Positive rebound to persist

Market Review

Malaysia:. The FBM KLCI (+0.26%) ended the 2022 last trading session on a positive note, boosted by sentiment on Wall Street coupled with local window dressing activities lifted the key index. The lower liners were mixed, while the transportation & logistics sector (+1.56%) was the best-performing sector.

Global markets:. The US stockmarkets closed lower on Friday, as investors mulled the persistent inflation and massive rate hikes throughout the year could translate to a recession in 2023. The European and Asia stockmarkets, however, were largely in the green on hopes reopening China’s travel borders.

The Day Ahead

The FBM KLCI ended higher on the final trading day as window dressing activities in utilities, banking and telecommunications heavyweights lifted the key index, albeit foreign funds showed an outflow of RM304.1m. After the window dressing activities, we expect local bourse to pullback in the near term, digesting the Covid- 19 situation in China. Nevertheless, we believe the reopening of business activities and travel borders in China should be able to avoid the recession risk going forward. Commodities wise, the Brent crude oil traded above USD85 per barrel, while the CPO price hovered above RM4,150. Meanwhile, gold price sustained above USD1,800.

Sector focus:. Trading interest in commodities related sectors such as energy and plantation may sustain given the firm commodities prices. Meanwhile, investors may continue to focus on value and defensive stocks such as banking and telecommunications in order to weather through the challenging environment.

FBMKLCI Technical Outlook

The FBM KLCI climbed above its daily EMA200 as trading volume doubled from the previous session. Technical indicators, turned positive as the MACD Histogram saw a positive bar, while the RSI above the 50 level. Resistance is pegged along 1,500-1,510, while support is located at 1,450-1,460.

Company Brief

Crest Builder Holdings Bhd's subsidiary Crest Builder Sdn Bhd has secured a RM478.9m contract from Perdana Parkcity Sdn Bhd to build two condominium blocks with a car park podium and retail units in Desa Parkcity, Kuala Lumpur. The contract will span 39 months from 5th May 2023 to 4th August 2026. The group expects the contract to contribute positively to its earnings from FY23 onwards. (The Star)

Cypark Resources Bhd's 4QFY22 net profit plunged 79.0% YoY to RM5.4m, dragged down by lower revenue. Revenue dropped 44.4% YoY to RM48.4m on lower contributions from the renewable energy division and waste management and waste-to-energy (WTE) division. (The Star)

Telekom Malaysia Bhd (TM) confirmed that it was hit by a data breach on 28th December 2022; the contact information of 250,248 Unifi Mobile customers were affected. The affected customers, comprising both individuals and small and medium enterprises have been notified. The type of data that was breached involved customer names, phone numbers and emails. No other information was breached. (The Edge)

Malayan Banking Bhd and Astro Malaysia Holdings Bhd have denied claims that they were hit by a data leak. The Communications and Digital Ministry, through the Personal Data Protection Department and Cybersecurity Malaysia, was obtaining feedback from Malayan Banking and Astro to verify the claims. (The Edge)

Hextar Healthcare Bhd's largest shareholder Datuk Eddie Ong Choo Meng is leaving his post as a non-independent non-executive director on 31st December 2022. Ong, who has an indirect stake of 29.2% in the company via Hextar Rubber Sdn Bhd, is exiting the board "to pursue other interests". Hextar deputy chairman Datuk Mohamed Hamzah is also slated to resign on 31st December 2022. The company has appointed Lim Siew Eng and Doris Cheng Chin Ching as independent non-executive directors, effective 1st January 2023. (The Edge)

The High Court has on 29th December 2022 dismissed an application by MISC Bhd in July 2020 to set aside US$330.2m (RM1.45 bn) representing parts of an arbitration award against its subsidiary involved in the Gumusut-Kakap semifloating production system (semi-FPS) project in 2014. The 2020 arbitration award, totalling US$352.4m excluding costs, was to be claimed by Sabah Shell Petroleum Co Ltd (SSPC) from MISC's subsidiary, Gumusut-Kakap Semi-Floating Production System (L) Ltd (GKL). In the 2020 arbitration, the Asian International Arbitration Centre ruled that GKL was liable for defects in the Gumusut-Kakap semi-FPS it provided SSPC in 2014. (The Edge)

Kuala Lumpur Kepong Bhd (KLK) foresees challenges to its cash flow going into 2023 as its committed major oleochemicals expansion in Indonesia, Malaysia, China and Europe are currently on schedule. A cash outflow of RM1.5 bn will be required over the coming two years. The plantation sector also has capital expenditure requirements to upgrade and renew some existing palm oil mills and infrastructure. However, its net debt at 40.7% is still able to cushion any impact from a shortfall in cash generation. (The Edge)

Poh Huat Resources Bhd 4QFY22 net profit stood at RM23.6m, vs. a net loss of RM3.5m in the previous corresponding quarter as revenue strengthened following the recovery of production activities to pre-pandemic levels, helped by forex gains due to the strong US dollar. Revenue jumped 215.4% YoY to RM167.3m, partly due to the low base effect as last year’s performance was affected by the pandemic, which paused operations in Malaysia and Vietnam for 2½ months. (The Edge)

Source: Mplus Research - 3 Jan 2023