Hovering in the overbought territory

Market Review

Malaysia:. The FBM KLCI (+0.1%) managed to creep higher, driven by the eleventh hour buying support in selected telco heavyweights as the key index rose 1.8% WoW. The lower liners also extended their gains, while the broader market closed mostly higher with the technology sector (+1.6%) helming the winners list.

Global markets:. Wall Street extended their gains as the Dow (+1.0%) rose, driven by solid corporate earnings from mega cap tech stocks like Amazon and Apple, while personal spending was upbeat in June 2022 (+1.1% MoM). The European stock markets were upbeat, while Asia stock markets ended mostly mixed.

The Day Ahead

The FBM KLCI eked out marginal gains on Friday, extending its gains for a third straight session supported by persistent buying from foreign funds. We believe the market undertone will improve as investors may expect a slower pace of interest rate hikes in the US moving forward. Nevertheless, inflation is likely to remain high as crude oil price is still elevated above the USD103 per barrel mark on the back of tight supply situation. Attention may turn to OPEC+ meeting on the 3rd of August 2022. Meanwhile, the CPO price surged more than 8.0%, trading above RM4,200.

Sector focus:. We remained a positive stance on the technology sector amid the extended uptrend movement in Nasdaq as well as the anticipation of better earnings result for our local tech stocks into the reporting month. The plantation sector may gain traction amid a jump in CPO prices, but the O&G stocks may take a mild breather as crude oil price is on a mild retracement.

FBMKLCI Technical Outlook

The FBM KLCI concluded the week with the extension of rebound as the key index remained above its EMA60 level. Technical indicators remained positive as the MACD Histogram extended a positive bar, while the RSI hovered above 50. The key index may look forward to its resistance at 1,500-1,530, while the support is pegged along 1,460, followed by 1,410.

Company Brief

IHH Healthcare Bhd and PT Prodia Widyahusada Tbk (Prodia) have signed a memorandum of understanding (MoU) to provide options for comprehensive healthcare services to Prodia customers seeking medical treatment in Malaysia. IHH has set up a one-stop customer service hotline that supports services in Bahasa Indonesia to provide assistance on appointment booking and medical enquiries. (The Star)

TDM Bhd is disposing of its entire stake in 2 loss-making Indonesian subsidiaries – PT Rafi Kamajaya Abadi (RKA) and PT Sawit Rezki Abadi (SRA) to Ikhasas CPO Sdn Bhd for RM115.0m. SRA has been loss-making since its incorporation, while RKA has also remained in the red since its incorporation up to FY20. The group intends to utilise the funds to repay interest bearing borrowings, general working capital as well as estimated expenses with regards to the proposed disposal. The disposal for RKA and SRA is slated to be completed by 3Q23 and 1Q25 respectively, subject to the fulfilment of the conditions of both agreements. (The Star)

Financially distressed Ireka Corp Bhd’s subsidiary Ireka Engineering & Construction Sdn Bhd has applied to the High Court to be placed under judicial management. It involves the appointment of an independent judicial manager to manage the affairs of the company in a move to prevent the company from being wound up. (The Edge)

CVC Capital Partners has completed the acquisition of a 68.35% stake in Affin Hwang Asset Management Bhd (Affin Hwang AM) from Affin Bank Bhd for RM1.54 bn. Affin Hwang AM will embark on a rebranding exercise to rejuvenate its image after 20 years, as well as reposition the company for its next growth phase. (The Edge)

Lion Industries Corporation Bhd’s unit Amsteel Mills Sdn Bhd entered into a sale and purchase agreement with Yinson Corporation Sdn Bhd for the proposed acquisition of land together with buildings erected thereon worth RM47.1m. The property is a leasehold industrial land measuring 3.2-ha (or 8.0-ac) located in Klang, Selangor together with buildings erected thereon. (The Edge)

Aemulus Holdings Bhd has secured new orders worth approximately RM37.9m from its existing Malaysia-based customer from the automotive industry. Its unit Aemulus Corporation Sdn Bhd had bagged the orders for the automotive test systems, which are expected to be fulfilled from August 2022 till June 2026. (The Edge)

SKB Shutters Corporation Bhd has proposed to acquire a 9.8-ac piece of land in Eco World Development Group Bhd's business park for a cash consideration of RM36.0m. Its wholly-owned subsidiary SKB Shutters Manufacturing Sdn Bhd has acquired the land from Paragon Pinnacle Sdn Bhd, a 60.0%-owned subsidiary of EcoWorld. (The Edge)

myNEWS Retail Sdn Bhd, a wholly-owned subsidiary of MyNews Holdings Bhd, has reported that revenues for over 500 of its outlets will be affected if the Control of Tobacco Product and Smoking Bill 2022 is approved. The Bill will make it illegal for people born in 2007 and onwards to smoke, buy or possess any type of tobacco product like vape. (The Edge)

EcoFirst Consolidated Bhd’s 4QFY22 net loss stood at RM4.4m vs. a net profit of RM16.0m recorded in the previous corresponding quarter, mainly due to deferment in the launching of new developments pending approval from relevant authorities. Revenue for the quarter fell 25.4% YoY to RM45.6m. (The Edge)

Tower Real Estate Investment Trust’s (REIT) 4QFY22 net property income (NPI) dipped 4.0% YoY to RM4.0m, mainly because the previous year had benefited from a reversal of expenses that it over-provided. Revenue for the quarter declined 0.9% YoY to RM8.3m. (The Edge)

Vizione Holdings Bhd’s 2QFY22 net loss stood at RM2.4m vs. a net profit of RM2.0m, dragged by lower contribution across all its segments. Revenue for the quarter fell 34.1% YoY to RM63.8m. (The Edge)

NetX Holdings Bhd’s 2QFY22 net loss stood at RM183,000 vs. net profit of RM241,000 recorded in the previous corresponding quarter, due to fair value adjustment on quoted investment and a rise in operating and administrative expenses. Revenue for the quarter sank 76.6% YoY to RM3.3m. Separately, has entered into a deal on 29th July 2022 to provide its Syariah-compliant loan products to customers of fintech company MYISCO Sdn Bhd, which has a digital Islamic financial services platform called MYISCO Wallet. (The Edge)

Just a day after five Caely Holdings Bhd directors joined the board of Top Builders Capital Bhd, the construction engineering firm went on to appoint 22-year-old Koo Soon Seng as its executive director, effective 29th July 2022. Koo is the son of Wong Siaw Puie, who is the executive vice chairman of Caely and Top Builders. (The Edge)

Former senior vice president of CIMB Investment Bank Bhd Datuk Yoong Leong Yan has been appointed as an executive director of Straits Energy Resources Bhd, effective 1st August 2022. (The Edge)

Source: Mplus Research - 1 Aug 2022