Energy and plantation sectors to be focused

Market Review

Malaysia:. The FBM KLCI closed flat in a volatile session as final-hour buying momentum in SIMEPLT pushed the key index higher, but upside was capped on persisting concerns over potential global recession. Meanwhile, the lower liners ended mixed, while rallies in the healthcare sector (+3.8%) persisted.

Global markets:. The US stockmarkets closed mixed with the Dow eked out marginal gains while Nasdaq slid as investors weighed the continuation of high yields coupled with concerns over economic outlook for 2023 has dampened the technology stocks. The European and Asia stockmarkets were largely in the green.

The Day Ahead

The FBM KLCI traded unchanged at the start of holiday-shortened week amid worries over the worsening Covid-19 situation in China. While quick profit-taking activities on Wall Street could imply that the outlook remained gloomy on the global front, we believe the local bourse may poised for further recovery on the back of bargain-hunting activities as China’s loosening of Covid-19 quarantine measures should boost tourism activities going forward. Commodities wise, the Brent crude oil price steadied above USD84 on prospects for reopening demand from China as well as Russia’s banning of supply to countries that impose a price cap. Meanwhile, the CPO price settled above RM4,100.

Sector focus:. Rallies in healthcare stocks may continue as China’s plan on loosening its Covid-19 quarantine rule for inbound travellers may lead to a higher number of Covid-19 cases. Besides, investors may look out for commodities related stocks such as oil & gas and plantation amid rising commodities prices.

FBMKLCI Technical Outlook

The FBM KLCI closed flat and well supported above its daily EMA9 level. Technical indicators remained mixed as the MACD Histogram extended a negative bar, while the RSI is hovering above 50. Resistance is set along 1,500-1,510, while the support is located at 1,460, followed by 1,450.

Company Brief

Ranhill Utilities Bhd’s indirect unit, Ranhill Water Services Sdn Bhd (RWS), has secured a RM38.5m project from the Public Works Department (JKR) for the upgrading of the piping system for treated water supply at the Royal Malaysian Navy Base, Lumut, Perak. The project is estimated to span 27 months starting from 6th January 2023, and be completed by 27th March 2025. (The Star)

Techbond Group Bhd has entered into a conditional share sale agreement with Chemquest Sdn Bhd to acquire 13.9m ordinary shares, representing 99.57% equity interest in Malayan Adhesives and Chemicals Sdn Bhd (MAC) for RM57.0m cash. MAC is involved in the manufacturing and marketing of adhesives, resins, additives, formaldehyde, and phenoset microspheres. The acquisition was in line with the group's long-term strategy to expand its products and geographical reach. (The Star)

G Capital Bhd's 96%-owned Gunung Hydropower Sdn Bhd has signed a 21-year renewable energy power purchase agreement with Tenaga Nasional Bhd (TNB). Under the deal, TNB will buy electricity generated by Gunung Hydropower's Perak mini-hydropower plant at a feed-in-tariff rate of 24.6 sen per kilowatt hour. The agreement will commence from the commercial operation date of the plant, slated for 11th May 2027. (The Star)

KNM Group Bhd, which announced a default on three credit facilities totalling RM417.6m earlier this month, has triggered another default with a principal repayment of US$3.4 (RM15.0m) and interest of US$16,104 (RM71,227) to the Bank of China (Malaysia) Bhd. The default, via its wholly owned KNM Capital Labuan Ltd, occurred on 26th December 2022. (The Star)

Berjaya Corp Bhd's (BCorp) major shareholder and chairman Tan Sri Vincent Tan Chee Yioun has trimmed his stake at the diversified group, which is in the midst of evaluating a potential acquisition involving a licensed entity governed by Bank Negara Malaysia under the Financial Services Act 2013. To initiate his stake sale, the tycoon sold 400.0m shares via direct business transaction on 22nd December 2022. Tan owns a 12.95% direct interest and a 13.29% indirect interest after the share sales. (The Edge)

Minority shareholders of Comintel Corp Bhd have been advised to reject a mandatory takeover offer launched by the company's largest shareholder Datuk Jackson Tan Kak Seng to acquire the remaining shares he does not own at 15 sen apiece or RM25.0m. Independent adviser BDO Capital Consultants Sdn Bhd held the view that the offer is "not fair and not reasonable" and recommended that shareholders reject Tan's offer. (The Edge)

Toyo Ventures Holdings Bhd, whose share price gained 65.0% in the last week, is going to issue irredeemable convertible unsecured loan stocks to settle RM354.0m worth of debts related to its Vietnam power plant project. The manufacturer plans to issue 295.0m ICULS at RM1.20 apiece to settle the bulk of the RM355.2m debt owed to three creditors — Ng Lu Siong @ Ng Soon Huat, Eng Lian (L) Inc, and Bukit Asa Sdn Bhd. (The Edge)

United Malacca Bhd's 2QFY23 net profit fell 56.5% YoY to RM15.7m, as lower crude palm oil prices more than offset higher production. Revenue dipped 2.6% YoY to RM140.1m. A first interim dividend of 5.0 sen per share, payable on 20th January 2023 was declared. (The Edge)

Infomina Bhd's subsidiary Infomina (Thailand) Co Ltd has received a purchase agreement from Siam Commercial Bank Public Co Ltd (SCB) to provide upgrade and transformation solutions to SCB's core banking applications for US$28.4m. The agreement is for the provision of technology application and infrastructure operations, maintenance and support services, as well as to provide solutions to improve and implement the SCBX Group Application Programming Interface gateway. (The Edge)

Source: Mplus Research - 28 Dec 2022