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Mplus Market Pulse - 15 Feb 2024

Publish date: Thu, 15 Feb 2024, 10:47 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

All materials published here are prepared by Malacca Securities. For latest offers on Malacca Securities trading products and news, please refer to: https://www.mplusonline.com.my

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Positive Sentiment To Prevail

Market Review

Malaysia: The FBM KLCI (-0.13%) closed lower, in line with the mixed regional markets’ performances, as the index was dragged by the Healthcare and Industrial Products heavyweights. On the broader market, the Telco & Media sector (+0.37%) was the leading sector, while the Technology sector (-0.75%).

Global markets: Wall Street ended higher rebounding from the steep losses yesterday as the sentiment was positive, led by gains in Uber and Lyft. The European stock markets ended higher, while Asia’s markets ended mostly lower dragged by the poor sentiment from the overnight Wall Street losses.

The Day Ahead

The FBM KLCI turned sideways after the recent consolidation breakout. We believe the overall market tone is still positive and likely to head higher after the earnings season. Meanwhile, Wall Street rebounded significantly after the sharp sell down, led mainly by the technology sector. Traders will be monitoring the retail sales and the US PPI data that will be released over the next two days. Although the inflation data may spike, the market will be focusing on the ongoing earnings season to look for trading opportunities. On the commodity market, the Brent oil price traded slightly lower as EIA reported the US inventories surged by 12 million barrels last week, above consensus estimates of 2.6 million.

Sectors focus: Key sectors that investors should be focusing on will be the (i) Construction, (ii) Property, (iii) Utilities and (iv) Renewable Energy given the trading themes revolving around the mega infrastructure projects as well as the data centre investments in Malaysia. Also, we like Consumer related, specifically the poultry sector in anticipation of stronger quarterly results amid normalising costs and higher demand. Besides, the Transportation & Logistics sector may benefit from the ongoing Middle East tensions.

FBMKLCI Technical Outlook

The FBM KLCI ended flat, after the break out. The technical readings on the key index were positive, with the MACD Histogram returning close to even level, while the RSI maintains above the 50 level. The resistance is envisaged around 1,540-1,550 and the support is set at 1,500-1,510.

Company Brief

IHH Healthcare Bhd said Agilus Diagnostic Ltd, a subsidiary of its 31.17%-owned associate Fortis Healthcare Ltd, has decided to withdraw its initial public offer (IPO) application to the Securities and Exchange Board of India (Sebi). IHH said the withdrawal was due to "commercial considerations and in consultation and mutual agreement" with Agilus’s private equity investors and selling shareholders, namely International Finance Corp, NYLIM Jacob Ballas India Fund III LLC and Resurgence PE Investments Ltd. However, the healthcare group disclosed its intention to refile the IPO prospectus with Sebi for a proposed IPO in the future. (The Edge)

Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) incurred a net loss RM484.18m for the year ended Dec 31, 2023 (FY2023), contrasting sharply with the RM67.77m net profit recorded a year earlier, due to additional cost provisions recognised for ongoing heavy engineering projects and the adverse impact of the weakening ringgit against the US dollar on the hedging of receivables for a heavy engineering project. This was despite its full-year revenue doubling to RM3.31bn from RM1.65bn.

For the fourth quarter ended Dec 31, 2023 (4QFY2023), MHB's net profit tumbled 77.21% to RM6.18m, from RM27.14m in the previous year’s corresponding quarter, on lower operating income and higher finance costs. In contrast, its revenue more than doubled to RM1.12bn in the quarter under review from RM424m a year prior, driven by revenue from the heavy engineering segment, which surged 213% year-onyear to RM1.02bn. (The Edge)

UMW Holdings Bhd will be delisted from Bursa Malaysia next Monday to mark the completion of its privatisation by Sime Darby Bhd. Shares of UMW had been suspended by Bursa Malaysia last Friday, after the expiration of five trading days from the extended closing date of the takeover offer by Sime Darby. As of Jan 31, Sime Darby already held 98.86% of the total shares in UMW. (The Edge)

