Market Review

Malaysia: The FBM KLCI (-0.61%) Closed Lower in Line With the Negative Regional Markets, as Selling Pressure Was Seen in Banking Stocks, Tracking the Softer Performance From Wall Street. On the Broader Market, the Plantation Sector (+0.48%) Gained, But the Financial Services Sector (-1.12%) Fell.

Global markets: Wall Street traded higher as investors regained confidence after Q3 US GDP growth fell below expectations, which fuelled optimism for the potential rate cuts next year. Meanwhile, traders will be eyeing the PCE data due later tonight. The European stock market ended lower, while the Asia markets ended mixed.

The Day Ahead

The FBM KLCI extended the pullback for the second session with further profit taking activities from the banking heavyweights. Meanwhile, Wall Street ended positively after a sharp one-day pullback despite the US GDP being revised lower at 4.9% for 3Q23, while jobless claims came in at 205k vs. estimates of 214k. Market will be watching the Federal Reserve’s preferred PCE Inflation report that will be released later tonight; as of this juncture, the dollar index headed lower with the anticipation of the dovish stance from the Fed next year. Following the positive rebound on Wall Street, buying interest may return to the local exchange. On the commodity markets, Brent oil prices steadied around the USD80/bbl as record US production and rising inventories offsetting the tensions in the Middle East, limiting the upside at this juncture.

Sector focus: Traders could relook into the Technology sector after the strong rebound on Wall Street, as we noticed overall earnings have been stabilising at least for the past 2 quarters. Meanwhile, we favour the infrastructure theme next year coupled with the Johor-region focus theme. Thus, we believe it should benefit the Construction, Property, Building Material and Utilities sectors.

FBMKLCI Technical Outlook

The FBM KLCI ended sharply lower after briefly surpassing the 1,465 zone. The technical readings on the key index were mixed, with the MACD Histogram forming a rounding top formation, while the RSI maintains above the 50 level. The resistance is envisaged around 1,470-1,480 and the support is set at 1,440-1,450.

Company Brief

MyNews Holdings Bhd returned to the black in the fourth quarter ended Oct 31, 2023 (4QFY2023) with a net profit of RM947,000, compared with a net a net loss of RM82,000 a year earlier, as quarterly revenue rose 3.08% to RM186.16m from RM180.6m driven by the increase in the number of outlets and improvement in the overall in-store sales. For the full year, MyNews narrowed its net loss to RM10.7m from RM19.62m in FY2022, with revenue rising 15.67% to RM730.24m from RM631.33m. The group currently operates 460 myNEWS (including 26 Supervalue) stores, 131 CU outlets and 19 WHSmith stores. (The Edge)

MCE Holdings Bhd, whose share price has risen by 42% this month, saw its net profit in the first quarter ended Oct 31, 2023 (1QFY2024) jump 39.4% to a record high of RM4.88m from RM3.49m a year ago, as revenue rose 8.48% to RM41.27m from RM38.56m, primarily driven by higher sales in the automotive parts segment, on sustained demand for products by local carmakers. (The Edge)

Automotive interior furnishing and components supplier SMIS Corp Bhd is selling a 35% stake in its Indonesian subsidiary PT Grand Surya Techno Tbk (PTGST), reducing its stake to 60%, to Japan-based Sugihara Co Ltd for US$1.37m (RM6.4m). SMIS said Sugihara intends to extend its relationship with SMIS and to have strategic participation in the operations of PTGST in Indonesia via the proposed disposal. (The Edge)

Stage and express bus service operator Epicon Bhd (formerly known as Konsortium Transnasional Bhd) is establishing a consortium with a unit of Permodalan Negeri Selangor Bhd (PNSB) to develop an affordable housing project in Rawang, Selangor. The housing project, Rumah Idaman MBI, will have 2,251 housing units, said Epicon, who also expressed intensions to explore future collaborations of such nature. (The Edge)

Sarawak-based plantation group Rimbunan Sawit Bhd has proposed to dispose of 9,935 hectares of oil palm land in Miri for a total of RM165m to Mahawangsa Sungai Bok Plantation Sdn Bhd. It intends to utilise RM86.11m of the proceeds to repay borrowings and reduce its gearing level to 0.61 times, from 0.99 times. Another RM19.1m will be used for replanting, and RM59.12m for working capital. (The Edge)

