On higher ground

Market Review

Malaysia:. The FBM KLCI (+1.3%) extended its lead to close at its highest level since April 2021, bolstered by gains the broad-based rally. The lower liners, however closed mixed, while the broader market finished mostly upbeat, led by the energy sector (+2.4%) as crude oil prices soared.

Global markets:. Wall Street turned choppy as the Dow (-0.3%) retreated, impacted by the concern over the Russia and Ukraine geopolitical tension towards the pace of economic growth while the rally in crude oil prices took a pause. The European stockmarkets turned lower, but Asia markets closed mostly higher.

The Day Ahead

The FBM KLCI rallied amidst the mixed regional markets after taking cues from the (i) less aggressive rate hikes tone from the US Federal Reserve and (ii) Bank Negara Malaysia kept the OPR unchanged at 1.75%. Also, we believe the sharp gains noticed in the commodity-related sectors may persist over the near term as the steep rise in crude oil and crude palm oil prices were deemed advantageous to Malaysia and should translate to earnings in the upcoming quarters. Nevertheless, investors may focus on the developments of the geopolitical tensions between Russia and Ukraine.

Sector focus:. As both the CPO and crude oil prices remains elevated (CPO:.RM6,649 and Brent oil:. USD110.46), traders may position themselves within the laggards in the energy and plantation sectors. Meanwhile, we believe the metal related companies may trade actively under the current environment with elevated aluminium and recovering steel prices, on the back of supply disruption.

FBMKLCI Technical Outlook

The FBM KLCI finished at its intraday high above the 1,600 psychological level. Technical indicators remained positive as the MACD Histogram extended a positive bar, while the RSI trended higher above the 50 level. Should the key index hold above the previous resistance at 1,615, the next resistance is pegged around 1,635-1,645, while the support is set at 1,600.

Company Brief

Lotte Chemical Titan Holdings Bhd has declared a 21.0 sen dividend per share, payable on 13th April 2022. The payout represents about 50.0% net profit after deducting the one-off cash gain from LC USA's partial disposal of equity interest in LACC LLC. (The Star)

The High Court has ruled that no more creditors are allowed to intervene in four Serba Dinamik Holdings Bhd-related companies' interim judicial management court hearing because the matter regarding the appointment of a judicial manager or interim judicial manager would have to be decided quickly. (The Edge)

The Court of Appeal has dismissed three striking-out appeals by Capital A Bhd and AirAsia X Bhd (AAX) against the original suit filed by Malaysia Airports (Sepang) Sdn Bhd (MASSB), a unit of Malaysia Airports Holdings Bhd (MAHB), relating to outstanding passenger service charges (PSCs). The court also ruled that the High Court did not err in granting MASSB a summary judgment for a total of RM41.6m against AirAsia and AAX, comprising the outstanding PSCs, late payment charges and costs. (The Edge)

PPB Group Bhd sees challenges on many fronts in 2022, which will affect several of the group’s business segments. The ongoing tension in Ukraine will contribute to more uncertainty to the global commodities market as these disruptions would adversely impact the group’s grains and agribusiness segment given the rise in food commodity prices. Raw material prices aside, several of PPB’s businesses are also affected by the labour shortage in Malaysia. (The Edge)

Malayan United Industries Bhd (MUI) has proposed to undertake an RM3.07bn capital reduction exercise to offset RM3.06bn in accumulated losses as at 31st December 2021. The capital reduction will enable the group to eliminate its accumulated losses to reflect more accurately its financial position. It will also enhance the group's ability to declare and pay dividends out of its retained earnings in the future when the company returns to profitability. (The Edge)

Coastal Contracts Bhd is selling one offshore support vessel and two other vessels for an aggregate value of RM109.7m. The transactions are expected to contribute positively to the earnings for FY22. (The Edge)

China Automobile Parts Holdings Ltd (CAP) managed to issue its annual report for the financial year ended 30th June 2021 for public release. As a result, trading in the company's shares will resume on 4th March 2022. Trading of CAP shares has been suspended since 8th June 2017 after it first failed to submit its quarterly report for the financial period ended 31st March 2017 within the stipulated time frame. (The Edge)

Vortex Consolidated Bhd plans to acquire a Johor-based company for RM21.0m to diversify into the oil palm plantation business. The company, Teras Gemumi Sdn Bhd, through its subsidiary Gemumi Multi Plantations Sdn Bhd (GMPSB), has 1,285.0-ac of oil palm-planted land in Kota Tinggi. The land was awarded by the Johor government to Lembaga Kemajuan Johor Tenggara (Kejora), which then sub-leased it to GMPSB. (The Edge)

Source: Mplus Research - 4 Mar 2022