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Mplus Market Pulse - 15 Jan 2024

Publish date: Mon, 15 Jan 2024, 10:22 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Market Review

Malaysia: The FBM KLCI (+0.29%) closed higher bucking the mostly negative performance of the regional markets, led by the rally in the Utilities heavyweights namely the YTL counters. On the broader market, the Energy sector (+2.57%) was the top gainer, while the Healthcare sector (-0.65%) declined.

Global markets: Wall Street ended lower led by bank stocks after the release of their quarterly earnings. The PPI data came in lower-than-expectations, supported the Technology stocks. The European markets ended higher, while Asia markets mostly lower, affected by the dip in China’s annual exports, but Nikkei extended its rally.

The Day Ahead

The FBM KLCI rebounded after a two-day pullback with the support seen in selected Banking and YTL-related heavyweights. Meanwhile, the US stock markets traded mixed with the mixed bag of bank earnings reports, while offsetting a cooler-thanexpected PPI data which lifted the hopes for interest rate cuts by the Fed in Mar-24 to 72.2% from 58.2% a week ago, based on Bloomberg. Closer to home, we believe the overall sentiment could remain positive as there are 5 consortiums that are expected to present their proposal for the development of KL-SG HSR. On the commodity markets, the Brent oil price gained marginally higher amid rising tension in the Red Sea region.

Sectors focus: With 5 consortiums bidding for KL-SG HSR projects, we believe this might provide buying support towards the Construction and Building Material sectors. Meanwhile, we think the land and properties along the KL-SG HSR could benefit under this scenario, favouring the Property segment. Also, we opine that the Johor-region investment could increase further going forward with the signing of JBSG SEZ agreement, providing upside towards the Renewable Energy and Water segments.

FBMKLCI Technical Outlook

The FBM KLCI rebounded from 2 consecutive days of losses. The technical readings on the key index were however mixed, with the MACD Histogram forming a rounding top formation, while the RSI maintains above the 50 level. The resistance is envisaged around 1,500-1,510 and the support is set at 1,470-1,480.

Company Brief

Building construction services provider Siab Holdings Bhd has secured a contract to build a food processing factory in Seremban, Negeri Sembilan, worth RM94.28m. Siab said the group’s wholly-owned Siab (M) Sdn Bhd had accepted a letter of award from by Mahsuri Food Sdn Bhd to build a four-storey factory block, one fermentation area, and one soy silage building unit with utility facilities. The construction, which will begin on Feb 14, is expected to be completed in 13 months. (The Edge)

Tuju Setia Bhd has bagged a RM209m contract from Avaland Bhd (previously known as MCT Bhd) for the construction of two blocks of service apartments in USJ 25, Subang Jaya. The Alora Residences project is slated to be completed in 33 months with work tentatively scheduled to commence in the second quarter of 2024. The construction group expects the contract to contribute positively to its earnings and net assets for the financial year ending Dec 31 2024 until the completion of the contract. (The Edge)

AmBank Group announced the granting of an RM84m financing facility to Malaysia Steel Works (KL) Bhd (Masteel) to facilitate its technological transformation into a sustainable steel producer of steel bars and billets with ultra-low greenhouse gas emissions. Masteel, a public-listed company established in 1971, is reportedly the first ultra-low-emission steel manufacturer in the nation listed on the FTSE4Good Bursa Malaysia Index, with a rating of four out of four stars in 2023. AmBank group chief executive officer Jamie Ling said the group acknowledges Masteel’s achievements, and is eager to contribute to the company’s ongoing success in its environmental, social and governance (ESG) efforts. (The Edge)

Malaysia’s largest golf specialty retailer chain MST Golf Group Bhd has confirmed the opening of five more retail stores in Jakarta alone by 2024, after opening its first outlet in the capital of Indonesia recently. MST Golf executive director and group chief executive officer (CEO) Ng Yap said that the Indonesian market holds a promising outlook for the group, driven by the dynamic market sentiment in Indonesia. The Indonesian store outlets will be managed by PT MST Golf Indonesia, a 51:49 joint venture (JV) between MST Golf and Indonesian-listed PT Sinar Eka Selaras Tbk, also known as Erajaya Active Lifestyle (Eral). (The Edge)

NexV Manufacturing Sdn Bhd (NMSB), a joint venture company between Careplus Group Bhd and GoAuto Group Sdn Bhd, will commence the construction of the country’s first green technology facility dedicated to the manufacture and assembly of new energy vehicles (NEVs), including electric vehicles (EVs), in Chembong, Rembau, Negeri Sembilan. The healthcare group, which received the green light from the Ministry of Investment, Trade and Industry to manufacture and assemble energyefficient vehicles in October last year, said the facility is expected to begin operations in the first quarter next year. (The Edge)

