Bargain hunting activities could emerge

Market Review

Malaysia:. The FBM KLCI (-0.5%) marked its 5th straight losing session, dragged by weakness in selected telco and oil & gas heavyweights yesterday. The lower liners ended mixed, while the healthcare sector (+3.4%) was the sole outperformer amongst the sectorial peers.

Global markets:. Wall Street staged a sharp rally as the Dow (+2.8%) jumped despite the inflation rate in September 2022 rose 8.2% YoY; as it marks the third monthly decline albeit on a moderate level. The European stock markets also rebounded, but Asia stock markets ended negative.

The Day Ahead

The FBM KLCI fell for another session as it struggled to find its footing amid broad based selldown prior to the US CPI data. However, given the Wall Street rebounded strongly from its intraday low following the US CPI print, we believe the short-term bargain hunting activities may emerge on the local bourse and regional markets. Nevertheless, as we think the inflation remains high and still far from the 2% inflation target of the Fed, we opine that the rebound will be short-lived. Global investors should remain wary in anticipation of further interest rate hikes in the US. Commodities wise, the crude oil price regained momentum, trading above USD94, while the CPO price hovered above RM3,700.

Sector focus:. Investors may pour into safe havens like banking and consumer stocks given the heightened volatility in the market. Besides, with the rebound in Wall Street, we expect the bargain hunting activities to emerge within the technology sector and healthcare stocks may take a breather for today.

FBMKLCI Technical Outlook

The FBM KLCI hit a fresh 52-week low, marking a fifth session of losses. Technical indicators implied signs of negative yet oversold as the MACD Histogram crossed below zero, while the RSI hovered below the oversold 30 level. Support is envisaged along 1,355-1,365, while the resistance is located at 1,400-1,430.

Company Brief

Nestcon Bhd's wholly-owned subsidiary Nestcon Infra Sdn Bhd has been appointed a contractor by Sino Natural Resources Malaysia Sdn Bhd to provide clearance, earthworks and ancillary works on a project site in Mukah, Sarawak, for a provisional contract sum of RM129.6m. The contract will be for a period of 24 months effective from 13th October 2022 to 12th October 2024 with an option to extend for an additional 24 months. (The Star)

Paragon Globe Bhd's wholly-owned subsidiary PGBG Construction Sdn Bhd has accepted a RM2.9m contract from Profit Stream Sdn Bhd for the construction of a single-storey detached factory in Jeram in Pontian, Johor. The appointment is for a period of eight months from the date of commencement. (The Star)

Amanat Lebuhraya Rakyat Bhd (ALR) has completed the acquisition of 4 highway concessionaires; Lingkaran Trans Kota Sdn Bhd, Sistem Penyuraian Trafik KL Barat Sdn Bhd (Sprint), Kesas Sdn Bhd (Kesas) and Syarikat Mengurus Air Banjir dan Terowong Sdn Bhd (Smart), following its issuance of sustainable sukuk murubahah amounting to RM5.50bn in nominal value. Separately, Gamuda Bhd has received a total of RM2.35bn from the equity disposals in Sprint, Litrak and Kesas and RM316.0m for the disposal of its 50.0%-equity in Smart. Kumpulan Perangsang Selangor Bhd, which held the other 20.0% in Sprint has received RM183.4m for the disposal. Gamuda’s 50.0%-owned Lingkaran Trans Kota Holdings Bhd (Litrak), which owns a 100.0% interest in Lingkaran Trans Kota Sdn Bhd and a 50.0% interest in Sprint has received RM2.28bn and RM459.0m respectively. (The Edge)

Atlan Holdings Bhd’s 2QFY23 net profit stood at RM2.6m vs. net loss of RM9.3m recorded in the previous corresponding quarter, thanks to improved revenue contributions from the group’s duty free and automotive segments. Revenue for the quarter swelled 353.8% YoY to RM87.8m. (The Edge)

Binasat Communications Bhd has proposed a bonus issue of free warrants on the basis of 1 warrant for every 2 shares held by the entitled shareholders. Total gross proceeds to be raised, assuming the warrants are fully exercised, is RM40.8m, which will be utilised for the company’s working capital. (The Edge)

Hextar Group chief executive officer Datuk Eddie Ong Choo Meng has raised his stake in fibre optic cable manufacturer Opcom Holdings Bhd to 20.7%, from 17.8% previously. Ong bought a total of 8.1m shares in 3 separate blocks in the open market between 11th October 2022 and 13th October 2022. (The Edge)

Golden Land Bhd has redesignated Tan Sri Hashim Meon as its independent and non-executive chairman, effective 14th October 2022. Hashim, 75, was appointed to the board as an independent and non-executive director on 7th October 2022. (The Edge)

An offshore company, Radio Port Ltd, has emerged as a new substantial shareholder of Cuscapi Bhd after acquiring 4.0m shares, raising its direct interest to 47.7m shares, or a 5.1% stake. The British Virgin Islands-incorporated company acquired the shares on 15th June 2022. (The Edge)

Oriental Holdings Bhd (OHB) is planning to acquire the remaining shares in 3 plantation companies, namely Selasih Permata Sdn Bhd (SPSB); Oriental Boon Siew (Mauritius) Pte Ltd, or OBS (M); and Southern Perak Plantations Sdn Bhd (SPP), for a total of RM802.3m. Simultaneously, with the proposed share acquisitions, OHB also signed agreements with Boontong Estates Sdn Bhd (BESB) to acquire 3 oil palm plantation estates measuring a total of 3,450.4-ha in Penang, Pahang and Kedah amounting to RM397.1m. (The Edge)

Source: Mplus Research - 14 Oct 2022