On the mend with limited upside

Market Review

Malaysia:. The FBM KLCI (+0.5%) mirrored the positive developments on Wall Street overnight as the key index trimmed its weekly losses to close -1.7% WoW. The lower liners also rebounded, while the broader market ended mostly higher, led by the telecommunications and media sector (+1.2%).

Global markets:. US stockmarkets extended their losses as the Dow (-0.2%) fell on concerns over the upcoming reading of inflation data tomorrow which may pile further pressure for the US Federal Reserve to stay hawkish. The European stock markets also retreated, but Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI rebounded on Friday following the back-to-back losing sessions, led by selected banking and industrial products heavyweights; rising regional markets added to the positive sentiment. Nevertheless, we deem the rebound may be short lived amid rebound in Covid-19 cases in Malaysia, reintroduction of lockdowns in China, as well profit taking activities on Wall Street overnight. On the commodity markets, crude oil price hovered around USD107 per barrel mark, while the CPO price moderated further to RM4,150.

Sector focus:. We believe the banking sector may be in focus, supported by interest rate upcycle environment. Meanwhile, traders may look at the healthcare sector for short-term trade amid growing Covid-19 cases. Also, we noticed buying interest has been seen within the construction and building material segment. On the flip side, we may anticipate technology stocks to pullback as Nasdaq reversed its gains yesterday.

FBMKLCI Technical Outlook

The FBM KLCI bounced off its 52-week low ahead of the long weekend. Technical indicators, however, turned bearish as the MACD Histogram bar fell below the zero line, while the RSI hovered below 50. Resistance is located at 1,460-1,480, while the support is pegged around 1,400-1,420.

Company Brief

VS Industry Bhd’s wholly-owned subsidiary, VS Capital Management Sdn Bhd (VSCM) has proposed to issue Islamic Medium Term Notes of up to RM1.00bn in nominal value based on the Shariah principle of Wakalah Bi Al-Istithmar. The Sukuk Wakalah Programme will be guaranteed by VS Industry. Proceeds from the issuance will be utilised for working capital requirements, capital expenditure (capex), investments and/or general corporate purposes. (The Star)

Harn Len Corp Bhd has proposed to acquire 3.8-ha. of freehold land in Tebrau, Johor from Sunitrend Sdn Bhd for RM4.5m cash. The land is cultivated with vegetables such the holding is well maintained. The proposed land acquisition will be funded by internally generated fund. (The Star)

Atrium Real Estate Investment Trust (REIT) has proposed to raise up to RM85.3m via a private placement and a special issuance of units to major unitholder Chan Kam Tuck at an indicative issue price of RM1.40 per unit. The placement involves issuing up to 40.9m new units (representing up to 20.0% of the REIT’s total issued units) to third party investors, while the special issuance involves issuing 20.0m new units to Chan. (The Edge)

TH Plantations Bhd‘s special purpose vehicle THP Suria Mekar Sdn Bhd (TSM) has issued sukuk wakalah amounting to RM300.0m in nominal value under its RM1.08 bn unrated Islamic medium-term notes (IMTN) (sukuk wakalah) programme. (The Edge)

Minetech Resources Bhd has announced that the RM30.4m subcontract it secured from Mutual Premium Sdn Bhd (MPSB) to build a secondary school in Perak has been mutually terminated. The company was informed by MPSB that the project was no longer achievable due to the prevailing unfavourable economic and market conditions. (The Edge)

Westports Holdings Bhd has reported that it has overprovided for deferred tax liabilities by RM17.0m in its financial results for 1QFY22, which has resulted in the reported effective tax rate of 39.0% for the quarter. As such, the amount will be reversed in the financial results for 2QFY22. (The Edge)

MMIS Bhd is buying a piece of industrial land measuring 40,054-sqm with buildings in Pusing, Perak for RM11.5m to expand its production capacity as its current facility is already running at full capacity. (The Edge)

G Capital Bhd’s 51.0%-owned subsidiary G Capital Water Solutions Sdn Bhd has secured a Letter of Award (LoA) from Pembinaan Limpah Bersatu Sdn Bhd worth RM7.1m for a non-revenue water (NRW) project in Pulau Langkawi. The project is estimated to be completed within 13 months from July 2022. (The Edge)

FGV Holdings Bhd has reported that the Federal Land Development Authority (Felda) resumed its share buy back in June and July 2022 when Felda acquired a cumulative 1.7m FGV shares on the open market after a more than four-month pause. (The Edge)

AirAsia X Bhd has redesignated Tan Sri Tony Fernandes as acting group chief executive officer (CEO) of the long-haul budget airline with effect from 8th July 2022, in addition to his position as a non-independent non-executive director of the Practice Note 17 company. (The Edge)

Sime Darby Property Bhd and LOGOS SE Asia Pte Ltd's (LOGOS Property) joint venture; SDPLOG has unveiled plans with the commencement of groundwork for its maiden asset E-Metro Logistics Park in Bandar Bukit Raja, Klang, Selangor. The first phase is expected to be completed with identified tenants in June 2023, and overall completion by 3Q26. (The Edge)

Duopharma Biotech Bhd will be partnering US-based foodtech company The Live Green Co in developing and manufacturing plant-based products and ingredients. These will be used to replace the synthetic or animal-based ingredients utilised in some of Duopharma’s products. (The Edge)

Industronics Bhd proposed a 2-for-1 rights issue at an indicative price of RM0.08 per share to raise up to RM70.0m mainly to repay advances made by a substantial shareholder, purchase of inventories for its luxury watches trading business and expansion of the group’s existing business of electronics and system integration. The group proposed to issue up to 875.1m rights shares and 656.3m warrants, and has secured irrevocable written undertakings from substantial shareholders Luk Tung Lam and executive director Datuk Chu Boon Tiong to collectively subscribe to 225.0m rights shares and 168.8m warrants. (The Edge)

Malaysian Genomics Resource Centre Bhd (MGRC) has proposed to raise RM9.9m via a private placement of up to 10.0% of its issued shares at an issue price to be determined later. The funds will be used for the group’s future investments as well as for the purchase of equipment including IT hardware, biological safety cabinet and extraction automation. (The Edge)

Source: Mplus Research - 12 Jul 2022