YNH Property Bhd has revealed that it is exploring proposals to sell certain landed properties of the company and its subsidiaries in response to an unusual market activity (UMA) query from Bursa Malaysia. The property developer, however, said these proposals are still under discussion, and that it would be more appropriate to release announcements once the terms of the offers have been finalised and agreed upon by both parties. Furthermore, the group and its subsidiaries are not aware of any rumours or reports regarding their business and affairs or any potential explanations that may account for the UMA. On Thursday, Rapid Synergy Bhd replied to Bursa's query about the steep drop in its share price, saying its management is currently considering proposals to sell certain landed properties of the company and its subsidiaries, but as these proposals are still being discussed, it feels that it is more appropriate to release an announcement to the stock exchange once terms of the offers have been finalised and agreed upon by both parties. (The Edge)

ACE Market-bound HE Group Bhd has priced its shares at 28 sen apiece for its initial public offering (IPO) and will have a market capitalisation of RM123.2m upon listing, with an enlarged share capital of 440m. This values the electrical engineering services provider at a price-earnings multiple of 20 times, based on a profit after tax (PAT) of RM6.17m and earnings per share of 1.4 sen for the financial year ended Dec 31, 2022 (FY2022). The group aims to raise about RM24.33m from the IPO. (The Edge)

Ranhill Utilities Bhd has announced the renewal of its licence by the National Water Services Commission (SPAN) to treat and supply water to consumers in Johor for the next three years. The group disclosed that its subsidiary, Ranhill SAJ Sdn Bhd, received a letter from SPAN on Jan 10, notifying it of the renewal for the sixth operation licence. The renewed licence, issued under the Water Services Industry Act 2006 (Act 655), is effective from Jan 1, 2024 to Dec 31, 2026. (The Edge)

Magna Prima Bhd, which drew the attention of Bursa Malaysia Securities Bhd following a spike in its share price over the last three days, said it is in the “final stage of negotiations for the monetisation of one (piece of land) of its land bank”. Magna Prima said the company and its subsidiaries have been continuously on the lookout for opportunities to strengthen its financial position. Apart from that, Magna Prima said it is not aware of any rumours or other possible explanations to account for the recent trading activity. (The Edge)

Cahya Mata Sarawak Bhd (CMS) said that Norges Bank, which manages Norway’s Government Pension Fund Global, is no longer a substantial shareholder after holding less than a 5% stake in the Sarawak-based cement manufacturer. CMS said it received an email notification the same day saying Norges Bank’s total shareholding stood at 4.989% as at Dec 6, 2023. However, the filing did not disclose the total number of shares disposed of. According to stock exchange disclosures dating back to Sept 15, when Norges Bank acquired 54.05m shares, representing a 5.03% stake and becoming a substantial shareholder in CMS, a 4.89% shareholding would be equivalent to 53.6m shares. (The Edge)

Eonmetall Group Bhd’s wholly-owned subsidiary Eonmetall Land Sdn Bhd (ELSB) has received a notice of award and offer for compensation from the district and land office of Klang for invoking the compulsory acquisition of 0.9 hectare of industrial land for RM30.41m. The group said the affected land was part of a larger 287.7- hectare land area in Kapar, Selangor, which is currently vacant and held for development. It said the land was purchased by ELSB in 2019, with an original investment cost of RM57.18m. (The Edge)

After securing court permission to challenge the Inland Revenue Board's (IRB) additional RM78.49m tax assessment, Southern Power Generation Sdn Bhd — a 70%-owned unit of Tenaga Nasional Bhd (TNB) — is now in talks with the tax agency for a potential out-of-court settlement. TNB disclosed this in a bourse filing on Friday, after the hearing of the case scheduled a day earlier was vacated due to the settlement talks with March 28 being fixed as the next hearing date. The additional taxes slapped on Southern Power — in which the remaining 30% equity stake is held by SIPP Energy Sdn Bhd, a company linked with the Johor royalty — were for the years of assessment of 2017 to 2021. (The Edge)

Mechanical and electrical engineering services specialist Bintai Kinden Corp Bhd and its wholly-owned subsidiary Kejuruteraan Bintai Kindenko Sdn Bhd (KBK) have been hit with a lawsuit by Dynamic Prestige Consultancy Sdn Bhd (DPCSB), which is seeking a refund of RM16.23m, plus 5% interest on the sum, from Bintai Kinden and KBK. DPCSB alleged that it had extended interest-free, unsecured and with no fixed term of repayment “friendly loans” and/or “advances” over several tranches to KBK between June 1, 2021 and Dec 1, 2022 for the amount of RM16.23m. (The Edge)

Source: Mplus Research - 15 Jan 2024

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