Taking a breather

Market Review

Malaysia:. The FBM KLCI (-0.1%) reversed some of its previous gains, dragged by profit taking activities in selected plantation heavyweights yesterday. The lower liners ended mixed, but the energy sector (+2.6%) led the mostly positive sectorial peers owing to the firmer crude oil prices.

Global markets:. Wall Street closed mixed as the Dow (+0.6%) recorded its fifth day winning streak, but the S&P 500 (-0.6%) and Nasdaq (-1.6%) sank on the lacklustre earnings from several technology firms such as Meta Platforms, Amazon and Apple. Both the European and Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI retreated as profit-taking activities emerged amid mixed regional performances led by plantation heavyweights. Given the mixed sentiment on Wall Street following the selldown in tech giants in the US, coupled with the interest rate hike by the European Central Bank, we believe the negative sentiment may spillover to the local front and the FBM KLCI could have limited upside potential for the near term. Commodities wise, the Brent crude oil price continued to climb above USD96 per barrel mark, while the CPO price sustained above RM4,100.

Sector focus:. We believe the rising crude oil price will benefit the trading activities within the energy counters. Meanwhile, the technology counters may track the negative performance on Nasdaq following a gloomy earnings season. We continue to favour construction, building material segment, solid consumer, and banking stocks prior to GE15. Meanwhile, export-oriented counters may be the beneficiaries of weakening MYR.

FBMKLCI Technical Outlook

The FBM KLCI staged a pullback but managed to sustain above its daily EMA60 level. Technical indicators remained positive, but looking toppish as the MACD Histogram is forming a rounding top. However, the RSI hovered above 50. Resistance is envisaged along 1,465-1,485, while the support is set at 1,400-1,420.

Company Brief

Gamuda Bhd together with Asia World Engineering & Construction Co (AWEC) has secured a RM2.13bn underground railway project in Taiwan. The contract was for the construction and completion of TaoYuan City underground railway project package CJ18 PingZhen Commuter Station at Taiwan by the Taiwan Ministry of Transportation and Communications’ Railway Bureau, a Taiwan state-owned railway company. The project, which has a duration of 96 months, was awarded to Gamuda and AWEC and will be undertaken by an unincorporated 60:40 joint venture comprising Gamuda and AWEC respectively. (The Star)

ViTrox Corporation Bhd’s 3QFY22 net profit grew 20.4% YoY to RM50.8m, boosted by the strengthening of the USD and favorable product mix. Revenue for the quarter rose 10.3% YoY to RM185.6m. (The Star)

Permodalan Nasional Bhd's (PNB) attempt to block Hong Leong Bank Bhd's proposed general mandate to issue and allot shares at the bank's AGM failed to come to fruition. PNB, however, did not reveal details of the rationale for the exercise and the utilisation purpose of the funds to be raised. PNB still voted in favour of the remaining eight proposals at the AGM including the reelection of directors and reappointment of PricewaterhouseCoopers PLT as the bank's auditor. (The Edge)

Malayan Banking Bhd (Maybank) has revised its return on equity target down to 11-12% by 2025 in its latest midterm strategy, dubbed M25+, from 13-15% previously, on expectations of higher investment and growing uncertainties in global economy. (The Edge)

Bursa Malaysia Securities Bhd has approved the listing of and quotation for 3.96bn new ordinary shares in Digi.com Bhd to be issued pursuant to the proposed merger with Axiata Group Bhd’s unit, Celcom Axiata Bhd. Digi must first fully comply with the relevant provisions under the listing requirements pertaining to the implementation of the proposed merger. (The Edge)

Unisem (M) Bhd's 3QFY22 net profit rose 53.3% YoY to RM61.7m, attributable to better average selling prices coupled with the appreciation of the USD. Revenue for the quarter gained 20.0% YoY to RM439.7m. A second interim dividend of 2.0 sen per share, payable on 23rd November 2022 was declared. (The Edge)

British American Tobacco (M) Bhd's (BAT) 3QFY22 net profit dropped 4.3% YoY to RM75.3m, due to non-deductible expenses and one-off prosperity tax. Revenue for the quarter, however, grew 8.8% YoY to RM666.9m. A third interim dividend of 25.0 sen per share, payable 18th November 2022 was declared. (The Edge)

Lotte Chemical Titan Holding Bhd’s (LCT) 3QFY22 net loss stood at RM355.5m vs a net profit of RM48.5m recorded in the previous corresponding quarter, due to a decline in margin spread, write down of inventories to net realisable value of RM71.9m and the share of loss from associated company, Lotte Chemical USA Corp. Revenue for the quarter, however, grew 6.1% YoY to RM2.37bn. (The Edge)

Pavilion Real Estate Investment Trust’s 3QFY22 net property income (NPI) jumped 90.0% YoY to RM90.2m, thanks to increased revenue as well as lower property operating expenses. Revenue for the quarter grew 26.7% YoY to RM143.6m. (The Edge)

CTOS Digital Bhd’s 3QFY22 net profit jumped 95.0% YoY to RM22.8m, driven by higher revenue and share of profit from associates. Revenue for the quarter added 37.0% YoY to RM52.9m. An interim dividend of 0.6 sen per share, payable on 14th December 2022 was declared. (The Edge)

WTK Holdings Bhd's wholly-owned unit WTK Alpha Sdn Bhd is acquiring BHB Sdn Bhd, which operates an oil palm plantation in Miri, from Sibu-based Harvard Master Sdn Bhd (HMSB) for RM237.5m. WTK Alpha is also buying a palm oil mill in Sungai Niah in Miri from HMSB for RM12.5m. The acquisitions are deemed as related party transactions as WTK managing director and shareholder Datuk Seri Patrick Wong Haw Yeong is also a director of WTK Alpha, BHB and HMSB. (The Edge)

Source: Mplus Research - 28 Oct 2022