Volatility still a feature

Market Review

Malaysia:. The FBM KLCI (+0.4%) edged higher to strengthen its position above 1,400, driven by gains in the banking heavyweights. The lower liners also advanced, while the energy sector (+1.4%) outperformed the mixed broader market following the higher crude oil prices.

Global markets:. Wall Street turned sharply lower as the Dow (-1.6%) tumbled in the final trading hour after the US Federal Reserve delivered a 25 basis point of rate hike and hinted that further rate hikes are still on the cards. The European stockmarkets edged higher, while Asia stockmarkets finished mostly positive.

The Day Ahead

The FBM KLCI ended on another upbeat note in tandem with the regional markets which have followed the performance on the overnight Wall Street; foreign funds turned net buyers for the second session. However, as Wall Street tumbled overnight, we expect the negative sentiment will spill over to the regional benchmark indices and local bourse, given the rate hike by the Fed and the “blanket insurance” statement on depositors from Janet Yellen. Commodities wise, the Brent crude oil price moved higher towards USD77, while the CPO traded above RM3,670. Gold prices hovered above USD1,970.

Sector focus:. We expect to see another broad-based selldown, especially in the technology sector following the slump in Wall Street overnight. Investors may brace for more volatility and are likely to choose to expose further in the defensive nature sectors such as consumer, telco and utilities.

FBMKLCI Technical Outlook

The FBM KLCI advanced for the second session as final-hour bargain hunting emerged. Technical indicators however, turned mixed as the MACD Histogram turned positive, while the RSI continued to hover below 50. Support is located at 1,370-1,380, while the resistance is monitored around 1,420-1,440.

Company Brief

Hap Seng Consolidated Bhd has entered into an agreement with Lei Shing Hong Capital Limited (LSHCL) to dispose of its entire stake of 50.0m shares in HS Credit (Manchester) Ltd (HCML) for £153m (RM837.3m). The group said it plans to utilise 77.6% of the proceeds from the disposal to repay borrowings, 22.3% would be for working capital requirements and the remaining for other expenses. HCML is a wholly-owned subsidiary of HSC Manchester, incorporated in England and Wales, and is involved in the provision of term loans to corporations in the United Kingdom. (The Star)

Pavilion Real Estate Investment Trust (Pavilion REIT) unitholders have agreed to acquire the Pavilion Bukit Jalil Mall for RM2.20bn. The endorsement by unitholders also saw the approval of 2 private placement exercises to partly fund the acquisition involving a RM720.0m tranche scheduled to be completed in 2Q23, and a RM550.0m tranche to be completed latest by 2Q25. The issue price of the new units will be determined later by a book-building exercise while the remainder of the acquisition consideration will be funded by bank borrowings. The acquisition is expected to raise Pavilion REIT’s portfolio base to RM 8.30bn, from RM 6.00bn and provide future growth opportunities for the trust. (The Star)

VS Industry Bhd’s 2QFY23 net profit fell 31.8% YoY to RM30.4, dragged down by forex losses and higher financing costs. Revenue for the quarter, however, improved 13.9% YoY to RM1.15bn. A second interim dividend of 0.3 sen, payable on 28th April 2023 was declared. (The Edge)

Eco World International Bhd’s 1QFY23 net loss widened to -RM30.8m, from a net loss of RM14.7m recorded in the previous corresponding quarter, weighed down by forex losses and lower revenue, a year earlier. Revenue for the quarter decreased 54.6% YoY to RM22.4m. (The Edge)

Barisan Nasional component party MCA has ceased to be a substantial shareholder of car leather upholstery maker Pecca Group Bhd after its investment vehicle Huaren Holdings Sdn Bhd disposed of 12.9m shares on 17th March 2023. (The Edge)

Nexia SSY PLT has resigned from its role as Sarawak Consolidated Industries Bhd (SCIB)’s external auditor because of difficulties in allocating sufficient resources requested by the company based on the fees charged. The appointment of a new external auditor will be announced in due course. (The Edge)

Trive Property Group Bhd’s 2QFY23 net profit surged 17.7x YoY to RM24.1m, thanks mainly to fair value gains of its investment properties that amounted to RM27.3m. Revenue for the quarter rose 27.0% YoY to RM2.3m. (The Edge)

KYM Holdings Bhd’s 4QFY23 net loss stood at -RM277,000 vs. a net profit of RM3.0m recorded in the previous corresponding quarter, due to lower profit contributions by its multi-wall industrial paper sacks division and higher tax expenses. Revenue for the quarter, however, gained 7.0% YoY to RM27.3m. (The Edge)

Theta Edge Bhd has reported that the purported termination of its contract to develop a hospital information system and electronic medical record for Institut Jantung Negara is based on alleged default by the company. The project has made substantial progress and the company is currently seeking legal advice. (The Edge)

Uzma Bhd has secured 2 contracts from Sabah Shell Petroleum Company Ltd to supply integrated production and integrity chemical and associated services to the Malikai Stage 1 and Gumusut Kakap projects, worth RM68.1m. Uzma's subsidiary Malaysian Energy Chemical & Services Sdn Bhd received the letters of award for the 3-year contracts. (The Edge)

Shareholders of Menang Corp (M) Bhd connected to Titian Hartanah (M) Sdn Bhd have ceased to be substantial shareholders of the property developer. Mariam Mohamed Eusoff, who directly held 48.1m shares or a 9.4% stake in Menang, ceased to be a substantial shareholder of the company after offloading her entire block of shares via a direct business transaction on 21st March 2023. (The Edge)

Source: Mplus Research - 23 Mar 2023