PT Resources Holdings Bhd net profit doubled to RM18.7m for the second quarter ended Oct 31 (2QFY2024) from RM8.34m a year ago, despite lower revenue, thanks to the group having secured supplies at competitive prices through bulk purchasing. Quarterly revenue decreased by 10.9% to RM111.7m from RM125.4m a year ago, dragged by a decline in overseas sales. For 1HFY2024, its net profit rose by 47.5% to RM23.39m from RM15.86m a year before, while revenue inched up 1.1% to RM243.3m from RM240.65m, as rise in overseas sales led by China offset decline in Malaysia. (The Edge)

Bursa Malaysia Securities Bhd has reprimanded Serba Dinamik Holdings Bhd and 10 of its directors for breaches of Bursa Malaysia Securities Main Market Listing Requirements (Main LR). In a statement on Thursday, Bursa Malaysia said that total fines ranging from RM355,200 to RM1.38m were imposed on 10 directors of the troubled oil and gas services company. The stock exchange operator also required Serba Dinamik to review and ensure the adequacy and effectiveness of its financial reporting function and carry out a limited review on the company’s quarterly report submission and comply with the training requirement imposed by Bursa Securities. Serba Dinamik group managing director and chief executive officer Datuk Mohd Abdul Karim Abdullah is fined a total of RM1.38m for numerous violations, including those pertaining to financial reporting. (The Edge)

AEON Credit Service (M) Bhd net profit rose 2.3% year-on-year for the third quarter ended Nov 30, 2023 (3QFY2024) despite a 16.4% increase in revenue, due to higher impairment losses, coupled with an increase in interest expenses. Net profit rose to RM85.55m from RM83.63m, while revenue climbed to RM486.51m from RM417.84m, amid stronger loan and financing growth. For the cumulative ninemonth period (9MFY2024), the group’s net profit dropped by 5.4% to RM305.1m, from RM322.35m in the previous corresponding period, although revenue increased 16.8% to RM1.41bn from RM1.21bn. (The Edge)

Foundpac Group Bhd has proposed to acquire a leasehold industrial land in Bayan Lepas, Penang, for RM41.88m from Bluemetal Sdn Bhd. The precision engineering parts maker, which is currently operating in six factories across Penang and Kedah, said it is buying the land to consolidate its production operations in Penang into a single premise for enhanced efficiency and potential cost savings. (The Edge)

Protasco Bhd has initiated bankruptcy proceedings against former director Datuk Tey Por Yee and his associate Datuk Ooi Kock Aun, demanding a total sum of RM123.37m from each of them. This move followed a ruling by the Kuala Lumpur High Court on Aug 30, which ordered Tey and Ooi to pay the company RM84.64m for breach of fiduciary and statutory duties related to a 2014 sale and purchase agreement. Subsequently, their motion to stay the execution of the judgement was dismissed on Nov 22. Protasco alleged that Tey and Ooi failed to disclose their interest in a transaction, engaged in a conspiracy to defraud the company, and undertook secret profit-making. (The Edge)

Oriental Interest Bhd has entered into a deal with TTDI Land Sdn Bhd to jointly develop 54.55 acres of land in Klang into commercial and residential units. The property developer said that under the deal, its 52.5%-owned subsidiary, Total Majority Sdn Bhd, has secured the rights to develop the project on the land and to sell the units to end-purchasers. TTDI Land as the land owner will be entitled to a payment of RM150 million, Oriental Interest said in a filing with Bursa Malaysia. (The Edge)

The Kedah government’s investment holding company, Bina Darulaman Bhd (BDB), has entered into a joint venture agreement (JVA) with OIB Properties (KV) Sdn Bhd to develop 782 affordable single-storey terrace homes in Kubang Pasu, Kedah. BDB, as the land owner, will provide development rights to OIB to build the affordable housing scheme on a plot measuring 53.75 acres in the Darulaman Saujana township, said BDB in a bourse filing on Thursday. OIB will bear the development costs. In return, BDB will be entitled to a revenue share of 25% or RM46.92m based on the residential project's gross development value (GDV) of RM187.68m. (The Edge)

Source: Mplus Research - 22 Dec 2023