Recovery stalled by quick profit taking

Market Review

Malaysia:. The FBM KLCI (-0.3%) reversed some of its previous session gains following the quick profit taking that resulted in more than half of the key index components closed in red. The lower liners, however, extended their gains, while the energy sector (+1.2%) continues to lead the mostly positive sectorial peers.

Global markets:. Wall Street snapped a four-day winning streak as the Dow fell 0.6%, dragged down by weakness in banking stock, while job openings fell below 10.0m in February 2023 for the first time in nearly two years. Both the European and Asia stockmarkets ended mixed.

The Day Ahead

The FBM KLCI slipped into the negative territory as investors pocketed profit from the recent uptrend. Meanwhile, the global stock markets may remain shaky as investors turned cautious while assessing the impact of the resilient crude oil price. Meanwhile, the latest job openings report in the US that suggested the labour market is slowing becomes another source of uncertainties. Commodities wise, the Brent crude oil traded above USD84, while the CPO traded above RM3,900. Gold price shifted above the psychological USD2,000 level.

Sector focus:. Gold related companies should be one of the outperforming stocks in view of the bullish trend of gold price. Meanwhile, as the global sentiment turns cautious, investors may shift their focus from growth sectors such as technology towards safety haven such as REITs, banking, and consumer stapled. We believe poultry stocks will be on the watchout as investors may speculate on the price ceiling removal in this quarter.

FBMKLCI Technical Outlook

The FBM KLCI dipped but managed to hold above its daily EMA20 level. Technical indicators however, remained positive as the MACD Histogram extended a positive bar, while the RSI hovered above 50. The key index may consolidate between its resistance at 1,445-1,460 and its support at 1,380-1,400.

Company Brief

Coastal Contracts Bhd’s wholly-owned subsidiaries have secured contracts for the sales of 2 units offshore support vessels for an aggregate value of approximately RM287.3m. (The Star)

Southern Cable Group Bhd has secured a contract addendum from Tenaga Nasional Bhd worth more than RM30.0m to supply underground cables and conductors. The amended contract with TNB increased to RM332.1m from RM293.8m, originally. The group’s current orders in hand will be fulfilled until 2024, comprising power cables and wires, and related products and services such as aluminium rods, as well as supply and installation of rectifier systems for 5G network. (The Star)

South Malaysia Industries Bhd (SMI) has lodged a complaint with the Securities Commission Malaysia (SC) alleging that over 20 parties comprising companies and individuals acting in concert have accumulated more than 33.0% equity stake without making a mandatory general offer. SMI alleged that the group of parties including Prolexus Bhd and YB Ventures Bhd was acting in concert with Honsin Apparel Sdn Bhd and Hi-Q Media (M) Sdn Bhd.

Meanwhile, apparel maker Prolexus has denied that it breached the Capital Markets and Services Act 2007 in its acquisition of shares in SMI, and will not succumb to demands that it make an MGO to acquire the remaining shares it does not own in the loss-making property developer. (The Edge)

Pharmaniaga Bhd is reassuring all of its vendors and suppliers that the group will meet its financial obligations by the end of the month at the earliest. The group is confident the current delay in payments will be resolved and normalised, following its meeting with the Pharmaceutical Association of Malaysia. (The Edge)

Sunway Construction Group Bhd (SunCon) has signed a second supplemental agreement for additional works amounting to RM606.6m in regards to the South Quay Square project. With the additional contract, the revised sum for the project is now at RM1.36bn. With the latest update on the scope of works, the South Quay Square project is expected to be completed by 31st October 2025. (The Edge)

Gamuda Bhd has reported that the concession holding companies which disposed of four highway concessionaires to Amanat Lebuhraya Rakyat Bhd (ALR) have come to an understanding with the not-for-profit private entity on the warranty claims in relation with the highways. Litrak Holdings agreed to a total sum of RM1.7m in claims from ALR for the replacement of Police Expressway Mobile Patrol Vehicles and enhancement/installation of RFID lanes. (The Edge)

Mah Sing Group Bhd has entered into a collaboration with the China Electronic Chamber of Commerce (CECC) to provide a one-stop service for Chinese investors to set up manufacturing facilities in Malaysia. The collaboration with CECC will help Chinese investors to understand Malaysia’s real estate and manufacturing industry as well as the government’s policies better. (The Edge)

Al-'Aqar Healthcare REIT has fixed the issue price of its impending private placement exercise at RM1.20 per new unit. The issue price represents a discount of approximately 9.5% to the volume weighted average price of the units for the 5 market days up to and including 3rd April 2023 of RM1.3254 per unit. (The Edge)

Tan Sri Vincent Tan Chee Yioun has ceased to be a substantial shareholder of Berjaya Land Bhd (BLand), in which he was formerly a major shareholder, after offloading a 1.4% stake in the property and hospitality company. The stake, comprising 69.9m shares of which 25.0m shares or 0.5% held directly, and 44.9m shares or 0.9% held under Berjaya VTCY Sdn Bhd was sold via direct business transactions on 30th March 2023. (The Edge)

Fitters Diversified Bhd will be seeking the approval of its non-interested shareholders to ratify its acquisition of shares and warrants in Computer Forms (Malaysia) Bhd, following Bursa Malaysia's advice to the company that the proposed acquisitions are deemed to be related party transactions, in accordance to Bursa's Main Market Listing requirements. The group has also appointed Wyncorp Advisory Sdn Bhd as the independent adviser to its non-interested shareholders in relation to the proposed acquisition. (The Edge)

Genting Plantations Bhd has proposed a retirement gratuity of RM787,523 to Quah Chek Tin in recognition of his long service and contribution to the company. Quah, who is an independent non-executive director of the company, has indicated his intention to retire at the conclusion of the forthcoming 43rd annual general meeting. (The Edge)

Source: Mplus Research - 5 Apr 2023