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Mplus Market Pulse - 29 Sept 2023

Publish date: Fri, 29 Sep 2023, 08:45 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Bargain hunting emerged on Wall Street

Market Review

Malaysia:. The FBM KLCI (-0.38%) closed lower on Wednesday as investors were taking profits prior to the public holiday coupled with the mixed sentiment across the regional benchmark indices. The Energy sector (+1.12%) gained from the rebound in Brent oil prices, while the Construction sector (-1.42%) declined.

Global markets:. Wall Street ended higher led by Nasdaq after the 10-year US Treasury yield fell from its 15-year high, while awaiting the release of the PCE data later today. The European markets gained after Germany’s inflation data was lowerthan-expected, while the Asian markets traded mixed.

The Day Ahead

The FBM KLCI traded in the negative territory prior to the public holiday, while investors were focusing on the Energy sector amid the rebound in Brent oil prices. In the US stock markets, buying interest emerged within Nasdaq or growth stocks after the 10-year US Treasury yield dropped from its 15-year high. Also, traders will be looking at the Personal Consumption Expenditure that will be released later tonight for more clues from the Fed on its tone going forward. Besides, we believe the upside on Wall Street may be limited as the US government is facing a shutdown if the US Congress is not able to pass a funding plan by end-Sep. Commodities wise, the Brent crude oil traded on a volatile manner within the range of USD93-95/bbl level, while the CPO prices rebounded strongly near the RM3,800/MT level.

Sector focus:. Given the rebound on Wall Street led by growth stocks, we expect trading interest to be seen on the technology stocks. Meanwhile, the news on EKOVEST streamlining most of the business segments could spur trading interest within the construction, property, and plantation sectors. Also, traders will be focusing on trading opportunities ahead of the Budget 2024, such as the industrial products and consumer sectors.

FBMKLCI Technical Outlook

The FBM KLCI ended lower and still trading below the 1,450 psychological level. Also, the technical readings on the key index were negative with the MACD Histogram turning lower and the RSI is below 50. The resistance is located around 1,465-1,470 and the support is envisaged around 1,430-1,440.

Company Brief

Glomac Bhd's net profit dropped 21.5% for the first quarter ended July 31, 2023 (1QFY2024) on lower contribution from its property development business after the completion of several projects, coupled with a dearth of new launches. Revenue also declined 8.2% to RM60.11m for 1QFY2024, from RM65.49m in the previous corresponding quarter. (The Edge)

Sapura Energy Bhd, which reported its second consecutive profitable quarter on Wednesday, said it has secured a US$300m (RM1.4bn) contract from Azule Energy Angola BV for a gas complex in Angola — the Angola Northern Gas Complex (NGC) project. The contract's scope of work comprises engineering services, transportation, installation and related activities for the Quiluma and Maboqueiro Platform of the Angola NGC project, according to Sapura’s stock exchange filing on Wednesday. The works are expected to be completed by the Q4 2026. (The Edge)

Capital A Bhd has inked three memoranda of understanding (MOUs) to partner longtime rival PT Garuda Indonesia (Persero) Tbk in both parties’ commercial airline, cargo as well as maintenance, repair and overhaul (MRO) businesses. Both parties will explore network expansion in commercial airline through AirAsia Aviation Group Ltd and Garuda’s low cost carrier PT Citilink Indonesia Tbk; logistics services between Teleport Everywhere Pte Ltd and Garuda Indonesia Cargo; aircraft maintenance between Asia Digital Engineering (ADE) and GMF AeroAsia. (The Edge)

Sunway Bhd’s 70%-owned Umech Land Sdn Bhd has signed a joint development agreement with Penang Development Corp (PDC) to develop a 559-acre prime industrial land in Batu Kawan, Penang, in exchange for a land entitlement of RM646.02m. PDC will receive a land entitlement that consists of a RM64.6m deposit, with the remaining RM581.42m to be paid via four instalments. Both parties will collaborate on the development of the land, which will be known as "Batu Kawan Industrial Park 2". (The Edge)

Pensonic Holdings Bhd’s managing director Vincent Chew Chuon Ghee is no longer a substantial shareholder of the electrical home appliances maker, having disposed of a 3.18% stake in the company for RM3m on Sept 25. Vincent disposed of 4 million shares off-market on Sept 25, trimming his shareholding to 5.18m shares or a 4.12% stake. On the same day, Pensonic also saw the emergence of a new substantial shareholder, Neo Ching Yuen who acquired a 6.6% stake on Sept 25. (The Edge)

