Relief rebound

Market Review

Malaysia:. The FBM KLCI (+0.6%) recovered most of its previous session losses, driven by bargain hunting in more than two third of the key index components yesterday. The lower liners ended mixed, while the broader market ended mostly positive, led by the healthcare sector (+1.1%).

Global markets:. US stockmarkets remained in red despite coming off from their intraday low as the Dow (-0.5%) fell after US Federal Reserve officials backed 75 basis points of rate hike to temper the hot inflation. The European stock markets extended their slide, but Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI bounced off 52-week low to outperform the mixed regional markets, supported by bargain hunting activities in selected index heavyweights. Nevertheless, we believe the local bourse may remain sour over the near term, taking cue from the mixed sentiment on Wall Street amid dismal earnings from banks, as well as the selloff in banking stocks in China which spread over from the developer stocks. Commodities wise, the crude oil price stabilised below USD100 per barrel mark, while the CPO price continues to tank; trading around RM3,650.

Sector focus:. Investors may tune into stocks with minimal borrowings under the consumer and REIT sectors in view of the interest rate upcycle environment. Besides, investors may see cherry pick in energy stocks amid stabilising crude oil price below USD100. Meanwhile, labour shortage remained as a major hurdle to the plantation sector.

FBMKLCI Technical Outlook

The FBM KLCI rebounded from 52-week low and closed above its previous support at 1,420. Technical indicators, however, remained negative as the MACD Histogram has extended a negative bar, while the RSI hovered below the 50 level. Resistance is pegged around 1,430-1,460, while the support is set at 1,380-1,400.

Company Brief

Jardine Cycle & Carriage Ltd (JCCL) has made a new offer of RM2.70 per share to acquire all the remaining ordinary shares in Cycle & Carriage Bintang Bhd (CCB) under its unconditional voluntary takeover. The offer price represents a premium of 3.9% or 10 sen over RM2.60, being the closing price of the shares on 13th July 2022, and 20.8% or 46.4 sen of RM2.24 recorded a year ago on a volume-weighted average market price basis. JCCL holds 90.7m shares, which translates to an 89.99% stake in CCB. (The Star)

Boustead Heavy Industries Corporation Bhd's (BHIC) indirect subsidiary, Boustead DCNS Naval Corporation Sdn Bhd (BDNC) has accepted another 9-month extension for a Ministry of Defence Malaysia (MINDEF) contract to provide in-service support for Prime Minister’s class submarines for the Royal Malaysian Navy worth RM79.3m. The extension is from 1st January 2022 to 30th September 2022. (The Star)

PTT Synergy Group Bhd's wholly owned subsidiary PTT Infra Sdn Bhd has accepted a contract from Topicana Development (Johor Bahru) Sdn Bhd to undertake common infrastructure works in Jeram Batu in Pontian, Johor, amounting to RM53.8m. (The Star)

Two more of debt-ridden Sapura Energy Bhd’s units, Sapura Pinewell Sdn Bhd (SPSB) and Sapura Fabrication Sdn Bhd (SFSB), have been served with winding-up petitions for failing to settle RM0.9m in outstanding amounts. SPSB and SFSB were served the petitions on 8th July 2022 due to the non-payment of invoices from Plomo Group Sdn Bhd and Marine Creation Sdn Bhd respectively. (The Edge)

Pavilion Real Estate Investment Trust (REIT) has reported that discussions to buy the Pavilion Bukit Jalil mall from Malton Bhd are still ongoing. Malton's executive chairman and major shareholder Tan Sri Desmond Lim is also the chairman and non-independent executive director of Pavilion REIT Management Sdn Bhd, the manager of Pavilion REIT. (The Edge)

Shareholders of Chin Hin Group Bhd have been recommended by M&A Securities Sdn Bhd to vote in favour of the group’s proposed disposal of its stake in Solarvest Holdings Bhd as the exercise is fair and reasonable. The group has proposed to dispose of its remaining 19.3% stake in Solarvest for RM103.3m cash or 80 sen per share to Divine Inventions Sdn Bhd in a related party transaction. (The Edge)

Former Attorney General Tan Sri Mohamed Apandi Ali has resigned from the board of loss-making Metronic Global Bhd effective 14th Jul 2022. The group also announced the resignation of its deputy independent non-executive chairman Datuk Seri Tan Choon Wa. The resignation of Tan followed his appointment as an adviser to the group.

Separately, Fitters Diversified Bhd has emerged as a new substantial shareholder of Metronic after its unit, Fitters Property Development Sdn Bhd, subscribed to rights shares and excess rights shares recently. Fitters Diversified now holds a 13.3% indirect stake in Metronic. (The Edge)

KESM Industries Bhd has declared an interim dividend of 1.5 sen per share for the financial year ending 31st July 2022. The dividend is payable on 23rd August 2022. (The Edge)

Source: Mplus Research - 15 Jul 2022