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Mplus Market Pulse - 21 Nov 2023

Publish date: Tue, 21 Nov 2023, 09:15 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Uptrend Move to Resume

Market Review

Malaysia: The FBM KLCI (-0.26%) closed lower as investors were lacking buying interest ahead of the US FOMC meeting minutes due midweek, which will shed light on the future interest rate direction. On the broader market, the Healthcare sector (+1.62%) rose carried by glove counters, while the Utilities sector (-0.51%) fell.

Global markets: Wall Street ended higher as the gains in tech giants boosted the market sentiment, while traders will be eyeing on the FOMC meeting minutes on Wednesday. Meanwhile, the Asian markets ended mostly higher after China announced that its benchmark lending rate will be kept unchanged.

The Day Ahead

The FBM KLCI retraced for the third session after the flag breakout. Meanwhile, Wall Street surged higher, supported by the buying interest within Nvidia and Microsoft and both were pushed towards new highs; Nvidia was higher in view of better results in the upcoming corporate earnings, while the OpenAI ex-CEO joining Microsoft may enhance the company into an AI powerhouse. We believe these positive catalysts may provide trading opportunities towards crafting new highs in the stock markets at least for the near term, offsetting the FOMC meeting minutes that will be released tomorrow. Closer to home, the focus will be on the ongoing reporting season. On the commodity markets, the Brent oil prices traded near USD82/bbl with the expectations that OPEC+ will take steps to extend the oil production cuts.

Sector focus: Given the bullish tone on Wall Street with the help of the tech giants, we expect buying support to be seen within the Technology sector. Meanwhile, we are anticipating stronger results from sectors such as the Utilities, Property, Building Material, Construction, Consumer and Transportation & Logistics sectors and buying support should be seen. Meanwhile, traders could perform short term trades in the O&G stocks amid the rebound in Brent oil prices.

FBMKLCI Technical Outlook

The FBM KLCI ended lower for the third session, forming another flag pattern. The technical readings on the key index are positive, with the MACD Histogram extending a positive bar, while the RSI has maintained above 50. The resistance is pegged around 1,470-1,480 and the support is at 1,440-1,455.

Company Brief

Cape EMS Bhd saw its third quarter net profit rise 47.01% to RM15.21m, from RM10.38m a year earlier, underpinned by a favourable foreign exchange movement between the US dollar and ringgit. The electronics manufacturing services (EMS) provider said revenue rose 4.57% to RM135.98m from RM130.03m in 3QFY2022, mainly attributed to an increase of sales from its EMS segment. The group declared a second interim dividend of 0.55 sen per share, to be paid on Feb 2, 2024. (The Edge)

MyEG Services Bhd’s third quarter net profit fell 20.38% to RM120m, from RM150.71m a year earlier when there was a one-off recognition of fair value gain of RM61.89m as a result of the listing of its associate Agmo Holdings Bhd on the ACE Market. Quarterly revenue rose 19.37% to RM194.12m from RM162.62m in 3QFY2022, driven by contributions from its newly launched services on the Zetrix blockchain platform and from the sales of Zetrix tokens. Moving forward, MyEG said it will continue to introduce innovative services by leveraging new technologies, specifically blockchain or Web 3.0 in Malaysia and globally to drive its organic growth for FY2023. (The Edge)

Oil and gas services provider Muhibbah Engineering (M) Bhd has bagged two contracts amounting to RM479m, for the provision of construction works in Perak and Terengganu. The contract in Perak is for the expansion of the Lumut Maritime Terminal in Lumut, Manjung, worth RM161m, specifically to build onshore infrastructure and offshore facilities, including a main open-type wharf under Phase 2 of the expansion project. The contract was awarded by Lumut Maritime Terminal Sdn Bhd. The group is to start work on it immediately and complete it in 20 months. The second contract was awarded to Muhibbah as "the consortium lead partner" from Petronas Carigali Sdn Bhd, in relation to the Gansar project located about 190km from Terengganu's shore for a total value of RM318m. (The Edge)

Green Packet Bhd said it is not proceeding with its proposed disposal of its entire 100% stake in Oasis Capital Investment Bank Ltd (OCIB) after the investment bank failed to obtain the required approval from the Labuan Financial Services Authority (LFSA). The group said it has received a notice from the purchaser, WKJ Capital Equity Sdn Bhd, to terminate the sale agreement as OCIB was unable to obtain LFSA's approval for the change of shareholder within the stipulated time frame. The plan to dispose of its investment banking business in Labuan to WKJ Capital Equity for RM23m cash was announced by Green Packet in March. (The Edge)

