Marching towards 1,500

Market Review

Malaysia:. The FBM KLCI (+0.1%) crept mildly higher, mainly buoyed by gains in selected telco heavyweights yesterday. The lower liners, however, ended mixed, while the technology sector (+1.9%) outperformed after taking cue from the positive movement from Nasdaq overnight.

Global markets:. Wall Street remained upbeat as the Dow (+0.6%) rose for the third straight session following the easing of inflation for the sixth straight month that only rose 6.5% YoY in December 2022. The European stockmarkets ended positive, while the Asia stockmarkets closed mostly higher.

The Day Ahead

The FBM KLCI eked out marginal gains as investors traded cautiously prior to the US inflation data. Following a cooling inflation print in the US, investors may anticipate a less aggressive tone from the Fed moving forward. The optimism on Wall Street overnight, coupled with the higher Brent crude oil price around USD84 per barrel could lift the sentiment on our local bourse. On a side note, a comment from Deputy Prime Minister and Minister of Plantation and Commodities on the potential halt of palm oil export to European Union may trigger higher volatility in plantation counters. The CPO price has been consolidating around RM3,900.

Sector focus:. Investors may seek for bargain hunting opportunities within the technology sector amid persisted uptrend move on Wall Street. Meanwhile, we continue to favour tourism and consumer stocks amid strong rebound in travel demand. The energy stocks may gain momentum amid firmer crude oil price.

FBMKLCI Technical Outlook

The FBM KLCI traded higher in despite failing to close above SMA200. Technical indicators were positive as the MACD Histogram cross above zero line, while the RSI hovered above 50. Resistance is located at 1,500-1,510, while support is envisaged along 1,450-1,460.

Company Brief

Genetec Technology Bhd plans to undertake a private placement of up to 10.0% of its shares to raise up to RM154.8m. Assuming the placement shares are valued at RM2.16 per share, the group intends to utilise RM94.0m of the proceeds for the expansion of manufacturing facilities, working capital requirements (RM57.8m) and the estimated expenses in relation to the exercise (RM3.0m). The production capacity of its manufacturing facilities would increase to approximately 1.5 times of its current production capacity. (The Star)

Harn Len Corp Bhd is acquiring a plantation outfit that owns 4,052.6-ac of plantation land in Rompin, Pahang, from textile giant Jakel group for RM54.7m in a cash-plus-shares deal. Under the deal, Harn Len will acquire 100.0% stake in Almal Resources Sdn Bhd by issuing 31.3m new shares at 70.0 sen apiece to fund 40.0% of the acquisition price, equivalent to RM21.9m, while the remaining RM32.8m will be funded by cash. (The Edge)

Malaysia Building Society Bhd's (MBSB) chairman Tan Sri Azlan Zainol, who was also former Employees Provident Fund chief executive officer, has passed away at a private hospital in Petaling Jaya at 2.40pm. Prior to his demise, Azlan was also serving as the chairman of Malaysian Resources Corp Bhd, Eco World International Bhd and YX Precious Metals Bhd, and was also a director in Kuala Lumpur Kepong Bhd. (The Edge)

Ireka Corp Bhd gave a profit warning that its financials are expected to be dragged by the huge losses in its wholly owned unit Ireka Engineering & Construction Sdn Bhd (IECSB) in 3QFY23. Ireka decided to discontinue its application to place its loss-making unit under judicial management. (The Edge)

Serba Dinamik Holdings Bhd submitted its 2022 annual report for the financial year ended 30th June 2022, together with its audited consolidated financial statements for FY22, to Bursa Malaysia Securities Bhd yesterday, after much delay since 31st October 2022. (The Edge)

Capital A Bhd is optimistic about its potential growth in 2023, following a strong rebound in travel demand post-Covid-19, and expects to be out of Practice Note 17 (PN17) status by the end of this year. The group plans to submit its finalised regularisation plan to Bursa Malaysia as early as February 2023. (The Edge)

The Ministry of Defence has increased the ceiling value of a contract awarded to Destini Bhd in July 2020 for the supply of non-proprietary aircraft parts to the Royal Malaysian Air Force (RMAF) by RM60.5m to RM181.5m from RM121.0m. The three-year contract that spans from 1st July 2020, till 30th June 2023, allows Destini’s wholly owned Destini Prima Sdn Bhd together with 29 other local companies identified by the government to bid on contracts should RMAF require any non-proprietary aircraft parts. (The Edge)

JAKS Resources Bhd’s joint venture (JV) is filing an application to stay and set aside the adjudication decision to pay RM11.5m to GUH Holdings Bhd's unit, plus other interests, costs and adjudicator's fees, following the termination of a work contract. JAKS Resources JV unit, which comprises JAKS Sdn Bhd and KACC Construction Sdn Bhd had on 10th January 2023 received the originating summons by GUH’s unit Teknoserv Engineering Sdn Bhd to enforce the adjudication decision. (The Edge)

Careplus Group Bhd is planning to place out up to 114.6m new shares or 20.0% of its enlarged issued share capital to raise as much as RM49.8m before the end of this year, mainly for capital expenditure and working capital. The shares will be placed out to third-party investors in one or more tranches over a 6-month period. (The Edge)

Reneuco Bhd proposed to undertake a private placement to raise as much as RM16.3m for the working capital requirements of the East Coast Rail Link (ECRL) project, Kuala Nerus project and other existing operations and business expansions. The private placement entails the issuance of up to 54.3m new shares (10.0% of Reneuco's total issued shares) to independent third-party investors at an issue price to be determined. (The Edge)

Source: Mplus Research - 13 Jan 2023