Taking a step back

Market Review

Malaysia:. The FBM KLCI (-0.4%) pared some of its previous session gains as sentiment turned negative following the weaker-than-expected China’s 2Q23 GDP data. The lower liners, however, marched higher, while the healthcare sector (+2.0%) outperformed the mixed sectorial peers.

Global markets:. Wall Street advanced as the Dow (+0.2%) recorded its 6th straight session of gains, driven by remarks from Treasury Secretary Janet Yellen that cools down recession fears premised to the strong labour data. The European stockmarkets, however, finished lower, while Asia stockmarkets ended mixed.

The Day Ahead

Mild profit taking emerged and the key index took a step back after delivering a strong performance last week. For now, we expect the key index to consolidate as investors could be taking this opportunity, retreating to the sidelines ahead of the mid-week break. Nevertheless, rotational play and the improved market sentiment may ensure the upward momentum on the lower liners to sustain overtime. Elsewhere, the on-going batch of corporate earnings in the US as well as several key economic data such as retail sales, industrial production and manufacturing production numbers will be in focus. Commodities wise, the Brent crude oil retreated below USD80, while the CPO remained above RM3,800.

Sector focus:. We continue to favour the plantation sector that is riding onto the higher CPO prices. With the Nasdaq cementing its position above 14,000, the technology sector may continue to gain ground. After a mild pullback yesterday, we anticipate further retracement in the energy sector that may track the weakness in crude oil prices after the softer-than-expected GDP data from China.

FBMKLCI Technical Outlook

Although the FBM KLCI formed a bearish candle, the key index remained sustained above 1,400 yesterday. Technical indicators stayed positive as the MACD Histogram formed another positive bar, while the RSI hovered above 50. Should the 1,400 remain sustainable, the next resistance will be envisaged along 1,430-1,450, while the support is pegged around 1,370.

Company Brief

CelcomDigi Bhd is partnering with Huawei Technologies (Malaysia) Sdn Bhd and ZTE (Malaysia) Corporation Sdn Bhd for the purchase of network services, solutions and equipment for its nationwide network integration and modernisation project. This marks one of the largest telecommunications network deployment projects in the country and follows the merger of Celcom and Digi in December 2022. Under the various agreements, CelcomDigi will modernise its nationwide Radio Access Network with the latest technologies spanning end-to-end engineering and optimisation services from both Huawei and ZTE. (The Star)

Berjaya Corp Bhd (BCorp) is selling its waste management business Berjaya Enviro Holdings Sdn Bhd (BEnviro) to Naza Corp Holdings Sdn Bhd for RM700.0m cash. BCorp subsidiary Berjaya Group Bhd (BGroup) and Naza Corp signed a share sale agreement to dispose of a 100.0% stake in BEnviro, which is expected to be completed by February 2024. The proposed disposal is expected to see BCorp lock in RM490.7m, which it has already allocated towards paring down its debt.

Meanwhile, a joint venture (JV) between Berjaya Group and Naza Group has filed a legal suit against the Ministry of Finance (MOF) for terminating a letter of intent (LOI) offered to the JV. The LOI is related to a contract to supply government vehicles, which was terminated 3 months after Tan Sri Muhyiddin Yassin previously took over the prime-ministership from Tun Dr Mahathir Mohamad. (The Edge)

Vestland Bhd has been awarded a RM93.0m design and build contract for 3 blocks of 15-storey apartments and related facilities located at Sultan Abdul Aziz Shah Golf Club in Shah Alam. The group via its wholly-owned unit Vestland Resources Sdn Bhd, has secured the contract from its recurring customer Mercu Majuniaga Sdn Bhd, which is principally involved in building construction activities. (The Edge)

TDM Bhd has proposed to acquire 21,860 sqm of gazetted Malay Reserve Land in Kemaman to build a private hospital. TDM wholly-owned subsidiary, Kumpulan Medic Iman Sdn Bhd (KMI), is buying the freehold vacant land in Kampung Jaya, about 3km north of Cukai town centre, from Majlis Perbadanan Kemaman for RM14.1m. (The Edge)

IOI Corp Bhd has appointed former Khazanah Nasional Bhd senior adviser and director Lim Tuang Ooi as its new independent and non-executive director, effective from 18th July 2023. Lim is currently the independent and non-executive directors of Allianz General Insurance Company (Malaysia) Bhd and Sumitomo Mitsui Banking Corp Malaysia Bhd. He was senior adviser and director at Khazanah from 2019 to 2021, and senior general manager and head of risk management division at the Employees Provident Fund from 2007 to 2019. (The Edge)

Bahvest Group Bhd wholly-owned subsidiary, Wullersdorf Resources Sdn Bhd (WRSB), has lodged a police report to investigate any possible element of fraud on the letter of demand issued by its mining lease land owner Southsea Gold Sdn Bhd. WRSB has also requested the police to investigate the subsequent payment of RM6.0m to Southsea Gold, which is controlled by Bahvest's founder and former chief executive officer Datuk Lo Fui Ming. (The Edge)

Sersol Bhd chief executive officer Datuk Justin Lim Hwa Tat, who is under Malaysian Anti-Corruption Commission (MACC) investigation, had approved and instructed 5 payments totalling RM2.5m made to a third party, HGC Legacy Enterprise. The purpose of the payments, which were recorded as deposits in April and May, has yet to be made known to the board. This is in response to Bursa Malaysia's request for additional details on the visit by a MACC team to Sersol's office on 26th June 2023. (The Edge)

Titijaya Land Bhd is acquiring Menara TM Semarak in Kuala Lumpur from Menara ABS Bhd for RM72.0m. Titijaya Land’s wholly-owned subsidiaries Titijaya PMC Sdn Bhd and Titijaya South Asia Sdn Bhd are buying the asset, comprising a 22-storey purpose-built office building together with the annexed six-storey Telekom Exchange and five level of basement car park, located at Jalan Raja Muda Abdul Aziz. The group is acquiring the property, measuring 30,115 sqm in net lettable area, to lease and to provide the group with an additional form of income in addition to the income from its existing property development projects. (The Edge)

Source: Mplus Research - 18 Jul 2023