Resurgence of volatility

Market Review

Malaysia:. The FBM KLCI (-1.0%) was under pressured on renewed volatility as sentiment turned wary over the rising bond yield. The lower liners also pullback from their overbought positions, while all the 13 major sectors closed in red with the technology sector (-3.4%) taking the biggest blow.

Global markets:. The US stockmarkets rebounded as the Dow (+0.8%) rose with investors cheering after the US Federal Reserve Chairman Jerome Powell’s acknowledgement that the inflation is subsiding. Both the European and Asia stockmarkets, however, ended mixed.

The Day Ahead

The FBM KLCI slipped deeper into the negative territory throughout the session amid renewed selling pressure. However, following yesterday’s broad-based selldown we believe the bargain hunting activities are likely to emerge, in view of the upbeat cue from Wall Street overnight after the Fed Chair Jerome Powell indicated that the inflation could be subsiding. Commodities wise, the Brent crude oil price surged above the USD83 per barrel level with the recovering demand from China’s reopening activities, while the CPO rebounded above RM3,900 as the sentiment turned more positive. Besides, we expect the upcoming reporting season and the re-tabling of the Budget 2023 will be on traders’ radar.

Sector focus:. The O&G sector is still attractive amid the elevated crude oil price. We may observe bargain hunting activities emerging after a sharp fall yesterday, especially within the technology sector; in line with the rebound on Wall Street. Meanwhile, the REIT and utilities sectors may bode well under the recovery theme.

FBMKLCI Technical Outlook

The FBM KLCI fell below the SMA200, while EMA9 was attempting to cross below EMA20. Technical indicators turned negative as the MACD Histogram extended a negative bar, while the RSI slipped below the 50 level. Support is monitored along 1,450-1,460, while the resistance is pegged around 1,525-1,540.

Company Brief

Hartalega Holdings Bhd’s 3QFY23 net loss stood at RM31.9m vs. a net profit of RM259.1m recorded in the previous corresponding quarter, on significant moderation in average selling prices (ASPs) and lower sales volume, along with higher energy and labour costs. Revenue for the quarter fell 54.1% YoY to RM461.8m. (The Edge)

Willowglen MSC Bhd has secured a contract worth RM11.9m for the comprehensive maintenance of fence intrusion detection system. Willowglen’s wholly-owned subsidiary, Willowglen Services Pte Ltd secured the contract from SP PowerAssets Limited, Singapore. The commencement date of the contract is on 7th February 2023 and will be completed by 6th April 2028. (The Star)

Aemulus Holdings Bhd’s 1QFY23 net loss stood at RM4.8m vs. a net profit of RM4.5m recorded in the previous corresponding quarter, due to slowdown in customer’s expansion pace. Revenue for the quarter tumbled 47.3% YoY to RM9.8m. (The Star)

MN Holdings Bhd’s wholly owned subsidiary MN Power Transmission Sdn Bhd has entered into a memorandum of understanding (MOU) with end-to-end cybersecurity solutions provider Intelligent Pie Consulting Sdn Bhd (IPIE) for collaboration in conducting potential operational technology (OT) cybersecurity projects in Malaysia. The MOU comes into force on the date of its execution and expires if the tender work order by MN Power Transmission and IPIE is not accepted by the market segments, or within two years from the date of the MOU. The MOU will expire should both parties agree to terminate it. (The Edge)

The Social Security Organisation (Perkeso) has emerged as Cypark Resources Bhd’s substantial shareholder, after acquiring 42.1m shares or a 5.5% stake via a direct deal. (The Edge)

Abrdn PLC (formerly known as Aberdeen Asset Management PLC) has emerged as CTOS Digital Bhd’s substantial shareholder, after acquiring 121.0m shares. The latest purchase puts Abrdn, with a 5.2% stake, as the third-largest shareholder in the company, putting it behind Creador and the Employees Provident Fund. (The Edge)

Artroniq Bhd has proposed a private placement to issue up to 65.7m new shares, equivalent to 20.0% of its current share base of 328.3m shares. Based on an illustrative issue price of 56.0 sen per placement share, the group may raise up to RM36.8m, of which 61.0% is meant for general working capital, 38.0% for spending in the electronic bicycles assembly and manufacturing business, and the remaining proceeds for expenses of this corporate exercise. Meanwhile, the group has also proposed to diversify into the electronic bicycles business to expand its revenue stream. (The Edge)

Tanco Holdings Bhd is buying a 50.1% stake in a real estate online sales submission and processing platform operator for RM20.0m cash. The group is acquiring the stake in Gplex Properties Sdn Bhd from Googolplex Holdings Bhd, which will still own the other 49.9% stake after the acquisition. Apart from the online platform, Gplex Properties also owns a 49.0% stake in a real estate agency called Gplex Realty Sdn Bhd, with the remaining 51% shareholdings controlled by CTL Realty Sdn Bhd. (The Edge)

SMRT Holdings Bhd has proposed to acquire 1.8m shares or the remaining 36.0% stake not already owned by the group in N'osairis Technology Solutions Sdn Bhd (NTS) from Permata Kirana Sdn Bhd for RM72.0m cash. This is part of the group's strategy to streamline its operations and purely focus on its technology business. NTS is a profitable company, posting a net profit of RM20.1m on revenue of RM51.1m for FY21.

As part of its plan to become a pure play IT solutions company, SMRT is also proposing to dispose of its entire stake in SMR Education Sdn Bhd to Special Flagship Holdings Sdn Bhd (SFHSB) for RM49.5m cash, allowing the group to exit its education business that has not been a strong contributor to the group's financials. (The Edge)

MNRB Holdings Bhd’s 4QFY22 net profit stood at RM71.2m vs. a net loss of RM22.1m recorded in the previous corresponding quarter, driven by improved underwriting performance on top of higher investment income. Revenue for the quarter grew 10.6% YoY to RM924.8m. (The Edge)

Kerjaya Prospek Group Bhd has accepted another contract for the Seri Tanjung Pinang (STP) development in Penang worth RM398.0m for the construction of a coastal protection structure. The contract involves Phases 2B and 2C of the STP reclamation project in Tanjung Tokong, Penang. The job was awarded by Tanjung Pinang Development Sdn Bhd (TPD), an indirect subsidiary of Eastern & Oriental Bhd (E&O). TPD holds the concession rights to both phases of the STP reclamation project. It said the contract would commence on 10th April 2023 and will be completed within 36 months. (The Edge)

Source: Mplus Research - 8 Feb 2023