Extended upbeat momentum

Market Review

Malaysia:. The FBM KLCI (+1.6%) notched its fifth winning session to outperform its regional peers with more than two-thirds of the key index components rallied. The lower liners were also upbeat, while the energy sector (+3.0%) outperformed the mostly positive sectorial peers following the higher crude oil prices.

Global markets:. The US stock markets reversed all their intraday gains as the Dow (-0.3%) was dragged by the hawkish remarks from the US Federal Reserve officials and a mixed bag of corporate earnings. The European stock markets, however, rebounded, but Asia stock markets closed mostly negative.

The Day Ahead

The FBM KLCI closed at intraday high spurred by persisted buying momentum in PCHEM and selected banking heavyweight after the announcement on the GE15 polling date. Nevertheless, we opine that the local bourse may trade sideways amid prevailing global and local headwinds, such as the political turmoil in the UK following the Prime Minister’s resignation and the still-hawkish Federal Reserve tone on the US interest rate direction. Meanwhile, investors are waiting for the outcome of the GE15. Commodities wise, the crude oil price sustained above USD92, while the CPO price hovered above RM4,000.

Sector focus:. Given the announcement on GE15 polling date, investors may position themselves into political related counters. Besides, China’s possible cutting on inbound quarantine may benefit the airline industry. Meanwhile, the technology sector may see mild profit taking activities following a decline in Wall Street Nasdaq.

FBMKLCI Technical Outlook

The FBM KLCI surpassed its immediate resistance at 1,420 and sustained well above its daily EMA20 level. Technical indicators turned positive as the MACD Histogram extended a positive bar, while the RSI hovered above 50. Next resistance is set along 1,465-1,485, while the support is monitored at 1,400-1,420.

Company Brief

Tenaga Nasional Bhd (TNB) has received approval from the Energy Commission (EC) to implement the Hydro Life Extension Programme for 6 stations in Sungai Perak Power Stations (SSJ Sungai Perak) with an investment of RM5.80bn commencing this year. The utility giant will repower SSJ Sungai Perak with a capacity of 650.9MW. The first unit will be in commercial operation in 2025. (The Star)

Pestech International Bhd’s 60.0% indirect-owned subsidiary Diamond Power Ltd (DPL) has proposed to dispose of its 230kV Kampong Cham-Kratie Transmission System project to Cambodian Transmission II Co Ltd (CTL II) for US$118.0m. Among conditions under the business transfer agreement (BTA) were the exercise must be completed on or before the completion date, which is five days following the Stop Date of 31st December 2022 and CTL II is required to provide a written confirmation of its achievement of financial closing to finance and undertake the disposal. (The Star)

Digi.Com Bhd’s (Digi) 3QFY22 net profit dropped 15.5% YoY to RM264.5m, mainly due to tax provision from the prosperity tax and higher net finance costs, coupled with higher net loss on fixed assets written off and disposed of. Revenue for the quarter fell 3.2% YoY to RM1.53bn. (The Edge)

Hextar Industries Bhd’s 4QFY22 net profit surged 13.3x YoY RM3.1m, driven by higher average selling prices at the fertilisers division and recovery in heavy equipment and equipment rental divisions. Revenue for the quarter jumped 104.9% YoY to RM61.4m. (The Edge)

Caely Holdings Bhd’s new board of directors, led by executive chairman Ng Keok Chai has reported that Virdos Lima Consultancy (M) Sdn Bhd will resume its forensic audit into allegations of suspicious and irregular transactions at the wholly-owned subsidiary Caely (M) Sdn Bhd. (The Edge)

Independent investigative accountant Ferrier Hodgson MH Sdn Bhd (FHMH) has found that there were no fraudulent transactions or misconduct by GIIB Holdings Bhd as alleged by former executive director Wong Weng Yew. The suspicious transactions include the disposal of GIIB Rubber Compound Sdn Bhd’s machinery to Top Rate Engineering Works; the sale of assets by Big Wheel Green Tyres Sdn Bhd to Looe Chee Keong amounting to RM2.7m, and the settlement of disputes owing from Looe of RM5.0m respectively. (The Edge)

Yinson Holdings Bhd has secured a one-month extension of its floating storage and offloading (FPSO) charter contract called FPSO Adoon for RM16.0m. Yinson’s indirect unit Adoon Pte Ltd entered into an agreement with Addax Petroleum Development (Nigeria) Ltd to extend the contract from 17th October 2022 to 16th November 2022. (The Edge)

T7 Global Bhd’s unit has secured a work order from Hibiscus Oil & Gas Malaysia Ltd to undertake well workover, and plug and abandonment services. The two-year work order was awarded to Tanjung Offshore Services Sdn Bhd under the Pan Malaysia Umbrella Contract, on a call-out basis. (The Edge)

K-One Technology Bhd is planning to form a joint venture company in Vietnam to conduct cloud computing business. Its wholly-owned unit G-AsiaPacific Sdn Bhd inked an agreement with Vietnet Distribution Joint Stock Company. (The Edge)

Keck Seng (Malaysia) Bhd is allocating 20.0-ac of its land to the Pasir Gudang City Council to facilitate the development of a new administrative centre in the city. The allocation was made under an agreement signed by the group and its 99.8%-owned subsidiary, Lim & Lim Plantations Bhd. (The Edge)

Dayang Enterprise Holdings Bhd was awarded a contract amendment and extension to provide offshore maintenance, construction and modification services from Petronas Carigali Sdn Bhd from 20th September 2022 to 31st December 2023. The value of the contract, as it is based on work orders issued by Petronas Carigali throughout the extended contract duration. (The Edge)

ILB Group Bhd is aborting its planned purchase of 1,124-sqm of freehold commercial land with shoplots in Petaling Jaya for RM15.9m. The logistics services company and Impian Nuri Sdn Bhd have mutually agreed to terminate the deal, after a condition precedent could not be fulfilled by the 31st October 2022 deadline. (The Edge)

Source: Mplus Research - 21 Oct 2022