Signs of mild stability

Market Review

Malaysia:. The FBM KLCI (+0.1%) edged mildly higher, taking cue from the positive developments on Wall Street, coupled with mild bargain hunting activities in oversold stocks. The lower liners also turned upbeat, while the construction and sector that added 1.6% each outperformed the mostly positive sectorial peers.

Global markets:. Wall Street edged mildly higher on a choppy trading session as the Dow added 0.1%, driven by the extended rally in mega-cap technology stocks. The European stockmarkets, however, were downbeat, while Asia stockmarkets ended mostly positive.

The Day Ahead

The FBM KLCI edged higher, buoyed by selected Petronas-related, telecommunications and banking heavyweights. Ahead of the US Fed FOMC and the US CPI data, regional markets and Wall Street were largely trading in the positive territory, anticipating that the US Fed could be keeping the interest rates at this level in view of softening of the US CPI print. We believe the gains last week may continue to spillover to our local bourse, but gains might be capped ahead of the 6 states elections. Commodities wise, the Brent crude oil traded above USD74, while the CPO price hovered above RM3,350.

Sector focus:. Given the advancement in Wall Street Nasdaq supported by optimism over potential pause in interest rate hike, we reckon the technology sector may see a further rebound. Besides, investors may favour the plantation sector following Malaysia and Indonesia’s mutual agreement to defend oil palm interest.

FBMKLCI Technical Outlook

The FBM KLCI rebounded and booked marginal gains following a two-day decline. Technical indicators however, remained negative as the MACD Histogram extended a negative bar, while the RSI hovered below the oversold 30 level. Next resistance is pegged along 1,400-1,440, while the support is located around 1,370.

Company Brief

Malaysia Building Society Bhd (MBSB) has entered into a conditional share purchase agreement with Permodalan Nasional Bhd (PNB) to acquire the entire share capital of Malaysian Industrial Development Finance Bhd (MIDF), comprising 480.4m shares currently held by PNB worth RM1.01bn. Upon completion of the proposed acquisition, MIDF will become a wholly-owned subsidiary of MBSB. The proposed acquisition will result in a well capitalised financial services group that is financially resilient to compete in the market with a stronger balance sheet. MBSB expects to table the proposed acquisition for shareholders’ consideration by August 2023. (The Star)

Power Root Bhd is expecting FY24 to deliver an even stronger set of results after signing a co-investment agreement with Thailand’s Sappe PCL to become the sole distributor of the Thai nata de coco drink, Mogu Mogu, in Malaysia. The initial investment is 20.0m baht (RM2.7m), and Power Root will contribute up to 12.0m baht (RM1.6m), while Sappe will contribute the remaining 8.0m baht (RM1.1m). (The Edge)

Cypark Resources Bhd is claiming, through arbitration, RM61.3m from the government for loss and expenses, which it alleged was due to various instructions that caused delays in the completion of a job. The company alleged that the claimed amount has not been paid despite acknowledgment of its rights to claim, notices provided and submission of its finalised claim for the loss and expenses dated 3rd January 2022. Its arbitration proceedings are against the government, the Ministry of Local Government Development, the National Solid Waste Management Department and its director general. (The Edge)

Pos Malaysia Bhd announced that Kumpulan Wang Persaraan (Diperbadankan) (KWAP) has ceased to be a substantial shareholder of the national postal service firm. This came after the civil service pension fund offloaded 100,000 shares on the open market to trim its stake to 4.99% or 39.1m shares. KWAP began disposing of Pos Malaysia shares in May 2023. Between 12th May 2023 and 8th June 2023, the pension fund sold 2.5m shares which is equivalent to 0.3% stake. (The Edge)

Bioalpha Holdings Bhd has proposed a rights issue of warrants to raise up to RM19.2m, mainly for the expansion of its pharmacy business as well as repayment of bank borrowings. The rights issue of up to 639.5m warrants will be on the basis of 3 warrants for every 8 existing shares held on an entitlement date to be determined. Based on an assumed price of 3.0 sen per warrant, the group will raise gross proceeds of RM3.0m under the minimum scenario and RM19.2m under the maximum scenario. (The Edge)

Serba Dinamik Holdings Bhd is in the midst of finalising its financial report for 3QFY23, with the aim of releasing it by 13th June 2023. The group has engaged Baker Tilly Insolvency PLT as restructuring consultant, and Dennis Nik & Wong as its restructuring lawyers as part of its restructuring and regularisation efforts to address its financial condition. (The Edge)

Kimlun Bhd has secured 2 construction contracts in Johor Bahru from Bandar Nusajaya Development Sdn Bhd worth a total of RM95.4m. The contracts, obtained via its wholly-owned Kimlun Sdn Bhd, are for the construction of one block of affordable apartments, 166 units of link houses, an ancillary building and related infrastructure. The projects are to be completed in 2Q25. (The Edge)

Radium Development Bhd’s wholly-owned Radium Global Sdn Bhd has proposed to acquire 2 pieces of land in Kuala Lumpur from several vendors for RM71.8m, to accumulate strategic land for property development purposes. (The Edge)

Top Builders Capital Bhd did not appoint any forensic auditors to look into irregularities found in the group's scheme of arrangement implemented in the 2QFY22 due to budgetary constraints. It has submitted its delayed financial report for 1QFY23. Trading of the group’s shares, which has been suspended from 8th November 2022 following the group’s failure to release its 2022 Annual report, will continue as there are still 2 more outstanding reports which are their quarterly reports for 2QFY23 and 3QFY23 which has yet to submit. (The Edge)

Source: Mplus Research - 12 Jun 2023