Market Review

Malaysia: The FBM KLCI (-0.7%) extended its losing streak as losses in industrial products & services heavyweights outweighed gains in telecommunication and banking. Meanwhile, the lower liners ended in the negative territory, with the industrial products & services sector (-1.9%) being one of the worst performers.

Global markets: Wall Street snapped a four-session losing streak to end higher, but gains were capped as investors mulled over Bank of Japan’s loosening of bond yield cap. The European stockmarkets ended mixed, while Asia stockmarkets were in the red.

The Day Ahead

The FBM KLCI was in line with the regional markets’ slump after Bank of Japan widened the allowable band for long-term yields to 50 basis points from 25 basis points previously. Nevertheless, we believe the key index is poised for a rebound amid reducing selldown from foreign investors, as well as the rebound move on Wall Street overnight. Also, window dressing activities may kick in towards year end. Commodities wise, the Brent crude oil price traded below USD80, while the CPO price retreated below RM3,950 as drop in exports from Malaysia stoked concern about weaker demand.

Sector focus: The construction and building material sectors may gain traction as the Transport Ministry agreed to review five development projects with a total contract value of RM650.0m. Meanwhile, we favour consumer, O&G as well as the technology sector for the session – the latter could rebound in view of slightly positive mood on Wall Street.

FBMKLCI Technical Outlook

The FBM KLCI retreated for the second session to close below its daily EMA120 level. Technical indicators remained slightly negative as the MACD Histogram extended a negative bar, while the RSI is hovering slightly above 50. Support is pegged along 1,450-1,460, while the resistance is set at 1,500-1,510.

Company Brief

Opcom Holdings Bhd’s shareholders have approved the acquisition of the entire equity interest in T&J Engineering Sdn Bhd for RM90.0m and its subsequent diversification into telecommunication network infrastructure solutions business. The acquisition and diversification are expected to be completed in the 1H23. (The Star)

Poh Kong Holdings Bhd’s 1QFY23 net profit jumped 189.1% YoY to RM15.7m, mainly due to rising demand for gold jewellery and gold investment products, amid a rebound of the economy. Revenue soared 111.3% YoY to RM370.4m. (The Star)

UWC Bhd’s 1QFY23 net profit rose 27.0% YoY to RM29.3m due to the appreciation of the US dollar against the ringgit, and an expansion in capacity to cater for the rising order book from the semiconductor industry. Revenue grew 22.0% YoY to RM92.1m. (The Edge)

Scomi Group Bhd’s proposed scheme of arrangements with its creditors has received the High Court’s approval. The decision came after the majority of its creditors voted in favour of the proposed scheme at a court-convened meeting on 15th November 2022. Scomi fell into Practice Note 17 status in December 2019, after its shareholders’ equity spread slipped below 25.0% of its issued share capital and its equity dropped below RM40.0m. (The Edge)

PBA Holdings Bhd said the water intake fee in Penang for 2023 remains at three sen per cubic metre, based on the annual actual production volume for the year. This was informed by the Penang government in a letter to PBA’s subsidiary Perbadanan Bekalan Air Pulau Pinang Sdn Bhd. The water intake fee will not have any effect on its issued share capital and shareholdings of the substantial shareholders, while the fee is not expected to have any material effect on the net assets and the earnings of the group for 2023. (The Edge)

JAKS Resources Bhd has proposed to undertake a private placement of up to 292.2m new shares, to raise up to RM74.4m, based on an illustrated issue price of 25.4 sen per share. Of the amount, RM43.0m will be used to repay credit facilities and lower the group’s net gearing ratio to 0.21 times, from 0.28 times as at end September. Another RM30.7m will be used as working capital and the remainder will be used to cover expenses related to the placement. (The Edge)

TDM Bhd’s 3.75%-owned Indonesian unit, PT Rafi Kamajaya Abadi, has failed in its appeal against Indonesia’s Ministry of Environment and Forestry in relation to a fire incident in 2019 at its land in West Kalimantan province. The unit was ordered by the Pontianak High Court to pay a compensation of 188.98 bn rupiah (RM53.5m) to the National Account of Indonesia for environmental loss in relation to the year 2019 fire that occurred at the unit’s plantation. (The Edge)

GIIB Holdings Bhd’s three shareholders — Tai Boon Wee, Wong Ping Kiong and Teng Pik Sun — with a combined stake of more than 10.0% in the group, have requisitioned for an extraordinary general meeting to remove Wong Weng Yew as a non-executive director of the group. (The Edge)

Citaglobal Bhd’s major shareholders’ takeover offer for the remaining shares in the group received a lukewarm response from minority shareholders. Only 17,365 shares, or less than 0.01% of the group’s total share base, were sold to the offerors, namely TIZA Global Sdn Bhd, Tan Sri Mohamad Norza Zakaria and persons acting in concert. This raised the offerors’ collective shareholding to 943.3m shares, from 943.3m. In percentage terms, their stake remains at 50.23%. (The Edge)

Malaysia Airports Holdings Bhd (MAHB) recorded 5.2m passenger movements for its 39 airports in the country in November 2022, reaching 60.0% of what was posted for the same month in 2019, before the Covid-19 outbreak in 2020. This was more than double the 2.3m passenger movements recorded for the same month in 2021. Airports in Malaysia recorded 2.9m domestic passenger movements last month, despite November being a typically slower month. Malaysia’s international passenger movement volume also continued to recover in November, recording 2.2m, a significant increase from the 150,000 seen in the same month last year, when international borders had yet to reopen. (The Edge)

Source: Mplus Research - 21 Dec 2022

Source: Mplus Research - 21 Dec 2022