Taking a breather

Market Review

Malaysia:. The FBM KLCI (-0.1%) ended marginally lower mainly dragged down by weakness in glove-related heavyweights. The lower liners, however ended mixed, while broader market closed mostly in red with the healthcare sector (-2.2%) endured the worst hit amid the bleaker outlook in the glove sector.

Global markets:. Wall Street advanced as the Dow (+0.5%) trended higher as market viewed the US Feds to be less hawkish following the release of New York Empire State Manufacturing Index, which sank to -31.3 in August of 2022. The European stock markets traded higher, but the Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI retreated amid worries over China’s economic slowdown, which led to an unexpected lending rate cut. While the market may trade in a positive-biased mode and looking forward to a brighter outlook in the ongoing earnings season, China’s economic slowdown may indicate risk and a spike in recession fears. Commodities wise, the crude oil price declined amid expectation on China’s lower demand outlook, trading around the USD95 per barrel mark, while the CPO traded above RM4,200.

Sector focus:. Traders may reduce exposure in the energy stocks along with the softer oil prices triggered by potential slowing demand from China. On the other hand, investors may accumulate solid consumer, plastics, and REIT as earnings season kicked off, in view of the improving GDP earlier. Meanwhile, we expect technology stocks to be traded actively on the back of positive Wall Street performance.

FBMKLCI Technical Outlook

The FBM KLCI slid as the buying momentum faded, but the key index remained above its EMA9 level. Technical indicators remained mixed as the MACD Histogram extended a negative bar, while the RSI hovered above 50. Resistance is pegged around 1,530-1,560, while support is envisaged at 1,460-1,480

Company Brief

Malaysian Bulk Carriers Bhd (Maybulk) has entered into a conditional collaboration agreement with Tunas Manja Sdn Bhd (TMSB) to undertake grocery retail business and other grocery retail-related businesses. The group will be seeking approval from its shareholders for the proposed diversification at an extraordinary general meeting to be convened. As at 9th August 2022, TMSB operates a chain of 85 supermarkets and grocery stores operating under the “TMG” brand throughout Malaysia, with the majority of the stores located on the East Coast of Peninsular Malaysia. (The Star)

Datasonic Group Bhd’s wholly owned subsidiary Datasonic Technologies Sdn Bhd (DTSB) has received an additional RM31.4m contract from the Home Affairs Ministry for the supply of the Malaysian passport chip. The changes in the new contract involve the maintenance services of equipment, software and system application for public key infrastructure and public key development for 2022 and 2023. Under the terms of the Letter, DTSB is required to furnish a performance bond for the amount of RM3.18mil to the Home Affairs Ministry with the validity period be extended until 30th November 2024. (The Star)

Malaysia Airports Holdings Bhd (MAHB), AirAsia X Bhd (AAX) and Capital A Bhd, which owns AirAsia Bhd, have clarified that they did not enter into any separate settlement agreement to discontinue legal proceedings against each other, in relation to collection of passenger service charges and negligence in the operation and management of Kuala Lumpur International Airport 2. (The Edge)

Malayan Banking Bhd (Maybank) has appointed Dr Siew Chan Cheong as the bank's group chief strategy officer effective from 15th August 2022. (The Edge)

Top Glove Corp Bhd executive chairman Tan Sri Dr Lim Wee Chai has bought two blocks of 2.8m shares in the rubber glove company for RM2.31m. This increased his direct stake to 27.6%. Top Glove, which has lost 66.7% year-to-date, settled 7.0% or six sen lower at 79.5 sen yesterday; a level not seen since March 2017. (The Edge)

Tiong Nam Logistics Holdings Bhd has entered into a preliminary collaboration agreement with a unit of Johor Corp to jointly develop a logistics hub on a 300-ac plot of land in Sedenak Tech Valley, Johor. (The Edge)

Kelington Group Bhd’s 2QFY22 net profit jumped 84.4% YoY to RM13.6m, thanks to higher project completion in Malaysia and Singapore. Revenue for the quarter surged 147.2% YoY to RM312.4m. A first interim single-tier dividend of 1.0 sen per share, payable on 22nd September 2022 was declared. (The Edge)

BP Plastics Holding Bhd's 2QFY22 net profit declined 17.5% YoY to RM12.2m, amid elevated freight charges and higher production costs. Revenue for the quarter, however, grew 28.1% YoY to RM139.5m. A second interim single-tier dividend of 1.5 sen per share, payable on 7th October 2022 was declared. (The Edge)

Protasco Bhd has bagged a contract worth RM299.2m for the upgrading of a section of federal road in Kulim, Kedah. Its wholly owned subsidiary HCM Engineering Sdn Bhd has entered into a memorandum of agreement with KI Engineering Sdn Bhd to set out their respective rights, duties and obligations in order to execute the contract. (The Edge)

The takeover offer for Cycle & Carriage Bintang Bhd at RM2.70 per share is "not fair but reasonable", according to independent adviser Kenanga Investment Bank Bhd. The RM2.70 offer price by Jardine Cycle & Carriage Ltd represents a discount of RM1.26 or 31.8% to the estimated revised net asset value per Cycle & Carriage Bintang share of approximately RM3.96. (The Edge)

Ivory Properties Group Bhd has aborted its plan to jointly develop residential components with ECK Development Sdn Bhd on 135.0-ac of land in AirportCity and Aerotropolis in Kuala Muda, Kedah. The group received a letter from ECK about the termination of the term sheet that the two companies inked on 2nd August 2021 for the development. (The Edge)

Source: Mplus Research - 16 Aug 2022