Resumption of Rebound After the Break

Market Review

Malaysia: The FBM KLCI (-0.49%) closed lower as sentiment turned negative after the Fed indicated doubts on the effectiveness of current interest rates in curbing inflation. On the broader market, the Transportation & Logistics sector (+0.20%) was the only gainer, while the Healthcare sector (-1.30%) declined the most.

Global markets: Wall Street ended flat as investors turned cautious ahead of the CPI data, where it may provide clues for the Fed to decide on the interest rate environment. The European stock markets ended higher led by travel stocks, while the Asian markets ended mostly mixed ahead of upcoming US-China meeting.

The Day Ahead

The FBM KLCI closed in the negative territory for the session after visiting the intraday low around 1,425. Overall trading sentiment was softer amid profit taking activities prior to the long weekend break. Meanwhile, Wall Street had a good pump last Friday, surging across 3 benchmark indices before turning flat on Monday, where traders were mixed ahead of the CPI data that will be released later tonight with PPI releasing tomorrow. These data will provide significant clues for the Fed to determine the overall interest rate environment going forward and hence the traders were trading cautiously. On the commodity markets, the Brent oil prices rebounded above USD 80/bbl as OPEC kept its demand outlook unchanged with the anticipation of higher demand from China.

Sector focus: After the long weekend break, we expect buying interest to spillover towards stocks on the local front, especially the technology stocks. Meanwhile, the focus may shift back on the O&G sector following the rebound in oil prices. Also, we believe the traders will be positioning ahead of the reporting season within the Construction, Property, Building Material, Utilities and Consumer sectors, in the anticipation of stronger results.

FBMKLCI Technical Outlook

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

Company Brief

Sime Darby Bhd confirmed that the group and its Australian partner are selling Ramsay Sime Darby Health Care Sdn Bhd (RSDH) to Columbia Asia Healthcare Sdn Bhd for RM5.7bn cash. This marks Sime Darby's exit from the healthcare business. Sime Darby group chief executive officer Datuk Jeffri Salim Davidson said Columbia Asia's offer was one that the group "could not refuse". He said the disposal was part of the group's strategic commitment to focus on its core trading business of motors and industrial. (The Edge)

Property developer GuocoLand (Malaysia) Bhd's net profit surged threefold to RM4.79m in its first quarter ended September 30, 2023 (1QFY2024) from RM1.57m a year ago, attributed to overall improvement in the property development and hospitality divisions. Quarterly revenue rose by 16.25% to RM119.15m from RM102.49m. The improvement in the group's hospitality division was contributed by higher occupancy rates and average room rates as a result of increased tourist arrivals and enhanced domestic commercial and social activities. (The Edge)

Hextar Industries Bhd (HIB), formerly known as SCH Group Bhd, has proposed to transfer its listing from the ACE Market to the Main Market of Bursa Malaysia as it looks to enhance the group's credibility, prestige and reputation. HIB said it has satisfied the requirements for the proposed transfer which include market capitalisation requirements, financial position and liquidity, and public shareholding spread. According to HIB, from Nov 10, 2022 to Nov 9, 2023, the group has recorded a daily market capitalisation of between RM605.22m and RM2.22bn, which surpassed the requirement of daily market capitalisation of at least RM500m. (The Edge)

Advancecon Holdings Bhd has secured an earthworks contract for the Bandar Universiti Pagoh development undertaken by Sime Darby Property Bhd in an industrial park in Muar, Johor. The 18-month contract worth RM22.78m is expected to contribute positively towards the group’s future earnings. The earthworks and civil engineering specialist said it intends to fund the contract via internally-generated funds or external borrowings. (The Edge)

Real estate developer LBS Bina Group Bhd has secured a solar power capacity of 28.67 megawatts under the Corporate Green Power Programme (CGPP) — a renewable energy initiative by the government that allows corporate consumers to virtually purchase solar energy from solar developers. LBS Bina said that its subsidiary Setara Armada Sdn Bhd, in collaboration with MWG Power Sdn Bhd and Ocean Solar Energy Sdn Bhd as a consortium, had been selected as the solar power producer under the CGPP by the Energy Commission for the development of a 28.67MW solar power plant. (The Edge)

Ibraco Bhd and China Railway Group Ltd have clinched a construction project worth RM568.81m involving infrastructure works for the Kuching Urban Transportation System (KUTS). Ibraco via its wholly-owned unit Ibraco Construction Sdn Bhd (ICSB) together with China Railway units, China Railway Engineering Corp (M) Sdn Bhd and Nanyang Tunnel Engineering Sdn Bhd, won the tender for Blue Line Package 1 from Rembus to Stutong for the KUTS project from Sarawak Metro Sdn Bhd on Friday. (The Edge)

