Surprise moves by Bank Negara Malaysia

Market Review

Malaysia:. The FBM KLCI ended relatively flat after recovering almost all its intraday losses that was supported by the rebound in telco and plantation heavyweights ahead of the Wesak Holiday. The lower liners remained downbeat, while the energy sector (-1.5%) faltered following the weakness in crude oil prices.

Global markets:. Wall Street remained soft as the Dow (-0.9%) fell on the rout of regional banks amid concerns over a potential lending crunch may spur a hard landing in the financial industry. The European stock markets also ended in red, but Asia stockmarkets closed mostly upbeat.

The Day Ahead

The FBM KLCI ended flat after erasing all its intraday losses as buying momentum emerged in the banking sector following Bank Negara Malaysia’s surprise OPR hike of 25 bps. However, the fears over the US banking crisis remained in place, and that may limit the upside potential for the near term as investors may shift their position towards a more defensive approach at least until the banking crisis is resolved. Nevertheless, traders may look at the corporate earnings season for earnings surprises trades. Meanwhile, the gold price is hovering firmly above USD2,000.

Sector focus:. Following the surprise Overnight Policy Rate (OPR) hike by Bank Negara Malaysia, follow-through buying interest may emerge in the banking sector for a short-term trade. Besides, gold related counters may shine over nearer term given the solid gold prices. Also, we expect the positive results from Apple may spur some demand on our technology stocks.

FBMKLCI Technical Outlook

The FBM KLCI recouped its intraday losses and closed flat, holding above its daily EMA20 level. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI hovered below 50. Resistance is envisaged along 1,440-1,450, while the support is set around 1,400-1,410.

Company Brief

Fraser and Neave Holdings Bhd’s (F&N) 2QFY23 net profit rose 7.9% YoY to RM101.2m, driven by better performance in its food and beverages business units. Revenue for the quarter gained 8.9% YoY to RM1.21bn. An interim single-tier dividend of 27.0 sen per share, payable on 1st June 2023 was declared. (The Star)

CelcomDigi Bhd has pulled out from participating in the equity of Digital Nasional Bhd (DNB) after Putrajaya reported that it will allow the formation of a second 5G network provider in the country as soon as 2024. The merged entity has terminated their respective agreements to subscribe for a 12.5% stake each in DNB as the long stop date to fulfil all the conditions precedent has lapsed. (The Edge)

MyEG Services Bhd's contract to provide Road Transport Department (JPJ)-related online services has been extended by 3 years. However, the contract will no longer be exclusive, which means other service providers could also potentially offer the services, which include road tax and driving licence renewal, and summons settlement. (The Edge)

Chin Hin Group Property Bhd has signed an agreement with Ivory Properties Group Bhd to jointly develop the RM475.0m Crown Penang, which is targeted for launch in 2Q24. This will be Chin Hin’s first foray into Penang. (The Edge)

Emico Holdings Bhd is buying a 20.0% stake in Kedah-based real estate firm PKBOperasi Tembaga Sdn Bhd from Permodalan Kedah Bhd for RM3.6m. The remaining 80.0% stake in PKB-Operasi Tembaga is owned by Operasi Tembaga Sdn Bhd, which is a 70.0%-indirect subsidiary of Emico. The transaction would enable Emico’s management to have full control over PKB-Operasi Tembaga and allow full profit enjoyment with the additional 20.0% of the shares acquired. (The Edge)

Astino Bhd’s wholly owned subsidiary, Astino (Malaysia) Colour Steel Sheets Sdn Bhd is buying a 884,703 sqf piece of land in Klang for RM60.2m to undertake its expansion programme. The group is acquiring the freehold land in Mukim Kapar from Bukit Saujana Jaya Sdn Bhd. (The Edge)

Bursa Malaysia Bhd’s 1QFY23 net profit declined 17.4% YoY to RM56.2m, primarily due to lower securities market operating revenue. Revenue for the quarter fell 5.3% YoY to RM156.5m. (The Edge)

Frontken Corp Bhd’s 1QFY23 net profit fell 11.1% YoY to RM23.6m, as its subsidiaries in Taiwan and Singapore recorded slightly lower revenue. Revenue for the quarter dipped 4.3% YoY to RM114.0m. (The Edge)

Sunway Real Estate Investment Trust's (Sunway REIT) 1QFY23 net property income rose 16.3% YoY to RM138.3m, driven by its retail segment. Revenue for the quarter grew 18.7% YoY to RM182.8m. (The Edge)

UOA Real Estate Investment Trust’s (UOA REIT) 1QFY23 net profit fell 8.8% YoY to RM14.6m, amid a decline in occupancy rate at its older buildings, coupled with an increase in expenditure, driven by higher electricity and borrowing costs. Revenue for the quarter decreased 1.5% YoY to RM28.8m. (The Edge)

Source: Mplus Research - 5 May 2023