Sentiment still dour

Market Review

Malaysia:. The FBM KLCI (-0.8%) extended its slide at the start of the trading week with more than two-thirds of the key index components decline. The lower liners extended their pullback and once again, all the 13 major sectors on the broader market were painted in red; the energy sector (-4.3%) taking the worst hit.

Global markets:. Wall Street stayed downbeat as the Dow (-1.1%) fell with the US Federal Reserve officials reiterated their aggressive stance on the interest rate direction to curb the stubbornly elevated inflation. The European stock markets ended mostly lower, while Asia stock markets remained in red.

The Day Ahead

The FBM KLCI tumbled as the plantation, telecommunication, and banking heavyweights continued its negative tone amid the persisted bearish sentiment on the global front. We observed that the 5-day foreign net selling stood at RM753.9m. With Wall Street sliding deeper into a bear market, we believe the local bourse is likely to witness heightened volatility on the back of worries over the global economic downturn. Commodities wise, both the crude oil and CPO price extended a downtrend move, hovering around USD84 and RM3,500 respectively. Meanwhile, gold price trended lower, trading around USD1,620 as investors headed for USD.

Sector focus:. The energy and plantation sectors could face further selldown as commodity prices extended a downward trending move. On the other hand, with ringgit skidded past RM4.60 against USD, we believe it should benefit the export oriented companies at least for the near term.

FBMKLCI Technical Outlook

The FBM KLCI booked a fourth-session decline as the key index moved closer to its 52-week low at 1,410. Technical indicators remained weak as the MACD Histogram extended a negative bar, while the RSI went below the oversold 30 level. The next support is located at 1,400-1,410, while resistance is set along 1,450-1,460.

Company Brief

Sapura Energy Resources Bhd’s 2QFY23 net loss narrowed to RM2.6m, from a net loss of RM1.51bn recorded in the previous corresponding quarter, mainly attributable to commercial settlements from certain contracts in engineering & construction (E&C), materialisation of additional claims in operations & maintenance (O&M), and improved rig utilisation and day rates in drilling business segment. Revenue for the quarter added 56.6% YoY to RM1.17bil from RM747.11mil a year earlier. (The Star)

LTKM Bhd has entered into sale and purchase agreements to dispose of its entire equity interest in six subsidiaries to Ladang Ternakan Kelang Sdn Bhd (LTKSB) for RM158.8m. Back in April 2022, the company proposed to dispose of its existing chicken egg production business to become an electronic manufacturing services provider. LTKM would acquire the entire equity interest in Local Assembly Sdn Bhd, which makes electronic, electrical and plastic injection moulded components, for RM336.0m, to be satisfied by RM100.0m in cash and the issuance of 393.3m new LTKM shares at 60 sen each. The company also proposed to undertake a special dividend cum capital repayment of RM1.11 per ordinary share in LTKM. (The Star)

Favelle Favco Bhd through several subsidiaries has received the purchase order (PO) or letter of intent with a combined value of RM130.8m. The PO received are from Marr Contracting Pty Ltd, OREC Engineering Holdings Pty Ltd, Lindores Construction Logistics Pty Ltd, Favco Heavy Industry (Changshu) Co Ltd, McDermott Middle East Inc and Zachry Industrial Inc. (The Star)

CIMB Group Holdings Bhd aims to extend RM30.00bn in financing to small and medium enterprise (SME) businesses via collaborations with credit guarantee agencies established by the government and Bank Negara Malaysia (BNM). The collaboration aims to mobilise financing, as well as guarantee schemes that will spur the acceleration of SME growth, as businesses continue to take advantage of post-pandemic opportunities, in tandem with the economic recovery momentum. (The Edge)

Computer Forms (Malaysia) Bhd has teamed up with Energy Absolute PCL to jointly produce and distribute electric vehicles (EVs) such as e-buses, e-cars, e trains, e-bikes and e-boats, as well as EV chargers in Malaysia. The partnership will allow the group to diversify into the EV industry, which is expected to provide a sustainable income stream, in addition to current income stream. (The Edge)

