Market Review

Malaysia:. The FBM KLCI (+0.1%) chalked in meagre gains as the recovery was  capped by the persistent selling activities from foreign funds. The lower liners  ended mixed, while the healthcare sector (+1.9%) outperformed the mixed broader  market to close at the highest level in a month.

Global markets:. Wall Street advanced as the Dow (+1.2%) recouped all its previous  session losses, driven by optimistic speculation that policymakers will be able to  reach a deal to raise US debt ceiling to avoid an unprecedented default. Both the  European and Asia stockmarkets closed mixed

The Day Ahead

The FBM KLCI gained marginally higher for the session, led by Petronas Dagangan  and Nestle. Although the deal for the US debt ceiling is not reached, the market  could be speculating a positive outcome before this weekend to be seen on the  ongoing debt ceiling negotiations, hence this has contributed to the strong  performance on Wall Street and the market has seen reducing exposure on gold.  However, on our local front, the state election, coupled with the ongoing earnings  season could cap the upside potential at least for the near term. Commodities  wise, the Brent crude oil price surged above USD75, while the CPO is below  RM3,500 and the gold price fell below USD2,000. 

Sector focus:. With the positive performance from Wall Street, we believe traders  may look into riskier sectors in the near term. We expect the healthcare related  stocks to take the lead on the back of recovering earnings, while investors may  look into poultry stocks for investing opportunities after Teoseng’s stellar results.

FBMKLCI Technical Outlook

The FBM KLCI rebounded for another session, but the technical indicators are  suggesting that the upside could be capped in the near term. The MACD Histogram  has extended another negative histogram, while the RSI is below 50. Resistance  will be located around 1,440-1,450, while the support is at 1,400-1,410. 

Company Brief

Pavilion Real Estate Investment Trust (Pavilion REIT) said it has fixed the issue  price of the first tranche of its private placement exercise at RM1.22 per unit to  raise approximately RM720.0m. That it is the largest private placement ever  recorded for Malaysian REITs (M-REITs). The issue price represents a discount of  approximately 6.6% to the 5-day volume weighted average market price of the units  up to and including 16th May 2023 of RM1.31. (The Star)

Malaysia’s Armed Forces Fund Board (LTAT) has accumulated over 90.0% shares  of Boustead Holdings Bhd, a threshold that paves the way for its privatisation of  the company. The RM703.3m deal’s principal adviser UOB Kay Hian Securities (M)  Sdn Bhd announced that LTAT now owns a 90.5% stake in Boustead, representing  1.83bn acceptance shares, and that the offer will remain open until 5.00pm next  Monday. (The Edge)

Berjaya Land Bhd (BLand) is venturing into the rail business, particularly in the  high-speed rail project with the launch of Berjaya Rail Sdn Bhd (Berjaya Rail). BLand  will initially engage in the Request for Information exercise conducted by MyHSR  Corp Sdn Bhd under the Ministry of Finance. (The Edge)

S P Setia Bhd’s 1QFY23 net profit slipped 17.9% YoY to RM55.5m, due to higher  losses in construction and other operations, which offset higher profit in the  property development segment. Revenue for the quarter, however, increased 11.6%  YoY to RM967.7m. (The Edge)

Perdana Petroleum Bhd’s 1QFY23 net loss narrowed to -RM8.3m, from a net loss  of -RM14.0m recorded in the previous corresponding quarter, mainly due to lower  operating costs, lower depreciation charges, as well as lower finance costs. Revenue for the quarter rose 2.8% YoY to RM29.6m. (The Edge)

GuocoLand (Malaysia) Bhd’s net profit rose 29.4% YoY to RM8.7m, due to higher  profits from associates and joint ventures and better gross profit margins from  finalisation of development cost in several projects. Revenue for the quarter,  however, fell 7.4% YoY to RM112.4m. (The Edge)

Kobay Technology Bhd’s 3QFY23 net profit contracted 47.6% YoY to RM7.9m,  amid lower contributions from its manufacturing division. Revenue for the quarter  fell 26.4% YoY to RM73.6m. (The Edge)

Volcano Bhd's 5QFY23 net profit sank 72.4% YoY to RM0.6m, on higher cost of  goods sold and lower revenue. Revenue for the quarter declined 9.6% YoY to  RM18.9m. (The Edge)

OSK Ventures International Bhd’s 1QFY23 net profit shrank 52.0% YoY to RM4.3m,  due to lower fair value gain on its financial assets. Revenue for the quarter slump  99.1% YoY to RM0.3m. (The Edge)

Mlabs Systems Bhd has proposed to diversify its business activities to include  factoring and related business activities. This came after Mlabs completed the  acquisition of an entire stake in Ikhlas Al Dain Sdn Bhd in December 2021, to  diversify the group’s earnings base and reduce business concentration risk. Mlabs  proposed the diversification as the group has been loss making for years amid  intense competition. (The Edge)

Edelteq Holdings Bhd, which is on the way to be listed on the ACE Market of Bursa  Malaysia, found itself in hot water just as the group was looking to raise RM24.0m through the initial public offering. The group CEO and largest shareholder Chin  Yong Keong is being sued by his former employer Mi Technovation Bhd for  allegedly breaching employment contracts and abuse of legal process. Mi  Technovation also alleged that Chin had provided false or misleading statements  about his profile in the prospectus published by Edelteq, pertaining to his  employment history in the former. Mi Technovation had filed the writ in the Penang  High Court against Chin on 14th May 2023. (The Edge)

A unit of Warisan TC Holdings Bhd will kickstart the completely knocked down  (CKD) vehicle project for Guangzhou Automobile Group Co Ltd’s GS3 EMZOOM  model with the aim to roll units off production lines in April 2024. The project is a  partnership between the China automotive company, more commonly known as  GAC MOTOR, and Warisan TC’s wholly-owned WTC Automotif (M) Sdn Bhd. (The  Edge)

Vinvest Capital Holdings Bhd is not aware of any report, rumour, corporate  development or any other possible explanation that could account for the recent  sharp fall in its share price, in response to an unusual market activity query (UMA)  issued by Bursa Malaysia. (The Edge)

Bahvest Resources Bhd has reported that the Malaysian Anti-Corruption  Commission (MACC) raided the goldmine and business premises of its whollyowned unit Wullersdorf Resources Sdn Bhd in Tawau, Sabah. The raid was  conducted on 16th May 2023 and key management personnel of the company,  including its managing director-cum-CEO Datuk Lo Fui Ming, have been detained  until 19th May 2023. (The Edge)

Integrated computer systems design company Willowglen MSC Bhd announced  several boardroom changes including the redesignation of its managing director  Wong Ah Chiew to executive chairman. Wong, 75, was redesignated as executive  chairman effective 17th May 2023. Wong had been the group's MD since August  2013, after being redesignated from his previous position as non-executive  director. He is succeeding independent and non-executive chairman Alfian  Mohamed Basir, who is retiring on the same day. Also retiring is independent and  non-executive director Wang Shi Tsang. (The Edge)

PPB Group Bhd has announced the retirement of its non-independent and nonexecutive chairman Tan Sri Oh Siew Nam, effective 17th May 2023. Oh, 84, has  been on the company’s board as non-independent and non-executive chairman  since March 2016. He served the group as non-independent and executive  chairman from 2004 to 2016, and managing director (MD) from 1993 to 1999. (The  Edge)

Source: Mplus Research - 18 May 2023