Market Review

Malaysia:. The FBM KLCI (-0.5%) extended its decline as sentiment remain wary  after selling pressure were evident across more than two-thirds of the key index  components. The lower liners also faltered, while the healthcare sector (+0.5%)  outperformed the mostly negative sectorial peers.

Global markets:. Wall Street faltered as there were limited progress over the ongoing debt ceiling negotiations, whilst investors are keeping a close tab onto the  impending release of FOMC minutes. The European stockmarkets also retreated,  while Asia stockmarkets finished mostly negative.

The Day Ahead

The FBM KLCI slid deeper into the red in the afternoon session as investors  watched the progress of the US debt ceiling talk. We believe investors may remain  jittery as the debt ceiling discussions appeared to yield little progress. Do note that  Janet Yellen commented that the “hard deadline” for raising the debt ceiling will be  on 1st of June. Meanwhile, investors may focus on fundamentally solid companies  amid the earnings season on the local bourse. Commodities wise, the Brent crude  oil traded above USD76, while the CPO price hovered above RM3,400. Gold price  remained below USD2,000. 

Sector focus:. The semiconductor sector could be one of the sectors under the  limelight following the government’s plans to strengthen Malaysia’s semiconductor  system in the hope to achieve 15.0% market share by 2030. Besides, investors may  favour telecommunications and utilities sectors prior to the release of their results.

FBMKLCI Technical Outlook

The FBM KLCI extended losses as the key index stayed below its daily EMA9 and  EMA20 level. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI hovered below 50. Support is located around  1,410, while resistance will be pegged around 1,430. 

Company Brief

Pecca Group Bhd’s wholly-owned subsidiary Pecca Aviation Services Sdn Bhd and  Global Component Asia Sdn Bhd have signed a memorandum of understanding  (MOU) to promote aircraft seat cover products in Malaysia and the wider region. Global Component Asia and Pecca Aviation will engage in joint marketing efforts to promote Pecca’s aircraft seat covers for both civil and enforcement/defense markets in aircraft cabin upgrade. (The Star)

Hextar Technologies Solutions Bhd’s 4QFY23 net loss stood at -RM0.9m vs. a net profit of RM1.1m recorded in the previous corresponding quarter, due to lower rental income from a tenancy agreement expiration for one of its warehouses and an impairment loss on trade receivables of RM1.2m. Revenue for the quarter,  however, improved 67.6% YoY to RM56.0m. (The Edge)

Sports Toto Bhd’s 3QFY23 net profit tumble 70.8% YoY to RM23.2m, mainly due to a lesser number of draws and higher prize payout. Revenue for the quarter fell 4.2% YoY to RM1.66bn. A third interim dividend of 2.0 sen per share, payable on 21st  July 2023 was declared. (The Edge)

Pertama Digital Bhd’s 1QFY23 net loss stood at -RM1.8m vs. a net profit of  RM5.1m recorded in the previous corresponding quarter, weighed down by higher operating expenses. Revenue for the quarter tumbled 73.6% YoY to RM1.4m. (The  Edge)

Kerjaya Prospek Group Bhd’s 1QFY23 net profit rose 1.9% YoY to RM29.4m, due to higher interest income. Revenue for the quarter, however, decreased 1.1% YoY to  RM297.3m. An interim dividend of 2.0 sen per share, payable on 6th July 2023 was declared. (The Edge)

Coastal Contracts Bhd’s 3QFY23 net profit surged 246.7% YoY to RM153.7m,  mainly buoyed by a higher share of profit of joint venture (JV) amounting to  RM129.9m. Revenue for the quarter rose 3.5% YoY to RM55.7m. (The Edge)

Uchi Technologies Bhd’s 1QFY23 net profit rose 41.2% YoY to RM37.8m, due to higher demand for its products and services, coupled with gains of RM11.3m from its disposal of assets. Revenue for the quarter improved 19.8% YoY to RM57.4m. (The Edge)

Star Media Group Bhd’s 1QFY23 net profit dropped 54.9% YoY to RM1.1m, as its main business segments reported lower earnings. Revenue for the quarter decreased 1.3% YoY to RM52.0m. (The Edge)

Pelikan International Corp Bhd is currently in negotiations with prospective strategic buyers to dispose of "substantially" all its assets and business interest.  The company is appointing an investment bank as the principal adviser to advise the board of directors on the said disposal and negotiate terms of the transaction.  Separately, Pelikan’s 1QFY23 net profit stood at RM4.7m, compared with a net loss of -RM6.1m recorded in the previous corresponding quarter, driven by strong sales development in the Latin American region. Revenue for the quarter rose 18.1% YoY to RM236.7m. (The Edge)

Wah Seong Corp Bhd’s 1QFY23 net profit soared 340.5% YoY to RM21.8m, on the back of a higher revenue contribution from all business segments. Revenue for the quarter grew 39.4% YoY to RM639.7m. (The Edge）

Dayang Enterprise Holdings Bhd’s 1QFY23 net loss stood at -RM16.0m vs. a net profit of RM13.8m recorded in the previous corresponding quarter, due to fewer work contracts being awarded, and lower vessel utilisation, which is typical during the monsoon season. Revenue for the quarter slipped 29.8% YoY or RM47.7m. (The Edge)

Aldrich Resources Bhd has proposed to diversify into the exploration of minerals,  mining and mining-related businesses, as well as money lending business. The group is presently involved in providing computerised maintenance management systems and fintech solutions, as well as corporate secretarial and share registration services. In February 2023, Aldrich had subscribed for a 96.2% stake of the enlarged issued share capital of a money lending company, Proficient  Premium Sdn Bhd, for RM250,000. (The Edge)

MISC Bhd’s wholly owned subsidiary Gas Asia Terminal (L) Pte Ltd has entered into an agreement with Regas Terminal (Sg Udang) Sdn Bhd (RGTSU) for a one-off prepayment of USD233.6m as early settlement of the capex hire fees payable for the remaining charter period of its 2 floating storage units (FSUs) at LNG Regas  Terminal Sungai Udang in Melaka. The amount will be paid fully in cash, and the  FSUs will continue to be employed by RGTSU until August 2032 as agreed upon. (The Edge)

Deleum Bhd has appointed Tan Sri Shamsul Azhar Abbas, who was president and chief executive officer of Petroliam Nasional Bhd from 2010 to 2015, as its chairman effective 1st June 2023, succeeding Datuk Izham Mahmud. Shamsul  Azhar joined Deleum's board of directors in June 2022, bringing with him more than 40 years in the oil and gas industry. Izham, 82, will continue to remain on  Deleum’s board as non-independent non-executive director. (The Edge)

Source: Mplus Research - 24 May 2023