Market Review

Malaysia: The FBM KLCI (-0.3%) registered its sixth straight session of decline after more than half of the key index constituents closed lower. The lower liners, however, staged a mild rebound from the previous session sell down, while the energy sector (+0.6%) emerged as the biggest winner among the sectorial peers.

Global markets: Wall Street ended mixed as the Dow (+0.02%) rose marginally after the ISM Manufacturing PMI edged higher to 47.7 in February of 2023, but the S&P 500 and Nasdaq shed 0.5% and 0.7% respectively. The European stockmarkets ended mostly in red, but Asia stockmarkets finished mostly higher.

The Day Ahead

The FBM KLCI kicked off March 2023 with losses given the lack-of-fresh-catalyst environment. Regional markets, however, traded in a positive-bias tone after stronger-than-expected manufacturing data from China suggesting that the reopening since January is boding well for the economic recovery; while Wall Street stocks headed south as inflation data from Germany indicate that the global interest rate hikes may continue to stay elevated. Despite the global uncertainties, we believe the local bourse may be due for a rebound. Commodities wise, the Brent crude oil traded above USD84, while the CPO price hovered above RM4,200.

Sector focus: Following Miti’s approval on Tesla’s application to import battery electric vehicles (EV) into Malaysia, the EV related counters may see buying momentum. Besides, the energy and plantation sectors may gain traction along with firmer commodities prices. Renewable energy sectors could also be in focus.

FBMKLCI Technical Outlook

The FBM KLCI fell but managed to close just above its immediate support at 1,450. Technical indicators remained negative as the MACD Histogram, while the RSI is hovering near the oversold level. Investors may monitor closely on the support at 1,450, followed by 1,430. Meanwhile, the resistance is pegged along 1,470-1,480.

Company Brief

ATA IMS Bhd's wholly-owned subsidiary ATA Industrial (M) Sdn Bhd (AIM) has been served a writ of summons and statement of claim by Hong Kong-based Johnson Electric Industrial Manufactory Ltd. Johnson is claiming damages totalling some RM20.0m (USD4.4m) being payment for finished goods in accordance to invoices issued, payment for the raw materials pursuant to the debit note, storage costs and testing fees among other. By way of email on 10th May 2022, AIM sought to cancel undelivered purchase orders issued to Johnson due to fluctuations in demand from AIM’s customer, which Johnson rejected the cancellation of the purchase orders via email reply. (The Star)

Tan Sri Vincent Tan has stepped down as non-independent and non-executive chairman, while his son Datuk Seri Robin Tan has resigned as non-independent and non-executive deputy chairman, of Berjaya Corp Bhd (BCorp) in the latest boardroom shuffle at the conglomerate, which has led to the formation of an allwomen board of directors for the group. Meanwhile, Chryseis Tan; daughter of Vincent Tan was redesignated as the group's executive director. In a related development, Berjaya Land Bhd appointed Robin as its non-independent nonexecutive deputy chairman. (The Edge)

KPJ Healthcare Bhd has entered into a share sale agreement with PT Nusautama Medicalindo via 3 subsidiaries for the proposed disposal of its Indonesian hospital operations and facilities involving KPJ Medica for a total consideration based on an enterprise value of RM150.2m. The subsidiaries are Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB), Crossborder Aim (M) Sdn Bhd (CAMSB) and Crossborder Hall (M) Sdn Bhd (CHMSB). The proposed disposal involves a 75.0% stake in KPJ Medica by KPJSB, and a 100.0% stake in Al-Aqar Bumi Serpong Damai by CAMSB and CHMSB to PT Nusautama Medicalindo at a provisional purchase price of RM13.7m, subject to adjustment based on closing cash, closing debt and closing working capital. (The Edge)

On the back of achieving record sales of RM1.10bn in FY22, Paramount Corp Bhd has set out to launch RM1.50bn worth of projects in FY23. While property development remains its core business accounting for 97.0% of the group’s revenue in FY22, the coworking division is set to turn profitable in FY23. (The Edge)

Sime Darby Property Bhd (SDP) has set a lower sales target of RM2.30bn for FY23 due to absence of normalisation in the labour situation, rising raw material prices, looming state elections and higher interest rates. The property developer will closely monitor the market and be ready to take advantage as soon as there is recovery in headwinds. (The Edge)

Despite facing higher operating costs amid cost-inflation pressure, UEM Edgenta Bhd is anticipating a better bottom line performance for FY23. There has been concern about the group's profit growth due to cost escalation related to higher repair and maintenance costs for some hospitals and incinerator plants, as well as the increase in the minimum wage for the hospital division. In addition, the group also faces margin compression for projects in its property and building solutions segment due to the global supply chain disruption. (The Edge)

Source: Mplus Research - 2 Mar 2023