Jiankun International Bhd, a property development and construction firm, plans to raise RM19m through a placement of 95m shares to third-party investors at an issue price of 20 sen per share. Proceeds from the proposed placement will be used to facilitate completion of a proposed land acquisition. As at Sept 20, Jiankun’s issued share capital was RM76.18m, comprising 360.51m shares. (The Edge)

Gamuda Bhd’s annual net profit crossed the RM1bn mark for the financial year ended July 31, 2023 (FY2023) after it posted a 128.03% increase to RM1.84bn from RM806.23m in the previous year (FY2022), largely fuelled by gains on the divestment of its highways. Annual revenue soared 68% to RM8.23bn from RM4.9bn in FY2022, as overseas construction revenue surged fourfold to a record RM3.5bn from last year’s RM714m due to a significant pick up in work progress in its Australia and Taiwan projects. (The Edge)

Lower selling prices of crude palm oil (CPO) and fresh fruit bunches (FFB) resulted in Kim Loong Resources Bhd’s net profit for the second quarter ended July 31, 2023 (2QFY2024) falling 12.72% to RM43.35m, from RM49.67m a year ago. Likewise, quarterly revenue fell 31.68% to RM385.61m versus RM564.38m previously, despite the plantation group noting that it recorded higher FFB production, while CPO output was largely flat in 2QFY2024. (The Edge)

Hiap Teck Ventures Bhd’s net profit for the full year ended July 31, 2023 (FY2023) declined 80% to RM30.91m from RM156.01m reported in the previous year (FY2022), due to lower profit from its operations. The steel company’s annual revenue was marginally higher at RM1.59bn, compared to RM1.58bn a year earlier, supported by higher sales volume.The group also declared its first and final singletier dividend of 0.5 sen per share. (The Edge)

Censof Holdings Bhd has secured a contract worth RM872,340.78 from Social Security Organisation (Perkeso). The company said its subsidiary Cognitive Consulting Sdn Bhd had received the letter of acceptance in relation to the renewal of subscription, supply, delivery, maintenance and support services for UiPath software as well as maintenance and support services for systems within Perkeso that utilise UiPath software. Censof said the project is for a period of three years from Oct 1, 2023 to Sept 30, 2026 with no option to extend and/or renew upon its expiry. (The Edge)

Tycoon Tan Sri Lim Kang Hoo wants to group the various but similar business segments of his stable of companies under an enlarged Ekovest Bhd to streamline and rationalise the businesses and assets, consolidate his direct shareholding in the companies and avoid potential conflict of interests. In his letter, Lim said the main proposal is intended to streamline, reorganise, rationalise and merge the businesses and assets currently owned and controlled by himself and persons acting in concert, through the various public listed and non-listed companies, as well as to consolidate his direct shareholdings in the various companies.

Furthermore, the proposals are aimed to mitigate any potential conflict of interests and speculations relating to the alignment of interest of Lim as a major shareholder of the companies. It will also eliminate many of the existing recurrent related party transactions and transfer pricing concerns moving forward. (The Edge)

TWL Holdings Bhd has proposed to undertake a private placement of up to 10% of its issued shares to raise up to RM23.51m, mainly to fund the group’s development costs of 715 units of affordable housing under the Rumah Selangorku scheme. The group is expected to receive the relevant approvals for the project including the development order, building plan and APDL by the third quarter of 2023. Meanwhile, the exercise is expected to be completed within six months from the date of the approval from Bursa Securities. Shares of TWL finished unchanged at 3 sen on Wednesday, with a market capitalisation of RM140.43m. (The Edge)

Kerjaya Prospek Group Bhd has secured a contract worth RM203.06m from Samsung-KP JV — the 30:70 joint venture between Kerjaya Prospek (M) Sdn Bhd and Samsung C&T (KL) Sdn Bhd, to undertake the concrete structure works of Texas Instruments Electronic Malaysia Sdn Bhd's factory in Melaka. A spokesperson for the company, when contacted, said Kerjaya Prospek will get an additional RM142m in revenue from this new contract, as RM60m had already been accounted for in the October announcement. Shares in Kerjaya Prospek settled 2 sen higher at RM1.28 on Wednesday, giving the group a market capitalisation of RM1.62bn. (The Edge)

Source: Mplus Research - 29 Sept 2023

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