Market Could Take a Breather

Market Review

Malaysia: The FBM KLCI (-0.37%) closed lower as sentiment turned negative prior to the Fed chair’s speech on Thursday, coupled with the upcoming US jobless claims data. On the broader market, the Utilities sector (+1.45%) gained, supported by YTL related counters, while the Property sector (-0.76%) declined.

Global markets: Wall Street ended lower as the US Treasury yields rose after the Fed suggested that more effort is required to reduce inflation. The European stock markets ended higher on the back of positive corporate earnings, while the Asian markets ended mostly higher despite China’s CPI fell more than expected.

The Day Ahead

The FBM KLCI closed weaker for the third session following the recent breakout above the 1440-1445 zones amid profit taking activities. Following the hawkish comments from the Fed’s chair, Wall Street ended softer for the session and we expect some selling interest to spillover towards the local stock exchange. Hence, upside may be limited for the FBM KLCI for the near term. However, we believe the traders could shift their attention to the ongoing reporting season and look for opportunities on stocks with better growth prospects. On the commodity markets, the Brent oil prices stayed below the USD80/bbl market, while the crude palm oil traded around RM3,750 zone.

Sector focus: Following the release of better results from SWIFT and WPRTS, we believe the trading interest may build up within the Transportation and Logistics sector. Meanwhile, we expect selected O&G stock to decline for the near term, amid softer crude oil prices. Heading into the reporting season, we favour the Construction, Property, Building Material, Utilities and Consumer sectors, especially the Poultry segment.

FBMKLCI Technical Outlook

The FBM KLCI ended lower for the third consecutive session. The technical readings on the key index are mixed, with the MACD Histogram forming a rounding top formation, while the RSI maintains above 50. The resistance is pegged around 1,470- 1,480 and the support is at 1,440-1,450.

Company Brief

The Italian government has rejected the proposed disposal by KNM Bhd’s wholly owned subsidiary KNM Europa BV of its entire stake in FBM Hudson Italiana SpA. KNM said the buyer, the United Arab Emirates' Petro MAT FZCO, had failed to obtain the Golden Power clearance from the Italian government. The Italian government's Golden Power refers to its special power to stop any foreign direct investment, or halt corporate transactions involving strategic assets that include defence, national security, and infrastructure such as transportation, energy, and communications. (The Edge)

Mi Technovation Bhd saw its net profit in the third quarter ended Sept 30, 2023 decline by 30.09% to RM14.16m against RM20.25m in the same period last year. Earnings per share dipped to 1.58 sen from 2.26 sen. The Penang-based semiconductor equipment manufacturer said its earnings were dragged down by a RM3.58m one-off withholding tax paid in relation to the dividend received from its Taiwanese subsidiary, and lower foreign exchange gain. Revenue, however, increased 9.8% to RM98.45m from RM89.66m, mainly driven by its semiconductor equipment business unit and semiconductor material business unit. (The Edge)

Southern Steel Bhd's net loss narrowed by 38.5% to RM39.59m for its first financial quarter ended Sept 30, 2023, from RM64.44m a year ago, thanks to higher sales volume and improved margin. Revenue rose 4.8% to RM601.81m from RM574.03m previously. Southern Steel said the industry outlook remains challenging as current global market conditions weigh on demand. (The Edge)

Vestland Bhd has secured a RM240m contract to undertake the main building works, mechanical and electrical and external works for two blocks of council homes in Taman Desa, Kuala Lumpur. The construction company secured the award from Ambang Besar Sdn Bhd. "Domestically, demand is not expected to improve until major infrastructure developments are rolled out. The group will continue to be cautious and responsive to market needs and continue to focus its effort on operational efficiencies," it said. (The Edge)

Sentral REIT’s net property income (NPI) rose 6.05% to RM30.12m in the third quarter ended on Sept 30, 2023 from RM28.4m a year ago, underpinned by higher gross revenue, offset by higher property expenses. Gross revenue for the quarter increased by 11.43% to RM39.78m from RM35.7m a year prior, mainly due to higher revenue generated from Menara Shell, Platinum Sentral and Sentral Building 3. (The Edge)

Westports Holdings Bhd saw its net profit increase by 29.66% in the third quarter ended Sept 30, 2023 to RM195m, from RM150.39m on higher revenue during the quarter coupled with lower administrative and tax expenses as well as finance costs. Revenue for the quarter gained 4.18% to RM542.31m from RM520.54m a year before due to an increase in container revenue. (The Edge)

Renewable energy specialist Samaiden Group Bhd has been selected as one of the solar power producers under the Corporate Green Power Programme (CGPP) by the Energy Commission (EC). In a filing with Bursa Malaysia on Thursday, Samaiden said its wholly owned subsidiary Samaiden Sdn Bhd (SSB) has been awarded by the EC with an individual export capacity of 13.42 megawatts (MWac) under the CGPP. On top of that, SSB, in a consortium with Premier Supreme Sdn Bhd, has additionally secured a quota of 29.90MWac, bringing the total capacity won to 43.32MWac. (The Edge)

Source: Mplus Research - 10 Nov 2023