Extended rebound

Market Review

Malaysia: The FBM KLCI (+0.9%) extended its rebound with 28 out of 30 key index components notched higher yesterday. The lower liners also trended higher, while all the 13 major sectors on the broader market remained upbeat, anchored by both the technology and industrial product & service sector that added 1.8% each.

Global markets: Wall Street marched higher as the Dow (+0.5%) was driven by stronger-than-expected corporate earnings that overcame negativity stemmed by news over US President Joe Biden tested positive for Covid-19. The European stock markets ended mostly upbeat, while Asia stock markets closed mixed.

The Day Ahead

The FBM KLCI propelled on the back of selected banking and industrial products & services heavyweights amid broad-based bargain hunting activities. The uptrend moves on Wall Street overnight signalled that the buying support on the local bourse should remain intact. Commodities wise, crude oil price slipped, but still trading above the USD103 per barrel mark after Libya increased output after the restrictions on exports were lifted. Meanwhile, European Central Bank surprised the markets with raising the interest rates for the first time in 11 years.

Sector focus: The technology sector should be gaining momentum following a extension of rebound in Nasdaq. Besides, investors may favour the automotives stocks after the Malaysian Automotive Association (MAA) raised its Malaysian automotive total industry volume forecast. On the other hand, investors may see some profit taking activities in the energy sector on declining crude oil prices.

FBMKLCI Technical Outlook

The FBM KLCI extended gains for the second session and closed above its daily EMA20 level. Technical indicators turned positive as the MACD Histogram has extended a positive bar, while the RSI has crossed above 50. Resistance is set at 1,460-1,480, while the support is envisaged along 1,420-1,430.

Company Brief

British American Tobacco (M) Bhd (BAT) 2QFY22 net profit increased 2.3% YoY to RM73.3m, driven by marginally higher revenue and gross profit margin coupled with lower tax expenses. Revenue for the quarter grew 7.0% YoY to RM637.5m. A second interim dividend of 25.0 sen per share, payable on 18th August 2022 was declared. (The Star)

Widad Group Bhd is expected to continue to regain a firm footing for FY22, supported by its current total orderbook of RM1.60bn. Out of the total orderbook, 52.0% or RM832.0m is contributed by integrated facilities management (IFM) business and concession. The construction sector contributes the remaining RM768.0m. (The Star)

Scomi Energy Services Bhd (SESB) is proposing to dispose of its 48.0% stake in Scomi KMC Sdn Bhd and 100.0% equity interest in Scomi Oilfield Ltd (SOL) to Cahya Mata Oiltools Sdn Bhd, a 75.0% owned subsidiary of Cahya Mata Sarawak Bhd. Meanwhile, Scomi Oiltools Sdn Bhd (SOSB) has proposed to dispose of its 4.0% stake in Scomi KMC Sdn Bhd (together with 25.0m redeemable preference shares in the company) to Oiltools International Sdn Bhd, a wholly-owned subsidiary of Cahya Mata Oiltools. SOSB is also planning to dispose of its 25.0% interest in Scomi Oiltools Gulf W.L.L and its 25.0% interest in Continental Wire Cloth (M) Sdn Bhd, as well as its Dataran Prima property and its inventories and equipment to the same party. The proposed disposals would result in a one-off pro forma gain of RM134.0m. (The Star)

Cahya Mata Sarawak Bhd (CMS) is suing its former executive director, Datuk Syed Ahmad Alwee Alsree, and 5 others for alleged breaches of fiduciary duties in respect of the construction of an integrated phosphate additives plant in Samalaju, Sarawak. Due to a lack of due diligence undertaken, CMS incurred RM67.6m in losses as on 26th September 2021, according to appointed consultant KPMG Management & Risk Consulting Sdn Bhd. (The Edge)

Berjaya Food Bhd’s board of directors has recommended shareholders to approve the group’s proposed bonus issue of up to 1.56bn shares on the basis of 4 bonus shares for every 1 share held. Shareholders are scheduled to vote on the proposal at an extraordinary general meeting on 19th August 2022. (The Edge)

Telekom Malaysia Bhd (TM) is aiming to achieve 58.0% fibre coverage in Sabah over the next 3 years, targeting to connect at least 145,000 premises as the group accelerates its fibre deployment through 2025. (The Edge)

UOA Real Estate Investment Trust (UOA REIT) 2QFY22 net rental income fell 1.5% YoY to RM21.7m as occupancy rates and rental rates continue to be affected by the economic growth. Revenue for the quarter declined 1.8% YoY to RM28.6m. An interim income distribution of 4.3 sen per unit for the quarter, payable on 30th August 2022 was declared. (The Edge)

Unitrade Industries Bhd, which made its debut on the ACE Market of Bursa Malaysia on 14th June 2022, has proposed a first and final dividend of 0.82 sen per share for FY22. (The Edge)

Kenanga Investment Bank Bhd has been named Best Securities House Malaysia 2022 at the Asiamoney 2022 Best Securities Houses Awards. (The Edge)

Source: Mplus Research - 22 Jul 2022