Buying Support To Persist

Market Review

Malaysia: The FBM KLCI (+0.32%) closed higher, despite the mixed regional markets’ performance, due to buying pressure in selected utilities and Telco heavyweights. On the broader market, both the Utilities sector (+2.14%) and the Construction sector (+1.86%) were the top performing sectors.

Global markets: Wall Street ended higher as investors are optimistic on the upcoming corporate earnings. The European stock market ended higher. Meanwhile, Asia ended mixed after China kept its loan prime rates unchanged and Japan to release key economic data and the result of the monetary policy meeting this week

The Day Ahead

The FBM KLCI extended the rebound for the second session as buying support emerged within selected index heavyweights within the Banking and Utilities sector following the small-cap and lower liners selldown started 2 weeks ago. Meanwhile, the US stock markets headed for another round of rally as US 10-year Treasury yield dipped ahead of several important key economic data such as the (i) US GDP, (ii) core PCE Index and (iii) US PMI; the Dow closed above 38k for the first time. Given the positive rally on Wall Street, we believe the buying interest may persist on the local front. On the commodity markets, the Brent oil spiked near the USD80/bbl mark after a drone attack on a Russian port in the Baltic Sea.

Sectors focus: Following the Wall Street rally, we expect buying support to prevail on the local front, especially the Technology sector. Meanwhile, we noticed strong trading activities within the h the strong sustaining rally in the US, we expect buying interest to build up on the local exchange within the Construction, Property and Utilities sectors, which is within our expectation as it is in tandem with the ongoing catalysts of (i) the potential revival of KL-SG HSR, (ii) easing requirements of MM2H as well as (iii) the focus in the Johor-region investments. We believe the Telco sector will benefit from the rising demand on data centre as well.

FBMKLCI Technical Outlook

The FBM KLCI ended higher for the second consecutive session. The technical readings on the key index were however mixed, with the MACD Histogram extending another negative bar, while the RSI maintains above the 50 level. The resistance is envisaged around 1,510-1,520 and the support is set at 1,460-1,470.

Company Brief

Samaiden Group Bhd has bagged a RM100m contract to build a 50-megawatt solar power plant (first phase) in Kulim Hi-Tech Park, Kedah. Samaiden said its unit Samaiden Sdn Bhd together with its consortium JS Solar Sdn Bhd have secured the engineering, procurement, construction and commissioning (EPCC) contract from Nur Renewables Sdn Bhd. Of the RM100m contract value, RM92m is the contract price while the remaining RM8m is the optional items price. It added that solar modules will be free-issued by Nur Renewables. The works are expected to be finished by March 31, 2025. (The Edge)

UOA Real Estate Investment Trust’s (UOA REIT) net rental income fell 11.77% to RM18.76m for the fourth quarter ended Dec 31, 2023 (4QFY2023), from RM21.26m a year earlier, dragged down by lower gross rental and higher property operating expenses. The operating expenses increased due to higher electricity costs and routine lift maintenance that occurs every few years. Total income dropped 11.52% to RM18.94m, from RM21.41m in 4QFY2022. Net profit contracted 17.59% to RM11.38m from RM13.81m, while earnings per unit shrunk to 1.68 sen from 2.04 sen. Quarterly revenue dropped 3.52% to RM27.30m from a year earlier. (The Edge)

Jentayu Sustainables Bhd, whose share price plummeted 58% over the last week, asserted that the recent selling wave does not accurately reflect the company's underlying fundamentals. The green energy solutions provider acknowledged the challenging week in the stock market, witnessing a significant reduction in share price over the past few trading days. However, the group believes these price fluctuations are short-term and do not represent its true fundamentals. (The Edge)

Bursa Malaysia on Monday again freezed the lower limit of the share price for Rapid Synergy Bhd and YNH Property Bhd following a sharp fall in both companies' prices. Bursa Securities previously freezed the lower limit for both stocks last Wednesday. The freeze was imposed because the counters were traded at static limit down prices for two consecutive days. (The Edge)

