Turning Slightly Bullish After PPI Data

Market Review

Malaysia: The FBM KLCI (+0.18%) closed slightly higher as buying support were noticed within the Banking and Industrial Products heavyweights, tracking the regional markets' performance. However, the mildly positive performance was muted as traders were cautious prior to the US PPI economic data.

Global markets: Wall Street ended higher led by Nasdaq supported by gains in tech heavyweights stocks like NVIDIA (+6.53%) after softer PPI data indicated that the inflation is tapering, raising more likelihood of the Fed rate cut in September. Meanwhile, both the European and Asia stock markets ended higher.

The Day Ahead

The FBMKLCI traded mildly positive, but the broader local market ended mostly negative ahead of the US PPI data release. With the PPI data coming in slightly better than expected, sentiment in the US turned bullish, leading to strong buying interest, particularly in technology heavyweights. We believe this buying interest may spill over to local stocks. Traders will also be monitoring several key economic data releases, including CPI (later tonight), retail sales, and the manufacturing index (later this week). In the commodity markets, Brent oil retreated more than 1% as concerns over Middle East tensions eased, while gold prices rose above USD2,460 due to the potential for a rate cut in September. Meanwhile, CPO prices have declined below RM3,700.

Sectors Focus: Given the strong performance of tech giants in the US, we anticipate increased trading interest in the local Technology sector. Also, the Construction, Property, Building Materials, and Utilities sectors may benefit from the data center and AI themes. We also favour stocks within the Renewable Energy and Banking sectors, as well as those related to the e-invoice theme.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher towards 1,609 level. The technical readings on the key index were positive with the MACD histogram forming positive bar and the RSI stayed above 50. The resistance is envisaged around 1,614-1,629 and the support is set at 1,589-1,594.

Company Brief

Uzma Bhd (UZMA) is set to begin operating its 50MW large-scale solar 4 (LSS4) project in Sungai Petani, Kedah, within the next two weeks after receiving approval from Tenaga Nasional Bhd (TENAGA). The company is awaiting its licence from the Energy Commission, expected within one to two weeks. (The Edge)

LBS Bina Group Berhad's (LBS) subsidiary, Gerbang Mekar Sdn Bhd (GMSB), is facing a RM43.03m claim filed by Mega Planner Jaya Sdn Bhd, now in liquidation. The claim relates to an alleged unpaid sum from a 2014 sales and purchase agreement for retail property in Setapak, Kuala Lumpur. GMSB has filed a memorandum of appearance in response to the writ at the Kuala Lumpur High Court. (The Edge)

Felda’s 81.9%-owned FGV Holdings Bhd (FGV) reaffirmed its plans to undertake a bonus issue. The bonus issue, intended to reduce Felda’s stake in FGV to meet public shareholding spread requirements, was initially set for completion in 4Q2023. Following the expiration of Bursa Securities' approval, FGV plans to reapply for the listing and quotation once the necessary consent has been obtained. (The Edge)

Enest Group Bhd (ENEST), a bird's nest supplier listed on the LEAP Market since August 2019, plans to transfer to the ACE Market on Bursa Malaysia. The move aims to support its expansion by providing access to a larger platform. As part of the transfer, the company will undertake an IPO offering 131.3m shares, representing up to 22.59% of its enlarged share capital. The final IPO price is yet to be determined. (The Edge)

Minetech Resources Bhd (MINETEC) has secured a RM36.79m contract to upgrade the sewage system in Terengganu. Awarded by Puncak Utara Sdn Bhd, the project covers the Ketengah Jaya, Bukit Besi, and Seri Bandi areas, and is expected to be completed by June 23, 2027. (The Edge)

Signature International Bhd (SIGN) is selling two parcels of freehold land in Negeri Sembilan's Techpark @ Enstek Phase 2 for RM25.7m. The proceeds will be used to pay off intercompany loans and bank borrowings, with an estimated gain of RM3.71m. (The Edge)

Seng Fong Holdings Bhd (SENFONG) reported a significant increase in net profit to RM16.5m for 4QFY2024, a fivefold rise from RM2.98m in the previous year, driven by higher sales volume and reduced diesel costs from operating biomass systems. Revenue grew 38.7% to RM331.3m from RM238.8m, with sales volume in the processing segment up 18.7%. The company declared a fourth interim dividend of 1.5 sen per share, bringing total FY2024 dividend to 5.50 sen per share. (The Edge)

Mr DIY Group (M) Bhd (MRDIY) said its second quarter net profit rose 3.3% to RM155.21m, from RM150.32m a year earlier, driven by higher revenue but offset by increased expansion costs. Revenue for the quarter rose 8.8% year-on-year to RM1.19b from RM1.1b, primarily driven by positive contributions from new stores. The company declared a second interim dividend of 1.2 sen per share, payable on September 13. (The Edge)

Axiata Group Bhd’s (AXIATA) 63%-owned tower company, Edotco Group Sdn Bhd, signed MOUs with Malaysia Digital Economy Corporation (MDEC) and Boost Holdings Sdn Bhd to boost Malaysia's digital economy. The MOU with MDEC includes offering advisory services and preferential rates for advanced digital infrastructure, including 4G and 5G connectivity, low-orbit satellites and smart city solutions. (The Edge)

Source: Mplus Research - 14 Aug 2024