Focusing on the Nonfarm Payroll

Market Review

Malaysia: The FBM KLCI (-0.02%) closed flat due to profit taking activities after the upward move in the morning session as investors were still trading cautiously amid the elevated interest rates environment. The Construction sector (+1.24%) gained momentum, while the Energy sector (-1.02%) fell after the plunge in Brent oil prices.

Global markets: Wall Street ended marginally lower from mild profit-taking activities as investors traded cautiously ahead of the US September jobs report on Friday, despite the mildly easing US Treasury yield. Meanwhile, both the European and Asian markets ended higher.

The Day Ahead

The FBM KLCI turned flat as the profit taking activities emerged in the first session of trading. Wall Street continues to trade lower overnight, affected by the US Treasury yield environment, while the market could be looking for possible clues in the upcoming Friday’s monthly jobs report to understand the Fed’s interest rate direction going forward. On the local front, we anticipate that the traders may focus on domestic catalysts such as NETR and NIMP for trading opportunities. Commodities wise, the Brent crude oil extended the selldown, closing below the USD85/bbl level due to weak demand for gasoline in the US even as production dropped, while the CPO prices headed lower towards RM3,600/MT level.

Sector focus: The investors may focus on fundamentally solid companies which have earnings growth over the past 2 quarters. Meanwhile, we like stocks that may benefit under the NETR and NIMP blueprints, while the traders may position for the upcoming Budget 2024; namely the renewable energy, construction, property and building materials. However, the Energy sector is likely to be pressured amid falling Brent oil prices.

FBMKLCI Technical Outlook

The FBM KLCI ended flat, falling into the support zone of 1,400-1,415. Despite the MACD Histogram extending another negative bar, the RSI fell below 30 which could mean the index is oversold and may be due for a rebound in the near term. The resistance is envisaged around 1,440-1,450 and the support is located around 1,400- 1,415.

Company Brief

Financially-distressed Capital A Bhd has requested to further extend the deadline for the company to submit its regularisation plan — which is due on Oct 7 — to Dec 31, 2023. This marks the third time that Capital A has requested an extension deadline from Bursa Securities. The original deadline on Jan 7, 2023 had been extended twice — first to July 7 and then Oct 7. (The Edge)

Jasa Kita Bhd is disposing of a parcel of land for a cash consideration of RM43.08m in a related party transaction. The leasehold piece of industrial land, measuring 14,294 square meters, is located within the PKNS Setapak industrial area in Kuala Lumpur. (The Edge)

Sunway Construction Group Bhd’s (SunCon) joint venture (JV) with construction firm Kajima (M) Sdn Bhd has won a RM595.38m contract to design and build a distribution centre warehouse for Daiso Malaysia Group Sdn Bhd in Pulau Indah, Selangor. The contract will span a period of 34.5 months and is expected to be completed by the second quarter of 2026. (The Edge)

Waja Konsortium Bhd has secured a contract worth RM279.15m from TH Tebrau Land Sdn Bhd as the sub-contractor for a housing project in Johor Bahru. The construction group said its 51%-owned subsidiary Waja Build Tech Sdn Bhd had accepted the Letter of Award (LOA) from TH Tebrau Land to undertake management work for the second phase of the One49 Residence apartment project comprising five blocks of service apartments totalling 2,260 units. (The Edge)

Inta Bina Group Bhd’s unit Inta Bina Sdn Bhd has received a RM100.5m contract to develop a 24-storey commercial building in Shah Alam, Selangor. The construction company said the contract period is 26 months starting on Oct 15, 2023. (The Edge)

Construction group Vestland Bhd has bagged two design and build contracts worth RM116.1m. Vestland said its wholly-owned subsidiary Vestland Resources Sdn Bhd has been awarded the said contracts. The first contract is from Derrida (M) Sdn Bhd and comprises a design and build project for a school, quarters, hostel and related facilities located in Sabah with a contract value of RM53m. The second contract is from Sg Besi Construction Sdn Bhd with a value of RM63.1m. The contract relates to a design and build project for two blocks of 13-storey apartments and related facilities located in Penang. (The Edge)

