Turning cautious

Market Review  

Malaysia:. The FBM KLCI (-0.7%) was nudged lower on profit taking activities after half of the key index components retreated, while selling pressure from foreign funds accelerated. The lower liners, however, extended their winning run, while the energy sector (+1.8%) took the top spot on the mostly positive sectorial peers.  

Global markets:. Wall Street ended mixed as the Dow (+0.1%) managed to recover all its intraday losses to close mildly higher, but the S&P 500 (-0.1%) and Nasdaq (- 0.2%) fell on the unexpectedly strong jobs data with 263,000 new jobs added in November 2022. Both the European and Asia stockmarkets ended mostly negative.  

The Day Ahead  

The FBM KLCI notched lower on Friday as stock rally ran out of steam with buying momentum turning to the broader market. The market sentiment was mixed on the global front as worries over inflation reignited following the release of US labour market report that showed strong data on wages. Meanwhile, the easing of Covid- 19 restrictions in China may indicate a shift towards economic reopening. On the local front, the formation of the new Malaysia cabinet may improve investors’ confidence on political stability. Commodities wise, the Brent crude oil price traded above USD85, while the CPO price plunged towards RM3,950.

Sector focus:. We believe with the new setup of cabinet; the market may stabilise and trade on certain political linked stocks. Meanwhile, we expect the O&G sector to outperform the broader market as the sector’s earnings have been growing positively over the past few quarters. Also, we like the technology sector with the improving sentiment from Wall Street.

FBMKLCI Technical Outlook

The FBM KLCI retreated as bulls failed to extend amid declined trading volume. Technical indicators remained positive as the MACD Histogram extended a positive bar, while the RSI hovered above 50. Support is located at 1,450-1,460, while the resistance is pegged along 1,500-1,510.

Company Brief

Reservoir Link Energy Bhd’s 51.0% owned subsidiary Founder Energy Sdn Bhd, has won 5 solar contracts worth RM12.1m between October and November 2022. The projects are targeted to be completed between end-2022 and mid-2023. With these contracts, its order book for solar renewable segment rose to RM51.5m. (The Star)

Comintel Corp Bhd is set to resume trade on Bursa Malaysia Securities on 5th December 2022, following the upliftment of the trading suspension of the stock. With the completion of Comintel’s private placement, the company’s regularisation plan has been completed. Comintel triggered the Practice Note 17 criteria on 28th March 2019, after its shareholders’ equity fell below RM24.0m or less than 25.0% of its issued capital. (The Edge)

Shareholders of plantation group Harn Len Corp Bhd have given their approval for the 8-for-5 bonus issue of 399.2m shares by way of poll at an extraordinary general meeting (EGM) held on 2nd December 2022. All shareholders who attended the EGM, who collectively held 140.3m shares, voted for the bonus issue. (The Edge)  

Ireka Corp Bhd is still working on a regularisation plan to address its financial condition after the construction company’s admission into the Practice Note 17 (PN17) list of Bursa Malaysia on 1st March 2022. The company has about 3 months left to submit the plan to the Securities Commission Malaysia and Bursa Securities under the obligations of a PN17 issuer, or face trading suspension and delisting. (The Edge)

Impiana Hotels Bhd has announced that the winding up petition served by Axventure Sdn Bhd over an unpaid sum amounting to RM2.3m relating to a resort redevelopment has been amicably resolved. Axventure filed a notice of discontinuance to discontinue the petition against Impiana’s wholly-owned subsidiary Impiana Cherating Sdn Bhd with liberty to file afresh. (The Edge)

CN Asia Corp Bhd has disposed of 54.5m shares in Zen Tech International Bhd through the open market. CN Asia disposed of 38.6m shares on 30th November 2022, followed by another 15.9 m shares on 1st December 2022. This brings CN Asia’s stake in Zen Tech to 54.1m shares, representing a 6.7% equity interest. (The Edge)

UEM Sunrise Bhd is disposing of 17 parcels of land in Perak, measuring a cumulative 1,776.6-ac to Sunsuria Bhd for RM75.5m, as part of the group’s strategy to monetise non-strategic lands. Notably, 4 of the parcels of land, measuring 42.9-ac, are affected by the settlement of a group of indigenous people. (The Edge)

Meta Bright Group Bhd has proposed to issue 389.5m new shares, or 20.0% of its share capital, to a group of investors, including its biggest shareholder and executive director Datuk Lee Wai Mun. The corporate exercise aims to raise some RM43.8m by pricing the new shares at 11.25 sen apiece, which is a discount of 9.9% to the stock’s five-day volume weighted average price up to 30th November 2022 of 12.49 sen. Of the proceeds raised, 42.5% will be used to develop the group’s solar photovoltaic business; 22.8% each for refurbishment of a four-star hotel in Kota Bharu, Kelantan and for other business opportunities; 11% for general working capital, and the remaining RM400,000 for expenses of the placement exercise. (The Edge)

FoundPac Group Bhd is to fork out RM25.5m to purchase industrial land measuring 8,365-sqm in the Bayan Lepas Free Industrial Zone in Penang, with a double-storey detached factory-cum-office building thereon, to increase its production capacity. FoundPac’s wholly-owned subsidiary FoundPac Technologies Sdn Bhd (FoundPac Tech) entered into a sale and purchase agreement with Zoomic Technology (M) Sdn Bhd, a unit of Iqzan Holding Bhd, to purchase 2 adjoining lots of industrial land. (The Edge)

Source: Mplus Research - 5 Dec 2022