SLP Resources Bhd’s third quarter net profit dropped 45.98% to RM2.67m from RM4.94m a year earlier, due to a change in product mix and higher production cost per unit following an increase in utility cost, as well as lower plant utilisation. Quarterly revenue fell 11.79% to RM41.66m from RM47.23m, mainly due to lower demand from Japan and regional markets, the group said. (The Edge)

Asdion Bhd has received a winding-up petition from Renox Stainless Steel Co Ltd for the sum of RM67,081.30 indebted to the latter. The software developer said the petition was presented by Renox Stainless to the High Court of Kuala Lumpur on Nov 7. According to Renox Stainless, Asdion had failed and neglected to pay or satisfy the said sum of RM67,081.30. (The Edge)

Adventa Bhd has announced the resignation of its chief executive officer Datuk Mark Victor Rozario, effective Nov 15. The healthcare supplier and equipment provider said Mark, 59, is stepping down from the position due to personal commitments. Mark has held the position since November 2021. (The Edge)

Maxis Bhd’s net profit for the third quarter ended Sept 30, 2023 (3QFY2023) dropped 6.8% to RM287m from RM308m a year ago due to restructuring charges related to cost optimisation initiatives aimed at improving operational efficiency. Quarterly revenue grew by 1.5% to RM2.442bn from RM2.405bn in 3QFY22, driven by its service revenue growth of 1.8% that is underpinned by steady consumer and enterprise revenue growth. The telco declared a third interim dividend of four sen per share payable on Dec 21, bringing the total dividend declared year to date to 12 sen compared with 15 sen in the first nine months of FY2022. (The Edge)

Lembaga Tabung Angkatan Tentera (LTAT) has issued an unconditional mandatory takeover offer (MTO) notice to acquire the remaining shares it does not own in Boustead Plantations Bhd (BPlant) for a cash price of RM1.55 per share, it said in a statement on Friday. This follows LTAT’s agreement with Boustead Holdings Bhd to acquire 739.2m shares or a 33% stake in BPlant after the RM1.15bn takeover deal by Kuala Lumpur Kepong Bhd (KLK) fell through last month. Boustead holds a 57.42% stake in BPlant while LTAT holds 10.59%. Upon the completion of the shares acquisition, LTAT’s shareholding in BPlant will increase to 976.41m shares, representing a 43.59% stake. (The Edge)

Malaysian Rating Corp Bhd (MARC) has revised its rating outlook on Tan Chong Motor Holdings Bhd’s (TCMH) RM1.5bn Islamic Medium-Term Notes (IMTN) programme to “negative” from “stable”. In a statement on Friday, the local rating agency said the outlook revision is premised on the continued weakening of its business profile that has resulted in declining market share in the domestic automotive industry and underperformance in foreign markets. Meanwhile, MARC has affirmed its “A+” rating on TCMH’s RM1.5bn IMTN programme. “The rating affirmation considers the group’s long-standing position in the domestic automotive industry and its healthy liquidity as well as low leverage positions,” it said. (The Edge)

Cahya Mata Sarawak Bhd (CMS) group managing director Datuk Seri Sulaiman Taib and his brother Datuk Seri Mahmud Abu Bekir Taib have filed an application to name their father Tun Abdul Taib Mahmud as a third defendant in a dispute with their stepmother, Toh Puan Raghad Kurdi Taib, relating to the transfer of CMS shares. The brothers' counsel Alvin Chong filed the application during the last mention of the case on Monday, The Borneo Post reported, adding that Chong raised the matter during proceedings in the Kuching High Court on Thursday before Judicial Commissioner Alexander Siew How Wai. (The Edge)

Rex Industry Bhd has entered into an agreement on Friday to dispose of its land measuring 31,428 sq metres (7.8 acres) in Seberang Perai, Penang for RM41.8m cash. This follows the canned food manufacturer's announcement in June that it intends to decommission its production facility in Seberang Perai, located at Taman Perindustrian Bukit Minyak, Simpang Ampat, in an effort to reduce its operating costs and improve its financial position. Rex expects to register a net gain of RM19.02 million from the disposal, and intends to use the bulk of the proceeds to repay its borrowings and finance its working capital. (The Edge)

Source: Mplus Research - 14 Nov 2023