Overbought Conditions May Attract Sellers

Market Review

Malaysia: The FBMKLCI (+0.52%) ended higher due to foreign institutional funds ramping up buying interest in the local bourse amid the positive market environment taking cue from the positive Wall Street performance. On the broader market, the Utilities sector (+1.88%) was the leading sector.

Global markets: Wall Street ended mixed and dull as the positive sentiment from the April’s job report ran out of steam and investors were waiting for fresh catalyst. Meanwhile, traders will be eyeing the upcoming set of corporate earnings. Both the European and Asian stock markets ended higher.

The Day Ahead

The FBMKLCI maintained its upward trend, rising for 12 days over the past 14 trading days as buying support was seen within the Banking and Utilities heavyweights, while the FBM70 charged towards its all-time-high, suggesting that the overall market sentiment is bullish. Over in the US, Wall Street ended mixed as the market digested the mixed batch of corporate earnings. Meanwhile, the traders will be focusing on the upcoming unemployment claims later tonight and the consumer sentiment data will be released on Friday. On the commodity markets, Brent oil traded in a rangebound mode around USD82-83, while the gold price traded mildly lower around USD2315 as the traders could be weighing on the ceasefire hopes. For the CPO, it has performed a rebound above RM3,900.

Sectors focus: We believe the overall uptrend is intact, but given it has been rising significantly higher over the past two weeks, it may attract profit taking activities. Nevertheless, we still like the Technology sector as more investments will be seen from big MNCs and should provide healthy sentiment towards the local markets. Also, the data center investments will boost the demand for the Power industry and the NETR and NIMP masterplans will translate to trading opportunities within the Construction, Properties and Building Material sectors.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher to a fresh 52-week high. The technical readings on the key index, were positive with the MACD Histogram extending another positive bar, while the RSI maintains above 50. The resistance is envisaged around 1,620- 1,625 and the support is set at 1,585-1,590.

Company Brief

Sime Darby Plantation Bhd (SDP) has proposed to develop a 1,000-acre Kerian Integrated Green Industrial Park (KIGIP) in its Tali Ayer Estate in Perak, together with its largest shareholder Permodalan Nasional Bhd (PNB). A joint proposal was submitted to the Ministry of Investment, Trade and Industry (Miti) in February. The solar farms for KIGIP will be owned and operated by SDP. (The Edge)

Pekat Group Bhd has signed a memorandum of understanding (MOU) to acquire a stake in switchgears supplier EPE Switchgear (M) Sdn Bhd from Apex Power Industry Sdn Bhd. The final equity interest of EPE Switchgear to be purchased, and the purchase consideration, will be determined later, subject to due diligence. (The Edge)

Siab Holdings Bhd has signed an underwriting agreement with M&A Securities and NewParadigm Securities Sdn Bhd for the group's rights issue with warrant exercise, aiming to raise RM91.98m to complete its RM103.98m equity fundraising exercise announced last year, in order to finance its acquisition of G7 contractor Taghill Projects Sdn Bhd. It raised RM12m in December through a special share issue of 100m shares. (The Edge)

OCK Group Bhd has entered into a 15-year agreement to lease telecommunications towers in its new market Laos to Best Telecom Co Ltd, which plans to launch its 5G network by year-end. OCK was awarded several clusters of sites located within the metropolitan area of Vientiane and a few major cities in the country. (The Edge)

Sapura Energy Bhd’s joint venture companies (JVCos) have bagged contracts worth US$1.8bn (RM8.53bn) from Petroleo Brasileiro Sa (Petrobras) to provide engineering services in Brazil via six pipe-laying support vessels. The scope of work includes the provision of subsea engineering, installation and other services. The vessels shall perform all operations required, including the installation of flexible pipes, electrichydraulic umbilical and power cables. (The Edge)

Following its record-breaking 2023, CTOS Digital Bhd posted a 25.6% year-on-year jump in net profit in its first quarter March 31, 2024 (1QFY2024), on higher revenue and lower tax expense thanks to incentive for subsidiary CTOS Data Systems Sdn Bhd (CDS). Net profit rose to RM20.82m, from RM16.58m a year ago. Revenue expanded by 20.1% to RM71.58m from RM59.59m, as revenue from all customer groups grew with higher sales of CDS reports and digital solutions. CTOS declared a first dividend of 0.64 sen per share, to be paid on July 2. In the corresponding quarter last year, the group paid 0.43 sen. (The Edge)

AwanBiru Technology Bhd (Awantec) reported a net profit of RM2.14m for its third quarter ended March 31, 2024 (3QFY2024), from a net loss of RM1.99m a year ago, as its software and services segment secured major contracts. Revenue jumped more than sixfold to RM55.77m from RM8.51m. For its first nine months of FY2024, the group notched a net profit of RM3.33m from a net loss of RM6.3m in 9MFY2023. Revenue more than doubled to RM84.39m from RM34.6m. (The Edge)

Urusharta Jamaah Sdn Bhd (UJSB) — a special purpose vehicle established under the Ministry of Finance to rehabilitate, restructure and monetise underperforming assets transferred to it from Lembaga Tabung Haji — has emerged as a substantial shareholder in Prolintas Infra Business Trust. UJSB on May 2 acquired 300,000 units in Prolintas Infra, a Main-Market listed trust that owns four highways in Klang Valley. This purchase lifted UJSB’s shareholding in Prolintas to 55.04m shares, or 5.003%, making UJSB the third largest shareholder in Prolintas Infra, behind Projek Lintasan Kota Holdings Sdn Bhd (PLKH) with its 51.02% stake, and the Employees Provident Fund (EPF) with its 6.18% stake. (The Edge)

Mobilia Holdings Bhd is planning to issue up to 218.75m free one-for-four warrants (Warrants-B). The warrants' indicative exercise price is 15 sen apiece, representing a 10% discount to Mobilia’s closing price of 16.5 sen on Tuesday. At 16.5 sen, Mobilia is valued at RM115.5m. Assuming full exercise of the warrants, the group is expected to raise about RM32.81m to fund its working capital requirements. (The Edge)

Power Root Bhd's subsidiaries have successfully regained trademark of its own “Ah Huat” brand for coffee and tea beverages, after reaching an amicable out-of-court settlement with its Indonesian distributor CV Ego Sun Star Sukses Mandiri (CV Ego) following an infringement wrangle that started in 2013. The settlement agreement entails that CV Ego recognises and acknowledges Power Root (M) Sdn Bhd’s (PRM) ownership and rights of the "Ah Huat" trademark. In return, Power Root's subsidiaries will provide a consideration of IDR725m (equivalent to approximately RM213,000) to CV Ego, setting aside a separate verdict of RM23.7m against Power Root. Power Root has settled the legal dispute by paying a total RM1.27m to CV Ego in order to reclaim the brand. (The Edge)

Source: Mplus Research - 8 May 2024