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Mplus Market Pulse - 15 Nov 2023

Publish date: Wed, 15 Nov 2023, 09:19 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Wall Street Rally to Spillover to Local Stocks

Market Review

Malaysia: The FBM KLCI (+0.45%) closed higher due to bargain hunting activities, snapping a 4-day losing streak as investors might be more optimistic ahead of the corporate earnings season. On the broader market, the Telco & Media sector (+1.39%) was the top gainer, while the Healthcare sector (-0.69%) declined the most.

Global markets: Wall Street rallied after the CPI data came out flat, beating consensus estimates, which suggests that inflation is cooling and the Fed may end the rate hikes soon. Both the European and Asian stock markets ended higher, with investors traded more positively ahead of the US-China meeting.

The Day Ahead

The FBM KLCI higher after the volatile move last Friday and we believe investors could be positioning themselves ahead of the corporate earnings. Meanwhile, the cooler-than-expected CPI data in the US had been fuelling a strong rally. Investors will be watching out the US PPI data that will be releasing tonight; should it come in below the consensus estimates that may provide another boost towards the stocks markets generally. Some other significant data and events includes (i) retail sales later tonight, (ii) unemployment claims on Friday and (iii) meeting between US-China will be on the lookout as well. On the commodity markets, the Brent oil prices traded towards intraday high around USD84/bbl amid softer USD after the CPI data release before easing towards USD82/bbl.

Sector focus: With Wall Street extending its upward move, we believe the trading interest will be revolving around the technology stocks as there might be a potential rerating of valuations for the technology sector after the cooling CPI data. Meanwhile, as we are heading into the full-blown release of the corporate earnings, focus will be seen within the Construction, Property, Building Material, Utilities and Consumer sectors.

FBMKLCI Technical Outlook

The FBM KLCI ended higher. 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

Property developer LBS Bina Group Bhd is planning to raise up to RM750m via sukuk for capital expenditure, investments, working capital and refinancing. The Islamic debt papers are to be issued under a Sukuk Wakalah Programme it has just lodged with the Securities Commission Malaysia on Tuesday. It said the programme provides the group the flexibility to issue both Sukuk Wakalah and Sustainability Sukuk Wakalah that complies with green/social/sustainability/sustainable and responsible investment sukuk guidelines, frameworks, standards or principles issued by the SC, the Asean Capital Markets Forum or the International Capital Market Association. (The Edge)

TMC Life Sciences Bhd’s net profit in the first quarter ended Sept 30, 2023 (1QFY2024) soared by 143.10% to RM15.14m from RM6.23m in the corresponding period a year ago (1QFY2023), in line with revenue growth attributed to the increase in capacity of Thomson Hospital Kota Damansara and the recovery of its fertility business. Quarterly revenue surged by 28.6% to RM92.44m from RM71.87m, underpinned by higher contribution from its fertility business. (The Edge)

Dialog Group Bhd’s net profit in the first quarter ended Sept 30, 2023 (1QFY2024) rose 5.07% to RM132.17m, from RM125.79m in 1QFY2023, largely due to better performance from its international operations and higher share of results from joint ventures and associates. The group’s earnings per share for 1QFY2024 increased to 2.34 sen from 2.23 sen in 1QFY2023, its Tuesday bourse filing showed. Quarterly revenue was 9.66% higher at RM780.45m, compared with RM711.70m previously, underpinned by higher sales of specialist products and services in various countries, and increased activities at the Jubail Supply Base. (The Edge)

Ranhill Utilities Bhd posted a 10% rise in net profit to RM10.22m for the third quarter ended Sept 30, 2023 (3QFY2023), from RM9.32m a year earlier, on higher earnings in all three of its business segments, namely environment, engineering services and energy. Quarterly revenue surged 40.42% YoY to RM609.39m from RM433.99m in 2QFY2022, attributed to higher recognition of water revenue contributed by its water supply subsidiary Ranhill SAJ Sdn Bhd, arising from a non-domestic tariff hike, as well as increased revenue from its engineering unit Ranhill Worley Sdn Bhd. The surge in revenue was also contributed by recognition of the construction progress of Ranhill Solar I in Bidor, Perak, and higher recognition of net electrical output and capacity factor reported in Ranhill Sabah Energy I Sdn Bhd. (The Edge)