Cypark Resources Bhd unit Cypark Renewable Energy Sdn Bhd has signed a Memorandum of Understanding (MOU) with Trina Solar Development Pte Ltd to explore business opportunities in the renewable energy (RE) segment in Malaysia and cross-border. Under the MOU, Cypark and Trina Solar have agreed to conduct joint marketing, and work in tandem to unlock new opportunities, the companies said in a statement. Both parties will collaborate to drive sustainability initiatives and “promote the adoption of renewable energy in Malaysia, as well as cross-border electricity supply to Singapore”. (The Edge)

In explaining its series of transactions on Sabah-based gold miner Bahvest Resources Bhd, Kretam Holdings Bhd justified that it viewed the former as an investment with potential after taking into consideration the uptrend in gold prices in recent years. Lim was among a group of shareholders who had sought a requisition for an extraordinary general meeting (EGM) to remove three board members from Bahvest. The trio resigned ahead of the Bahvest’s EGM on June 13, and after the Malaysian Anti-Corruption Commission (MACC) conducted a raid on Bahvest’s operation centre in Tawau, Sabah. Shares in Kretam closed unchanged at 58 sen, giving it a market capitalization of RM1.36bn. (The Edge)

LTKM Bhd has scrapped the reverse takeover deal, which includes the planned RM336m acquisition of an entire stake in electronics manufacturing services (EMS) player Local Assembly Sdn Bhd. The reverse takeover deal was first proposed in April 2022, which would have seen the company sell its existing chicken egg production business to become an EMS provider. The deal also involved a corporate revamp with the emergence of new controlling shareholders in LTKM and change of its name to LA Technology Bhd. In a bourse filing on Thursday, LTKM said the group and vendors had mutually terminated the proposed acquisition given that both parties have experienced contrasting financial performance after the execution of the latest supplemental letter agreement dated May 10, 2023. (The Edge)

After Malayan Banking Bhd's share price hit a record high last month, investors appear to be taking profit against the country's largest public-listed company amid growing concerns over the group’s rising costs while expectations of “higher and longer” global interest rates weigh on risk appetite towards the capital markets. The stock’s adjusted closing price, which reached its highest of RM8.93 on Sept 18 after climbing 9.8% since the start of the year, has since pared some of these gains. On Thursday, the bank, largest in the country by asset size, closed at RM8.76, three sen or 0.3% higher than the day before, but 1.9% lower than its recent high. The latest valuation gave Maybank a market capitalisation of RM105.65bn, still the most valuable stock on Bursa Malaysia. (The Edge)

A day after the Armed Forces Fund Board (LTAT) announced its intention to privatise its 68.01%-controlled Boustead Plantations Bhd (BPlant), BPlant’s share price rebounded by 13 sen or 10.24% to close at RM1.40 on Thursday, though still 10.7% off the armed forces fund board’s RM1.55 buyout offer. The move pulled some investors back towards the plantation group’s stock on Thursday, which now gives the group a market capitalisation of RM3.14bn, and pushed it up Bursa Malaysia’s top gainers and most actives lists for the day. (The Edge)

Infomina Bhd has secured a contract valued at RM35.4m from Bangkok Bank Pcl for the provision of technology application and infrastructure operation services. In a bourse filing on Thursday, the IT support services provider said its 99.99%-owned subsidiary Infomina (Thailand) Co Ltd has inked a software subscription agreement (SSA) with the bank. “The SSA is for the provision of technology application and infrastructure operations, maintenance and support services to Bangkok Bank, over a period of three years commencing March 31, 2023, to March 30, 2026. (The Edge)

Sunway Bhd has clarified that there was no valuation made by independent registered valuer on the 559-acre prime industrial land in Batu Kawan, Penang which it acquired from Penang Development Corp (PDC). While there was no valuation made by independent registered valuer, Sunway said that based on market available information to them, the market price for undeveloped freehold industrial land in the Batu Kawan area ranged between RM21 and RM35 per square feet. Shares in Sunway finished one sen or 0.52% higher at RM1.95, giving it a market capitalization of RM9.75bn. (The Edge)

Source: Mplus Research - 6 Oct 2023