Starting the week on the slower gear

Market Review

Malaysia:. The FBM KLCI (-0.1%) staged a mild pullback on profit taking activities in selected banking and plantation heavyweights yesterday. The lower liner, however, extended their gains, while the construction sector (+1.3%) led the mixed sectorial peers list, after clawing its way back above SMA200.

Global markets:. The US stockmarkets were closed in conjunction with the Martin Luther King Jr. Day holiday. Elsewhere, the European stockmarkets was driven mildly higher by gains from the real estate and retail sectors, but the Asia stockmarkets ended mixed.

The Day Ahead

The FBM KLCI staged a minor pullback, snapping three-session winning streak as investors took profit ahead of the Chinese New Year holiday. Investors may take a cautious stance amid the lack of fresh catalysts environment, but overall sentiment could suggest that the downside risk is limited as the Fed is expected to be raising the interest rate at a softer pace going forward following the declining US CPI data. Meanwhile, the market is waiting for BoJ’s interest rate decision, as well as the UK and Eurozone’s inflation rate. Commodities wise, the Brent crude oil traded above USD84, while the CPO price hovered above RM3,850.

Sector focus:. Without any significant catalysts in the market and the holiday mood in the US, we expect the news on China’s Covid situation to take the centre stage, providing a booster to glove stocks in the near term. On the other hand, we believe the traders may lookout and position themselves for China’s reopening theme beneficiary such as the consumer and shipping sectors at least for 1H23.

FBMKLCI Technical Outlook

The FBM KLCI retreated after three consecutive sessions of gains but managed to hold above SMA200. Technical indicators remained positive as the MACD Histogram extended a positive bar, while the RSI is hovering above 50. Resistance is pegged along 1,500-1,510, while the support is located at 1,450-1,460.

Company Brief

Binasat Communications Bhd’s 51.0%-owned subsidiary, Borderless Connection Sdn Bhd (BCSB) has secured 2 subcontract works worth a total of RM16.m from Binalite Electrical Engineering Sdn Bhd (BEESB). The first subcontract worth RM14.2m is for a project known as the underground cable 132KV double circuit from Bayan Lepas – Sungai Ara into Sungai Tiram, Penang. The duration of the contract is 14 months and is expected to be completed on 30th March 2024. The second contract worth RM2.1m is for underground cable relocation works and is expected to be completed on 30th March 2023. (The Star)

Revenue Group Bhd's founding brothers Brian Ng Shih Chiow and Dino Ng Shih Fang, who were suspended from their executive director functions less than 2 weeks ago pending an investigation, are striking back at their accusers. Brian has served a notice of requisition to the group to call for an extraordinary general meeting to remove its current board of directors, save for him and Dino. (The Edge)

PLS Plantations Bhd and Japan’s Millennium Agriculture Technology Sdn Bhd (MAT) and MyFarm Inc have signed a Heads of Agreement to negotiate further the launch of large-scale durian cultivation in Malaysia, under a joint venture (JV) vehicle valued at RM371.0m. PLS LESB, a 51.0%-owned subsidiary of PLS Plantations Bhd, will have a 51.0% stake, while MAT is set to invest up to 49.0% equity interest in the company for RM181.8m. (The Edge)

Kejuruteraan Asastera Bhd (KAB) is acquiring Future Biomass Gasification Sdn Bhd (FBG) and its biogas power plant asset for RM15.0m. This acquisition is targeted for completion in 2Q23, and will be funded by a combination of bank borrowings and internally-generated funds. (The Edge)

The Sabah government has approved Suria Capital Holdings Bhd’s wholly-owned unit Sabah Ports Sdn Bhd's plan to enter into a strategic collaboration with DP World. The key areas of the collaboration are the management and operation of Sapangar Bay Container Port as well as investment of logistics and supply chain infrastructure in Sabah. (The Edge)

Two directors of Boustead Heavy Industries Corp Bhd (BHIC), Datuk Norliza Abdul Rahim and Datuk Nasarruddin M Zin have resigned to pursue other interests effective 16th January 2023. (The Edge)

GIIB Holdings Bhd, whose officials have been charged for allegedly deceiving the company's external auditor in relation to a purported sale of machinery, has reported that the auditor had not raised any adverse opinion in relation to the matter. (The Edge)

Saudee Group Bhd has appointed former Selangor police chief Datuk Arjunaidi Mohamed as its independent and non-executive chairman. Arjunaidi, 60, had served the police force for 35 years, before retiring as Selangor police chief on 31st December 2022. (The Edge)

K Seng Seng Corp Bhd’s managing director Koh Seng Lee has stepped down to pursue his personal interest. K Seng Seng also announced the appointment of Keh Chuan Seng as its new executive chairman, and the re-designation of Lee Hai Peng as executive director from independent non-executive director. (The Edge)

Source: Mplus Research - 17 Jan 2023