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Mplus Market Pulse - 26 Dec 2023

Publish date: Tue, 26 Dec 2023, 08:32 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Upbeat Mode To Prevail

Market Review

Malaysia: The FBM KLCI (-0.08%) closed marginally lower as investors traded cautiously prior to the US PCE data and the Christmas long break. On the broader market, the Industrial Products & Services sector (+0.38%) gained, while the Healthcare sector (-0.36%) fell due to selling pressure in glove counters.

Global markets: Wall Street ended mostly higher at a slower pace, as investors may be taking a break prior to the long Christmas weekend, despite the PCE data came in within expectations. The European stock market ended higher, while the Asia markets ended mixed despite Japan’s November inflation levels came in softer.

The Day Ahead

The FBM KLCI digested the recent gains for the third session as profit taking activities emerged within the banking heavyweights. Similarly, the US stock markets trended sideways after a long stretch of upward trending movements. We believe the market is still pricing in the dovish statements from the Federal Reserves, coupled with the recent inflation data that came in within expectations. Given the US GDP is still growing for 3Q, and both the PCE and CPI were increasing at a moderate pace, we expect global markets to trend higher over the near term. Hence, for this week, we believe buying support may return on the local front, heading into the final week of window dressing activities. On the commodity markets, Brent oil prices maintained around the USD80/bbl level.

Sector focus: We will be looking for possible trading opportunities within the Banking heavyweights amid the final week of window dressing activities. Meanwhile, we like the Technology sector with the rising Wall Street environment. Also, the Johor-theme may emerge in 1H24 if the government revive the KL-SG HSR project. Hence, we favour the Construction, Property, Building Material and Utilities sectors.

FBMKLCI Technical Outlook

The FBM KLCI ended marginally lower, consolidating for the third session. 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

Leong Hup International Bhd has reiterated its stand that its wholly owned subsidiary Leong Hup Feedmill Malaysia Sdn Bhd (LFM) was not involved in pricefixing practices involving poultry feed as part of a "chicken feed cartel", as alleged by the Malaysia Competition Commission (MyCC). MyCC’s finding of infringement by LFM is without merit and the group will challenge the decision. Earlier on Friday, MyCC announced that it has imposed a fine of RM157.47m on LFM for colluding in a "chicken feed cartel" to fix poultry feed prices. LFM was one of five companies that were alleged to have been part of the cartel. The other parties include Bursa Malaysia-listed companies Malayan Flour Mills Bhd's partially owned Dindings Poultry Development Centre Sdn Bhd and PPB Group Bhd's 80%-owned FFM Bhd. The remaining two companies are Gold Coin Feedmills (M) Sdn Bhd under Gold Coin Group and PK Agro-Industrial Products (M) Sdn Bhd under Charoen Pokphand Holdings (M) Sdn Bhd, which in turn is a subsidiary of Thai conglomerate Charoen Pokphand Group Co Ltd. (The Edge)

Capital A Bhd is requesting another extension to submit its regularisation plan, originally due on Dec 31, 2023, now aiming for June 30, 2024. This marks the fourth time Capital A has sought a deadline extension from Bursa Securities. The initial deadline of Jan 7, 2023, was extended three times — first to July 7, then to Oct 7, and subsequently to Dec 31, 2023. Capital A triggered Practice Note 17 (PN17) criteria in July 2020 after external auditors EY issued an unqualified audit opinion with material uncertainty regarding on-going concern for its audited financial statements for FY2019. Additionally, its shareholders' equity on a consolidated basis was 50% or less of its share capital. (The Edge)

A month after a fertiliser group became a substantial shareholder of ILB Group Bhd, Vestland Bhd managing director Datuk Liew Foo Heen has also emerged as a substantial shareholder of the rooftop solar power system provider. Fohen Holding Sdn Bhd has become a substantial shareholder of the group after acquiring 23.17m shares or a 12.27% stake via a direct business transaction. A check with the Companies Commission Malaysia (SSM) showed that Fohen is 100%-owned by Liew, the major shareholder of construction company Vestland with a 63.33% stake. Meanwhile, ILB chief executive officer Makoto Takahashi has ceased to be a substantial shareholder of the group after he disposed of his entire 7.57% stake or 14.3m shares for RM22.63m on Friday. (The Edge)

