Turning sideways

Market Review

Malaysia:. The FBM KLCI closed relatively unchanged on the lack of fresh leads following the national holidays in Hong Kong and China. The lower liners ended mixed, while the healthcare sector (+1.2%) outperformed the mixed sectorial peers following a deadly infection spread through tick bites in several parts of UK.

Global markets:. Wall Street ended mixed as the Dow gained 0.2%, but the S&P 500 and Nasdaq shed 0.3% and 1.1% respectively on concerns over the rise of recessionary risk, while the 10-year treasury yields fell to the lowest level since September 2022. Both the European and Asia stockmarkets closed mixed.

The Day Ahead

The FBM KLCI turned sideways and profit taking activities emerged with the negative performance on Wall Street overnight. With further selling pressure seen on the technology sector in the US as the market could be pricing in a recession scenario as the 10-year treasury yield dip further, coupled with the private payrolls that came in below expectations, we believe the selling activities may spillover to stocks on the local front; specifically on the technology stocks. Commodities wise, the Brent crude oil continues to trade around USD84, while the CPO traded slightly below RM3,900. Gold, the safe haven asset is located above the USD2,000 level.

Sector focus:. With the Nasdaq falling more than 1%, it may exert pressure on the technology sector for the session. Meanwhile, we believe investors may lookout for gold related stocks in view of the firm gold price. Also, we expect traders to position themselves within defensive sectors such as the REITs, utilities and consumer sectors.

FBMKLCI Technical Outlook

The FBM KLCI maintained its position above the daily EMA20 zone. Meanwhile, both the MACD (MACD Histogram above zero) and RSI (above 50) are suggesting that the momentum is still positive. The resistance is located around 1,440-1,450. Support is located around 1,400-1,410.

Company Brief

Deleum Bhd has secured a contract from ExxonMobil Exploration and Production Malaysia Inc for the provision of slickline equipment and services. The contract is for a period of 4 years, commencing on 15th March 2023. (The Star)

Classita Holdings Bhd has reached a settlement with its substantial shareholder Datuk Seri Tee Yam @ Koo Tee Yam and former executive vice-chairman Jessie Wong Siaw Puie over a RM4.0m advance the latter provided to the loss-making Perak-based lingerie and apparel maker. A suit filed by Tee Yam and Wong in November 2022, claimed that they had advanced Classita a total sum of about RM4.0m for day-to-day operation and management costs. (The Edge)

Tek Seng Holdings Bhd is acquiring 3 parcels of freehold vacant land near its factories in Seberang Perai, Penang for RM34.0m. Its subsidiary Wangsaga Industries Sdn Bhd (WISB) is acquiring a plot of land measuring 4.9-ha from Bagan Specialist Centre Sdn Bhd for RM27.0m. WISB is also acquiring a land plot measuring 0.4-ha for RM2.2m, and another 0.9-ha for RM4.8m. (The Edge)

Opcom Holdings Bhd, through its 60.0% wholly owned subsidiary Opcom Vision Sdn Bhd, has mutually agreed with VC Telecoms Sdn Bhd to terminate its role as a project consultant for VC Telecoms, effective from 5th April 2023. The termination was due to a delay in the design and consultation for the data centre for the POP1 project, which is expected to expire on 11th April 2023. The project, valued at RM25.0m, entailed the design and consultation of a data centre for the provision and maintenance of points of presence (POPs) for an optic fibre infrastructure hub near schools, industrial areas, government premises and nearby community areas in the central and eastern regions. (The Edge)

Pestech International Bhd has bagged an engineering, procurement, construction and commissioning (EPCC) contract worth up to AUD2.2m (approximately RM6.6m). The contract is part of the Economic and Social Infrastructure Programme (ESIP) for PPL Arawa, and its practical completion is slated for 10th January 2024. Included in the contract price of AUD2.2m is a provisional sum of AUD430,000 for selected items to be determined during the execution of the project. (The Edge)

Infomina Bhd has been appointed by the Companies Commission of Malaysia (SSM) to provide a platform for the public to search, extract and purchase data on companies and businesses registered with SSM. The appointment is for 6 years, from 31st March 2023 to 30th March 2029. It did not disclose any value for the job. Instead, Infomina would charge a service fee, which will be based on the actual consumption of the platform. (The Edge)

DRB-Hicom Bhd’s 50.1%-owned Proton Holdings Bhd has sold 40,287 units in 1Q23 (+50.9% YoY), and is confident of maintaining its sales momentum in the coming quarters. In March 2023, it achieved sales of 14,573 units which represents an increase of 3.8% MoM; giving it an estimated market share of 18.7% and maintaining its 2nd place position in the sales table rankings. (The Edge)

KPJ Healthcare Bhd and Samsung Electronics Co Ltd have entered into a collaboration aimed at advancing precision medicine and diagnostics in Malaysia. The two groups plan to explore innovative technologies and collaborative opportunities over the next 6 months via a memorandum of understanding (MoU) signed on 5th April 2023. (The Edge)

Signature International Bhd is acquiring a 45.0% stake in home furnishing company Zig Zag Builders (M) Sdn Bhd (ZZBSB) to diversify its customer base. The purchase of the stake from ZZBSB’s director Foo Khai Shin for RM13.1 m is in line with its objective of acquiring strategic stakes in companies with potential for future growth. The acquisition which is expected to be completed by 2Q23, will be paid via internally-generated funds. (The Edge)

G Capital Bhd has proposed to issue up to 1.41bn redeemable convertible unsecured loan stocks (RCULS) at 8.0 sen each on the basis of 4 RCULS for 1 existing ordinary share. The proposed rights issue will raise up to RM112.9m under the maximum subscription level. Proceeds from the exercise will be used to partfinance project costs (from RM4.8m up to RM100.4m) and for working capital requirement. (The Edge)

Tanco Holdings Bhd has aborted a plan to raise RM100.0m through an allotment of 100.0m redeemable preference shares (RPS) of RM1.00 each to the Social Security Organisation (Socso). Tanco received notification from Sosco of the parties' inability to finalise and execute the transaction documents on or before the cut-off date of 31st March 2023 and as prescribed in the terms of the supplemental term sheets. (The Edge)

Pecca Group Bhd has reached a new milestone as the first and only Malaysian company to be certified by the European Union Aviation Safety Agency (EASA). The certification comes on the heels of Pecca’s wholly-owned subsidiary, Pecca Aviation Services Sdn Bhd (PASSB), receiving a production organisation approval (POA) certificate from the agency. The POA, which is valid indefinitely unless revoked, certifies that PASSB is compliant with European Union regulations. (The Edge)

Source: Mplus Research - 6 Apr 2023