Looking Forward To FOMC Meeting

Market Review

Malaysia: Despite the rising positive sentiment in the global markets, the FBM KLCI (-0.09%) closed marginally lower as profit-taking activities emerged in selected banking heavyweights such as PBBANK (-5.0 sen) and CIMB (-7.0 sen). In the broader market, the Technology sector (+2.82%) was the best performer.

Global markets: The dollar index declined, and Wall Street extended its gains as sentiment was buoyed by the performance of the Magnificent-7 stocks, shrugging off hotter-than-anticipated PPI data. Meanwhile, both European and Asian stock markets ended the session higher.

The Day Ahead

The FBMKLCI declined marginally, but the Small Cap index managed to rebound as bargain hunting activities emerged in tandem with the crude oil price. Meanwhile, Wall Street managed to trade higher for the fourth session, despite core PPI data came in slightly above consensus estimates at 0.3%. Unemployment claims were also modestly higher, which gave rise to the market to continue speculate that the Fed will be introducing a rate cut next week. At this juncture, the expectation of the cut is at least 25 bps. In the commodities market, Brent oil continues to rebound, traded above USD72 as Hurricane Francine’s may affect the supply in the near term, while the gold price shot towards new high above the USD2555 level awaiting the rate cut next week. The crude palm oil was positive but still below RM3,900.

Sector Focus: The rebound in the US may spillover to stocks on the local front, specifically in the tech sector as they are significantly oversold, but upside may be capped due to the strong ringgit environment, where the earnings may be softer in the upcoming quarters. Meanwhile, on the flip side, the elevated RM tone could help our domestic sector such as Consumer, Financial and selected Utilities. We also favour Construction and Building Materials as we believe the data center projects may start to materialise into earnings of the construction sector going forward.

FBMKLCI Technical Outlook

The FBM KLCI index closed lower towards the 1,638 level. Additionally, the technical readings on the key index were negative, with the MACD histogram forming another negative bar and the RSI dipping below 50. The resistance is envisaged around 1,653-1,658 and the support is set at 1,618-1,623.

Company Brief

Creador Sdn Bhd has agreed to invest RM163.1m to acquire a 40% stake in CCK Consolidated Holdings Bhd’s (CCK) Indonesian unit, PT Adilmart. This amount is slightly lower than the RM170.3m initially proposed in May. The deal involves three tranches: the first is a 26.5% share acquisition for RM88.1m, while the remaining RM75m will come from share subscriptions in the second and third tranches. (The Edge)

Ecobuilt Holdings Bhd (ECOHLDS), which is under an interim liquidator, has secured a RM190m construction contract through its subsidiary Rexallent Construction. However, no project details were provided. The three-year contract is expected to boost the company's finances in 2024. Simultaneously, Rexallent Construction faces a winding-up petition from Strong Force (M) Sdn Bhd over a RM2.01m payment dispute, with no response from Rexallent after being notified in March 2024. (The Edge)

RHB Bank (RHBBANK) is in a legal dispute with Tokio Marine Life Insurance over a bancassurance deal. Tokio Marine claims it still has the right of first refusal under their agreement, which ends in December 2024, and has sued RHB to enforce this. RHB argues that Tokio Marine has already exercised this right but did not accept the offer. Analysts are concerned about how long the dispute might last, but believe RHB can easily find another insurance partner. (The Edge)

Tech firm Green Packet Bhd (GPACKET) said that four out of six investors, originally set to subscribe to its private placement of over 598m shares, have withdrawn from the exercise. The four investors — Dr Prem Kumar, Roberto Guiati, Chan Yok Peng and Ler Pei Fen — who were supposed to purchase 490m shares, mutually terminated their agreements on Sept 12, 2024. However, the subscription agreements with the remaining two investors, Chow Dai Ying and Tay Guat Eng, are still in effect. (The Edge)

Chin Hin Group Bhd's (CHINHIN) founder Datuk Seri Chiau Beng Teik is no longer a substantial shareholder in NCT Alliance Bhd (NCT) after selling a 3.58% stake, or 59m shares, in an off-market transaction. This reduces his shareholding to 4.48%, below the 5% required to be considered a substantial shareholder. The transaction price was not disclosed, but based on the closing price of 49.5 sen on Sept 9, the sale would have been worth RM29.65m. (The Edge)

Fiamma Holdings Bhd (FIAMMA) has signed an MOU with Guangdong-based Zhuhai Samyou Environmental Technology Co Ltd to establish an air conditioning production facility in Malaysia, marking Samyou's first plant outside of China. Samyou expects to launch the facility by mid-2025 and aims to achieve international sales of US$100m (RM434.2m) within the next three years. (The Edge)

Construction firm Binastra Corp Bhd's (BNASTRA) net profit for the second quarter ended July 31, 2024 (2QFY2024) surged 171.4% to RM22.86m from RM8.4m, driven by increased construction activities and the launch of five new projects. Revenue rose 157.5% to RM230.9m compared to the same period in 2023. The company did not declare a dividend for the quarter. (The Edge)

Oil and gas exploration and production (E&P) group Hibiscus Petroleum Bhd (HIBISCS) has proposed an additional 1 sen dividend per share for FY2024, bringing the total payout to 8.5 sen per share, up from 3.25 sen in FY2023. The company had previously forecasted a 7.5 sen dividend for FY2024. For FY2025, Hibiscus plans to pay a divided of at least 8 sen per share if Brent crude averages US$70-$79 per barrel, and up to 10 sen if it exceeds US$80 per barrel. (The Edge)

IOI Properties Group Bhd (IOIPG) plans to launch its IOI Industrial Park in Banting, Selangor by 2Q2024, and another in Melaka two quarters later. By the end of 2025, the group will have three industrial parks, including one in Iskandar Malaysia, Johor, which is expected to contribute up to 20% of the group's annual revenue. Based on its FY2024 revenue of RM2.06bn, this could contribute up to RM400m per year. (The Edge)

ITMAX System Bhd's (ITMAX) subsidiary, Southmax Sdn Bhd, has been appointed by the Tangkak District Council to manage 5,113 street parking bays for 15 years. The contract, the value of which was not disclosed, commenced on Sept 1, 2024, and runs until Aug 31, 2039. It will use a revenue-sharing model, with Southmax receiving 70% of revenue from parking collections and compounds. (The Edge)

MN Holdings Bhd (MNHLDG) has signed an MOU with Reservoir Link Energy Bhd (RL) to explore renewable energy opportunities. Under the agreement, MN Holdings’ unit MN Power Transmission Sdn Bhd and Reservoir Link’s subsidiary Founder Energy Sdn Bhd will collaborate on solar, biogas and biomass projects. They will exchange information, propose actions and evaluate the collaboration's effectiveness. (The Edge)

Source: Mplus Research - 13 Sep 2024