Sentiment turns jittery

Market Review

Malaysia:. The FBM KLCI (-0.9%) extended its losses after the market sentiment turned jittery with investors trimming their position prior to the GE15. The lower liners, however, remained mixed, while the healthcare sector (-2.3%) snapped a 7- day winning streak on profit taking activities.

Global markets:. The US stockmarkets ended mildly lower with the Dow rising 0.2% after the Producer Price Index in October rose 8.0% YoY; below consensus expectations of 8.3% YoY rise, which eases the inflationary pressure concerns. Both the European and Asia stockmarkets ended mostly positive.

The Day Ahead

The FBM KLCI ended lower, underperforming the regional bourses as jittery sentiment prevailed ahead of GE15 and the foreign investors have turned net seller for the session. We believe the optimism from Wall Street overnight, which sparked by a cooler-than-expected October Producer Price Index in the US that signalled a cooler inflation environment may spilled over to the global stock markets. Nevertheless, local investors may remain cautious towards the GE15. Commodities wise, the crude oil price sustained above USD93 per barrel mark, while the CPO price hovered above RM4,050.

Sector focus:. The technology sector may gain momentum following a rebound in Wall Street Nasdaq overnight. Besides, selected building material, construction and property counters may trade higher ahead of GE15. Also, we like the consumer sector for its defensive characteristic.

FBMKLCI Technical Outlook

The FBM KLCI sank further, closing just above its daily EMA9 level. Market breadth, however, remained positive as the MACD Histogram extended a positive bar, while the RSI hovered above 50. Resistance is envisaged along 1,480-1,500, support is set at 1,420-1,430.

Company Brief

Dialog Group Bhd’s 1QFY23 net profit dropped 1.6% YoY to RM125.8m, due to higher material price and labour cost. Revenue for the quarter, however, rose 40.8% YoY to RM711.7m. (The Star)

PLS Plantations Bhd’s trading and export subsidiary, Dulai Fruits Enterprise Sdn Bhd has signed an export and exclusive distribution agreement with COFCO Food Import Co Ltd. COFCO Food is the import and distribution subsidiary of China Oil and Foodstuffs Corporation (COFCO) in Shanghai. (The Star)

Affin Bank Bhd’s shareholders unanimously voted to approve the single-tier special dividend payout of 18.09 sen per share, amounting to RM400.2m, following the divestment of a 63.0% stake the group owned in Affin Hwang Asset Management Bhd, which was completed on 29th July 2022. Moving forward, Affin Islamic Bank Bhd aims to grow its loans with small and medium enterprises with many are still facing challenges to obtain funding in a tough economic environment. (The Edge)

Dutch Lady Milk Industries Bhd’s (DLMI) 3QFY22 net profit rose 19.7% YoY to RM24.4m, on robust demand for the group’s products, higher sale prices and strong cost management actions. Revenue for the quarter gained 16.2% YoY to RM337.8m. A second interim dividend of 25.0 sen per share, payable on 13th December 2022 was declared. (The Edge)

Hektar Real Estate Investment Trust’s (Hektar REIT) 3QFY22 net property income rose 77.2% YoY to RM18.3m, mainly due to higher revenue recognition and improved NPI margin, besides reversal of impairment losses of trade receivables. Revenue for the quarter climbed 62.4% YoY to RM31.1m. (The Edge) Teo Seng Capital Bhd’s 3QFY22 net profit plunged 77.3% YoY to RM0.5m, dragged down by higher operating costs, finance costs and tax expenses. Revenue for the quarter, however, rose 15.3% YoY to RM166.6m. (The Edge)

Malaysian Bulk Carriers Bhd (Maybulk) has called off its plan to diversify into the grocery retail business, as conditions precedent of the relevant agreement had not been fulfilled by the cut-off date on 14th November 2022. The dry bulk carrier operator had announced 3 months ago that it planned to invest RM54.4m for the grocery foray via a collaboration with the operator of a retail chain under the Tunas Manja Group. (The Edge)

Minetech Resources Bhd has inked an original equipment manufacturing agreement with Cretpaver Asia Sdn Bhd (CASB) to manufacture and trade bituminous products, with an estimated contract value of RM10.0m per annum. The agreement was entered through Minetech Asphalt Man International Sdn Bhd (Mami), an 85.0%-owned subsidiary of Minetech. (The Edge)

Scomi Group Bhd announced that its proposed scheme of arrangement has been approved by the majority of its creditors. This came after a court-convened meeting earlier in the day for the creditors to consider and vote on the proposed scheme. Separately, Scomi requested for further extension of time from Malayan Banking Bhd (Maybank) to pay the settlement sum under the revised settlement proposal. (The Edge)

Source: Mplus Research - 16 Nov 2022