Extended pullback

Market Review

Malaysia:. The FBM KLCI (-0.1%) remained downbeat for the fifth straight session, marred by weakness in Petronas-related and selected banking heavyweights yesterday. The lower liners, however, closed mixed, while the construction (+0.2%) and plantation sector (+0.1%) outperformed their sectorial peers.

Global markets:. Wall Street rebounded as the Dow (+0.6%) rose ahead of the Producer Price Index data to be released tonight that will provide some guidance towards the final US Federal Reserve meeting for 2022 next week. The European stockmarkets ended mixed, while the Asia stockmarkets closed mostly in red.

The Day Ahead

The FBM KLCI was dragged down marginally by the selldown in Petronas-linked heavyweights; 5-day net foreign selling stood at year-to-date high of RM938.8m. The global stock markets are deploying a wait-and-see approach as investors are waiting for more details from the upcoming FOMC meeting, focusing on the US Fed’s interest rate decision next week. Nevertheless, we believe some bargain hunting activities to emerge on the domestic front following the Covid-19 easing measures in China. Commodities wise, the Brent crude oil price traded above USD76, while the CPO price hovered above RM3,950.

Sector focus:. Following the rebound on Wall Street, the technology sector could see some buying momentum. Besides, investors may look at the building materials sector while waiting for the re-tabling of Budget 2023. For the China’s reopening theme, we like the tourism, aviation, airports and consumer. Meanwhile, the energy sector may stay in a negative biased tone amid declining crude oil price.

FBMKLCI Technical Outlook

The FBM KLCI recorded marginal losses amid persisted downbeat trading. Technical indicators remained mixed as the MACD Histogram extended a negative bar, while the RSI is still hovering above 50. The support is set along 1,450-1,460, while the resistance is monitored at 1,480-1,500.

Company Brief

Bermaz Auto Bhd’s (BAuto) 2QFY23 net profit jumped 152.2% YoY to RM65.7m, due to the continued fulfilment of the substantial back orders received prior to the expiry of the sales tax exemption incentive on 30th June 2022. Revenue for the quarter grew 61.8% YoY to RM783.0m. A second interim dividend of 3.5 sen, payable on 6th January 2023 was declared. (The Star)

Mitrajaya Holdings Bhd has secured a contract for the construction and completion of 2 blocks of housing apartments and ancillaries at Bandar Tun Razak, Kuala Lumpur, for RM265.9m. The contract is for a duration of 40 months from the date for possession of the site on 15th December 2022 and is expected to be completed by 14th April 2026. (The Star)

Sime Darby Motors, the automotive arm of conglomerate Sime Darby Bhd has earmarked RM500.0m to build 40 showrooms for China's BYD in Malaysia by 2024 to showcase vehicles such as the all-electric SUV model BYD Atto 3. The model will be available in 2 variants, with prices starting from RM149,800 for the standard range and RM167,800 for the extended range. The first showroom is slated to be opened by the middle of December 2022 at TREC Kuala Lumpur. (The Edge)

Gamuda Bhd has allocated RM2.00bn for investment in renewable energy businesses over the next 5 financial years to tap the demand for renewable energy. The investment will be funded by the group's internally-generated funds or borrowings, but unlikely to be financed through equity fundraising. Separately, Gamuda announced the retirement of its independent and non-executive chairman Datuk Mohammed Che Hussein effective 8th December 2022, whom has been on the company’s board as chairman since December 2013. (The Edge)

Sapura Energy Bhd’s 3QFY23 net profit stood at RM10.2m vs. a net loss of RM669.3m recorded in the previous corresponding quarter, due to lower recognition of provision for foreseeable losses, lower project costs recognised, lower depreciation, higher share of profit from associates and joint ventures, and a favourable foreign exchange gain. Revenue for the quarter, however, declined 12.4% YoY to RM1.28bn. (The Edge)

Sarawak Consolidated Bhd shareholders have refused to approve the payment of directors’ fees and benefits of up to RM900,000 for the period end-February 2022 to 7th December 2022 at the group’s 46th annual general meeting (AGM) held on 8th December 2022. Also rejected was a resolution to seek approval for the payment of the same to the tune of RM1.0m for the period spanning 8th December 2022 till the next AGM. (The Edge)

Cypark Resources Bhd and its indirect subsidiaries have been awarded feed-in approval certificates by the Sustainable Energy Development Authority (Seda) for a period of 21 years, while Tenaga Nasional Bhd will purchase the electricity from the project companies at pre-agreed feed-in tariff rates. The first biogas project is in Layang-Layang Johor, and the second is in Kemaman, Terengganu. Meanwhile, a floating solar plant in Pasir Mar, Kelantan is scheduled to begin operations in May 2023. (The Edge)

Scientex Bhd’s 1QFY23 net profit rose 4.2% YoY to RM107.2m, due to healthy contributions from its packaging and property divisions. Revenue for the quarter added 11.0% YoY to RM1.03bn. (The Edge)

Paramount Corp Bhd deputy group chief executive officer Benjamin Teo Jong Hian has emerged as a substantial shareholder in the property developer. Teo, who is the son of the group’s late chairman Datuk Teo Chiang Quan, is deemed to have an interest in 178.3m Paramount shares pursuant to a transmission of these shares on 8th December 2022. He holds a 0.2% direct stake or 1.4m shares in the company, and 28.7% indirect stake (178.6m shares). (The Edge)

Reneuco Bhd has inked a joint venture agreement with the Terengganu government for the development of a mixed housing project in Kuala Nerus. The project comprises of 636 units of Type A affordable housing, 360 units of Type B affordable housing and commercial housing. The gross value for the project is RM293.8m and would be completed within 60 months. (The Edge)

LFE Corp Bhd proposed a private placement to partially fund the acquisition of the remaining 49.0% stake in construction firm Cosmo Property Management Sdn Bhd. The private placement entails the issuance of 240.4m new shares to raise RM20.8m based on an issue price of 8.64 sen apiece and it would use RM20.5m of the private placement’s proceeds for the partial settlement of the RM29.4m price of acquiring the Cosmo Property stake. (The Edge)

Ranhill Utilities Bhd’s unit bagged a RM15.0m contract for the provision of detailed design engineering services for the Rosmari-Marjoram gas project’s solar power offshore platform for Sarawak Shell Bhd. The contract was awarded by Malaysia Marine and Heavy Engineering Holdings Bhd’s wholly-owned subsidiary on 5th October 2022. (The Edge)

Malaysian Bulk Carriers Bhd (Maybulk) is planning to pay shareholders an additional interim special dividend of 3.5 sen for its financial year ending 31st December 2022, on top of the 6.5 sen special dividend it announced last month along with its 3QFY22 results. Both the special dividends, totalling 10.0 sen, are payable on 5th January 2023. (The Edge)

Source: Mplus Research - 9 Dec 2022