Driven by FTSE rebalancing

Market Review

Malaysia:. The FBM KLCI (+0.5%) nudged higher, driven by the final hour buying interest in selected index heavyweights following the quarterly FTSE rebalancing. The lower liners closed mixed, while the utilities sector (+1.3%) outperformed the sectorial peers.

Global markets:. Wall Street retreated as the Dow (-0.3%) fell on profit taking activities ahead of the extended weekend break with technology giants retreated. The European turned upbeat, while Asia stockmarkets ended mostly positive on expectations that China may continue to cut interest rates to spur economy.

The Day Ahead

The FBM KLCI notched higher amid the FTSE rebalancing activities as well as optimism increased within the local and regional markets following a pause in US rate hike campaign. Whilst bargain hunting activities are likely to emerge, the local bourse may see upside to be capped for now with the investors keeping an eye on Malaysia’s inflation reading due this week. Meanwhile, we deem the decline on Wall Street as a healthy pullback following its recent gains. Commodities wise, the Brent crude oil price rose above USD76, while the CPO price jumped above RM3,600.

Sector focus:. The energy and plantation sectors may shine as commodities prices are charged higher. Besides, the technology stocks may continue to climb on the back of a positive outlook of artificial technology. The aviation and travel-related sectors may also gain traction amid normalisation of economic activities.

FBMKLCI Technical Outlook

The FBM KLCI rebounded as the key index ended the week above its daily EMA9 level. Technical indicators remained mixed as the MACD Histogram extended a positive bar, while the RSI hover below 50. The resistance is set along 1,400-1,440, while the support is located around 1,370.

Company Brief

UWC Bhd has agreed to buy MCE Technologies Sdn Bhd and MCT Thailand Co Ltd, wholly-owned subsidiaries of Meta Health Ltd, for a price which is to be determined. The purchase will be funded with internal resources. The two proposed subsidiaries are primarily engaged in metal stamping as well as manufacturing of tools and fixtures in Malaysia and Thailand. (The Star)

Top Glove Corp Bhd’s 3QFY23 net loss stood at -RM130.6m, from a net profit of RM15.3m recorded in the previous corresponding quarter, owing to the weaker sales and ASP, while the group also laid off 600 people under a mutual separation scheme during the quarter. Revenue for the quarter slipped 64.5% YoY to RM530.6m. (The Edge)

Jentayu Sustainables Bhd has announced that its healthcare operation Ohana Specialist Hospital has received approval from the Ministry of Health (MOH) to reopen, after a little over 2 months of closure. The paediatrics and obstetrics and gynaecology specialist hospital, which was acquired by Jentayu in September 2022, had its licence revoked in April due to non-compliance with mandated operating procedures. (The Edge)

Independent power producer Edra Power Holdings Sdn Bhd is partnering with TNB Power Generation Sdn Bhd (TNB Genco), a wholly-owned subsidiary of Tenaga Nasional Bhd (TNB) to spearhead its power generation business. The collaboration is intended for the 2 companies to share technical information and spare parts pooling for the operations and maintenance of the 9HA.02 gas turbine technology. (The Edge)

Cahaya Mata Sarawak Bhd (CMS) has failed to secure a court injunction to restrain Syarikat Sesco Bhd (Sesco) from terminating electricity supply to its phosphate production facility in Sarawak, in its ongoing dispute with Sesco over a power purchase agreement inked between them in 2019 that has been referred to arbitration. CMS' phosphate production is housed under its subsidiary Cahya Mata Phosphates Industries Sdn Bhd (Phosphates), formerly known as Malaysian Phosphate Additives (Sarawak) Sdn Bhd. (The Edge)

Singapore-based private equity fund Hildrics Asia Growth Fund I’s wholly-owned subsidiary HAGF Investment (I) Pte Ltd emerged as GIIB Holdings Bhd’s substantial shareholder after acquiring 48.6m ordinary shares, or an 8.2% stake. Hildrics Asia is managed by Hildrics Capital Pte Ltd, which was founded in 2021 by Choo Kee Siong and Wee Teng Chuen. Following the investment, HAGF is now the second-largest shareholder of GIIB, after Tai Qisheng who holds an 11.5% stake. (The Edge)

