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Mplus Market Pulse - 17 Mar 2023

Publish date: Fri, 17 Mar 2023, 08:59 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

All materials published here are prepared by Malacca Securities. For latest offers on Malacca Securities trading products and news, please refer to: https://www.mplusonline.com.my

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Market Review

Malaysia:. The FBM KLCI (-0.9%) erased all its previous session gains as the weakness was largely in line with the negative performance across the regional peers. The lower liners also turned weaker, while the healthcare sector (+4.1%) rallied above SMA200 after Top Glove announced a better outlook.

Global markets:. Wall Street rebounded as the Dow (+1.2%) recovered all its previous session losses after First Republic Bank secured USD30.0bn deposits from several big banks. The European stockmarkets also advanced, but Asia stockmarkets ended mostly in red. The Day Ahead Resurfaced fears over global banking crisis has once again sent the FBM KLCI below the key 1,400 mark, but we expect a broad-based rebound on the local bourse amid increased optimism on Wall Street over banking industry following a joint rescue on First Republic by several big US banks. Nevertheless, the rebound could be short-lived as investors are likely to trade in a cautious mode while keeping an eye on the US Fed’s interest rate decision next week. Commodities wise, the Brent crude oil traded above USD74, while the CPO price hovered above RM3,900.

Sector focus:. We reckon that the technology sector will gain momentum following a strong rebound on Wall Street overnight. Besides, the health care may shine as investors anticipate a higher ASP of glove which may cushion the rising cost. We continue to favour sectors such as consumer staples, REITs, and utilities.

FBMKLCI Technical Outlook

The FBM KLCI retreated and sank below the 1,400 level. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI is hovering in the oversold zone. Investors may monitor next support at 1,370-1,380 and resistance at 1,420-1,440.

Company Brief

Sunway Real Estate Investment Trust (Sunway REIT) is acquiring 6 hypermarkets, 5 within the Klang Valley and 1 in Johor, for RM520.0m. Collectively, the properties will have a total land area and total gross floor area of 56.0-ac and 2.4m sqf, respectively. Sunway REIT Management Sdn Bhd, had entered into a conditional sale and purchase agreement with Kwasa Properties Sdn Bhd, a wholly-owned subsidiary of the Employees Provident Fund, for the proposed acquisitions. The properties are expected to generate an indicative net property income (NPI) yield of approximately 8.0% based on the purchase consideration, in comparison to Sunway REIT’s portfolio NPI yield of 5.4% for FY22. (The Star)

Microlink Solutions Bhd has bagged a RM17.8m contract from Public Sector Home Financing Board (LPPSA) for the maintenance and support services for the loan management system. The contract is for a period of 5 years, commencing from 1st April 2023 until 31st March 2028 with no clause on renewal. (The Star)

MGB Bhd’s wholly-owned subsidiary, MGB Construction and Engineering Sdn Bhd, has secured a contract worth RM46.8m from Blee and W Architects Sdn Bhd on behalf of Astana Modal (M) Sdn Bhd for a proposed development project in Puchong, Selangor. The contract would involve two phases of developments at the D’Island Residence that are expected to commence on 22nd March 2023 and to be completed by 21st June 2024. (The Star)

Dialog Group Bhd has launched Dialog Terminals Langsat 3, which marks the expansion of its terminal operations into storage facilities for renewable fuel products at the terminal in Tanjung Langsat, Johor. The expansion is expected to commence operations by end-2024, and caters to growing investor interest in low carbon fuel alternatives. (The Edge)

Top Glove Corp Bhd’s 2QFY23 net loss stood at -RM164.7m vs. a net profit of RM87.6m recorded in the previous corresponding quarter, as the existing glut in stocks and ongoing moderation of average selling prices, compounded by rising production costs. Revenue for the quarter slipped 58.2% YoY to RM618.0m. (The Edge)

Serba Dinamik Holdings Bhd, which is in the midst of appealing the High Court's dismissal of its application for a permanent stay of a winding up petition from its creditors, has reported that several right-sizing initiatives that are in line with its regularisation efforts have been agreed to by its liquidator Victor Saw Seng Kee from PricewaterhouseCoopers Advisory Sdn Bhd.

Meanwhile, the High Court has refused to grant a permanent stay of a winding up petition against Serba Dinamik and its 3 subsidiaries, pending its appeal to the Court of Appeal. The companies have failed to prove there are special circumstances for the court to grant the stay of the winding-up order issued on Jan 10. He said it was better that the provisional liquidator be answerable to the court rather than leaving it in the hands of directors of the companies. (The Edge)

Datasonic Group Bhd has secured a 3-month extension contract from the Ministry of Home Affairs for the supply of MyKad, MyTentera, MyPOCA raw cards and consumables to the National Registration Department. The extension, from 15th February 2023 to 14th May 2023, will give rise to an additional contract value of RM12.5m. (The Edge)

UWC Bhd's 2QFY23 net profit declined 23.7% YoY to RM19.1m, expansion and higher minimum wage increased staff costs while the Ringgit's appreciation against the USD resulted in a foreign exchange loss. Revenue for the quarter, however, grew 15.0% YoY to RM91.9m. (The Edge)

Ancom Nylex Bhd has accepted 2 separate sale and purchase agreements with Petronas Chemicals Marketing (Labuan) Ltd (PCML). The agreements entail PCML supplying methanol to Ancom's wholly owned subsidiary Perusahaan Kimia Gemilang Sdn Bhd and the 51.0%-owned subsidiary Ancom Kimia Sdn Bhd. The duration of the contract is for 5 years commencing 1st January 2022 to 31st December 2027. (The Edge)

Pertama Digital Bhd expects to raise gross proceeds of up to RM87.8m from the subscription by Australia-based Macquarie Bank Ltd of new shares in the group under a placement exercise. The placement involves up to 43.0m new shares, representing approximately 10.0% of Pertama Digital’s current share base of 433.36m shares. (The Edge)

TT Vision Holdings Bhd has secured purchase orders totalling RM23.6m for its solar cell inspection equipment from a major customer. The contract is expected to be fulfilled within 6-9 months. (The Edge)

Sunsuria Bhd has launched Sunsuria Care, a community-driven initiative, in a bid to provide basic medical services and support to its community. The maiden project of the initiative is Sunsuria Care Hub, which is located at the Sunsuria City Celebration Centre in Sepang. (The Edge)

Pasdec Holdings Bhd has decided to sell its subsidiary that is developing the 5.0- MW mini hydro power plant project in Bentong, Pahang, for RM1.2m amid cost escalation, while recouping RM10.8m of advances provided to the subsidiary. Pasdec is divesting its 100.0% equity interest in Pasdec-Mega Sdn Bhd to SPAC Sdn Bhd, which is wholly owned by Sy Choon Yen. The construction costs to complete the project has escalated significantly from the original budgeted costs. (The Edge)

Inta Bina Group Bhd has secured a RM79.9m contract to build houses near Bandar Puncak Alam in Ijok, Selangor. The contract to build 300 units of double-storey houses at the Eco Grandeur township was awarded by Paragon Pinnacle Sdn Bhd, a unit of Eco World Development Bhd. The construction period is 16 months, commencing from the date of site possession on 14th April 2023. (The Edge)

The High Court has ordered the directors of Jerasia Capital Bhd’s unit to pay employees’ unpaid EPF contributions, dividends and late payment charges. The court ordered Jerasia Fashion Sdn Bhd’s 3 directors at the material time to pay a total of RM2.4m remaining EPF. (The Edge)


Source: Mplus Research - 17 Mar 2023

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