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Mplus Market Pulse - 05 Apr 2024

MalaccaSecurities
Publish date: Fri, 05 Apr 2024, 10:09 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Building Material Segment Charging Higher

Market Review

Malaysia: The FBMKLCI (+1.06%) ended higher, in line with the positive performance across the regional stock markets, as the index was led by Industrial Products, Utilities and Plantation heavyweights. On the broader market, the Industrial Products sector (+1.78%) gained, while the Technology sector (-0.32%) declined.

Global markets: Wall Street ended lower as investor sentiment dipped after the cautious comments from the Feds on the timing of the rate cuts, meanwhile traders will be eyeing the upcoming nonfarm payroll data. Both the European and Asian stock markets ended higher.

The Day Ahead

The FBM KLCI turned stronger after a one-day selldown, with the help of Industrial Products heavyweight like PMETAL. Also, we believe the market is focusing on the small caps and lower liners given the fresh 52-week high seen in FBM Small Cap. The US stock markets extended its negative performance observed on 3 of the major indices, each ending more than 1% loss. The market is pricing in further delays in the Fed’s interest rate cuts as the inflationary may remain elevated amid the spike in oil prices. On the commodity front, Brent oil charged above USD91 contributed by the heightened geopolitical tension in the Middle East region. Besides, the CPO price is hovering above RM4,300, while the gold price is hovering along the 52-week high.

Sectors focus: Given the massive profit taking on Wall Street, sentiment may turn weaker on the local front, especially on the Technology stocks. However, we believe the focus will gain within the commodity-related sectors such as O&G, Plantation and Gold-related sectors supported by their respective firm underlying commodity prices. Also, we noticed Aluminium and Steel stocks are gaining momentum in tandem with the recent bullish tone in the Construction and Property sectors.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher. The technical readings on the key index were positive, with the MACD Histogram extending another positive bar, while the RSI broke above 50. The resistance is envisaged around 1,570-1,575 and the support is set at 1,535-1,540.

Company Brief

Johor-based property developer Crescendo Corp Bhd said its wholly-owned subsidiary, Panoramic Industrial Development Sdn Bhd (PID) has entered into a conditional sale and purchase agreement with Microsoft Payments (Malaysia) Sdn Bhd for the sale of a vacant parcenl of freehold land measuring 1.1m sq ft in Pulai, Johor, for RM132.47m, or RM120 per sq ft. This transaction follows Crescendo's prior disposal of three vacant pieces of land measuring 2.62m sq ft in the vicinity to Microsoft Payments for RM315.17m, cash, last November. Crescendo intends to utilise the net cash proceeds of RM127.7m for debt repayment, working capital and related exercise expenses. (The Edge)

MN Holdings Bhd (MNHB) has secured a contract valued at RM25.96m for engineering, procurement, construction and commissioning work for a large-scale solar photovoltaic plant in Kulim, Kedah. The contract was awarded to its wholly- owned subsidiary, MN Power Transmission Sdn Bhd, by Samaiden Sdn Bhd, a subsidiary of Samaiden Group Bhd. It involves establishing new step-up station interconnection facilities for the solar substation and extending 132kV interconnection facilities at the existing 132kV NUR power station for NUR Renewables Sdn Bhd. The contract is scheduled to last 11 months, commencing on April 1. (The Edge)

Axiata Group Bhd, Malaysia's largest wireless carrier by revenue, announced on Thursday its plan to sell its Myanmar tower business for US$150m, approximately RM713m, as part of its exit strategy from the Southeast Asian country. Axiata's subsidiary, edotco Group Sdn Bhd, will sell its entire 87.5% stake in edotco Investments Singapore Pte Ltd, which serves as the investment holding company for its Myanmar ventures. The decision to divest was attributed to the worsening macroeconomic and operating conditions in Myanmar. However, the buyer of Axiata's Myanmar business was not disclosed. (The Edge)

Sapura Energy Bhd has secured a contract to provide pan-Malaysia underwater services for the Petronas group of companies and petroleum arrangement contractors. The contract, awarded by Sarawak Shell Bhd and Sabah Shell Petroleum Company Ltd to its subsidiary Sapura Subsea Services Sdn Bhd, is a call-out contract with agreed unit rates. Although the contract value was not disclosed, it is valid for five years from Jan 31, 2024. The scope of work includes providing diving support vessels, air and saturation diving systems, remotely operated vehicles and other underwater services. (The Edge)

Source: Mplus Research - 5 Apr 2024

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