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Mplus Market Pulse - 16 Feb 2024

Publish date: Fri, 16 Feb 2024, 12:09 PM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Buying Interest To Sustain, Tracking Wall Street

Market Review

Malaysia: The FBM KLCI (-0.06%) ended flat, bucking the negative performance in the regional stock markets, dragged by selected Telco, Consumer Products and Plantation heavyweights. On the broader market, the Telco & Media sector (+1.04%) was the leading sector, while the Construction sector (-0.72%) declined.

Global markets: The US stock markets ended on a positive note as retail sales data came in below expectations and speculation of the earlier rate cuts may happen sooner. The European stock markets closed positively despite UK’s economy has fallen into a technical recession, while Asia stock markets gained momentum.

The Day Ahead

The FBM KLCI extended the consolidation phase for the second day as the focus turned to FBM Small Cap, which added 0.7% for the session. Meanwhile, the US stock markets charged higher as investors could be pricing in an earlier rate cut following the slightly weaker retail sales. We believe the market will be monitoring the corporate earnings season for trading opportunities as we think most of the companies may exceed expectations as 4Q23 was a recovering quarter based on the US GDP data. Thus, we opine that the buying support may prolong on the local exchange today. On the commodity market, the Brent oil price closed firmer as the US Treasury yields slid and dollar index eased after the US retail sales.

Sectors focus: Following the contract win by UZMA, coupled with the firmer Brent oil prices, we expect the O&G stocks to trade on a strong note today. Meanwhile, we still favour the (i) Construction, (ii) Property, (iii) Utilities and (iv) Renewable Energy as the attention will be given towards the mega infrastructure projects such as the revival of KL-SG HSR and ongoing RTS link, coupled with the Bayan Lepas LRT talks. Also, the data centre investments in Malaysia will be another catalyst to focus. Meanwhile, for the upcoming earnings, we like Consumer stocks.

FBMKLCI Technical Outlook

The FBM KLCI ended flat for another session. The technical readings on the key index were positive, with the MACD Histogram extending a positive bar, 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

Malaysia Smelting Corp Bhd’s (MSC) net profit for the 4QFY2023 fell nearly 64% to RM9.37m from RM25.84m a year earlier, dragged by foreign exchange losses as well as the absence of sale of refined tin from processed tin intermediates and byproducts. MSC proposed a final single-tier dividend of 7 sen per share for the quarter, bringing the full-year payout to 14 sen per share. For the full year, MSC’s net profit dropped 13.5% to RM85.05m from RM98.31m in FY2022, while revenue slipped 4.5% to RM1.44bn from RM1.5bn. (The Edge)

APB Resources Bhd has completed a RM140m purchase (10.4% stake) in Penangbased semiconductor firm Globetronics Bhd from the Ng family, following an agreement signed on 18-Dec-2023, this marks the Ng family’s exit from the company co-founded by its patriarch Michael Ng Kweng Chong in 1991. — (The Edge)

GIIB Holdings Bhd reported a net profit of RM2.32m for the second quarter ended Dec 31, 2023 (2QFY2024), compared to a net loss of RM11.99m a year ago, primarily due to the recognition of revenue from a land disposal amounting to RM14m. Quarterly revenue surged nearly threefold to RM25.46m from RM9.2m in the previous corresponding quarter, driven by a 24% increase in rubber compound sales and the disposal of land. (The Edge)

Fraser & Neave Holdings Bhd (F&N) entered into an agreement with Suvannaphum Investment Co Ltd to lease a 32,200 sq m parcel of industrial land in the Suvannaphum Special Economic Zone, Cambodia for 50 years for US$3.86m (RM18.5m) to set up a manufacturing facility for dairy products. The total cost for the setting up of the facility is estimated at US$37.5m (RM179.5m), including the cost of leasing the land, construction of building and purchase of machinery. The manufacturing facility is expected to commence operations in the first quarter of 2026. (The Edge)

Hume Cement Industries Bhd’s (HCIB) wholly owned Hume Concrete Sdn Bhd has inked a conditional sale and purchase agreement to sell a plot of land in the Prai Industrial Estate in Penang to Skygate Technology (KL) Sdn Bhd for RM39.8m, cash. HCIB said the property is not needed for operations, and the proposed disposal will enable it to realise its investment in it. The proposed disposal is expected to be completed in the second half of the year, and will net HCIB a disposal gain of about RM32m. (The Edge)

GFM Services Bhd is acquiring the entire stake in Era Gema Bina Sdn Bhd for RM23m to expand into the highway rest and service area (RSA) business. Era Gema has been awarded the rights by the Malaysian Highway Authority to undertake the proposed development of an RSA on a 1.74ha land located at Sungai Muda, Penang. The acquisition comes with plans for GFM to position as the facility manager of the premise upon completion by 2027. (The Edge)

Carimin Petroleum Bhd’s wholly owned Carimin Engineering Services Sdn Bhd has received a contract extension from Petronas Carigali Sdn Bhd for the provision of integrated hook-up and commissioning services. The initial contract, which took effect on Jan 1, 2020 and expired on Dec 31, 2023, has been extended for one year, starting from Jan 1, 2024. (The Edge)

Priceworth International Bhd has proposed a bonus issue of 801.81m free warrants on the basis of one warrant for every two shares held. The Sabah-based timber manufacturer intends to fix the exercise price at a premium range of 10% to 30% to the five-day volume weighted average market price immediately preceding the pricefixing date. Based on an illustrative price of 13 sen each and assuming the warrants are fully exercised, Priceworth will raise gross proceeds of up to RM104.24m for working capital. (The Edge)

Uzma Bhd has secured a term contract from Petronas Carigali Sdn Bhd to provide a portable water injection module (PWIM) for the Sepat platform in Terengganu. This is a continuation of its previous contract that expired on Jan 11 and will remain valid for 20 months or until the primary contract expiry of the Sepat Redevelopment. The job involves the operation and maintenance of PWIM, including the supply of personnel, consumables, chemicals and spare parts, and the upgrading and modification of the existing PWIM unit. (The Edge)

Hektar Real Estate Investment Trust (Hektar REIT) issued five-year medium-term notes (MTNs) worth RM215m — the first issuance under Hektar MTN Satu Sdn Bhd's MTN programme of up to RM500m in nominal value. The MTNs have a coupon rate of 4.2% per annum and are guaranteed by Credit Guarantee and Investment Facility, a trust fund of the Asian Development Bank. Proceeds from the guaranteed MTNs will be used to refinance existing borrowings and fund the REIT's capital expenditure and asset enhancement initiative for Subang Parade. (The Edge)

Source: Mplus Research - 16 Feb 2024

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