Bearish momentum escalated

Market Review

Malaysia:. The FBM KLCI (-1.0%) trended lower for the third straight session and the key index recorded -2.9% WoW decline. The lower liners were also downbeat, with all the 13 major sectors on the broader market ended in the negative territory; the technology sector (-1.3%) taking the worst hit.

Global markets:. Wall Street remained under pressure as the Dow (-1.6%) sank amid the heightened concern over a hard economic landing following the hawkish stance from the US Federal Reserve over future interest rates direction. Both the European and Asia stock markets were splashed in red.

The Day Ahead

The FBM KLCI tumbled as persistent risk-off undertone, coupled with foreign fund outflow (5-day cumulative stood at RM562.5m) led to a broad-based selldown on the local bourse. While the cautious sentiment is likely to continue, we may see milder selling pressure as investors could pick up undervalued stocks and trade ahead of the tabling of the Budget 2023 in October 2022. Commodities wise, the crude oil price slumped to trade around the USD86 per barrel mark, while the CPO price continue to consolidate around RM3,700.

Sector focus:. As the crude oil price tumbled on recession fears, the energy sector may follow the pullback move. Meanwhile, we believe the technology sector may continue to move lower in tandem with Wall Street’s sentiment. With the thinking that investors may shift their focus on Budget 2023, sectors that traders may focus will be construction, building materials, and telecommunications.

FBMKLCI Technical Outlook

The FBM KLCI tumbled and the key index extended losses for the third straight session breaching below the earlier support of 1,430. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI hovered below 50. Support is set along 1,400-1,410, while the resistance is pegged at 1,450-1,460.

Company Brief

Sime Darby Bhd’s indirect wholly-owned subsidiary, Kumpulan Sime Darby Bhd (KSDB), is disposing of 519.0-ha of land in the Malaysia Vision Valley (MVV), Negeri Sembilan to NS Corporation for RM445.0m. The disposal is a continuation of Sime Darby’s strategy to unlock the value of its non-core assets through divestments. The disposal is expected to be completed in FY24 and is expected to record a net gain on disposal of about RM399.0m. (The Star)

Ecofirst Consolidated Bhd is acquiring the remaining 49.0% stake in BCM Holdings Sdn Bhd, to fully own the 4.2-ac freehold land in Sungai Besi for RM78.4m. The 2- freehold is located along Jalan Satu within Chan Sow Lin in KL, and has a development order (DO) approved by Kuala Lumpur City Hall (DBKL) with a plot ratio of 1:9.3. The estimated gross development value (GDV) of the intended development amounts to RM1.00bn, while the estimated gross development cost (GDC) amounts to RM620.0m and expected gross profit of RM380.0m. (The Star)

Malaysia’s second richest man, Tan Sri Quek Leng Chan, has emerged as a substantial unitholder in AME Real Estate Investment Trust (AME REIT) after acquiring 29.1m units in the REIT over 2 days. This was after AME REIT made its debut on Bursa Malaysia on. Following the transactions, Quek currently holds a 5.6% indirect stake or 29.1m units in AME REIT. (The Edge)

Sime Darby Plantation Bhd (SDP) continued to engage with the US Customs and Border Protection (CBP) over forced labour claims against the plantation company. The US CBP on 30th December 2020 issued a withhold release order to SDP, and subsequently issued the findings on 28th January 2022 against palm oil and palm oil products by SDP and related parties at SDP's Malaysian operations. (The Edge)

Salcon Bhd wholly owned subsidiary Salcon Engineering Bhd has been awarded Package 3 for the design and construction of a residual conveyance and disposal system for the Langat 2 water treatment plant by Pengurusan Aset Air Bhd (PAAB). The project is valued at RM210.0m and will commence on 4th October 2022 upon possession of the site. (The Edge)

Tri-Mode System (M) Bhd has obtained a freight forwarding agent licence from the Royal Malaysian Customs Department (RMCD) on 1st September 2022 via the International Integrated Logistics Services (IILS) status. The IILS status enables the group to have 100% equity ownership in the freight forwarding agent licence, which in turn allows it to complete the integrated and seamless logistics services along the value chain as a single entity on a regional and global scale. (The Edge)

Seremban Engineering Bhd has bagged subcontract work worth RM72.0m from MIE Industrial Sdn Bhd to supply, fabricate, and install steel structures for a factory project in Seremban. The contract is for the construction of structural steel works for the Samsung SDI Energy Malaysia Sdn Bhd (SDIEM) Complex 2 Factory Project (Zone A). (The Edge)

Khee San Bhd has obtained leave from the High Court on Friday to proceed with a scheme of arrangement with its creditors. The court ordered the company to convene a meeting with the creditors to consider approving, with or without any alteration or modification, a scheme of arrangement and compromise. The court also granted Khee San a restraining order on proceedings against the company, its subsidiaries or their assets for a period of 3 months. (The Edge)

Konsortium Transnasional Bhd (KTB) has bagged a RM41.0m contract for earthworks and building, internal and major infrastructure works for a Perumahan Rakyat 1Malaysia (PR1MA) Pahang mixed development in Lipis, Pahang. KTB’s wholly owned subsidiary Transnational Builder Sdn Bhd received a Letter of Award from Living Stones Development Sdn Bhd for a 2-year contract. (The Edge)

Mulpha International Bhd has received an unconditional voluntary takeover offer from several joint offerors for the company's shares not already held by them, at RM2.30 a share. The joint offerors intend to acquire the remaining 155.5m shares or 50.0% of Mulpha's total issued shares. (The Edge)

Axis Real Estate Investment Trust (REIT) is acquiring an industrial facility located in Kapar, Klang for RM41.0m cash. Axis REIT’s trustee RHB Trustees Bhd has entered into a sale and purchase agreement with Jemaramas Jaya Sdn Bhd for the proposed acquisition. The industrial premises comprise 2 warehouses and a 3- storey annexed office building, all on a 268,581 sqf freehold land. (The Edge)

APB Resources Bhd has bagged purchase orders contract worth RM11.8m that entails mechanical engineering, and procurement and construction of pressure vessels and heat exchangers. The work and services to be performed under the contract are within the business scope of the fabrication division. (The Edge)

Boustead Heavy Industries Corporation Bhd (BHIC) is selling a piece of land in Kota Kinabalu, Sabah for RM18.8m in cash to strengthen its liquidity and cash flow position. It is selling the 9.8-ac plot to Jantoco Realty Sdn Bhd (JRSB), a wholly owned subsidiary of Harrisons Holdings (Malaysia) Bhd that is principally engaged in property investment and management. The disposal which will raise net cash proceeds of RM16.7m for BHIC will use as working capital. (The Edge)

Malaysian Genomics Resource Centre Bhd (MGRC) has inked a series of collaborations with Acquest Healthcare Stem Cell Research and Development Co Ltd to grow its customer base in Thailand, as well as explore opportunities for research and development of new products and services. (The Edge)

Source: Mplus Research - 26 Sept 2022