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Mplus Market Pulse - 4 Dec 2023

Publish date: Mon, 04 Dec 2023, 08:38 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Buying Interest May Persist

Market Review

Malaysia: The FBM KLCI (+0.25%) closed higher from last minute buying activities in Telco counters AXIATA (+7.0 sen) & MAXIS (+6.0 sen). On the broader market, the Healthcare sector (+1.60%) rose carried by glove counters, while the Energy sector (-1.63%) fell amid the weaker oil prices.

Global markets: Wall Street ended higher as the Fed Chair’s comments and the weaker manufacturing data further cemented expectations of the end to rate hikes. Meanwhile, the European stock market ended higher, while Asia ended lower despite the increase in Chinese Caixin manufacturing PMI data.

The Day Ahead

Following the bullish engulfing last week on the FBM KLCI, the buying support continued within selected Telecommunication heavyweights; lifted the KLCI higher for the second session. Meanwhile, with the Fed’s Chair Jerome Powell offered optimism on the progress that the US central bank’s 2% inflation target is well on track, the Dow & S&P500 surged to highest close in 2023, with the market looking at a peak of interest rate and looking for rate cut potential in 2024. This week, we expect traders to focus on the (i) ISM Services PMI, (ii) jobs data such as unemployment claims, unemployment rate, non-farm payroll. On the commodity markets, the Brent oil prices traded below USD80/bbl with as traders were not convinced by the additional voluntary cuts from OPEC+ members, while the gold price surged towards all-time-high at on the back of rate cut optimism.

Sector focus: We expect the investors to re-assess and trade the companies with positive growth in earnings following the November reporting season. We favour the Poultry sector, specifically the egg segment as traders could be waiting for the upliftment of egg’s ceiling price. Also, in view of the strong gold price, the gold retailing stocks could be favourable to trade. Meanwhile, with the Brent oil prices declining, traders may be avoiding in the near term.

FBMKLCI Technical Outlook

The FBM KLCI ended higher following the bullish engulfing bar. The technical readings on the key index are positive, with the MACD Histogram forming a rounding bottom formation, while the RSI maintained above the 50 level. The resistance is pegged around 1,460-1,465 and the support is at 1,430-1,440.

Company Brief

Citaglobal Bhd, in which the Yang di-Pertuan Agong Sultan Abdullah Sultan Ahmad Shah is a substantial shareholder, has together with its consortium partner TIZA Global Sdn Bhd, executed a 40:60 joint development agreement with clean energy player Abu Dhabi Future Energy Company PJSC (Masdar) for a two-gigawatt solar farm project in Pahang for US$2bn (RM9.75bn). Under the deal, Citaglobal and TIZA will hold a 40% equity interest in the project, with the remaining 60% held by Masdar. The parties will put in funding for the project's development's cost — which will be determined later — in proportion to their stake in the project. (The Edge)

CelcomDigi Bhd via its wholly-owned Infranation Sdn Bhd, Maxis Bhd, Telekom Malaysia Bhd, YTL Power International Bhd’s 60%-owned YTL Communications Sdn Bhd and U Mobile Sdn Bhd will take up the equity stakes in the government-owned 5G network infrastructure outfit. The five mobile network operators inked the subscription agreements (SSAs) with Digital Nasional Bhd (DNB) and the Ministry of Finance Incorporated to subscribe to a 14% stake each in the network, while the remaining 30% will be retained by Putrajaya, accompanied by a golden share, according to Communications and Digital Minister Fahmi Fadzil. In exchange for the respective 14% stakes, each telco will inject RM233m into DNB, which it would be used to meet DNB’s funding requirements. (The Edge)

After seven turbulent years in Nepal, Axiata Group Bhd is selling its stake in Ncell Axiata Bhd by disposing of its shares in Reynolds Holdings Ltd, which holds an 80% stake in Ncell Axiata, and exiting the country. "The group's decision to withdraw from Nepal is based on a thorough evaluation of the prevailing business environment in Nepal, which led to the conclusion that continuing operations under the current conditions of unfair taxation and regulatory uncertainties was no longer sustainable for the group," the group said. Axiata first entered the Nepal market in 2016, by acquiring Reynolds for US$1.365bn, which effectively secured it an 80% equity interest and controlling stake in Ncell. (The Edge)

Pansar Bhd has secured a contract for road construction works in Sarawak valued at RM107.5m. Its unit Perbena Emas Sdn Bhd received the contract from Jabatan Kerja Raya Sarawak. The scope of work includes the construction and completion of approach roads, comprising a new JKR R5 standard two-lane carriageway for the Sebuyau and Triso side. The contract period is 32 months and the project is scheduled to commence in December 2023. (The Edge)