Perak Transit Bhd has entered into 20-year agreements with Tenaga Nasional Bhd (TNB) and GSPARX Sdn Bhd to install solar photovoltaic (PV) energy generating system with total installed capacity of 422.0-kWp at the designated site of its subsidiaries. Under the deal, GSPARX will install the solar PV energy generating systems at Perak Transit's Terminal Meru Raya in Ipoh, Kampar Putra Sentral in Kampar, and at three petrol stations. Perak Transit, which also provides public bus services, said its subsidiaries will purchase and accept the energy generated, and make payments based on monthly billings issued by TNB. (The Edge)

Pertama Digital Bhd's China-based foreign directors have resigned from its board, following the sale of its textile business in China for RM70.0m in August 2022. Group managing director Pan Ding and executive director Pan Dong had resigned, effective 22nd September 2022, and did not have any disagreement with the board. (The Edge)

Astro Malaysia Holdings Bhd's group chief executive officer, Henry Tan Poh Hock will be retiring on 31st January 2023. Tan will continue to serve as adviser to strengthen Astro's content pipeline to serve the group's businesses and platforms. For its succession plan, current group chief operating officer Euan Daryl Smith will be appointed as group CEO-designate with immediate effect.

Separately, Astro’s 2QFY23 net profit increased 13.0% YoY to RM98.5m, mainly due to the lower net financing and depreciation costs. Revenue for the quarter, however, fell 13.1% YoY to RM921.1m. A second interim single-tier dividend of 1.0 sen per share, payable on 25th October 2022 was declared. (The Edge)

Genting Malaysia Bhd has announced 3 additional rides at its Genting SkyWorlds theme park are expected to be commissioned within 4Q22, as the casino and hotel operator plans investments in targeted events and promotions to drive leisure traffic to its hilltop resort in Pahang. (The Edge)

Sarawak Cable Bhd (SCable) has appointed Joseph Nixon S Lourdesamy as its acting chief executive officer, effective immediately. Joseph Nixon, 52, has more than 29 years of experience in finance, operations and management in various sectors including trading, manufacturing and construction and engineering, procurement, construction and commissioning projects. (The Edge)

Microlink Solutions Bhd has secured a 5-year contract worth RM48.6m from Koperasi Co-opbank Pertama Malaysia Bhd (CBP) for the upgrade of its existing MiBS core banking platform. Microlink Systems Sdn Bhd has accepted a letter of offer from CBP, which entails 2 years of implementation and 3 years of maintenance and support, commencing next month. (The Edge)

Catcha Digital Bhd has been granted another 6 months, which is up to 5th April 2023 by Bursa Securities to complete its proposed regularisation plan. Earlier, Bursa had approved Catcha Digital’s revised proposed regularisation plan about 19 months, after the Guidance Note 2 (GN2) company first proposed its acquisition of iMedia Asia Sdn Bhd in September 2020. (The Edge)

Paramount Corp Bhd is disposing of its remaining stake in education units Paramount Education Sdn Bhd (PESB), Sri KDU Klang Sdn Bhd (SKK) and Sri KDU Sdn Bhd (SK) to XCL Education Malaysia Sdn Bhd for RM120.0m cash. This will mark Paramount’s exit from the education business. (The Edge)

Omesti Bhd has bagged a 1-year contract from Telekom Malaysia Bhd (TM) valued at RM20.0m. The work contract comprises design, development, customisation, configuration, delivery, installation, integration, testing, commissioning and knowledge transfer for mobile services business support system. (The Edge)

Apex Equity Holdings Bhd’s 2 substantial shareholders; Fun Sheung Development Ltd (15.8% stake) and Yenson Investments Ltd (5.2% stake), have filed a lawsuit to stop the tabling of a resolution for the approval of a mandate to allot and issue new shares. The resolution, if approved by shareholders at an extraordinary general meeting (EGM) scheduled for 29th September 2022, will provide the company a general mandate to allot and issue shares pursuant to Sections 75 and 76 of the Companies Act 2016. (The Edge)

CTOS Digital Bhd further raised its equity interest in RAM Holdings Bhd to 57.7% after buying out MUFG Bank (Malaysia) Bhd’s 2.1% stake in the credit reporting firm for RM6.0m. The acquisition will be fully funded by bank financing. (The Edge)

Source: Mplus Research - 27 Sept 2022