Engineering precision parts manufacturer CPE Technology Bhd has priced its shares at RM1.07 apiece for its initial public offering (IPO), which seeks to raise approximately RM179.58m. The IPO involves the issuance of 167.83m new ordinary shares in the company or 25% of the enlarged share capital. The IPO will also see the offer for sale of 67.13m shares or a 10% stake to institutional and selected investors by way of private placement. (The Edge)

Ecobuilt Holdings Bhd said it is not proceeding with its plan to build a 24-storey police office building in Kuala Lumpur jointly with another company, after it was unable to comply with the terms of the deal within the stipulated period. In a filing on Monday, Ecobuilt said its wholly-owned subsidiary Eko Bina Sdn Bhd (EBSB) has received a notice of termination of the RM148.04m project from the joint-venture partner TJ Civil & Structural Contractor Sdn Bhd (TJCS). (The Edge)

Information technology products and services provider Mesiniaga Bhd has secured a RM38m contract with the Royal Malaysian Customs Department. Mesiniaga officially signed the letter of award for the provision of MYGST system maintenance services on Monday. (The Edge)

Eurospan Holdings Bhd’s proposed RM54.55m sale of its furniture manufacturing unit and properties in Seberang Perai to its controlling shareholder for future leaseback has been deemed “fair and reasonable” by independent adviser Mainstreet Advisers Sdn Bhd. Eurospan is disposing of Dynaspan Furniture Sdn Bhd (DFSB) for RM38.9m cash to its executive chairman and largest shareholder Guan Kok Beng, managing director Guan Shaw Yin and deputy MD Guan Shaw Kee. (The Edge)

Petronas Gas Bhd’s net profit rose 10.01% YoY in the third quarter ended Sept 30, 2023 (3QFY2023) on lower financing costs, taxes and expenses, but fell 3.48% QoQ on the back of weaker sales, amid planned plant turnaround in Kertih and lower product prices in the utilities segment. The better performance was despite a 9.69% drop in gross profit, on the back of a 0.93% drop in revenue to RM1.55 bn, from RM1.56 bn. On a QoQ basis, PetGas’ net profit fell to RM468.46m from RM485.37m, amid a 5.3% drop in revenue from RM1.64 bn. (The Edge)

Mr DIY Group (M) Bhd has posted a 22.5% increase in its net profit for the third financial quarter ended Sept 30, 2023 (3QFY2023) to RM123.95m, from RM101.18m in the corresponding quarter of 3QFY2022, on the back of a higher revenue and gross profit margin. Quarterly revenue rose 10.4% to RM1.07bn from RM966.17m in 3QFY2022, driven primarily by contributions from new stores. During the period, the group's store network grew by 170 from 1,038 to 1,208 stores. Together with the release of the quarterly results, Mr DIY declared an interim single tier dividend of 0.8 sen per share or RM75.5m in total, for its FY2023 ending Dec 31, 2023, to be paid on Dec 22. This raised its year-to-date payout to 2.2 sen per share. (The Edge)

XL Holdings Bhd is buying 25% equity interest in Sabah-based Samajutera Sdn Bhd to venture into seaweed cultivation activities through Samajutera’s 70%-owned subsidiary, WAF Holding Sdn Bhd. WAF Holding is a 70:30 joint venture between Samajutera and Inno Resource Development Sdn Bhd (IRD) — a subsidiary of Innoprise Corp Sdn Bhd, which is an investment arm of Yayasan Sabah. XL said the proposed investment forms part of the group’s long-term business strategy as it is currently involved in the businesses of foods distribution, fish farming, merchandise, edible bird nest operations and growing crops. (The Edge)

Lagenda Properties Bhd has recorded a net profit of RM38.77m for the third quarter ended Sept 30, 2023 (3QFY2023), up 8.5% from RM35.73m a year ago, mainly due to contribution from the property development segment as sales conversion improved. Quarterly revenue rose 20.6% to RM217.89m from RM180.72m in 3QFY22, attributed to heightened construction activities and sales conversion from various projects, most notably Lagenda Teluk Intan 3A & 3B in Perak, and Darulaman Lagenda in Kedah, according to the group's filing with Bursa Malaysia on Monday. However, for the first nine months of FY2023, Lagenda Properties' net profit fell 16.4% to RM111.29m from RM133.12m during the same period in the previous year, while revenue went down by 5.8% to RM595.23m from RM632.02m. (The Edge)

Source: Mplus Research - 21 Nov 2023

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