Reservoir Link Energy Bhd has proposed to acquire a 100% stake in SAG Renewables Sdn Bhd (SAGR) for a total purchase consideration of RM10.5m. The group said its wholly-owned subsidiary, Reservoir Link Renewables Sdn Bhd, had entered into a share sale agreement with SAGR's parent company SAG Green Tech Sdn Bhd (SGT) for the proposed acquisition. SGT is principally engaged in the installation of non-electric solar energy collectors. (The Edge)

Cheong Lai Sin has emerged as the largest shareholder of K Seng Seng Corporation Bhd after receiving shares transferred from the late Koh Seng Kar, founder and chairman of the steel manufacturer. The group said Cheong, a Singaporean, now holds 41.58m shares or a 27.69% stake in the group. In March 2019, Seng Kar passed away at the age of 75. (The Edge)

IHH Healthcare Bhd’s indirect unit, Northern TK Ventures Pte Ltd (NTK), is seeking over ¥20bn (approximately RM634m) in damages from Japan’s Daiichi Sankyo Company Ltd (Daiichi Sankyo) in relation to its stake acquisition in India’s Fortis Healthcare. In a statement on Tuesday, the group said NTK had filed the claim against Daiichi Sankyo on Oct 16 in the Tokyo District Court in Japan. (The Edge)

Bursa Malaysia has suspended the intraday short selling (IDSS) on JF Technology Bhd (JF Tech) for the rest of Tuesday, after the stock dropped more than 15% or five sen from its reference price. The local stock exchange said on Tuesday that IDSS will only be re-activated for JF Tech, a manufacturer of high-performance test contacting solutions for global integrated circuit makers, at 8.30am on Wednesday. JF Tech dropped as much as 16% or 18.5 sen to an intraday low of 96.5 sen on Tuesday, before paring some losses to trade at RM1.03 at 4:17pm — still down 12 sen or 10.4%, valuing it at RM954.87m. Earlier on Tuesday, the group announced it had formed a joint venture — HFC Tech Sdn Bhd — with Shenzhen HFC Co Ltd, to establish its first manufacturing facility outside of China. (The Edge)

Seremban-based property developer Matrix Concepts Holdings Bhd has secured a RM512m financing facility from AMMB Holdings Bhd (AmBank Group) to facilitate the development of 1,382.2 acres of prime housing in Malaysia Vision Valley 2.0 located in Sendayan, Negeri Sembilan.The project, which has a gross development value of RM7bn, will be developed through an 85:15 joint venture between Matrix Concepts’ indirect subsidiary MHCB Development (NS) Sdn Bhd and NS Corporation called N9 Matrix Development Sdn Bhd. It will feature a mix of residential, commercial and retail elements. (The Edge)

Malakoff Corp Bhd, through its wholly-owned subsidiary Malakoff Radiance Sdn Bhd, has signed a solar power purchase agreement with Gas Malaysia Bhd as part of its commitment towards ensuring access to sustainable energy for all. The agreement encompasses the development, operation and maintenance of solar photovoltaic systems at three Gas Malaysia sites. The sites include the Gas Malaysia headquarters in Shah Alam, Selangor, the southern regional office in Pasir Gudang, Pahang, and the eastern regional office in Gebeng, Kuantan. (The Edge)

NationGate Holdings Bhd saw its net profit and revenue drop by over 40% year-on-year in its third quarter ended Sept 30, 2023 (3QFY2023), amid slower demand for the group’s electronic manufacturing services (EMS), especially from networking and telecommunication customers. Net profit dropped by 42.5% to RM17.28m or 0.83 sen per share for 3QFY2023, from RM30.05m or 1.83 sen per share in 3QFY2022, the group disclosed in its stock exchange filing on Tuesday. Revenue fell by 45.7% to RM165.58m from RM305.17m. NationGate declared an interim dividend of 0.25 sen per share, with the entitlement and payment dates to be announced. (The Edge)

Source: Mplus Research - 15 Nov 2023

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