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Mplus Market Pulse - 29 Dec 2022

Publish date: Thu, 29 Dec 2022, 06:30 PM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Energy and plantation sectors to be focused

Market Review

Malaysia:. The FBM KLCI (+0.4%) ended in the positive territory with selected banking and telecommunications heavyweights leading the rebound amid year-end window dressing activities. The lower liners declined, while the healthcare sector (- 2.1%) took a breather following the rally in view of the Covid situation in China.

Global markets:. The US stockmarkets sank as investors could be pricing in a potential recession in 2023 and carefully assessed China’s move to reopen its economy amid surging Covid-19 cases. The European and Asia stockmarkets were largely splashed in red.

The Day Ahead

The FBM KLCI outperformed the regional peers, driven by year-end window dressing activities and persisting buying from foreign funds (5-day cumulative stood at RM222.3m). Global sentiment might remain tilted to the downside in view of the overnight slump on Wall Street. Nevertheless, the local bourse should continue to be supported by year-end window dressing as well as elevated firmer commodities price. The Brent crude oil price settled above USD83, while the CPO price hovered above RM4,000. Meanwhile, gold price snapped two-day uptrend but stabilised above USD1,800.

Sector focus:. Investors may favour big cap stocks amid year-end window dressing activities; the banking and telecommunication sectors could be in the limelight. As commodities prices remained elevated, buying momentum should remain strong in the energy and plantation sector. On the other hand, the technology sector may remain under pressure in tandem with Nasdaq’s overnight losses.

FBMKLCI Technical Outlook

The FBM KLCI closed above its daily EMA9 level for the third straight session. Technical indicators, however remained mixed as the MACD Histogram extended a negative bar, while the RSI is moving higher above the 50 level. Resistance is pegged along 1,500-1,510, while support is located at 1,450-1,460.

Company Brief

Berjaya Corp Bhd’s wholly owned subsidiary Berjaya Yokohama Hospitality Asset TMK (BY-TMK) has entered into a sale and purchase agreement with the City of Yokohama to acquire six parcels of freehold land collectively measuring about 2.1- hektare for 12.66 bn yen (RM408.8m), contemplating the development of a Four Seasons Yokohama Harbour Edge project on these land parcels. The project comprises a luxury hotel and upscale residences, aquarium and retail outlets. The estimated gross development cost, including land acquisition cost, amounts to about ¥101.54 bn (RM3.28 bn), while the estimated gross development value is ¥138.17 bn (RM4.46 bn). (The Star)

Toyo Ventures Holdings Bhd’s wholly-owned subsidiary, Toyo Ink Group Bhd, and Song Hau 2 Power Company Ltd have entered into an interim agreement with Sunway-PECC2 Consortium to undertake a US$2.20 bn (RM9.73 bn) job for the development of a 2,120 MW coal-fired power plant in Vietnam. The agreement outlined a framework for negotiations and discussions for the parties to establish the detailed terms and conditions for the design, engineering, procurement, manufacture, supply, construction, erection, testing, and commissioning of the coal-fired electric generation plant. (The Star)

SCGM Bhd’s 2QFY23 net profit soared 3669.3% YoY to RM295.1m following the disposal of its 100.0% equity interest in Lee Soon Seng Plastic Industries Sdn Bhd (LSSPI). Revenue, however, fell 70.4% YoY to RM21.5m due to the quarter’s revenue only accounting for one month period up to the date of disposal. (The Star)

Duopharma Biotech Bhd has set a milestone by becoming the first pharmaceutical company to receive halal certification for an oncology product. The certification was granted by the Department of Islamic Development Malaysia (JAKIM). The product is currently approved as an adjuvant treatment for postmenopausal women with early breast cancer, as well as a first-line treatment for postmenopausal women with advanced breast cancer. (The Edge)

Cypark Resources Bhd has fixed the issue price of its private placement exercise at 38 sen per share to raise about RM68.0m, which is lower than what it had planned earlier. The issue price represents a discount of almost 8.0% to the volume-weighted average price of the units for the five market days up to and including 27th December 2022 of 41.27 sen apiece. (The Edge)

Tiong Nam Logistics Holdings Bhd has entered into a joint venture (JV) agreement with Johor Corp to develop a high-tech logistics industrial park on a 300-ac land at Sedenak Technology Valley in Johor. It inked the agreement with Johor Corp's wholly owned subsidiary JLand Group Sdn Bhd following a preliminary collaboration agreement in August 2022. The development consists of ready-built and customised warehouses, factories and commercial buildings, along with integrated logistics infrastructure for global businesses. (The Edge)

ATA IMS Bhd is looking to undertake an impairment exercise and slash its operating capacity, following the termination of contracts by Dyson announced last week. It will provide the estimate as soon as possible, which will include early termination of certain tenancy agreements for leasing of its production plant, warehouse and hostel. The company also pointed to potential impairment from the acquisition of IMS Group it made in 2018, which included a RM76.4m goodwill it recognised earlier. (The Edge)

EP Manufacturing Bhd has entered into an exclusive distributor agreement spanning five years with Hubei Dongfeng Power Auto Trade Co Ltd and Xiamen Tsingyan Hylong Motor Technology Co Ltd to assemble and sell Lingbox electric vehicles in Malaysia and Indonesia. EP Manufacturing's subsidiary EP 4Wheeler Sdn Bhd has also been granted the right to assemble completely knocked-down and semi-knocked-down Lingbox vehicles as well as conducting independent upgrades or adaptive improvements to the products. (The Edge)

SEG International Bhd (SEGi) is planning to pay a second interim dividend, payable on 20th January 2023 of 2.0 sen per share for FY22. Meanwhile, SEGi is buying two companies for RM700,000 in an all-cash deal — Peninsula Education Sdn Bhd and Imperial Education (Ipoh) Sdn Bhd — which are involved in the K-12 education business from its managing director cum largest shareholder Tan Sri Clement Hii Chii Kok. (The Edge)

Source: Mplus Research - 29 Dec 2022

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