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Mplus Market Pulse - 23 Apr 2024

Publish date: Tue, 23 Apr 2024, 10:15 AM
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Rebound Move Seen Ahead Of Tech Earnings

Market Review

Malaysia: The FBMKLCI (+0.78%) ended higher, as the index was supported by banking heavyweights as the sentiment within the sector was lifted by China keeping benchmark lending rates unchanged. On the broader market, the Property sector (+1.52%) was the leading sector, while the Technology sector fell (-0.14%).

Global markets: Wall Street ended higher after the recent dip in technology stocks amid elevated inflationary pressure and higher-for-longer interest rates environment; NASDAQ noticed strong bargain hunting activities ahead of the upcoming tech giants’ earnings. Both the European and Asian stock market ended higher.

The Day Ahead

The FBM KLCI continued to charge higher for the fourth session supported by the banking stocks and positive sentiment across the board. Meanwhile, Wall Street rebounded, snapping its recent losing streak as bargain hunting activities emerged ahead of several corporate earnings releases from Tesla, Microsoft, Apple, and Meta starting from today onwards. Should there be positive surprises from the earnings, we believe the market may stabilized and rebound further. Closer to home, we believe the positive momentum could persist following the KL20 summit where more investment into the Technology sector is anticipated. On the commodity markets, Brent oil steadied around USD87, while the gold price has fallen more than 2.7% overnight as Middle East tension subsided. The FCPO managed to rebound from more than 2 weeks of selling streak, currently trading slightly below RM4000.

Sectors focus: With the rebound in Nasdaq overnight, coupled with the KL20 summit where Malaysia aims to become the chip powerhouse in the SEA region, traders may shift their focus back in the Technology sector. Also, we expect that may provide momentum on the Construction, Property, Utilities and Building Material segments going forward.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher for the fourth consecutive day. The technical readings on the key index were positive, with the MACD Histogram forming a rounding top formation, while the RSI maintains above 50. The resistance is envisaged around 1,575-1,580 and the support is set at 1,540-1,545.

Company Brief

Sapura Energy Bhd is selling its remaining 50% stake in SapuraOMV Upstream Sdn Bhd to TotalEnergies Holdings SAS for US$705.3m (RM3.37bn) — comprising US$530.3m, cash, and US$175m relief on debt obligations. Sapura Energy bought the E&P unit for US$898m back in 2014 from Newfield Exploration Co, before selling half its stake to OMV AG in 2018 for up to US$975m. The price tag of its remaining 50% stake is US$198m less than the US$903m that TotalEnergies is paying to get the other 50% stake from OMV. With the sale, the French oil major will fully own SapuraOMV. (The Edge)

Keyfield International Bhd made a robust debut on the Main Market of Bursa Malaysia on Monday with a closing price of RM1.93, a whopping 114.4% or RM1.03 higher than its initial public offering price (IPO) of 90 sen. The impressive gain was the best maiden day trading performance of a Main Market IPO stock over the last six years. The group remains bullish on the outlook for accommodation vessels, due to a shortage of suitable vessels, coupled with strong issuances of new work orders by oil companies. (The Edge)

Awanbiru Technology Bhd (Awantec) is appealing Bursa Malaysia Securities’ decision to suspend the trading of its shares, saying the group has demonstrated that its current business operations are viable, sustainable and have growth prospects. The appeal against suspension will be escalated to the relevant regulatory committee of Bursa Securities for deliberation and decision. “Notwithstanding the appeal against the suspension, the trading in the securities of Awantec will be suspended with effect from April 26,” it added. (The Edge)

Norges Bank, which manages Norway's government pension fund, has emerged as a substantial shareholder in CPE Technology Bhd with a 5.45% stake, after acquiring 3.5m shares or a 0.52% stake in CPE through Citigroup Nominees (Asing) Sdn Bhd. Based on the company’s closing price of RM1.30 on April 17, a back-of-the-envelope calculation indicates that the block of shares was valued at about RM4.55m. (The Edge)

Axis Real Estate Investment Trust (Axis REIT) has proposed to acquire an industrial complex and open storage yard in the Bukit Raja Industrial Park in Klang for RM351.8m, cash, from a unit of Lion Industries Corp Bhd, Amsteel Mills Sdn Bhd. Axis REIT said it views the properties as high quality and earnings-accretive with strong recurring rental income, and the acquisition will be funded by existing bank financing. According to the REIT's latest financial statement, its cash and bank balances amounted to RM7.79m, while its bank financing stood at RM1.55bn at end- 2023. (The Edge)

