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Mplus Market Pulse - 19 Dec 2023

Publish date: Tue, 19 Dec 2023, 09:18 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

All materials published here are prepared by Malacca Securities. For latest offers on Malacca Securities trading products and news, please refer to: https://www.mplusonline.com.my

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Window Dressing Activities to Continue

Market Review

Malaysia: The FBM KLCI (+0.19%) closed higher with a 6-day winning streak despite the mostly negative regional markets, as buying interest picked up in energy, banks and commodity related stocks. On the broader market, the Healthcare sector (+3.21%) gained from the rally in glove counters, while the Utility sector (-1.40%) fell.

Global markets: Wall Street ended higher buoyed by the selected Tech giants such as Meta & Alphabet, as investors were still optimistic on the economic data, coupled with the interest rate cut expectation next year. The European stock market ended lower, while Asia ended mostly lower, ahead of Japan’s inflation data on Friday.

The Day Ahead

The FBM KLCI traded above 1,465 for a brief moment and ended higher for the sixth session supported by buying interest within the banking stocks in the window dressing month. Also, the US stock markets headed for another rally with the expectation of 3 rate cuts from the Fed in 2024. However, economic data will be crucial to determine the overall sentiment for the stock markets; the market is anticipating the final 3Q23 US GDP, and consumer confidence index and core PCE index this week. On the commodity markets, Brent oil prices extended the rebound for another session, trading near the USD78/bbl zone after Red Sea attack.

Sector focus: With the strong tech rally in the US, coupled with Chinese firms look to Malaysia for assembly of high-end chip, we expect the trading interest to continue within the Technology sector at least for the near to mid-term. Meanwhile, we like the overall Johor related theme with the ongoing infra developments, this could boost the buying support within the Construction, Property, Building Material and Utilities sectors.

FBMKLCI Technical Outlook

The FBM KLCI extended another bullish candle, briefly revisited the 1,465-1,470 zone. The technical readings on the key index were positive, with the MACD Histogram extending another positive bar, while the RSI maintains above the 60 level. The resistance is envisaged around 1,470-1,480 and the support is set at 1,440- 1,450.

Company Brief

UWC Bhd’s net profit dropped 85.12% to RM4.35m in the first quarter ended Oct 31, 2023 (1QFY2024) from RM29.25m a year earlier due to lower revenue. Earnings per share fell to 0.4 sen from 2.66 sen. Quarterly revenue declined 51% to RM45.46m from RM92.12m which the group blamed on the impact of macroeconomic headwinds, especially the semiconductor market cyclical downturn. On a quarter-onquarter basis, the group’s net profit came in higher compared with RM1.94m in 4QFY2023 as revenue climbed 13.73% from RM39.97m. (The Edge)

APB Resources Bhd is acquiring 70m shares in Globetronics Technology Bhd, representing a 10.41% stake in the Penang-based semiconductor manufacturer for RM140m cash. The consideration of RM140m or RM2 per share is a 16% premium to Globetronics' share price of RM1.73 at the time of writing. Upon the completion of the proposed acquisition, APB Resources will emerge as the second-largest shareholder in Globetronics. In a bourse filing, APB Resources said it was acquiring the shares from General Produce Agency Sdn Bhd (6.89%, or 46.31m shares) and Ng Kweng Chong Holdings Sdn Bhd (3.52%, or 23.69m shares), vehicles of the Ng family that founded Globetronics, which confirms a report by The Edge weekly on Monday about the purchase. (The Edge)

Keynote Capital Sdn Bhd, controlling shareholder of Apollo Food Holdings Bhd, is confirmed to be exiting the group after Scoop Capital Sdn Bhd, the franchisee of Baskin-Robbins, proposed to acquire Keynote's entire 51.31% stake in the confectionary maker for RM238.08m in cash. Scoop Capital is purchasing the 41.05m Apollo shares from Keynote — the investment vehicle of Singaporeans Liang Chiang Heng and his younger brother Liang Kim Poh — at RM5.80 per share, a 7.4% premium to the last closing price of RM5.40. While Scoop Capital is obliged to extend an unconditional mandatory takeover offer to acquire all the remaining 48.49% stake in the group at RM5.80 per share, it intends to maintain the listing status of Apollo on the Main Market of Bursa Malaysia. (The Edge)

NTPM Holdings Bhd saw its net loss in the second quarter ended October 31, 2023 (2QFY2024) widen to RM4.03m from RM3.49m in the previous year. This is largely due to income tax expenses incurred during the current quarter under review. Quarterly revenue, however, rose by 1.9% to RM224.66m from RM220.37m, underpinned by increased sales in the personal care products segment. Despite posting the net loss, the group declared its first interim dividend of 0.8 sen per share to be paid on Jan 26, 2024, matching the amount per share declared in the previous financial year. (The Edge)

Newly listed ACE Market counter Critical Holdings Bhd ended its maiden trading day at 57 sen on Monday (Dec 18), up 62.86% from the initial public offering (IPO) price of its shares of 35 sen. The mechanical, electrical and process utilities (MEP) engineering company saw 136.7m shares changing hands, making it the fourth most actively traded stock of the day, valuing the group at RM211.9m. This makes Critical Holdings the 12th best performing IPO among the 31 new stocks listed on Bursa this year. Critical Holdings raised a total of RM26.02m via the public issuance of 74.35m shares under its IPO. (The Edge)

United Malacca Bhd’s net profit in the second quarter ended October 31, 2023 (2QFY2023) fell by 12.64% to RM13.72m from RM15.71m in the previous year, mainly due to higher expenses and investment losses. Notably, net foreign exchange loss of RM2.83m was recorded in the current quarter. Quarterly revenue, however, climbed by 3.13% to RM144.51m against RM140.13m on the back of lower revenue contribution from its Malaysian and Indonesian operations. Meanwhile, the group also declared its first interim dividend of five sen per share, to be paid on Jan 31, 2024. (The Edge)

Majuperak Holdings Bhd is disposing of 2.01 acres of land in Ipoh to a wholly-owned unit of the Perak State Agriculture Development Corporation (PPPNP) for RM18.4m as part of its business regularization plan. Majuperak, a 51.41%-owned subsidiary of the Perak State Development Corp, said its wholly-owned subsidiary, Syarikat Majuperak Bhd, is selling the property to Ladang Lekir Sdn Bhd, a wholly-owned subsidiary of Perak Agro Oil Palm Sdn Bhd, which in turn is a wholly-owned unit of PPPNP. The disposal will enable the group to unlock the land's value, the group said in a bourse filing on Monday, adding that the proceeds will be used to settle debts and for day-to-day operations. (The Edge)

Supermax Corp Bhd, which came under the spotlight recently as a strain within the Thai family resurfaced over the purchase of a private jet, has announced a new chief executive and senior executive director, Tan Chee Keong, also known as CK Tan, who is the nephew of both Supermax's co-founders Datuk Seri Stanley Thai Kim Sim and his wife Datuk Wira Cheryl Tan Bee Geok. Chee Keong's appointment is part of a boardroom restructure to drive synergy across the group's operations in both Malaysia and the US. (The Edge)

Source: Mplus Research - 19 Dec 2023

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