Market Review

Malaysia: The FBM KLCI (-0.5%) extended its decline as the market sentiment remain wary, while selling pressure emerged within selected banking and Petronasrelated heavyweights. The lower liners also inched lower, while the property sector (+0.6%) outperformed the mixed sectorial peers.

Global markets: Wall Street ended mixed as the Dow fell 0.1%, but the S&P 500 (+0.5%) and Nasdaq (+1.0%) rose after the inflation data in April 2023 moderated to +4.9% YoY. The European stockmarkets edged lower, while Asia stockmarkets closed mostly downbeat.

The Day Ahead

The FBM KLCI slid further, tracking the subdued trading tone across the regional bourses as China’s disappointing trade data weighed on the sentiment, while investors were trading cautiously prior to the US inflation data. With the latest CPI data showing signs of easing inflationary pressure, investors are likely to turn more optimistic on the technology sector and the Fed is likely to pause on rate hikes next month. Commodities wise, the Brent crude oil traded above USD76 per barrel, while the CPO price hovered above RM3,700. Gold price continued to stay above USD2,000.

Sector focus: The technology sector may shine along with overnight rallies on Nasdaq, following the slightly lower-than-expected inflation readings in the US. Besides, investors may favour the renewable energy (RE) sector with export business following the government’s lifting of the 18-month ban on RE export.

FBMKLCI Technical Outlook

The FBM KLCI sank to close below its daily EMA9 and EMA20 level. Technical indicators were mixed as the MACD Histogram extended a positive bar, while the RSI hovered below 50. The key index may continue to consolidate between its resistance along 1,440-1,450, and the support is set around 1,400-1,410.

Company Brief

Kimlun Corp Bhd’s wholly-owned subsidiary, Kimlun Sdn Bhd has secured 2 contracts worth RM94.5m from Horizon Hills Development Sdn Bhd. The contracts were for the main building works for 78 units of shop offices and a shopping mall with facilities in Pulai, Johor. The projects are expected to be completed by 2Q25. (The Star)

Swift Haulage Bhd’s 1QFY23 net profit fell 29.2% YoY to RM10.1m, impacted by the uptick in interest rates and overheads due to our ongoing capacity expansion Revenue for the quarter, however, added 5.7% YoY to RM169.4m. (The Star)

A week after CelcomDigi Bhd announced it was pulling out from participating in the equity of Digital Nasional Bhd (DNB), Telekom Malaysia Bhd has announced that it has terminated the share subscription agreement (SSA) with DNB to be effective immediately. The termination of the agreements came after Communication and Digital Minister Fahmi Fadzil announced on 3rd May 2023 that the government has decided to tweak the 5G single wholesale network model and allow a second 5G wholesale network to be established once DNB achieves 80.0% coverage of populated areas by the end-2023, citing risks of single point of failure as among the main reasons. (The Edge)

Petronas Dagangan Bhd (PetDag) will continue to embark on an aggressive expansion of its convenience business, even though profit for the segment dropped in FY22. The group had allocated capital expenditure of RM400.0m for FY23 for both its core and non-fuel businesses.

Yong Tai Bhd saw the emergence of a new largest shareholder after Domain Capital Sdn Bhd acquired 90.0m shares representing a 23.8% stake in the property developer.Yong Tai also announced that City Mall Sdn Bhd had ceased to be a shareholder after offloading all of its 20.0m shares or 5.3% stake in the company. Datuk Leong Sir Ley, who is deemed interested in Domain Capital, was appointed as Yong Tai's new managing director and executive director. Separately, Yong Tai executive director and CEO Datuk Wira Boo Kuang Loon has relinquished his position as CEO of the company. (The Edge)

Tomei Consolidated Bhd is not planning to pare down its shareholding in its newly listed jewellery manufacturing arm YX Precious Metals Bhd (YXP), despite the unit's share price appreciation and the lapse of a 6-month moratorium on share sales. Tomei expect sales to likely be sustained by persistent safe haven demand amid global economic uncertainties, including the regional banking distress in the US, Russian-Ukraine war, and inflationary pressures.

Separately, YXP announced 1QFY23 net profit fell 12.6% YoY to RM2.7m, due to higher administrative expenses incurred. Revenue for the quarter, however, rose 3.0% YoY to RM62.6m. (The Edge)

Five minority shareholders of Bahvest Resources Bhd, who sought to replace 3 of the Sabah-based gold miner's directors, filed an originating summons to compel the company to hand over an updated record of depository (ROD) for the purposes of convening an extraordinary general meeting (EGM). Bahvest has dismissed the suit as "redundant", saying that the suit was filed at 6.30pm on 8th May 2023, after the company had announced on the same day that it will hold the EGM on 13th June 2023 to put all the shareholders' proposed resolutions to the other shareholders. (The Edge)

Lotte Chemical Titan Holding Bhd warned that a high inflation environment and geopolitical tensions will continue to hurt demand for polyethylene (PE) and polypropylene (PP) products, as supply is also outstripping demand, particularly now that China is becoming self-sufficient. Demand for PP and PE is expected to improve slightly in 2H23, but may not be sufficient to stem a decline in earnings this year. Moreover, feedstock prices remain high. (The Edge)

Source: Mplus Research - 11 May 2023