keep inflation persistently high. The European stockmarkets also trended lower, while Asia stockmarkets ended mostly negative.

The Day Ahead

Once again, the FBM KLCI managed to outperform after coming off from its session lows. Given the sharp gains, the key index is now looking increasingly toppish and may warrant for a consolidation over the near term. At the same time, the lower liners are also experiencing bouts of profit taking after enjoying good run over recent weeks. While we think that the potential pullback is healthy to allow gains to be digested, volatility will still remain a feature as investors are uncertain on the interest rate direction, albeit it is less hawkish after the meeting yesterday.

Sector focus:. We remain upbeat on the plantation sector as CPO prices continue to trend higher amid the tighter output and leveraging on India’s move to cut tax on CPO imports. Likewise, the energy sector may also continue to ride onto the high crude oil prices. On the other end, the technology sector is expected to remain choppy as quick profit taking activities are emerging from the recent rebound.

FBMKLCI Technical Outlook

The FBM KLCI chalked in mild gains as the key index surpassed the immediate resistance of 1,580. Technical indicators were positive as the MACD remained above the zero level, while the RSI has crept towards marginally below the overbought position. The next resistances are located at the 1,600-1,620, while support is now set around 1,550, followed by 1,525.

Company Brief

Muhibbah Engineering (M) Bhd (MEB) has secured new purchase orders worth RM50.3m from Siemens Energy (Sweden) and Siemens Energy (Houston). Both contracts involved the delivery of waste heat recovery unit (WHRU) and expected to be delivered by 4Q22. (The Star)

Uzma Bhd’s wholly owned subsidiary Uzma Engineering Sdn Bhd (UESB), has received a contract from ExxonMobil Exploration and Production Malaysia Inc. The contract was for the provision of electric wireline logging equipment and services of non-rig assisted for ExxonMobil. The duration of the contract is two years commencing from 13th January 2022 until 12th January 2024. (The Star)

AirAsia X Bhd (AAX) has secured full belly space utilisation for one third of its wide body A330-300 fleet for an initial period of one year, under Teleport, the logistics venture of Capital A Bhd. It would use the additional capacity from AAX to fulfil its robust customer requirements, both intra and across the whole of Asia Pacific. (The Edge)

Euro Holdings Bhd has reported that the proposed special placement of 74.0m shares has been called off, as the furniture company expects to comply with Bursa Malaysia’s minimum 25.0% public spread requirements upon completion of its other corporate proposals. (The Edge)

HB Global Ltd plans to undertake a private placement to raise about RM23.1m to fund future investments and for working capital purposes. The placement entails the issuance of up to 154.0m shares, representing 20.0% of its issued shares of 770.0m as of 26th January 2022. (The Edge)

Lotte Chemical Titan Holding Bhd (LCT) has reported that its US associate Lotte Chemical USA Corp (LC USA) has transferred an additional 3.2% of its equity interest in LACC LLC to Eagle US 2 LLC. The stake was sold for US$89.1m (RM373.4m). With this, Eagle US’ shareholding in LACC will rise to 50.0%, with LC USA holding the remaining 50.0% stake. LCT owns 40.0% of LC USA, with the balance 60.0% owned by LCT’s parent, Lotte Chemical Corp. (The Edge)

The High Court has set 6th April 2022 to deliver its decision on Malaysia Airports Holdings Bhd (MAHB)'s application to strike out a RM479.8m suit filed by Capital A Bhd and AirAsia X Bhd (AAX) against the airport operator. Capital A and AAX are suing MAHB's wholly-owned unit Malaysia Airports (Sepang) Sdn Bhd (MASSB) for loss and damages due to negligence at Kuala Lumpur International Airport's second terminal, klia2. (The Edge)

NWP Holdings Bhd has received a notice of demand from Seri Tiara Development Sdn Bhd in relation to the outstanding rentals, service charges and late payment interest between Oct 2021 and Feb 2022, totalling RM2.6m for a premise in Block A, Desa Commercial Centre. The delay in payment is because there are no subtenants for the premise and therefore, no income is being received for the rental payments. (The Edge)

Optimax Holdings Bhd has proposed a bonus issue of up to 405.0m shares on the basis of 1 bonus share for every existing share held. The theoretical ex-bonus price of 59 sen was based on the 5-day volume-weighted average market price of RM1.18. (The Edge)

Sapura Energy Bhd’s five of its wholly-owned subsidiaries have been served with winding-up petitions by separate petitioners in relation to unpaid contract sums, settlement agreement sums and judgment sums. (The Edge)

Serba Dinamik Holdings Bhd has failed in its application for a stay of a court order requiring the group to make public the fact-finding update done by Ernst & Young Consulting Sdn Bhd. The decision came following a hearing in the High Court on 14th February 2022. (The Edge)

Supermax Corp Bhd has aborted a plan to acquire 2 pieces of freehold land in Setia Alam, Selangor from S P Setia Bhd's subsidiary Bandar Setia Alam Sdn Bhd for RM73.5m cash to build an operations headquarters for its wholly-owned subsidiary Maxter Glove Manufacturing Sdn Bhd. The group had failed to obtain approval from the Economic Planning Unit to waive a 30.0% Bumiputera equity ownership condition prior to transferring ownership of the land on 15th December 2021. (The Edge)

Suria Capital Holdings Bhd has signed a memorandum of understanding with Vandelay Ventures Sdn Bhd to develop the Sabah Maju Jaya Renewable Energy Industrial Complex at Sapangar Bay in Kota Kinabalu. The complex is expected be completed by 2025 and bring in an investment of RM700.0m. (The Edge)

Telekom Malaysia Bhd's (TM) subsidiary Webe Digital Sdn Bhd has accepted an offer from the Malaysian Communications and Multimedia Commission (MCMC) for spectrum assignment for 20MHz in the 2,575-2,595MHz frequency band. Webe had agreed to an upfront fee of RM7.1m and an annual fee component of RM6.0m throughout the assignment period of 5 years, from 1st July 2022. (The Edge)

UMW Holdings Bhd’s automotive arm, UMW Toyota Motor Sdn Bhd combined sales for Toyota and Lexus in January 2022 increase 96.0% YoY to 7,528 units. Vios reigns as the best-selling Toyota model, capturing 28.0% of January’s sales, while Hilux is its best-selling pick-up truck, contributing 38.0% of total sales. (The Edge)

Source: Mplus Research - 15 Feb 2022