Budget 2023 in focus

Market Review

Malaysia:. The FBM KLCI (-0.01%) erased all its intraday gains as profit taking activities took hold in selected oil & gas and plantation heavyweights in the final hour of the trading session yesterday. The lower liners, however, advanced, while the broader market ended mostly higher, led by the healthcare sector (+2.0%).

Global markets:. Wall Street turned volatile as the Dow (-1.2%) slipped ahead of the unemployment rate data which perceived to be stable and that may re-iterate the US Federal Reserve hawkish stance on future interest rate direction. The European markets remained in red, while the Asia markets closed mixed.

The Day Ahead

The FBM KLCI booked marginal losses as investors took profit in the final hour. Meanwhile, the Wall Street has reversed its course after a few days of rebound. Given the selldown on Wall Street, we expect the market may remain volatile in the global scene, while investors on the local front may trade cautiously ahead of the tabling of Budget 2023. Commodities wise, the crude oil price climbed above USD94 as investors mulled over OPEC+’s decision to cut production, while the CPO price hovered above RM3,750.

Sector focus:. Selected consumer, construction, solar related, and telecommunication stocks may be in focus ahead of the Budget 2023. Meanwhile, buying momentum is likely to sustain in the healthcare sector especially the glove counters given its improving outlook. Also, we opine that the energy sector should see further buying interest following the rise in crude oil price.

FBMKLCI Technical Outlook

The FBM KLCI ended marginally lower after wiping out all its intraday gains on final-hour selldown. Technical indicators remained mixed as the MACD Histogram extended a positive bar, while the RSI hovered below 50. Resistance is envisaged along 1,430-1,450, while the support is located at 1,385-1,400.

Company Brief

Citaglobal Bhd’s shareholders have approved its proposed acquisition of the entire equity interest in Citaglobal Engineering Services Sdn Bhd (CESSB) for RM140.0m. The proposed acquisition would be satisfied via the issuance of 736.8m new shares at an issue price of 19 sen each, and is expected to be completed in 4Q22. Its shareholders also approved the proposed consolidation of every 5 existing Citaglobal shares into 1 Citaglobal share on an entitlement date that will be determined at a later period. The proposed acquisition comes with a net profit guarantee of RM60.0m over 3 financial years, beginning from FY22 to FY24. (The Star)

Nestcon Bhd has secured a contract worth RM91.2m from Euro Saga Sdn Bhd for the Nenggiri Hydroelectric project. The total provisional sum shall be claimable by and payable to Nestcon Infra on a progressive claim based on the work done. The expected completion date for the construction works is by 25th April 2026. (The Star)

Yinson Holdings Bhd via its indirect unit has secured a US$720.0m (RM3.33bn) syndicated loan facility for the FPSO Maria Quitéria project. The 6-year limited recourse loan will be used to support the ongoing construction of the FPSO, which was awarded to Yinson by Petróleo Brasileiro SA (Petrobras) in November 2021. (The Edge)

TPG Capital and Johor Corp have halted talks about taking KPJ Healthcare Bhd private. The private equity firm and the investment arm of the Johor State government have been unable to agree on the terms of the potential purchase of Malaysia’s largest private-hospital operator, including its valuation. (The Edge)

Malaysian Resources Corp Bhd (MRCB) is buying Quill Resources Holding Sdn Bhd (QRH)’s 39.0% stake in Sentral REIT’s manager Sentral REIT Management Sdn Bhd (SRM). Sentral REIT, however, did not specify how much MRCB will pay for the stake in SRM. (The Edge)

MY EG Services Bhd (MYEG) and Mimos Technology Solutions Sdn Bhd have agreed to explore a collaboration on developing and operating the national Layer 1 public blockchain. They plan to do this using Zetrix and Mimos blockchain technology as the components of the Malaysia Blockchain Infrastructure, which is a key element of the National Blockchain Roadmap that was launched by the government on 9th August 2022. (The Edge)

Mynews Holdings Bhd’s subsidiary has been served with a winding-up petition over a rental dispute involving a retail lot at the Pacific Express Hotel. The group wholly owned Mynews Retail Sdn Bhd entered into a 3-year tenancy agreement with landlord Kumpulan Hamzah Kwong Hing Realty Sdn Bhd in 2014, with an option to renew for a further 3 consecutive terms of 3 years each. After renewing the tenancy once in 2017, the intention to discontinue the tenancy was hampered by the landlord, who alleged that Mynews Retail purportedly renewed summarily for all 3 terms of 3 years in 2017. (The Edge)

Source: Mplus Research - 7 Oct 2022