Profit taking persisted

Market Review

Malaysia:. The FBM KLCI (-0.8%) recorded its third straight losing streak prior to the extended weekend break and the key index slipped 0.6% WoW. The lower liners, however, marched higher, while the broader market closed with the technology sector (+1.7%) leading the pack.

Global markets:. Wall Street eked out mild gains as the Dow (+0.1%) rose on the positive news in regards to easing of China’s Covid-19 measures re-opening that could boost global economic growth. The European stock markets marched higher, while Asia stock markets ended mostly positive.

The Day Ahead

The FBM KLCI slid for the third straight session as investors took further profits in in the banking heavyweights, while picking up shares in technology and energy sectors. We believe the local bourse is poised for a mild turnaround supported by bargain hunting activities especially in commodity and technology stocks given the flat overnight Wall Street movements. Nevertheless, downside risks include global inflation and the prolong Russia-Ukraine conflicts. Commodities wise, the crude oil price settled just below USD120 per barrel mark as concern over supply-demand imbalance remained in focus following abating China’s zero-Covid strategy.

Sector focus:. We opine that the sentiment for the session may remain positive for the selected technology stocks as Nasdaq has been trading above 12,000. Meanwhile, the pickup in oil prices driven by could help lift the energy stocks. Other sectors that we like include shipping, plantation and consumer sectors.

FBMKLCI Technical Outlook

The FBM KLCI remained below its EMA9 level as it declines further before the weekend break. Technical indicators remained mixed as the MACD Histogram has extended a positive bar, while the RSI hovered below the 50 level. Support is pegged at 1,530, followed by 1,500, while the resistance is set around 1,570-1,580.

Company Brief

Fraser & Neave Holdings Bhd (F&N) has proposed to acquire the entire equity interest in Cocoaland Holdings Bhd it does not already own for RM488.2m or RM1.50 a share. The proposed privatisation, which is to be undertaken by way of members' scheme of arrangement, will involve the acquisition of 325.4m Cocoaland shares held by the scheme shareholders, or about 72.3% of the share capital of the company. The food and beverage group holds the remaining 124.4m shares in Cocoaland, which represents a 27.7% stake in the company. The offer price for the shares represents a price-to-book ratio of 2.8x based on the net assets attributable to equity holders of RM243.3m or 54 sen per share. The proposed privatisation, which F&N will fund via bank borrowings, is expected to be completed in 4Q22. (The Star)

GIIB Holdings Bhd has filed a legal suit against 7 defendants for amongst others, conspiracy to injure the company, breach of fiduciary duties and seek, inter alia, damages in the sum of RM103.6m and any other reliefs deemed fit by the court. The 7 defendants are Wong Weng Yew, Yee Voon Hon, Yee Kwek Keong, Yap Kwee Heong, Glomaxes Latex Glove Manufacturer Sdn Bhd, Ewe Ee May and Michelle Sammy. (The Edge)

MISC Bhd has announced that group CEO Datuk Yee Yang Chien, 54, will retire on 30th September 2022 after holding the post since 2015. Captain Rajalingam Subramaniam, the chief operating officer of the group since February 2022 will take over as group CEO effective 1st October 2022. (The Edge)

AME Elite Consortium Bhd continues to attract foreign direct investment (FDI) with its latest addition, Nasdaq-listed medical device giant Insulet Corp whose manufacturing facility will be built in the integrated industrial space solutions provider's newest industrial park, namely i-TechValley in SiLC, Johor Baru. The new fit-for-purpose facility with a built-up area of approximately 400,000-sqf is Insulet’s first presence in Southeast Asia, complementing its existing manufacturing capacity in the US and China. The manufacturing facility is expected to be operational in mid-2024. (The Edge)

Top Glove Corp Bhd executive chairman Tan Sri Lim Wee Chai raised his direct stake in Top Glove to 27.5% after acquiring 1.5m shares at RM1.24 each or RM1.9m in total. He also holds an indirect 8.5% stake in the company. The latest acquisition came after Lim bought 1.0m shares in the company at RM1.27 on 2nd June 2022. (The Edge)

Malaysia Smelting Corp Bhd’s (MSC) unit Rahman Hydraulic Tin Sdn Bhd (RHT) has proposed to acquire Asas Baiduri Sdn Bhd, a firm that has been granted a mining lease over a parcel of land located adjacent to its mining land in Perak — from Tin International Sdn Bhd for a purchase consideration of 272.3 shares or 20.0% of the enlarged share capital of RHT. Upon the completion of the acquisition, Asas Baiduri will become a wholly-owned subsidiary of RHT. Meanwhile, RHT would cease to be wholly owned by MSC and become an 80.0%-owned subsidiary. (The Edge)

LEAP Market-listed Uni Wall APS Holdings Bhd’s 80.0%-owned subsidiary NS Aero City has inked a Memorandum of Collaboration with Astrom Training, an aviation training solutions provider, to organise a group of companies to participate in the Malaysia Vision Valley 2.0 project, including but not limited to, real estate and infrastructure development. (The Edge)

Alam Maritim Resources Bhd has approved the audit committee's recommendation to appoint Messrs Baker Tilly Monteiro Heng PLT as the company's new auditors. In March 2022, Alam Maritim had received a notice of voluntary resignation from Messrs Al Jafree Salihin Kuzaimi PLT, due to the audit firm's limited number of partners registered with the Audit Oversight Board and its plan to focus on serving non-public interest entities. (The Edge)

Source: Mplus Research - 7 Jun 2022