Ending 3Q22 lower

Market Review

Malaysia:. The FBM KLCI (-0.2%) finished mildly lower to record its 8th straight session of decline as the key index sank -7.8% MoM. Both the lower liners and the broader market ended mixed, with the construction sector (+1.6%) outperformed in the latter ahead of the Budget 2023 announcement this Friday.

Global markets:. Wall Street extended its slide as the Dow (-1.7%) tumbled after the strong personal spending data in August 2022 (+0.4% MoM) continues to expedite the prospects of future interest rate hikes. The European stock markets, however, rebounded, while the Asia stock markets closed mixed.

The Day Ahead

The FBM KLCI wrapped up 3Q22 with a downbeat note as prolonged bearish cue from the global markets coupled with continuous selling from foreign investors dragged the key index lower. We believe global market turmoil will likely to continue, stemming from fear over potential recession in view of the elevated inflation rate. However, we expect mild bargain hunting activities to emerge ahead of the Budget 2023 this week. Commodities wise, the crude oil price fell to trade around USD85, while the CPO gained momentum to close above RM3,410, tracking soybean oil gains.

Sector focus:. Investors may trade on healthcare, solar, and telecommunication related sectors prior to the tabling of Budget 2023 this week. Besides, market may gradually pick up on the transportation and logistics counters as Baltic Dry Index has been rising throughout September 2022. The plantation stocks may gain momentum in tandem with CPO price.

FBMKLCI Technical Outlook

The FBM KLCI marked its eighth session losses last Friday buying interest failed to lift the key index beyond 1,400. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI is still trending below 30. The resistance is pegged along 1,410-1,430, while support is set at 1,365-1,380.

Company Brief

UEM Edgenta Bhd’s wholly-owned subsidiary, Edgenta Arabia Ltd (EAL) hopes to strengthen its presence in Saudi Arabia with a 60.0% equity stake investment in MEEM for Facilities Management Company (MEEM). The proposed investment into MEEM is expected to be completed by 1Q23 upon fulfilment of the local regulatory approvals and conditions precedent of the agreement. (The Star)

Sarawak Cable Bhd has triggered Practice Noted 17 status after its external auditor Ernst and Young PLT expressed a disclaimer of opinion on its audited financial statements for the 17-month period ended 31st May 2022 (FY22). This occurred as it was not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements. (The Edge)

Cypark Resources Bhd’s 3QFY22 net profit fell 29.2% YoY to RM11.8m, dragged by lower revenue as most of its LSS contract jobs are completed. Revenue for the quarter dropped 30.9% YoY to RM45.5m. (The Edge)

MISC Bhd’s subsidiaries have inked 10-year ship lease agreements for 2 newly built liquefied natural gas (LNG) carriers with ExxonMobil Corp’s wholly owned unit SeaRiver Maritime LLC. Charters for the vessels will commence in 2026. (The Edge)

Malaysia Building Society Bhd (MBSB) has obtained a 3-month extension from Bank Negara Malaysia (BNM) to negotiate with Permodalan Nasional Bhd (PNB) over its proposed merger with Malaysian Industrial Development Finance (MIDF) until 5th January 2023. MBSB is 65.9%-owned by Employees Provident Fund while MIDF is wholly owned by PNB. (The Edge)

Mudajaya Group Bhd’s indirect associate Kendiri Emas Mudajaya Sdn Bhd has secured a contract from the Public Works Department of Sarawak (JKR Sarawak) to undertake the design and construction of a vehicle yard and associated facilities at Senari Port in Sarawak for RM56.9m. The project is targeted for completion by October 2024, with a construction period of 24 months. (The Edge)

Pestech International Bhd has secured a contract from the National Grid Corp of the Philippines (NGCP) for the maintenance of a gas-insulated switchgear substation in Subic, Philippines. The contract value spans USD3.9m (RM18.1m) for the offshore portion and another 181.0m pesos (RM14.3m) for the onshore portion. (The Edge)

Encorp Bhd has entered into a deal with LMC Mining Sdn Bhd to undertake the distribution of silica for a 2-year period. LMC has the rights to mine the silica from a piece of 97.7-ac land in Kinta, Perak and a 100.0-ac piece of land in Kuantan, Pahang. Encorp’s wholly owned unit Encorp Construction & Engineering Sdn Bhd is granted the rights to distribute all silica produced from the contract areas. (The Edge)

One day after withdrawing an appeal involving its RM1.02bn suit against Petroliam Nasional Bhd (Petronas), Barakah Offshore Petroleum Bhd has filed a fresh suit against the national oil company for suspending its wholly owned unit’s licence to bid for new projects from the national oil company in 2019. Barakah is seeking a mandatory injunction for the suspension of licence to be lifted, damages for misfeasance in public office, and damages for unlawful interference in trade or business. (The Edge)

Ageson Bhd’s unit Ageson Retails Sdn Bhd has inked a Memorandum of Understanding as part of its proposal to sell 4,000 units of vending machines and retail fridges to Koperasi Belia Nasional Bhd (Kobena) for RM120.0m or RM30,000 per unit. (The Edge)

Lion Industries Corp Bhd (LICB) has proposed a bonus issue of warrants in the form of 1 warrant for every 2 existing shares with a 3-year maturity. The warrants’ entitlement date and exercise price will be determined at a later date. (The Edge)

Destini Bhd’s 70/0%-owned unit Destini ESS Sdn Bhd has been appointed the exclusive distributor in Malaysia for Singapore-based Alpha ESS International Pte Ltd, namely for its energy storage systems for residential and commercial usage, and electric vehicle (EV) chargers. Alpha ESS is part of China-based Alpha ESS Co Ltd, which specialises in the manufacture of battery storage products and intelligent energy management systems. (The Edge)

Source: Mplus Research - 3 Oct 2022