Sentiment Mixed Ahead Of Jobs Report

Market Review

Malaysia: The FBM KLCI (-0.32%) extended its losses, dragged down by selling pressure in YTL-related counters due to one of its subsidiaries being questioned by the Malaysian anti-graft agency; in line with the overnight US market performance in view of softer US economic growth going forward.

Global markets: The Dollar Index fell, and Wall Street ended mixed as investors traded cautiously ahead of key economic data to be released later tonight. Meanwhile, both European and Asian stock markets ended lower following the weak job data reported in the US.

The Day Ahead

The negative sentiment persisted on the local front, leading to another round of broad-based sell-offs, with the technology sector being hit the hardest as the AI- driven rally fizzled out following Nvidia’s weaker guidance. Meanwhile, U.S. stock markets ended on a mixed note as August private payrolls grew by only 99k, the smallest increase since 2021 and well below the consensus estimate of 140k, signalling a weakening labour market. Looking ahead, traders will be closely monitoring the non-farm payroll report due later tonight, which could influence the extent of the interest rate reduction at the upcoming FOMC meeting. In the commodity markets, Brent oil remained below USD73 due to softer demand from China and the US, despite OPEC+ delayed a production hike for Oct and Nov. Gold prices remained above the USD2,500 level, and CPO prices hovered above RM3,900.

Sector Focus: We expect sentiment to remain negative on the local front, particularly within the technology sector, as the strong ringgit environment could lead to softer earnings going forward. Conversely, we favour select stocks within the Consumer, Construction, Building Materials, and Utilities sectors, which may benefit from the elevated ringgit. Additionally, we believe investors may focus on fundamentally solid companies with high dividend yields, given the current oversold conditions.

FBMKLCI Technical Outlook

The FBM KLCI index ended lower towards the 1,664 level. However, the technical readings on the key index were positive with the MACD histogram forming another positive bar and the RSI trended above 50. The resistance is envisaged around 1,679- 1,684 and the support is set at 1,644-1,649.

Company Brief

Inta Bina Group Bhd (INTA) has secured another construction contract from Sime Darby Property Bhd (SIMEPROP) worth RM96.55m to undertake main building and construction works for a 37-storey serviced apartment project in Putra Heights. Its wholly-owned subsidiary, Inta Bina Sdn Bhd, was awarded the contract by Sime Darby Property (Bukit Raja) Sdn Bhd. The project involves the construction of 246 business serviced apartments and 62 affordable business units, five levels of parking and other resident facilities. (The Edge)

Sentoria Group Bhd (SNTORIA) said Messrs Grant Thornton Malaysia PLT (GTM) has voluntarily resigned as the company’s external auditor. However, it did not specify the reason for its departure. Sentoria said it is now in the process of appointing new external auditors. Recently, the builder and developer has been in the spotlight due to a dispute with its former chief executive officer Datuk Loh Yuen Tuck. (The Edge)

Systech Bhd (SYSTECH) has teamed up with Pinetop Technology Venture Sdn Bhd to develop and operate data centres. The information technology services firm announced that its wholly-owned subsidiary, SysAIU Sdn Bhd, has entered into a collaboration agreement with Pinetop Technology Venture Sdn Bhd to establish, develop and operate data centres and other related business activities. (The Edge)

Kerjaya Prospek Property Bhd's (KPPROP) chief executive officer Joanne Lee Sor Phaik has resigned from her role after only slightly more than a year helming the property developer. Kerjaya Prospek Property said Lee, 54, had stepped down "to pursue personal interest". (The Edge)

IHH Healthcare Bhd’s (IHH) planned acquisition of Island Hospital is done at an attractive valuation and would deepen the hospital operator’s presence in the medical tourism market, analysts said. The price tag, which values the Penang- based hospital at forward enterprise multiple of 19.2 times, is “reasonable” and “attractive” given its high quality assets, said Hong Leong Investment Bank. The valuation is also lower than that of IHH’s past acquisition and others’ recent deals, the research house noted. (The Edge)

PPB Group Bhd (PPB) is optimistic about its 2H2024 outlook, saying that the strengthening of the ringgit against the US dollar could lead to higher consumer spending and reduced raw materials cost. “I think we are optimistic in all the segments, and it should be better than the first half, and [thus,] we are quite confident to deliver satisfactory results,” PPB group managing director Lim Soon Huat said. Lim said the stronger ringgit is favourable to the conglomerate’s procurement of raw materials, which are mostly imported. (The Edge)

Steel Hawk Bhd (HAWK), which has transferred its listing to the ACE Market of Bursa Malaysia via an initial public offering (IPO), said the group is bidding for more long- term Petroliam Nasional Bhd (Petronas) contracts and expanding its renewable energy business. “We are bidding for quite a number of long-term call-out agreement contracts [from Petronas] ranging from three to 10 years,” said deputy chairman and executive director Datuk Sharman K Michael. The company already holds 12 call- out contracts with Petronas, extending through 2027, he added. (The Edge)

Binastra Corporation Bhd (BNASTRA) has secured a construction contract worth RM283.33m for an apartment project in Kuala Lumpur. The contract is expected to contribute to its income over the next four financial years ending Jan 31 (FY2025 to FY2028). The project from Kaisar Maxim Sdn Bhd, owned by Maxim Global Bhd (MAXIM), involves main building works for the proposed development of three blocks of 31-floor apartments totalling 624 units in Taman Desa. (The Edge)

Source: Mplus Research - 6 Sep 2024