Dayang Enterprise Holdings Bhd secured two more contract extensions from Petronas Carigali Sdn Bhd for the provision of two accommodation work boats, namely Dayang Ruby and Dayang Opal. Value of the extensions, secured via its wholly-owned unit DESB Marine Services Sdn Bhd, was not given as they would be based on work orders issued by Petronas Carigali. Dayang Ruby's contract was extended for 203 days, starting from Nov 11, 2023, while Dayang Opal's was extended for 270 days from Nov 5, 2023. (The Edge)

Pansar Bhd bagged a RM130m contract from Borneo Development Corp (Sarawak) Sdn Bhd (BDC) to construct an infectious disease centre in Sg Jernang, Samarahan, Sarawak. Pansar said its wholly owned subsidiary Perbena Emas Sdn Bhd has signed a letter of acceptance from BDC for the tender of the proposed Sarawak infectious disease centre (package 1). The work period is for 30 months. (The Edge)

Ann Joo Resources Bhd group chairman Datuk Lim Kiam Lam has ceased to be a substantial shareholder in Engtex Group Bhd. Lim disposed of 2.9m shares or a 0.66% stake in the pipe maker both on and off market last Thursday. This trimmed Lim’s shareholding in Engtex to 20.95m shares or a 4.75% stake — below the 5% threshold required to be deemed a substantial shareholder. Lim has been paring his stake in Engtex since late December last year. From Dec 22 to the latest disposal last Thursday, he has disposed of a total 5.56m shares, or a 1.26% stake, in the company. (The Edge)

Perdana Petroleum Bhd has secured a new contract, along with a seven-month extension of an existing contract, from Saujana Marine Sdn Bhd, with a combined value of RM38.3m. Perdana Petroleum said the new contract is related to the provision of a unit of accommodation work barge (AWB) of up to 240 days, with an extension option of up to 30 days, starting from Jan 15, with a contract value of RM22.1m. Meanwhile, the contract extension relates to a work order extension for one unit of AWB for 220 days, commencing from Dec 24, 2023, with a contract value of RM16.2m. Under both contracts, Perdana Petroleum will provide an AWB unit with crew and equipment to execute continuous service in accordance with the agreed scope of work to support Saujana Marine's project activities. (The Edge)

PLB Engineering Bhd's external auditor flagged a material uncertainty that could cast significant doubt on its ability to continue as a going concern. The auditor, Grant Thornton Malaysia PLT, highlighted PLB Engineering’s net loss of RM27.97m for the financial year ending August 31, 2023 (FY2023), with negative cash flows from operating activities at both the group level (amounting to RM14.79m) and company level (RM3.81m). PLB Engineering also saw its current liabilities exceed current assets by RM82.36m, the auditor added. (The Edge)

UEM Sunrise Bhd issued Islamic medium-term notes (IMTNs) worth RM500m in nominal value. The notes were part of UEM Sunrise’s IMTN programme, which together with an Islamic commercial papers programme, have a combined aggregate limit of up to RM4bn. UEM Sunrise said the proceeds from the new IMTNs will be used for the group’s shariah-compliant general corporate purposes. This includes the acquisition of new landbank, companies, investments, project development and infrastructure cost, capital expenditure, general expenditure, and refinancing of Islamic financing or outstanding loan facilities. (The Edge)

Harn Len Corporation Bhd managing director Low Quek Kiong has purchased a 1.6% stake in the oil palm planter for RM3m. Low acquired the stake, comprising 9.1m shares, via a “direct deal” at 33 sen apiece or a total of RM3m last Thursday. The 33 sen purchase price is 21.4% lower than the Feb 8 closing price of 42 sen. Meanwhile, the Low family’s investment vehicle LNH Enterprise Sdn Bhd acquired a 0.07% stake in Harn Len, comprising 380,000 shares, via another direct deal also on Feb 8 for RM114,000 or 30 sen per share — a 28.6% discount over the 42 sen closing price. The transactions brought Low’s total stake in Harn Len to 52.34% — 47.65% of which is held under his family-owned companies. (The Edge)

Source: Mplus Research - 15 Feb 2024

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