Market Review

Malaysia: The FBM KLCI (-0.2%) edged lower for the fourth straight session as sentiment remain wary after 1Q23 GDP data moderated to +5.6% YoY, from +7.1% YoY recorded in 4Q22. The lower liners, however, ended mixed, while the plantation sector (+0.6%) outperformed the mixed broader market.

Global markets:. Wall Street edged lower as the Dow (-0.03%) fell on lingering concerns over the health of the economy, while the debt ceiling negotiations that was scheduled last Friday was postponed to this week. The European stockmarkets extended their gains, while Asia stockmarkets closed mixed.

The Day Ahead

The FBM KLCI posted a fourth-session decline with selected banking and industrial products & services heavyweights being targeted and led the losses. The overall market sentiment may remain vulnerable amid global economic concern, while investors await the Eurozone’s inflation rate this week. Meanwhile, traders are focusing on the debt ceiling negotiations this week. Although we expect that the bargain hunting activities may kick in on the local bourse amid releasing of more earnings reports, the upside could be limited in the near term. Commodities wise, the Brent crude oil price hovered above USD74, while the CPO traded slightly below RM3,650. Gold price continued to stay above USD2,000.

Sector focus:. Investors may favour sectors like telecommunication, utilities and poultry amid weak sentiment on the global front; the latter might be heading higher on the back of the speculation of price ceiling removal for chickens and eggs. Meanwhile, gold related counters may gain traction given the solid commodities prices amid the uncertain market environment

FBMKLCI Technical Outlook

The FBM KLCI slid for the fourth straight session as final-hour profit taking activities emerged. Technical indicators remained mixed as the MACD Histogram extended a positive bar, while the RSI hovered below 50. The support is set around 1,400-1,410, while resistance is envisaged along 1,440-1,450.

Company Brief

Kumpulan Kitacon Bhd’s wholly owned subsidiary, Kitacon Sdn Bhd, has secured a letter of award from GLM Emerald West (Rawang) Sdn Bhd for a construction contract worth RM101.5m. The contract involves main building and infrastructure works for a residential project comprising two-storey terrace houses in Rawang, Selangor. The contract shall commence on 1st June 2023, and is to be completed within 20 months from the commencement date. (The Star)

Hap Seng Consolidated Bhd is in discussions with Mercedes-Benz Malaysia Sdn Bhd (MBM) to shift from its present dealership distribution model to an agency model. This came after Hap Seng’s unit Hap Seng Star Sdn Bhd and MBM inked an MOU to commence negotiations over the proposed business model change. The MOU is to remain effective for 6 months unless either party issues a notice of early termination. (The Edge)

Tomei Consolidated Bhd’s 1QFY23 net profit declined 24.8% YoY to RM11.9m, dragged by higher operating overheads. Revenue for the quarter, however, increased marginally by 1.5% YoY to RM237.7m. (The Edge)

In less than six months after acquiring a controlling 51.0% stake in Innov8tif Holdings Sdn Bhd in January 2023 to venture into the digital industry, Hong Seng Consolidated Bhd is offloading the stake to Revenue Group Bhd, citing its lack of experience in the digital business as the reason. The RM36.0m disposal came prior to Hong Seng's payment of the balance consideration of RM24.4m for the stake. It has paid only RM3.1m of the RM30.9m price tag so far. Hong Seng expects to pocket a gain of RM5.2m from the disposal of the stake to Revenue Group for RM36.0m. (The Edge)

Ageson Bhd's subsidiaries and Koperasi Belia Nasional Bhd (Kobena) have mutually agreed to terminate 3 MOUs in relation to a vending machine business and the sale and development of a parcel of land in Gombak. The MOUs were terminated as the parties were unable to agree to and finalise the terms of the respective deals. (The Edge)

Teladan Setia Group Bhd’s 1QFY23 net profit fell 12.3% YoY to RM8.3m, mainly due to higher administrative expenses. Revenue for the quarter, however, increased by 4.6% YoY to RM61.6m. This year, it plans to launch properties with an accumulated gross development value (GDV) of RM1.10bn. (The Edge)

SFP Tech Holdings Bhd's 1QFY23 net profit rose 16.5% YoY to RM10.1m, underpinned by higher revenue in its mechanical assembly segment. Revenue for the quarter climbed 93.4% YoY to RM34.6m. (The Edge)

Source: Mplus Research - 15 May 2023