Market Review

Malaysia: The FBM KLCI (+0.93%) Closed Higher Despite the Mixed Performance of the Regional Markets, Led by the Rally in Heavyweights Such as YTLPOWR (+15.0 Sen), SIMEPLT (+17.0 Sen) and PBBANK (+6.0 Sen). On the Broader Market, the Property Sector (+2.59%) Was the Top Gainer, While the Healthcare Sector (-0.88%) Declined.

Global markets: Wall Street was closed on Monday for holiday. Meanwhile, the European markets ended lower, but Asia markets ended mostly higher, after China left its medium-term policy loans rate unchanged and Taiwan stocks rose after the ruling Democratic Progressive Party won the 3rd consecutive presidential term.

The Day Ahead

The FBM KLCI experienced a strong flag formation breakout led by significant buying interest in YTL-related utilities and banking heavyweights. Meanwhile, the US was closed for holiday break. Events that investors will be watching out this week include (i) earnings releases from Goldman Sachs and Morgan Stanley, (ii) monthly retail sales in the US, (iii) US unemployment claims and (iv) China Industrial Production data. On the local market, we expect overall sentiment to stay positive following the announcement of 7 consortia submitted RFI proposal for KL-SG HSR project. On the commodity markets, the Brent oil price gained marginally higher amid rising tension in the Red Sea region.

Sectors focus: With the potential revival of the KL-SG HSR project, we opine that the overall Construction and Building Material sectors will be positive in the near term. We also favour the Property sector, where companies with land banks along the project may benefit. Meanwhile, the recent signing of the JB-SG SEZ agreement could provide upside towards investments in the Johor-region and may benefit the Renewable Energy and Water segments in the future.

The FBM KLCI continued to rally after forming a flag formation. 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 1,510-1,520 and the support is set at 1,470-1,480.

Company Brief

Econframe Bhd has acquired industrial property builder ETA World Sdn Bhd for RM56m. The total door system solutions provider said it has entered into a conditional share sale agreement with ETA Industries Sdn Bhd for the proposed acquisition. ETA World provides turnkey design and build solutions of industrial buildings such as factories and warehouses, customising each project based on its customers’ requirements and specifications. (The Edge)

MGB Bhd, a subsidiary of LBS Bina Group Bhd, has promoted its executive vice chairman, Tan Sri Lim Hock San, to group executive chairman with effect from Monday. Lim, 66, succeeds Datuk Abdul Majit Ahmad Khan, 78, who has resigned as the group’s independent and non-executive chairman. He was appointed to the position in August 2014. MGB said Abdul Majit's resignation is in adherence to the Malaysian Code on Corporate Governance and the board charter of the company, which stipulates that the tenure of an independent director should be limited to nine years. (The Edge)

Tien Wah Press Holdings Bhd has entered into an agreement with Cat Loi Joint Stock Company (CLC) to form a joint venture company (JVco) to undertake the business of production of paper packaging, print packaging and other business activities in Vietnam. The group’s wholly owned subsidiary Alliance Print Technologies Co Ltd (APTV) has signed an agreement with CLC to establish a company under the proposed name C&A Packaging Company Ltd. APTV will subscribe to 50% of the charter capital of the JVco for a total cash consideration of VND6bn (RM1.14m), while the remaining 50% will be held by CLC. (The Edge)

Fertility care specialist Alpha IVF Group Bhd said it has obtained the approval of Bursa Malaysia Securities to proceed with its proposed initial public offering (IPO) on the ACE Market. The group, which provides assisted reproductive services (ARS) with a primary focus on in-vitro fertilisation (IVF), said it targets to be listed within the first quarter of 2024. (The Edge)

George Kent (Malaysia) Bhd has ventured into Vietnam with a new subsidiary that will operate an assembly plant capable of producing 600,000 water meters annually, and is set to commence operations in the second quarter of 2024. The group’s wholly owned subsidiary George Kent International Pte Ltd (GKI) has invested up to US$532,000 (RM2.46m) for a 70% stake in George Kent (Vietnam) Company Ltd. The remaining 30% stake is held by Pham Nguyen Hoang, a Vietnamese entrepreneur with over 30 years of experience in the metering distribution business. According to George Kent chairman Tan Sri Tan Kay Hock, the new plant has an annual assembly capacity of 600,000 meters and strengthens the group’s ability to meet growing demand for water meters in Vietnam and potentially in neighbouring regions. (The Edge)

