Likely to consolidate further

Market Review

Malaysia:. The FBM KLCI (-1.4%) staged a pullback, underperforming most of the regional markets as profit taking activities emerged following the recent gains during the window dressing session. The lower liners, however ended mixed, while the transportation & logistics sector (+2.3%) outperformed the broader market.

Global markets:. The US stockmarkets extended its losing streak with Nasdaq leading the decline as recession fears persisted while investors await the release of minutes of the US Fed’s December meeting. The European and Asia stockmarkets, however, were largely in the positive territory.

The Day Ahead

The FBM KLCI kicked off the first trading day in 2023 in the negative territory as market digested recent gains buoyed by year-end window dressing activities. We believe the pullback could be deemed as a healthy pullback and bargain hunting activities should pick up in undervalued stocks despite worries over the Covid-19 sub-variants may continue to weigh on investors’ sentiment. Still, we believe the reopening of China’s travel borders may provide decent growth for most of the global economies with another round of pent-up demand. Commodities wise, the Brent crude oil traded around USD82, while the CPO price hovered above RM4,200.

Sector focus:. We remain positive stance on the oil & gas and plantation sectors as both the underlying commodity prices remain firm and should lift the sectors, respectively. Besides, tourism sector may see a turnaround with traveling activities picking up amid the reopening of China’s borders. Besides, the healthcare sector could see some trading interest on anxiety over the Covid-19 variants.

FBMKLCI Technical Outlook

The FBM KLCI closed lower after trading in the negative territory for the entire session. Technical indicators, however remained positive as the MACD Histogram extended a positive bar, while the RSI is hovering above 50. Support is located at 1,450-1,460, while the resistance is pegged along 1,500-1,510.

Company Brief

Bintai Kinden Corporation Bhd's 51%-owned sub-subsidiary Bintai Energy Sdn Bhd has been awarded a series of subcontracts by Petro Flanges & Fittings Sdn Bhd (PFF) and various customers recommended by PFF for the supply of high-grade carbon steel/stainless steel piping, valves and piping accessories to various oil and gas businesses. The contracts are worth a combined value of RM4.0m. BESB has also received approved licences as dealers of instrumentation cables and general cables in relation to power and control from Petronas. (The Star)

G Capital Bhd’s wholly owned subsidiary, GPB Corp Sdn Bhd has signed a supplementary agreement with the Defence Ministry for a contract worth RM8.4m. The group’s two-year contract for the chartering of school buses for the children of armed forces personnel has now been extended until 31st December 2023, with the total value rising to RM52.6m from RM44.2m. (The Star)

Gamuda Bhd’s wholly-owned subsidiary Gamuda Land (Botanic) Sdn Bhd is acquiring eight parcels of freehold land measuring about 532 ac. next to its Gamuda Gardens development in Gombak, Selangor, for RM360.0m. The land is slated to be the site of a mixed-development project with a gross development value of about RM3.30 bn, scheduled for launch in 2026. (The Star)

Jakel Group is expected to surface as the single largest shareholder in renewable energy company Cypark Resources Bhd. Market sources told The Edge that Jakel’s investment arm Jakel Capital could be taking up the whole block of Cypark’s private placement exercise, involving 30.0% of the total issued shares. Another source, however, said Jakel Group will only be subscribing to half of the private placement shares — representing a 15.0% stake of the company — while the remaining half block is to be taken up by another friendly party. (The Edge)

Kejuruteraan Asastera Bhd’s (KAB) wholly owned subsidiary KAB Energy Holdings Sdn Bhd has secured a letter of award from Petronas Gas Bhd’s unit Regas Terminal (Lahad Datu) Sdn Bhd for the engineering, procurement, construction, and commissioning (EPCC) of a 52-megawatt (MW) power plant and its associated facilities in Sabah. The contract is for a total non-escalating all-inclusive fixed lump sum of RM230.0m. (The Edge)

Sunway Construction Group Bhd’s (SunCon) wholly-owned subsidiary Sunway Construction Sdn Bhd has entered into a RM1.70 bn contract with Yellowwood Properties Sdn Bhd to provide general contractor services for a data centre construction project in Sedenak Tech Park (STeP), Johor. The contract is expected to be completed by the third quarter of 2024. (The Edge)

Hextar Technologies Solutions Bhd announced the appointment of former Bank Negara Malaysia (BNM) governor Tan Sri Muhammad Ibrahim as its independent non-executive chairman, the appointment of controlling shareholder Datuk Eddie Ong Choo Meng as its group chief officer, and Choo Joon Keong as its group deputy CEO and an executive director. Ong controls a 71.5% stake in Hextar Technologies — direct interest of 16.7% and indirect interest of 54.8% via his investment vehicle Hextar Tech Sdn Bhd. (The Edge)

Focus Point Holdings Bhd is set to be transferred to the Main Market from the ACE Market on 5th January 2023 under the "Consumer Products & Services” sector, after the optical retail chain store operator met the profit test of the Securities Commission Malaysia’s Equity Guidelines. (The Edge)

MAG Holdings Bhd has proposed a private placement of up to 10.0% of its total issued shares to raise up to RM35.5m — based on a placement size of 212.9m shares and an illustrative issue price of 16.68 sen apiece — with RM30.3m of the proceeds to partly fund the expansion of its prawn farm in Tawau, Sabah. (The Edge)

Petra Energy Bhd’s contract for the provision of services to operate and maintain Petroliam Nasional Bhd’s (Petronas) Banang oilfield off Terengganu has been extended by 22 months until 6th August 2024. Petra did not disclose the value of the supplementary agreement. The group’s original two-year contract awarded back in June 2020 carried an estimated value of US$40.0m. (The Edge)

Hektar Real Estate Investment Trust (Hektar REIT) announced a final income distribution of 5.3 sen per unit for 4QFY22, taking its total distribution for the financial year 2022 to eight sen per unit. An income distribution reinvestment plan will be applied to the final income distribution, and the gross electable portion has been set at 5.3 sen per unit. (The Edge)

Source: Mplus Research - 4 Jan 2023