Marching higher

Market Review

Malaysia:. The FBM KLCI extended its lead (+0.2%) but gains were meagre as quick profit taking emerged towards the end of the trading session. The lower liners ended mixed, while the energy sector (+1.5%) outperformed on the back of the higher crude oil prices.

Global markets:. Wall Street ended mixed as the Dow (-0.2%) fell, while both the S&P 500 and Nasdaq added 0.1% and 0.2% respectively that was driven by AIrelated technology shares such as Advanced Micro Device (+5.8%) and Nvidia (+1.6%). Both the European and Asia stockmarkets closed mostly higher.

The Day Ahead

The FBM KLCI started the week on a mildly positive note as the key index took cue from the positive performances on Wall Street last Friday. We believe the upside may sustain as the US Fed commented on a steady interest rate, which means it is likely to that the Fed is hinting for a pause on the interest rate at least for the near term. However, we expect the upside could be capped ahead of the inflation report in the US. Commodities wise, Brent crude oil marched higher, trading above USD77, while CPO is priced above RM3,700 amid hot weather conditions. Gold price stayed above USD2,000.

Sector focus:. Following the Prime Minister’s calls for EPF portfolio to comprise 70% domestic investments by end-2023, the larger cap companies may benefit from larger fund inflows. Besides, follow-through buying interest might be seen across energy and plantation counters given the firmer crude oil prices and crude palm oil prices.

FBMKLCI Technical Outlook

The FBM KLCI climbed as the key index attempting to cross above its daily EMA60 level. Technical indicators remained positive as the MACD Histogram extended a positive bar, while the RSI hovered above 50. Next resistance is envisaged along 1,440-1,450, while the support is set around 1,410-1,420.

Company Brief

Hartalega Holdings Bhd will be decommissioning its Bestari Jaya facility and consolidating operations at its Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang as it embarks on a rationalisation plan. The exercise is expected to incur an impairment loss of RM347.0m in FY23, and a further provision for retrenchment costs and contract obligation expenses amounting to about RM70.0m in FY24. The decommissioning of the Bestari Jaya plant, which consists of four production plans with 40 production lines, is expected to be completed by end-2023. Upon completion of the decommissioning, Hartalega expects a reduction in operating cost and depreciation, which will directly benefit its bottom line. (The Star)

Barakah Offshore Petroleum Bhd has decided to discontinue its legal action against Petroliam Nasional Bhd (Petronas) for suspending its unit’s licence to bid for new projects from the national oil company in 2019. It also dropped the legal action against former Petronas president-cum-chief executive officer (CEO) Tan Sri Wan Zulkiflee Wan Arifin, current president and group CEO Datuk Tengku Muhammad Taufik Tengku Aziz, and six defendants including Petronas chief financial officer Liza Mustapha. The financial impact from the withdrawal or discontinuance of the civil suit is confined only to legal costs. (The Edge)

Pos Malaysia Bhd has opened its first convenience store Pos Shop along Jalan Tuanku Abdul Rahman, as part of its strategic transformation journey. The new venture came as the courier service provider continued to explore avenues to reverse half a decade of losses, following declining mail volume and stiff competition in the parcel delivery market. (The Edge)

The Sessions Court (civil) has granted Sapura Energy Bhd an interim stay in relation to the revelation of its former CEO and co-founder Tan Sri Shahril Shamsudin’s remuneration and incentives. With the interim stay, Sapura Energy is not required to disclose the details of Shahril’s remuneration package for the time being. (The Edge)

Two independent and non-executive directors of Cypark Resources Bhd have stepped down from their positions as their tenures had exceeded the nine-year term limit, to be in line with Practice 5.3 of the Malaysia Code on corporate governance. The duo are Datuk Abdul Malek Abdul Aziz and Datuk Dr Freezailah Che Yeom. Their resignations took effect on 5th May 2023. (The Edge)

Aaron Chen Khai Voon is subscribing to a 20.0% stake in Seal Incorporated Bhd via a RM16.2m placement exercise, paving the way for the low-profile businessman to be the largest shareholder in the property developer. Seal will be placing out 62.3m shares to Chen at an issue price of 26.0 sen per share. Proceeds raised from the placement will mainly be utilised by Seal for the acquisition of a new viable business, while the proposed placement provides an opportunity to rope in Chen as a strategic investor, who is widely known for his ventures into PapaRich restaurant chain and Genetec Technology Bhd. (The Edge)

ECM Libra Group Bhd’s 30.0%-owned associate Positive Carry Sdn Bhd is to exit TYK Capital Sdn Bhd by selling its entire equity interest of 27.0% to Singaporebased private equity (PE) firm PrimeMovers Equity (S) Pte Ltd for RM120.0m cash. This came after Positive Carry inked a conditional sale and purchase agreement (SPA) with Enzo II Holdings Pte Ltd which is PrimeMovers’ special purpose vehicle to dispose of its entire 24.0m shares in TYK Capital. (The Edge)

Focus Dynamics Group Bhd’s executive director Benson Tay Ben Seng has ceased to be a substantial shareholder in Saudee Group Bhd, after offloading 33.1m shares or 2.8% stake in the company at 3.0 sen per share. With the disposal, Tay is left with 32.0m shares or a 2.9% stake in the company. (The Edge)

Mi Technovation Bhd’s 1QFY23 net profit fell 50.2% YoY to RM6.4m, due to lower contributions from its semiconductor equipment business and its semiconductor material business. Revenue for the quarter shrank 13.7% YoY to RM76.9m. (The Edge)

Source: Mplus Research - 9 May 2023