Apex Healthcare Bhd has proposed to acquire industrial land in Melaka for RM66.5m from Panasonic Appliances Refrigeration Devices Malaysia Sdn Bhd (PAPRDMY). It said the site is strategically located across the road and 400 metres from the current production site of its wholly-owned subsidiary Xepa-Soul Pattinson (Malaysia) Sdn Bhd. The proximity offers the advantage of lean management by minimising duplication of support services which will be required if expanded production facilities are constructed at a distant site. It plans to fund the purchase via a combination of internally generated funds and/or external borrowings. (The Edge)

Construction and engineering contractor Crest Builder Holdings Bhd has acquired the remaining 49% equity interest in its indirect subsidiary Unitapah Sdn Bhd for RM43.61m, cash. Unitapah holds a 23-year concession to develop and maintain Universiti Teknologi MARA’s (UiTM) campus in Tapah, Perak. Crest Builder said the stake was acquired via its wholly-owned Crest Builder International Sdn Bhd from Detik Utuh Sdn Bhd, resulting in Unitapah becoming a wholly-owned subsidiary of Crest Builder International. Crest Builder expects the acquisition to facilitate the group's strategy to strengthen its future earnings base and enhance its cash flow arising from the concession arrangement. (The Edge)

Bursa Malaysia Securities Bhd has reprimanded Sarawak Consolidated Industries Bhd (SCIB) and two of its former directors, Datuk Mohd Abdul Karim Abdullah and Rosland Othman, for failing to submit the group’s 2021 annual report within the approved timeline. The regulator also fined Mohd Karim, the group's nonindependent and non-executive chairman at the material time, and Rosland, its then managing director cum chief executive officer, RM27,000 each. Mohd Karim, 57, stepped down from the post of chairman in October 2022 and retired from the group's board in December that year, while Rosland, 50, left the group in June this year. In a statement, Bursa said SCIB had failed to issue the annual report, including the audited financial statements and its auditors’ and directors’ report for the 18 months ended June 30, 2021 (AR 2021), on or before Oct 31, 2021. SCIB only issued AR 2021 on Jan 17, 2022, after a delay of about two months. (The Edge)

Aeon Credit Service (M) Bhd has issued a senior sukuk with a nominal amount of RM300m and a tenure of five years. This is the fourth and final tranche of the financial service provider’s sukuk wakalah programme of RM2bn in nominal value. Proceeds from the senior sukuk issuance will be used for financing disbursements to customers as part of its business of providing consumer financing based on Shariah principles, and to refinance any existing loans or financing of the company or any sukuk issued, the group said in a filing with Bursa Malaysia on Friday. (The Edge)

Property developer Avaland Bhd (formerly known as MCT Bhd) has redesignated its non-independent non-executive director Apollo Bello Tanco as the group’s executive director (ED) and chief executive officer effective Jan 1, 2024. He succeeded Teh Heng Chong, who has resigned to pursue his personal interest. Teh was appointed to the board as the ED and CEO in March 2019. According to the group’s annual report, Apollo first joined the board as a non-independent non-executive director in January 2019. Subsequently, within two months, he was appointed to the positions of ED and chief operating officer (COO) in March 2019. (The Edge)

Technological solutions provider Willowglen MSC Bhd has secured a RM12.75m contract from Singapore-based SP PowerAssets Ltd for the installation and maintenance of substation intrusion detection system for three years. In a bourse filing, Willowglen said the contract, which starts on Friday (Dec 1) to be completed by Dec 31, 2026, was awarded to its wholly owned Willowglen Services Pte Ltd. "The contract is expected to contribute positively to the group’s earnings and net assets per share for the financial years ending Dec 31, 2024 to 2026," it said. (The Edge)

Bintai Kinden Corporation Bhd has proposed to undertake a private placement of up to 281.54m shares, or 30% of its issued share capital, to third-party investors who have yet to be identified. The engineering services company said based on an indicative price of seven sen per placement share, the private placement is expected to raise RM19.71m. The group is expected to utilise the majority of the proceeds to finance the group’s working capital. (The Edge)

Pavilion Real Estate Investment Trust (Pavilion REIT) has terminated two memoranda of understanding (MOUs) it inked for the purchase of renewable energy (RE) from a solar power plant in Pasir Mas, Kelantan, under the Corporate Green Power Programme (CGPP) to power its malls. The terminations are due to the REIT's unsuccessful bids to the Energy Commission to participate in the CGPP, according to its filing to Bursa Malaysia on Friday. The CGPP is a government programme that allows businesses to participate in the promotion and use of renewable energy in their operations. (The Edge)

Source: Mplus Research - 4 Dec 2023

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