Malaysian Resources Corp Bhd (MRCB) has proposed to acquire the rights to carry out the development of an office tower in the PJ Sentral commercial development from the Selangor State Development Corp (PKNS), for RM270m. The acquisition consideration will be satisfied through the disposal of malls and several residential units to PKNS, and funding through internally generated funds. MRCB said the group plans to dispose of Plaza Alam Sentral Mall and the adjoining land in Section 14, Shah Alam, to PKNS, for RM178m. (The Edge)

Green Packet Bhd has proposed a new agreement to sell its wholly owned Labuan investment banking business, Oasis Capital Investment Bank Ltd (OCIB), to Velocity Capital Sdn Bhd (VCSB) for RM11m, which is half the RM23m initially proposed to a different buyer. In a local bourse filing on Friday (Dec 22), the digital solutions provider said it has entered into a share sale agreement with VCSB, a wholly owned unit of Velocity Capital Partner Bhd (formerly known as CSH Alliance Bhd). (The Edge)

Construction outfit TRC Synergy Bhd has secured a RM23.8m contract from the Department of Irrigation and Drainage (DID) to design and build a flood mitigation dam in Gombak, Selangor. TRC Synergy said its wholly-owned subsidiary Trans Resources Corp Sdn Bhd had on Thursday received the letter of acceptance from the department. No further details of the contract were disclosed. (The Edge)

Property development and construction group Jiankun International Bhd is acquiring 99.99% equity interest in Penang-based Oriental Link Properties (M) Sdn Bhd (OLPSB) from the privately held property development company's two directors Lee Khoon Eng and Lee Phaik Choo for RM9.5m. Khoon Eng currently holds a 99.2% stake in OLPSB and Phaik Choo 0.79%, while the remaining 0.01% is still being held by its other director Ong Cheng Tat. Jiankun said the proposed acquisition is expected to provide the group an opportunity to venture into property development in the northern part of Peninsular Malaysia and contribute positively to the group's revenue and profitability. The proposed acquisition will be funded via internal funds, it added. (The Edge)

Sunview Group Bhd said its unit is buying Mestron Holdings Bhd's 10% stake in Winstar Aluminium Manufacturing Sdn Bhd, raising the group's interest in the aluminium firm to 30%. The renewable energy group said its wholly owned indirect subsidiary, Vafe System Sdn Bhd, is buying the additional stake for RM6m. "The solar industry is undoubtedly booming. As aluminium-related components account for approximately 10% of the total components, our stake in Winstar enables us to establish a cost-effective supply chain for aluminium mounting structures sourced from the local market for use in the solar photovoltaic system," said Sunview chief executive officer and executive director HP Ong. (The Edge)

The Armed Forces Fund Board (LTAT) offer to take Boustead Plantations Bhd (BPlant) private has now become unconditional after it accumulated 2.02bn BPlant shares, representing 90.26% of the total issued shares on Friday. As LTAT accumulates 90% or more of Boustead Plantations' shares, Bursa Securities will now suspend the trading of Boustead Plantations' shares five days after the closing date of the offer. However, LTAT will keep its RM1.55 per share offer to take BPlant private open until Jan 5, 2024, with the option for further extensions, according to BPlant's bourse filing on Friday. (The Edge)

IJM Corporation Bhd’s unit, IJM Construction Sdn Bhd, has bagged a RM260m contract for the Kuching Urban Transportation System (KTUS) project. The job was secured via a joint venture (JV) comprising two other companies – Azam Sehasrat Sdn Bhd and Unique Deco Sdn Bhd. The contract is for the construction and completion of the KTUS Rembus autonomous rapid transit (ART) depot in Samarahan and other associated works that include depot buildings and associated structures, stabling yard, detention pond, access road as well as civil works. (The Star)

Source: Mplus Research - 26 Dec 2023

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