Further selling pressure could emerge

Market Review

Malaysia:. The FBM KLCI (-0.1%) staged a mild pullback as sentiment turned cautious prior to the release of the US inflation data. The lower liners ended mixed, while the healthcare sector (-1.4%) underperformed the mostly positive sectorial peers after snapping 5 consecutive sessions of gains.

Global markets:. Wall Street edged lower after a volatile trading session despite the softer inflation data as investors perceived that the decline were not enough for the US Federal Reserve to put a break towards further interest rate hikes. The European stockmarkets were upbeat, but Asia stockmarkets ended mixed.

The Day Ahead

The FBM KLCI halted 3 straight sessions of winning run as sentiment turned cautious prior to the release of the US CPI data. Despite the slower-than-expected US inflation at +5.0% YoY (vs. consensus expectations of 5.2% YoY rise), we reckon that cautious sentiment may persist given the US FOMC meeting minutes were suggesting rising recession risks in the US economy. We believe further profit taking activities may emerge in the regional markets and our local bourse. Commodities wise, the Brent crude oil price rallied towards USD87, while the CPO eased towards near RM3,700. Gold price continues to trade above USD2,000

Sector focus:. Gold-related stocks and the energy sector may stay focused amid firmer gold prices and higher oil prices, respectively. However, the technology sector may pullback with the weakness on Nasdaq overnight. Meanwhile, the construction sector may gain ground from the easing of foreign labour shortage.

FBMKLCI Technical Outlook

The FBM KLCI formed a hammer candle on top of EMA9 as the key index experienced some signs of buying support towards the end of the session. Technical indicators remained positive as the MACD Histogram extended a positive bar, while the RSI hovered above 50. The resistance is located at 1,440- 1,450, while the support is pegged around 1,400-1,410.

Company Brief

Country Heights Holdings Bhd founder Tan Sri Lee Kim Yew has been declared bankrupt by the Shah Alam High Court. Lee had received the bankruptcy notice on 26th January 2023 over a RM3.0m legal suit. Lee will hold a press conference to address the issue today. Lee, who is the largest shareholder of Country Heights with a 57.6% stake, resigned as executive chairman of the company on 3rd February 2023 to cater for a change in management for the transformation of the group. (The Star)

Air Asia X Bhd (AAX) has once again applied to Bursa Securities for more time to submit its regularisation plan by extending its 28th April 2023 deadline to 28th July 2023. The low-cost carrier, however, did not reveal the reason that it could not manage to meet the extended deadline. The regularisation plan is crucial as it is supposed to lift not just AAX, but also its sister company Capital A Bhd out of Practice Note 17 (PN17) status. It is widely expected that the regularisation plan involves Capital A injecting its aviation business into AAX via an issuance of shares. (The Edge)

FGV Holdings Bhd said its subsidiaries Sri Kehuma Sdn Bhd and Yapidmas Plantation Sdn Bhd are being sued over alleged fraudulent transactions and continuing trespass on lease agreements for 41 parcels of land. The plaintiff, Euggne Kousai, is seeking damages of RM24.9m. (The Edge)

Sime Darby Motors, the automotive arm of Sime Darby Bhd, has delivered 1,000 BYD ATTO 3 models within the first 100 days, following its delivery of 100 units within the first 10 days of the BYD launch in Malaysia. The deliveries reflect the increasing popularity and acceptance of electric vehicles in Malaysia. (The Edge)

Tenaga Nasional Bhd (TNB) and its wholly-owned subsidiary GSPARX Sdn Bhd have signed a supply agreement for renewable energy (SARE) with AEON Co (M) Bhd for the installation of solar photovoltaic (PV) facilities at all AEON malls and AEON BiG nationwide. Under the agreement, GSPARX will install and maintain a 77,000-kwp PV system at the AEON ecosystem for 25 years. (The Edge)

Tomypak Holdings Bhd has received an offer for full insurance compensation payment of RM205.0m for material damage resulting from a fire outbreak at its manufacturing plant in Senai, Johor in December 2021. Its wholly-owned subsidiary Tomypak Flexible Packaging Sdn Bhd has accepted the insurance compensation from lead insurer Berjaya Sompo Insurance Bhd. (The Edge)

Zhulian Corp Bhd's 1QFY23 net profit dropped 71.4% YoY to RM6.9m, due to absence of land disposal recorded in the previous corresponding quarter. Revenue for the quarter slipped 5.8% YoY to RM32.6m. (The Edge)

Malaysia Airports Holdings Bhd (MAHB) announced that the issue price of its new shares under its dividend reinvestment plan has been fixed at RM6.06 per share. The issue price was fixed based on the five-day volume weighted average market price of MAHB shares of RM6.7631 up to 11th April 2023. (The Edge)

MyEg Services Bhd (MyEG) has won a tender from Penang Development Corporation to set up a workers village at the Batu Kawan Industrial Park 3 in Seberang Perai. The group sub-subsidiary MyEG Lodging Sdn Bhd will lease an 8.4- ac land for RM20.4m over a duration of 30 years, to build and operate the workers village and related facilities at its own cost. (The Edge)

MMS Ventures Bhd (MMSV) seeks to expand its original design manufacturing (ODM) business amid anticipation of slow sales in the semiconductor segment this year. The ODM/OEM segment made up 20.5% of the group’s RM52.9m revenue for FY22. (The Edge)

Sealink International Bhd’s auditor Messrs Grant Thornton Malaysia PLT has issued an audit opinion with a material uncertainty related to the company’s ability to continue as a going concern. This is the second time the external auditor has raised its doubt on the marine support vessel operator’s future prospects. The auditor drew attention to the company’s net loss of RM20.2m for FY22 and the total current liabilities which exceeded total current assets by RM49.9m. (The Edge)

MBSB Bank Bhd, under Malaysia Building Society Bhd, will offer a specially designed financing programme to contractors and vendors involved in current and future projects by Mass Rapid Transit Corp Sdn Bhd (MRT Corp), including the Rapid Transit System Link project between Johor Bahru and Singapore, to increase their competitiveness in the open market. (The Edge)

DRB-Hicom Bhd’s 50.1%-owned Proton Holdings Bhd may accelerate the introduction of electric vehicles suitable for Malaysian consumers as early as 2025 compared with 2027 as initially projected. Proton is currently in the process of identifying suitable models of electric vehicles that are more affordable and practical. (The Edge)

Topvision Eye Specialist Bhd is proceeding with the proposed withdrawal of its listing from the LEAP Market, in accordance with Bursa Malaysia's recent amendments to its rules for the transfer of listing from LEAP to the ACE Market, which took effect on 1st April 2023. Topvision's announcement came 2 months after the group's directors and major shareholders proposed on 3rd February 2023 that it would be voluntarily withdrawing its LEAP listing to pave the way for its ACE transfer. (The Edge)

Source: Mplus Research - 13 Apr 2023