MSM Malaysia Holdings Bhd has announced a further extension of the garden leave for its chief financial officer (CFO) Dr Mazatul 'Aini Shahar Abdul Malek Shahar by another month. This marks the second extension of Mazatul’s garden leave, which was initially set from Oct 20 to Dec 15, 2023, first prolonged to Jan 15, 2024, and now extended to Feb 15, 2024, or until the board provides further notice. MSM assured that its business operations would continue as usual, with any material developments on this matter prompting further announcements. (The Edge)

Sime Darby Bhd is to compulsorily acquire the remaining shares of UMW Holdings Bhd after accumulating 96.81% of the industrial group's shares as of Monday. Sime Darby will invoke the Capital Markets and Services Act 2007 (CMSA) to compulsorily acquire any remaining offer shares from shareholders who have not accepted the offer, or failed to transfer their shares to the group, said CIMB Investment Bank Bhd in a statement on behalf of Sime Darby. (The Edge)

Magna Prima Bhd extended its losses for a second consecutive trading day on Monday, after it was slapped with an unusual market activity (UMA) query by Bursa Securities last week. While Magna Prima initially rose 3% or two sen to 68.5 sen in the morning, the counter reversed to a loss position as selling pressure kicked in. This dragged its share price down by as much as six sen or 9.02% to 60.5 sen, before paring some losses to end the day at 62.5 sen, a net decline of four sen or 6.02% from the previous close, giving the group a market capitalisation of RM251m. (The Edge)

ACE Market-listed Sunview Group Bhd is in talks with several Cambodian companies for the proposed development of some renewable energy facilities in Cambodia, in its bid to expand its business abroad. The renewable energy player’s wholly-owned unit Fabulous Sunview Sdn Bhd has inked a strategic business alliance agreement with “a few” undisclosed Cambodian companies for the development of the RE plants, according to Sunview executive director and CEO Ong Hang Ping. The identities of the potential Cambodian partners cannot be disclosed at this juncture, Ong said, nor can the whereabouts of the facilities be revealed yet due to a non-disclosure agreement. (The Edge)

Wentel Engineering Holdings Bhd is pricing its shares at 26 sen apiece in an ACE Market listing exercise worth RM83m, comprising RM71.03m to be raised by the company via an initial public offering (IPO), and an offer for sale of a 4% stake in the company by two shareholders for RM11.96m. The valuation gives the metal fabricator a market capitalisation of RM299m, based on an enlarged share capital of 1.15bn shares upon listing on Feb 6. This also values the group at a price-earnings multiple of 14.61 times, based on its profit after tax (PAT) of RM20.48m and earnings per share of 1.78 sen for the financial year ended Dec 31, 2022 (FY2022). (The Edge)

EVD Bhd on Monday said its wholly-owned unit, EVD Engineering Sdn Bhd (EVDE), is being sued over a claim of RM600,292 by a subcontractor for the supply of civil and structural building works. This comes after EVD announced on Jan 11 that the subcontractor, North Line Eng (M) Sdn Bhd, had obtained a judgment in default of appearance against EVDE over the claim. The claim is over a dispute on the scope of work claimed by North Line and the verification approval of the work done at the project site, said EVD in a bourse filing on Monday. The work involved the installation of cables. (The Edge)

Kanger International Bhd said its executive director Wu Wai Kong has emerged as a substantial shareholder on Monday after acquiring 50.50 million shares in the company. In a bourse filing, the construction outfit said the shares were acquired through the exercise of options under a share issuance scheme, at 5.8 sen per share or a total of RM2.93 million. Post-transaction, Wu now owns a direct interest of 7% or 51.17 million shares and an indirect stake of 0.024% or 178,000 shares in the company. (The Edge)

Source: Mplus Research - 16 Jan 2024