Minor setback

Market Review

Malaysia:. The FBM KLCI (-0.1%) mirrored the weakness across most of the regional peers as the key index recorded -0.5% WoW. Meanwhile, the broader market ended mostly negative with the energy sector (-0.8%) underperformed, but the technology sector rebounded strongly by 2.03% on Friday.

Global markets:. US stock markets staged a strong rebound as the Dow (+2.2%) rallied on expectations that the US Federal Reserve may only deliver 75 basis point rate hike in July 2022 against earlier expectations of 100 basis point hike. The European stock markets advanced, but Asia stock markets ended mostly negative.

The Day Ahead

The FBM KLCI ended the week with marginal losses as quick profit-taking activities emerged on selected heavyweights. While the local bourse may be poised for a rebound following the strong gains on Wall Street, we believe recession fears will continue to permeate investors’ sentiment in the near term. Meanwhile, investors may be watching the European Central Bank’s meeting and Malaysia’s inflation data later this week. On the commodity markets, the crude oil rebounded, trading above USD101 per barrel mark, while the CPO price hovered around RM3,600.

Sector focus:. We expect the technology sector to track the overnight gains in Nasdaq. Meanwhile, selected consumer stocks and REITs may be viewed defensive and outperform during the volatile stock market environment. Traders may trade cautiously within the energy sector as oil price was pressured due to re

The FBM KLCI booked marginal losses and the key index remained below its daily EMA9 level. Technical indicators remained negative as the MACD Histogram has extended a negative bar, while the RSI hovered below zero. Support is pegged along 1,380-1,400, while the resistance is set around 1,430-1,460.

Company Brief

Artroniq Bhd is acquiring 156,000 ordinary shares representing 60.0% stake in precision tools component trader Fujim Digital Sdn Bhd for RM12.0m. The purchase of the equity from sole shareholder Teoh Boon Thiam will be satisfied with RM6.0m cash and RM6.0m via the issuance of new shares in Artroniq. As per the agreement, the vendor will provide a profit guarantee to Artroniq, which entails a net profit of not less than RM2.1m for the period of 1st May 2022 to 30th April 2022, and RM2.1m for the subsequent same period. (The Star)

LYC Healthcare Bhd’s wholly-owned subsidiary LYC Health Manufacturing Group Sdn Bhd (LYCHM) has entered into a share sale agreement (SSA) with Lim Lee Ping, Tan Sook Yong, and Goh Kok Neng to acquire 450,000 ordinary shares or 75.0% equity interest in Nutrogreen Health Industries Sdn Bhd for RM525,000.

Meanwhile, another wholly-owned subsidiary of the group LYC Health Manufacturing (NS) Sdn Bhd (LYCNS) has entered into a business sale agreement with Wong See Kit and Wong Looi Cheng @ Wong Chin See to acquire Kitta Enterprise and specific assets under the Kitta Enterprise partnership for RM1.0m. (The Star)

Favelle Favco Bhd’s (FFB) subsidiaries, Favelle Favco Cranes Pty Ltd and Kroll Cranes A/S have received purchase orders with a combined value of RM42.7m. Favelle Favco Cranes will supply a tower crane to G A Caelli Holdings Trust which is expected to be delivered by the end-2022. Meanwhile, Kroll Cranes A/S will supply a tower crane to Daewoo Shipbuilding & Marine Engineering Co., Ltd which is expected to be delivered by mid-2023. (The Star)

CTOS Digital Bhd has proposed to buy a 19.9% stake in RAM Holdings Bhd from Creador’s Oscar Matrix Sdn Bhd for RM51.3m cash or RM25.80 per share, raising its shareholding to 39.1% or 3.9m shares. The credit reporting agency also proposed to buy up to 3.1m shares in RAM or 30.9% stake at a price not more than RM28.50 per share or up to RM88.0m over a period of 12 months. (The Edge)

Digi.Com Bhd's 2QFY22 net profit dropped 21.4% YoY to RM220.0m, due to the one-off prosperity tax and the increased net finance costs as a result of non-cash hedge accounting. Revenue for the quarter fell 4.9% YoY to RM1.54bn. A second interim dividend of 2.8 sen per share, payable on 30th September 2022 was declared. (The Edge)

Mah Sing Group Bhd unveiled its M Nova's sales gallery in Taman Wahyu, Kepong on 15th July 2022. The mixed development will be officially launched in 4Q22. The three-tower M Nova is sited on an 8.1-ac parcel in Kepong with an estimated gross development value of RM790.0m. (The Edge)

Al-Salam Real Estate Investment Trust (REIT) and Al-‘Aqar Healthcare REIT's chief executive officer Wan Azman Ismail, 58, has stepped down as executive director in both the listed entities after completing his contract of service. Neither of the REITS has announced a successor to Wan Azman yet. (The Edge)

MK Land Holdings Bhd is diversifying into renewable energy with the development of a 11.0-megawatt (MW) large-scale solar photovoltaic (PV) plant in Kerian, Perak. The company has appointed Solarvest Holdings Bhd as the engineering, procurement, construction, and commissioning (EPCC) solutions provider for the project. (The Edge)

The controlling shareholder of Hextar Technologies Solutions Bhd (formerly known as Complete Logistics Services Bhd), Datuk Eddie Ong Choo Meng, has bought over the company's entire stake of 14.9% in Classic Scenic Bhd. Ong purchased the stake, comprising 36.0m Classic Scenic shares, via direct business transactions on 14th July 2022. Ong is now the largest shareholder of Classic Scenic with a total stake of 77.3m shares or 32.1%, while Hextar Technologies has ceased to be the substantial shareholder. (The Edge)

Pharmaniaga Bhd’s wholly-owned subsidiary Pharmaniaga LifeScience Sdn Bhd is collaborating with China-based Suzhou Ronnsi Pharma Co Ltd through a Memorandum of Collaboration (MoC) to commercialise a halal ovine-based (sheep and goat) anti-coagulant blood clot thinner. (The Edge)

Tiles manufacturer YB Ventures Bhd has appointed former Kuala Lumpur police chief Datuk Seri Tajudin Md Isa as the group’s independent non-executive chairman, effective 15th July 2022. (The Edge)

Malaysian Genomics Resource Centre Bhd (MGRC) has appointed Datuk Seri Dr Chen Chaw Min as its independent non-executive chairman, effective immediately, following the resignation of Tan Sri Ahmad Mohd Don on 12th July 2022. (The Edge)

Pasukhas Group Bhd has reported that Messrs Crowe Malaysia PLT (Crowe) has voluntarily resigned as the auditor of the company due to a disagreement on the audit fees. Pasukhas received a notice in writing from Crowe on 14th July 2022. (The Edge)

Nextgreen Global Bhd is forming a joint venture company to develop 20 palm oil waste collection and processing centres throughout Malaysia. The group has inked a Memorandum of Agreement with Greentech Malaysia Alliances Sdn Bhd, Koperasi Sahabat Amanah Ikhtiar Malaysia Bhd and Koperasi Perkhidmatan Setia Bhd to form the joint venture through a special purpose company known as GTC Biomass Bhd. Nextgreen will own 65.0% stake in the joint venture firm. (The Edge)

Source: Mplus Research - 18 Jul 2022