Trading Activities May Turn Softer Ahead of CNY

Market Review Market Scorecard

Malaysia: The FBM KLCI (+0.01%) closed flat, in line with the mixed regional markets, as Utilities heavyweights gains were offset by losses in selected Industrial Products and Telco heavyweights. On the broader market, the Utilities sector (+1.30%) was the leading sector, while the Telco & Media sector (-1.05%) fell.

Global markets: Wall Street closed higher as corporate earnings boosted investor sentiment, while traders awaiting the jobless claims data to be released tonight. The European stock market ended lower, while Asia ended mostly higher boosted by mostly stronger corporate earnings.

The Day Ahead

The FBM KLCI hovered sideways for the past 7 trading days and formed a 2-bar consecutive rebound with the help from Utilities heavyweights. Meanwhile, the US stock markets managed to head higher on the back of strong corporate earnings season that offset the expectations of the Fed which may not cut the interest rates soon. Concerns over the US regional banks returns, coupled with the weaker sentiment in China may slowdown the trading activities on the local front ahead of the Chinese New Year long weekend break. Despite the EIA reported that the US oil inventories rose by 5.5m barrels last week, the Brent oil price traded above USD79.00/bbl.

Sectors focus: We expect the trading activities to slowdown ahead of Chinese New Year mood and the FBM KLCI may consolidate further along 1,510-1520 zone. Meanwhile, sector that traders may focus include the Technology sector on the back of solid close in the US, while Consumer, Telco, REITs and Utilities may perform positively given their defensive characteristics and investors may look into solid dividend yield as part of their considerations within these sectors.

FBMKLCI Technical Outlook

The FBM KLCI ended flat and still hovering within the consolidation phase. The technical readings on the key index were mixed, with the MACD Histogram extended another negative bar, while the RSI maintains above the 50 level. The resistance is envisaged around 1,520-1,530 and the support is set at 1,490-1,480.

Company Brief

KLCCP Stapled Group’s net profit rose 37.6% to RM384.59m for the fourth quarter ended Dec 31, 2023, from RM279.47m a year ago, primarily contributed by improvement in the hotel and retail segments, while the office segment remained stable. The group — comprising KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust — saw quarterly revenue grow 7.1% to RM442.63m from RM413.26m previously. It declared a dividend of 14.4 sen per stapled security for the quarter, bringing the total declared dividend for the year to 40.5 sen — the highest since its listing as a stapled security in 2013. For the full year, KLCCP's net profit climbed 18.9% to RM931.29m from RM782.66m for the previous year, as revenue rose 10.9% to RM1.62bn from RM1.46bn. (The Edge)

Carlsberg Brewery Malaysia Bhd’s net profit for 4QFY2023 rose 39.75% to RM84.02m from RM60.12m a year ago, in the absence of the one-off loss recorded from the disposal of its old bottling line and prosperity tax, as well as recognition of deferred tax income. Quarterly revenue slipped 5.26% to RM580.53m versus RM612.75m previously, amid lower sales in both Malaysia and Singapore. Net profit for FY2023 was up 5.11% to a record high of RM333.24m against RM317.05m a year ago, mainly in the absence of the RM21.6m prosperity tax incurred last year. Likewise, full-year revenue declined 6.28% to RM2.26bn compared with RM2.41bn in FY2022, dragged by lower sales on the back of softer market sentiment and inflationary pressures. It has recommended a final dividend of 31 sen per share subject to shareholders' approval at its upcoming 54th annual general meeting. (The Edge)

MNRB Holdings Bhd’s net profit for its third quarter ended Dec 31, 2023 surged 47.36% to RM84.61m or 10.8 sen per share, from RM57.42m or 7.33 sen per share a year ago, driven by higher revenue from its insurance and takaful segment. Quarterly revenue rose 22.05% to RM980.87m from RM803.69m a year ago, mainly contributed by higher investment income and favourable fair value movement of investments. No dividend was declared for the quarter. (The Edge)

Rexit Bhd’s new substantial shareholders — Datuk Seow Gim Shen, Metaco Assets Holdings Sdn Bhd and Bemas Holdings Sdn Bhd — have extended a formal unconditional mandatory takeover offer to acquire all the remaining ordinary shares in the company at 85 sen per share. This came after the three parties emerged as the new substantial shareholders of Rexit on Jan 17, after acquiring an aggregate of 92.27m shares or a 53.27% stake in the group for a total cash consideration of RM78.43m. The offer will remain open for acceptances until Feb 28, being the first closing date — the joint offerors may extend the date and time for acceptance beyond the first closing date in accordance with the provisions of the rules. The joint parties have also agreed to maintain the listing status of Rexit. (The Edge)

One Glove Group Bhd plans to implement an internal reorganisation of its glove business to focus solely on its existing glove factory in Kamunting, Perak. The reorganisation would include the reallocation of operational resources utilised by One Glove Venture Sdn Bhd (OGVSB) to Onetexx Sdn Bhd, a wholly owned subsidiary of One Glove which operates the Kamunting glove factory, given that OGVSB will not be carrying out the glove business moving forward. (The Edge)

YTL Hospitality REIT (YTL REIT) is acquiring Syeun Hotel in Ipoh, Perak, for RM55m cash from Syeun Hotel Bhd, as it looks to continuously acquire and invest in highquality hospitality properties in Malaysia and internationally, with a view to providing long-term and sustainable income distribution to unitholders and achieving longterm growth in net asset value per unit. The proposed acquisition is expected to be completed during the first half of 2024. (The Edge)

Ranhill Utilities Bhd has achieved commercial operation date of its 50MW large scale solar project under the 2021 awards (LSS4). This marks the group’s first venture into LSS ownership, being part of its pursuit into renewable energy. The project will operate under a 25-year concession period. (The Edge)

PLB Engineering Bhd has entered into a deal to sell a vacant piece of land in Bandar Tanjung Bungah, Penang, measuring 1,922 square metres, from Victorious Triumphant Sdn Bhd for RM11.5m. The group said it bought the land in 2009 for RM5.49m. As at Aug 31, 2023, the audited net book value of the land stood at RM8.45m. As such, the disposal is expected to result in a gain of about RM1.49m. PLB Engineering said net proceeds will be utilised for repayment of bank borrowings worth up to RM8.05m, and as working capital for the group. (The Edge)

Kuala Lumpur City Hall (DBKL) has expanded the scope of ITMAX System Bhd’s contract to install and maintain the networked street lighting systems in Kuala Lumpur by RM47.2m. This comes after DBKL awarded the company with a variation order for the job to include the replacement of broken light-emitting diode (LED) street lights with an expired warranty in the city. (The Edge)

Econpile Holdings Bhd has secured a RM30m contract from Chingsan Development Sdn Bhd to undertake substructure works for a 15-storey office building in Shah Alam. The contract’s scope of work includes site clearing, earthworks, substructure and structure works for a five-storey basement car park, and is scheduled for completion within 16 months from Feb 24, 2024. (The Edge)

LEAP Market-listed Steel Hawk Bhd has secured a one-year contract extension from E&P O&M Services Sdn Bhd (EPOMS) for the provision of scaffolding services for EPOMS' operations in Peninsular Malaysia to Feb 9, 2025. The contract was initially awarded in February 2022 for a contract period of two years with a one-year extension option. EPOMS is a wholly owned subsidiary of Petronas Carigali Sdn Bhd. (The Edge)

Source: Mplus Research - 8 Feb 2024