Bina Darulaman Bhd (BDB), the Kedah state government’s investment holding company, has teamed up with Shanghai Youzhu Industry Co Ltd to pursue an industrial waste management project. BDB executive director Raja Shahreen Raja Othman said the collaboration is aligned with the Kedah Development Plan 2035 (PPK 2035) and is an integral component to the company's new strategic business plan. He said the proposed project mirrors regional aspirations outlined in PPK 2035 while aligning seamlessly with national and global initiatives, including the National Cleanliness Policy, National Climate Change Policy, and Sustainable Development Goals. (The Edge)

Global Man Capital Sdn Bhd has ceased to be a substantial shareholder in the information and communications technology (ICT) company G3 Global Bhd, following a disposal of 168.67m shares or 4.47% in the company via off-market trade. Global Man Capital is linked to Datuk Wan Khalik Wan Muhammad and Datuk Khan Mohd Akram Khan. The sale, in which the buyer is unknown at the time of writing, resulted in Global Man Capital being left with 180m shares or 4.77% in G3. (The Edge)

Ajiya Bhd slipped into a net loss of RM13.02m in the fourth quarter ended Nov 30, 2023 (4QFY2023), compared to a net profit of RM9.48m a year ago. The significant earnings contraction was primarily due to investment loss of RM9.57m, and impairment of RM2.88m for stock, RM3.1m for retrenchment benefits, among others.Loss per share stood at 4.47 sen, contrasting with earnings per share of 3.29 sen in 4QFY2023. Quarterly revenue, however, increased by 20.9% to RM89.64m from RM74.17m in the previous corresponding quarter, primarily due to an improvement in demand for the group’s products. (The Edge)

PGF Capital Bhd's net profit rose over two-fold in the third quarter ended Nov 30, 2023 (3QFY2024) to RM5.4m from RM2.03m a year ago, driven by higher revenue. Quarterly revenue surged 107% to RM36.7m from RM17.75m in the previous corresponding period, primarily due to improved production output and increased sales in the Oceania market in the insulation segment. PGF's insulation segment's profit before tax was RM7.44m, compared to RM3.71m previously, in line with the increase in revenue. The group is also involved in property development, where it recorded a slight increase in its loss before tax to RM0.26m compared to a loss before tax of RM0.23m a year ago. (The Edge)

TAS Offshore Bhd (TAS) via its wholly-owned subsidiary has secured shipbuilding contracts for three units of tugboats with a total value of RM22.6m. The company said the contracts were signed with an existing customer from Indonesia. It said these vessels are expected to be delivered in the third quarter of 2025. TAS said the revenue generated from the contract is expected to contribute positively to its earnings for the financial year ending May 31, 2026. (The Edge)

Master Tec Group Bhd, which is set for listing on the ACE Market of Bursa Malaysia on Jan 29, said its shares offered to the public under its initial public offering (IPO) has been oversubscribed by 7.11 times. Master Tec is primarily involved in the manufacturing and distribution of power cables, control and instrumentation cables, and solar direct current power cables under its Mastertec trademark since 2009. Master Tec’s IPO entails the public offering of 285.6m ordinary shares, comprising a public issuance of 158.1m new shares and an offer-for-sale of 127.5m existing shares, which collectively represent 28% of the group’s enlarged issued share capital of 1.02bn shares, at an offer price of 39 sen per share. The public issue is expected to raise RM61.66m. (The Edge)

HE Group Bhd, slated for a listing on the ACE Market of Bursa Malaysia on Jan 30, has seen its initial public offering (IPO) oversubscribed by 63.35 times. The electrical engineering service provider received a total of 12,201 applications for 1.41bn issue shares with a value of RM396.36mil from the Malaysian public, representing an overall oversubscription rate of 63.35 times. Meanwhile, 11m shares made available for application by the eligible persons have also been fully subscribed. Further, the placement agent, Alliance Islamic Bank Bhd, has confirmed that the 53.88m issue shares and 44m offer shares made available for application by way of private placement to selected investors have been fully placed out. (The Edge)

Source: Mplus Research - 23 Jan 2024