Bumi Armada Bhd has announced that Indian state-owned Oil and Natural Gas Corp Ltd (ONGC) has expressed intention to extend the charter for its floating vessel Armada Sterling II for 1 year. The value of the contract extension is estimated to be USD43.0m (RM198.4m). The original time charter is slated to expire on 7th March 2024. The contract was first signed with ONGC in March 2013 for a 9-year period, with 7 annual extension options. (The Edge)

Khazanah Nasional Bhd and Boustead Holdings Bhd have offloaded the discontinued indoor family attraction KidZania Singapore to Singapore-listed Sim Leisure Group Ltd for SGD110,000 (RM380,000). KidZania Singapore, which opened in April 2016 on Sentosa Island, Singapore, closed its doors permanently in 2020 during the Covid-19 pandemic. The theme park developer and operator also secured an agreement with Sentosa Development Corp to lease the premises in which the discontinued KidZania Singapore is situated. (The Edge)

PTT Synergy Group Bhd (PTTS) 70.0%-owned subsidiary, PTT Logistics Sdn Bhd, has formed a strategic alliance with Oriental Material Handling (Malaysia) Sdn Bhd (OMH) to venture into the automated warehousing and total intralogistic solution segment in Malaysia, Indonesia, Thailand, Vietnam and Cambodia. OMH is wholly owned by OMH Science Group Co Ltd, the largest intelligent logistic equipment manufacturer and total intralogistic solutions provider in China. (The Edge)

KIP Real Estate Investment Trust (KIP REIT) is buying KIPMall Kota Warisan in Sepang, Selangor for RM80.0m cash. The exercise is deemed as a related-party transaction as Datuk Ong Kook Liong is a director and major shareholder of Cahaya Serijaya Sdn Bhd, the vendor, as well as the managing director and a major unitholder of KIP REIT. The acquisition is expected to be completed by 1Q24 will expand KIP REIT’s portfolio to 11 assets. Concurrently, KIP REIT is planning a private placement to raise up to RM10 m, based on the illustrative issue price of 81.5 sen per unit for the issuance of a maximum of 12.3m placement units to partially fund the acquisition. (The Edge)

Due to a change in business plans, Impiana Hotels Bhd and Cafelink (M) Sdn Bhd whom is the operator of franchise restaurants SOULed OUT and WIP have mutually decided to end talks for the hotels and resort operator to take up a 70.0% stake in Cafelink. This was due to the change of business plan of the parties and is not expected to have any effect on the issued share capital and substantial shareholding of the company termination. (The Edge)

CIMB Group Holdings Bhd has appointed Novan Amirudin as the chief executive officer of CIMB Investment Bank Bhd, effective from 15th June 2023. Novan is taking over from Jefferi Hashim, whose role has been expanded as the group head, private banking and head of ESG advisory and solutions, Group Wholesale Banking of CIMB Group. (The Edge)

Malaysia Building Society Bhd (MBSB) has confirmed that CIMB Group Holdings Bhd's CEO of group transaction banking Mohamed Rafe Mohamed Haneef is set to head the merged MBSB and Malaysian Industrial Development Finance Bhd (MIDF) entity once the RM1.01bn merger deal is completed. The appointment is said to be effective 1st July 2023. With Mohamed Rafe set to take over as group CEO, current holder of the post, Datuk Nor Azam M Taib, is to be re-aligned and focus on his responsibilities as CEO of its wholly-owned MBSB Bank Bhd, an appointment that will take effect on the same date. (The Edge)

Supermax Corp Bhd has named Tan Poh Chan as its new independent and nonexecutive director, effective 1st July 2023. In April 2023, the group announced the resignation of Sharon Sung Fong Fui as its independent non-executive director, due to the latter’s personal commitments and rising workload in another public-listed company. Following Sung's departure, Supermax will review and reshuffle its boardroom to align with Supermax’s global strategy and forward direction. (The Edge)

Mestron Holdings Bhd has appointed Datuk Faiza Zulkifli, a former chairman of the Special Commissioners of Income Tax under the Ministry of Finance (MOF), as its independent and non-executive chairman, effective from 16th June 2023. Faiza, 62, replaces Tajul Arifin Mohd Tahir, who has resigned due to other personal commitments. Mestron's independent and non-executive director Leong Peng Phooi has also resigned due to personal circumstances. (The Edge)

Source: Mplus Research - 19 Jun 2023