Unitrade Industries Bhd’s wholly-owned subsidiary Syarikat Logam Unitrade Sdn Bhd has entered into a collaboration agreement with Huawei Technologies (Malaysia) Sdn Bhd and JJ-LAPP (M) Sdn Bhd to facilitate the purchase and sale of Huawei Digital Power-Smart Photovoltaic (PV) solutions. Under the agreement, Huawei will serve as technology adviser while JJ-LAPP will be the authorised valueadded partner to promote and sell the smart PV solutions across residential as well as commercial and industrial (C&I) sectors. Meanwhile, Unitrade will act as the project delivery partner in facilitating broader market access. (The Edge)

ITMAX System Bhd plans to work with a unit of Johor Corp (JCorp), JLand Corp Sdn Bhd, to explore potential partnerships in developing and deploying smart city and integrated facilities management solutions for township and industrial park developments through its 65%-owned subsidiary Southmax Sdn Bhd. The duo have signed a memorandum of understanding to establish the principles and framework for the intended collaboration. They seek to finalise a JV agreement before setting up a joint venture company for the partnership. (The Edge)

Renewable energy player Sunview Group Bhd’s wholly-owned Fabulous Sunview Sdn Bhd has set up a special purpose vehicle (SPV) with Saudi Arabia-based Vision Ambassadors Company for International Trade Consultancy to explore renewable energy (RE) projects. Fabulous Sunview will hold a 40% stake in the SPV, with the remainder to be held by Vision Ambassadors. Both parties have agreed that the initial paid-up capital for the SPV will be 100,000 riyals (RM127,533). The SPV is to explore RE projects in the Gulf Cooperation Council (GCC) countries — Saudi Arabia, United Arab Emirates (UAE), Kuwait, Qatar, Bahrain and Oman — as well as Central Asia. (The Edge)

Iris Corp Bhd is forming a joint venture with Sri Lankan firm Aitken Spence Plc to establish an offshore company that provides business processes outsourcing services in the Colombo Port City Special Economic Zone in Sri Lanka. The group announced that its wholly-owned subsidiary Iris Tech Ventures Sdn Bhd has entered into a shareholders’ agreement with Aitken Spence’s wholly-owned subsidiary Aitken Spence International Pte Ltd. The joint venture will be a 50-50 partnership between the duo, with total investment of the venture amounting to US$500,000 (RM2.39m). (The Edge)

Gadang Holdings Bhd posted a net profit of RM6.47m for the third quarter ended Feb 29, 2024 (3QFY2024), compared to a net loss of RM4.96m a year ago, driven by interest accumulation on trade receivables and favourable foreign exchange (forex) translation. The group’s revenue also climbed by 14% to RM141.15m for 3QFY2024, compared with RM123.98m a year earlier, driven by increased contributions from the property division. For 9MFY2024, the group posted a net profit of RM14.1m, compared to a net loss of RM1.62m for 9MFY2023, attributed to better sales achieved and higher work progress from development projects. (The Edge)

Ancom Nylex Bhd (ANB) registered a 21.6% year-on-year jump in its net profit for 3QFY2024 to RM20.11m from RM16.36m, attributable to improved margins for its agricultural chemicals and industrial chemicals divisions. Revenue was up by 6.8% to RM516.78m from RM483.95m. For 9MFY2024, ANB reported a 10% increase in its net profit, as this rose to RM63.03m from RM56.95m, while revenue declined 3.6% to RM1.51bn from RM1.57bn. (The Edge)

Ornapaper Bhd plans to diversify into the property development and property investment business. The group said while it remained focused on its existing business — corrugated boards and carton boxes, paper-based stationery products and logistics services — it has been actively seeking other business opportunities that could enhance long-term returns to its shareholders. (The Edge)

Powerwell Holdings Bhd’s wholly-owned unit Kejuruteraan Powerwell Sdn Bhd has secured a RM22.05m sub-contract from One Ocean Environment Sdn Bhd to supply a low voltage (LV) switchboard for the first stage of Sg Rasau Water Supply Scheme development in Selangor. The project is expected to be completed by the end of June 2025. (The Edge)

Bursa Malaysia has demanded an explanation from HHRG Bhd on its proposal to purchase 51% stakes in two companies that jointly own a parcel of land in Kuala Muda, Kedah, that was originally belonged to the Kedah state government. HHRG had proposed to acquire the stakes for RM40m, which provides the group with access to a parcel of land measuring 150 acres in Kuala Muda, valued at RM96.68m. (The Edge)

Source: Mplus Research - 23 Apr 2024

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