Sentiment turning calmer

Market Review

Malaysia:. The FBM KLCI (+0.8%) extended its recovery move after hovering in the positive region for the entire trading session, in line with the gains from Wall Street overnight. The lower liners also marched higher, while the plantation sector (-1.1%) was the sole underperformer amongst the sectorial peers.

Global markets:. Wall Street extended its lead as the Dow (+2.8%) roared above 30,000, on the back of soft economic data whereby job openings fell to 10.1m in August 2022 (the lowest since June 2021) and a decline in US treasury yield. The European markets stayed upbeat, while the Asia markets ended on a positive note.

The Day Ahead

The FBM KLCI witnessed further gains as selected telecommunication, consumer, and banking heavyweights lifted the key index; the foreign funds turned net buyer after a 14-session selloff. We believe the local bourse may set for further recovery on the back of stronger oil price, coupled with bargain hunting activities ahead of the tabling of Budget 2023. On the commodity markets, the crude oil surged above USD91 per barrel after American Petroleum Institute reported a surprise draw, while the CPO price hovered above RM3,750.

Sector focus:. We opine that the buying momentum in telecommunications, solar related, and selected consumer stocks are likely to sustain towards the tabling of Budget 2023. Meanwhile, investors may put energy stocks on radar with the rebound in crude oil price. In view of the overnight rally in Wall Street Nasdaq, investors may also see follow-through buying interest in the technology counters.

FBMKLCI Technical Outlook

The FBM KLCI closed above the psychological 1,400 level. Technical indicators could be signalling for further gains as the MACD Histogram contracted nearer towards zero, while the RSI has hooked up above the oversold region. The resistance is monitored at 1,430-1,450, while the support is set along 1,400.

Company Brief

LYC Healthcare Bhd’s 60.0% indirect owned subsidiary LYC Beauty & Wellness Sdn Bhd has completed the acquisitions of Tao Global Ventures Sdn Bhd, a medical aesthetic clinic, a beauty and wellness centre and three dental clinics for RM4.0m. The acquisition of Tao Global comes with a 2-year annual profit guarantee of RM500,000 for FY24 and FY25. (The Star)

Econpile Holdings Bhd has secured a contract worth RM24.6m from Berjaya Construction Bhd to undertake the execution and completion of sub-structure work in Kuala Lumpur. The project would entail piling, pile cap, contiguous bored piling, basements, ground floor and associated works for a proposed block of 41-storey service suites at Jalan Imbi, Kuala Lumpur. The project shall be completed within 13 months from 6th October 2022. (The Star)

Two contractors of the controversial littoral combat ship (LCS) project whose contracts were terminated have sued Boustead Naval Shipyard Sdn Bhd (BNS) for outstanding payments and a declaration that the contracts are not void. The lawsuit was filed by Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED), both of which are 51:49 joint ventures between Boustead Heavy Industries Corp Bhd and Germany's Rheinmetall Group. The suit is seeking an order for BNS to pay CAD and CED a combined value of RM444.24 m. (The Edge)

FGV Holdings Bhd's chief executive officer Datuk Mohd Nazrul Izam Mansor has been appointed to the board of MSM Malaysia Holdings Bhd. He will serve as the sugar refinery operator's non-independent and non-executive director with effect from 4th October 2022. (The Edge)

Farm Fresh Bhd was the most bought new listing by local institutional investors in the 3Q22, up to 29th September 2022, according to Bursa Malaysia. The stock is up 19.3% from its initial public offering price of RM1.35, closing at RM1.61 on 4th October 2022. (The Edge)

Hibiscus Petroleum Bhd has proposed to undertake a RM800.0m capital reduction to eliminate RM690.6m in accumulated losses as of 30th June 2022. The exercise entails a reduction of the issued share capital of Hibiscus via the cancellation of the company's paid-up capital of RM966.0m. Less the RM880,000 estimated expenses for the exercise, the remaining RM108.5m will be credited to the retained earnings, which will be used to facilitate a proposed share buy-back.

Separately, Hibiscus, which had previously questioned the imposition of state sales tax (SST) on its two units operating in Sabah, has proceeded to pay the tax amounting to RM85.7m. The SST was imposed on revenues from petroleum products sold by SEA Hibiscus Sdn Bhd. (The Edge)

Dolomite Corp Bhd has been ordered by the High Court to wind up due to its failure to repay US$38.2m (RM177.4m) of debt. Following a lawsuit filed by Maybank International Labuan Branch in September 2020, the court had given Dolomite until 4th October 2022 to settle the outstanding amount, or be wound up. (The Edge)

Majuperak Holdings Bhd has proposed to collaborate with its 55.0%-shareholder Perbadanan Kemajuan Negeri Perak to jointly develop residential property projects on several land banks measuring 857.8-ac in Perak. (The Edge)

Source: Mplus Research - 5 Oct 2022