Upward trend sustained

Market Review

Malaysia: The FBM KLCI (+0.9%) took another step forward, driven by Petronasrelated and selected banking heavyweights yesterday. The lower liners however, retreated, while the property sector (+1.6%) outperformed the mostly positive sectorial peers.

Global markets: Wall Street ended mixed as the Dow (+0.2%) advanced after the US Federal Reserve delivered another 25 basis points of rate hike and signalled for a potential pause in September 2023, but the S&P 500 fell -0.02%. The European stockmarkets closed mostly negative, while Asia stockmarkets finished mixed.

The Day Ahead

The key index has performed relatively well to hold above the 1,400 level, backed by some fresh buying from foreign institutional participants. Although there was a bout of positive signs on the local bourse, the lower liners are expected to see a consolidation as market participants may trim their holdings ahead of the upcoming states election. Expectedly, the US Federal Reserve delivered another 25 basis points of rate hike. Going forward, market expectations are skewing towards a potential pause in interest rate hikes, which is deemed to be positive for the equities markets. Still, we are cautious over the extended rally and it may warrant a mild pullback over the near term. Commodities wise, the Brent crude oil took a pullback below USD83/bbl, while the CPO steadied above RM4,000/MT.

Sector focus: Strong passenger load factor numbers delivered by Air Asia X may buoy the aviation and tourism-related stocks. On the flipside, we expect mild profit taking activities to emerge within the energy sector that may take cue from the pullback in crude oil prices.

FBMKLCI Technical Outlook

The FBM KLCI formed another bullish candle as the key index strengthen its positive move above SMA200. Technical indicators remained solid as the MACD Histogram added another positive bar, while the RSI hovered in the overbought territory. Next resistances are located along 1,460-1,480, while the support is pegged around 1,400-1,420.

Company Brief

Ekovest Bhd has signed a tripartite memorandum of understanding (MoU) with China’s Shenzhen Maoxiong Co Ltd (MX) and Anxi County People’s Government (Anxi) for cross-border socio-economic collaboration. The strategic partnership will promote cooperation in the conceptualisation, planning, prioritising, financing and implementation of property development, infrastructure development and fresh produce, agriculture and aquaculture distribution and processing development in both Malaysia and China. The parties aim to immediately focus on durian processing and explore infrastructure development within China and do not discount the potential expansion of their collaboration beyond China and Malaysia, should this initiative prove successful. (The Star)

Daythree Digital Bhd made an impressive debut on the ACE Market of Bursa Malaysia at 65 sen, or more than double its initial public offering (IPO) price of 30 sen a share. Shares of the tech-driven global business services reached an intraday high of 73 sen before easing to 62.5 sen, for a gain of 32.5 sen or 108.3% at market close. (The Edge)

Pharmaniaga Bhd’s unit, Pharmaniaga LifeScience Sdn Bhd, has signed a memorandum of understanding with CSPC Pharmaceutical Group Ltd (CSPC), which is a subsidiary of CSPC Ouyi Pharmaceutical Co Ltd to enhance the production of CSPC’s biopharmaceutical portfolio. The partnership agreement is premised on the research, development, manufacturing and commercialisation of innovative pharmaceutical and biopharmaceutical products, as well as focusing on CSPC’s advanced mRNA vaccines, leading towards the commercialisation of these products in Malaysia and other relevant territories. (The Edge)

Alliance Bank Malaysia Bhd (ABMB) expects net interest margin (NIM) compression in FY24 as competition for deposits remains stiff. The bank recorded a NIM of 2.6% for FY23, against a backdrop of four consecutive hikes of 100 basis points (bps) to the overnight policy rate (OPR) by Bank Negara Malaysia last year. (The Edge)

AirAsia X Bhd recorded a passenger load factor of 76.0% (+47.0% YoY) for 2Q23, while seat capacity surged by over 26.0x, hitting 818,422 seats flown. The group attributed the hike in seat capacity to additional aircraft being brought into service and flight network further enhanced compared to the preceding quarter. (The Edge)

VS Industry Bhd has filed an oppression lawsuit against NEP Holdings (M) Bhd and 3 of its directors, alleging the directors had conducted or exercised their powers as directors of NEP in a manner that was "oppressive" or "unfairly prejudicial" to VS Industry or its interests as a member of NEP. The directors named are Lim Chang Huat, Lim Chee Kon and Chow Chun Pooi @ Chow Chan Leong. (The Edge)

Solarvest Holdings Bhd has secured a contract with a US-based company in Malaysia to install a 3.6MWp solar photovoltaic system at its manufacturing facility in Batu Kawan, Penang. Solarvest will provide engineering, procurement, construction and commission (EPCC) services to Dexcom Malaysia Sdn Bhd to install rooftop solar PV at Dexcom’s main building facilities and carpark. The installation will allow Dexcom to offset 3,190 tonnes of carbon dioxide. (The Edge)

IGB Real Estate Investment Trust’s (IGB REIT) 2QFY23 net property income (NPI) fell -2.8% YoY to RM102.8m, due to higher utility expenses and higher reversal for impairment of trade receivables in the same period last year. Revenue for the quarter, however, increased 5.8% YoY to RM141.5m. A distribution of 2.37 sen per unit, payable on 29th August 2023 was declared. (The Edge)

IGB Commercial Real Estate Investment Trust’s (IGB Commercial REIT) 2QFY23 net property income increased 3.4% YoY to RM31.1m, as it recorded higher revenue on higher occupancy rate. Revenue for the quarter grew 9.5% YoY to RM53.0m. A distribution of 1.74 sen per unit, payable on 29th August 2023 was declared. (The Edge)

Axis Real Estate Investment Trust’s (Axis REIT) 2QFY23 net property income (NPI) fell -7.6% YoY to RM58.4m, due to lower property income, higher expenses and lower gains on financial liabilities. Revenue for the quarter declined 5.6% YoY to RM68.5m. A second interim income distribution of 2.05 sen per unit, payable on 30th August 2023 was declared. (The Edge)

Sasbadi Holdings Bhd's 3QFY23 net profit jumped 122.9% YoY to RM4.6m, mainly driven by its print publishing division. Revenue for the quarter rose 51.8% YoY to RM29.4m. (The Edge)

JAKS Resources Bhd has teamed up with a Germany-based renewable energy company to participate in a solar photovoltaic project with an installed capacity of 63.3MW in Tuscany, Italy. Its wholly-owned subsidiary, JAKS Power Sdn Bhd has signed a memorandum of understanding with Zero Carbon Energy Europe GmbH (ZC Energy). Under the MOU, JAKS Power has 3 months to conduct its due diligence exercise, after which it may sign a definitive project investment agreement with ZC Energy. (The Edge)

Source: Mplus Research - 27 Jul 2023