Positive US Tone May Extend To Local Bourse

Market Review

Malaysia: The FBM KLCI (-0.48%) extended its sixth consecutive decline and closed lower, dragged down by heavyweights like TENAGA and MAYBANK. The market is trading cautiously ahead of the US Presidential election, coupled with the IMF lowering the global growth forecast, which has contributed to the negative sentiment.

Global markets: The US market closed higher as investors ahead of the upcoming US election, while awaiting key corporate earnings and economic data which will set the stage for the next Fed rate cut decision. The European market closed higher, while the Asian market ended mixed amid the political uncertainty in Japan.

The Day Ahead

The FBM KLCI and FBM Small Cap began the week on a softer note as selling pressure persisted across the broader market. Meanwhile, Wall Street rebounded ahead of the US Presidential Election next week, with investors cheered positively as energy supplies remained unaffected by recent developments in the Middle East. Also, investors are awaiting quarterly financial results from major technology companies such as Apple, Microsoft, Google, Amazon, and Meta Platforms. This week, traders will closely monitor the US core PCE, US jobs data, and China’s manufacturing PMI. In the commodities market, Brent crude oil fell by more than 6%, closing near USD71 as Middle East tensions eased, while gold prices continued rallying toward an all-time high, and CPO prices remained above the RM4,500 level.

Sector Focus: With US markets turning positive after a stretch of selling, coupled with a strengthening USD, we believe buying interest may extend to the local market, particularly in the Technology and Glove sectors. Meanwhile, the O&G sector may remain muted due to softer Brent oil prices, but Plantation and Gold-related stocks could trend positively as CPO and gold remain in an uptrend. Besides, we favour selected Consumer, Construction, and Property stocks.

FBMKLCI Technical Outlook

The FBM KLCI index ended lower towards the 1,610 level. The technical readings on the key index are negative, with the MACD histogram has turned negative while the RSI is below 50. The resistance is envisaged around 1,625-1,630, and the support is set at 1,590-1,595.

Company Briefs

KLCCP Stapled Group (KLCC) has appointed Datuk Mohd Salem Kailany as chief executive officer of KLCC Property Holdings Bhd and KLCC REIT Management Sdn Bhd, effective Nov 1, succeeding Datuk Md Shah Mahmood. Salem, 55, a seasoned professional in the property development and real estate sector, will be stepping into the role to oversee KLCC REIT’s operational and strategic direction. He served as president and CEO of UDA Holdings Bhd in 2019, and was previously CEO at PNB Development Sdn Bhd and senior vice president at Sime Darby Property Bhd (SIMEPROP). (The Edge)

Genting Bhd (GENTING) has awarded two contracts worth a collective RM1.36bn to Indonesian and Chinese contractors to complete the onshore gas processing plant, connecting pipelines and supporting facilities for its floating liquefied natural gas (FLNG) facility that will be deployed in West Papua, Indonesia. In a press release, Genting said its 95%-owned indirect subsidiary PT Layar Nusantara Gas (PTLNG) has entered into a definitive agreement with China National Machinery Import & Export Corporation (CMEC) and Shandong Kerui Energy Development Co Ltd (Kerui) for the design, engineering and procurement activities for the onshore gas processing plant, connecting pipelines and supporting facilities (midstream infrastructure). The award is worth US$182.87m (about RM793.22m). PTLNG has also entered into a separate contract for the construction, installation and commissioning of the midstream infrastructure with a local Indonesian company, PT China Construction Yangtze River Indonesia, for a fixed lump sum contract price of IDR2.05 trillion (approximately RM566.79m). The midstream infrastructure is estimated to be completed in 25 months. Once it is completed, it shall be ready to receive raw gas from the Asap, Merah and Kido structures within the concession area of the Kasuri Block in West Papua, Indonesia. (The Edge)

Mah Sing Group Bhd (MAHSING) has signed a second partnership with Bridge Data Centres Malaysia Sdn Bhd, a company wholly-owned by Bain Capital, to expand a joint-venture (JV) data centre project named Mah Sing DC Hub@Southville City at the Southville City township in Bangi, Selangor. A press statement said the latest partnership will see the two parties developing additional plots of land adjacent to the initial one. The plots span 35.68 acres (14.44 hectares) and are poised to offer 200MW of power capacity. The data centre’s first phase is anticipated to commence operation by 2026. Bridge Data Centres will lead the design, construction and infrastructure development in the first phase. (The Edge)

Axis Real Estate Investment Trust (AXREIT) (Axis REIT) saw its third quarter net property income rise 12% to RM69.35m from RM61.90m a year earlier, as it recognised contribution from newly acquired properties. Its total revenue or trust income came in at RM80.27m, 11.8% higher than the RM71.81m it logged a year ago. The REIT, which focuses on industrial assets, declared a third interim income distribution of 2.35 sen per unit, payable on Nov 29. This brings income distribution to 6.90 sen per share year-to-date, up 0.65 sen compared with the 6.25 sen it paid in the same period last year. (The Edge)

Higher rental income provided a boost to IGB Real Estate Investment Trust (REIT) (IGBREIT) and IGB Commercial REIT’s (IGBCR) NPI for the third quarter ended Sept 30, 2024 (3QFY2024). IGB REIT’s NPI for 3QFY2024 rose 2.53% to RM114.11m from RM111.29m in the same period last year. Revenue increased 3.73% to RM155.27m, compared to RM149.68m in 3QFY2023. Distribution per unit (DPU) rose to 2.68 sen — payable Nov 29 this year — up from 2.60 sen in the same period last year. This brings total DPU for the nine months ended Sept 30, 2024 (9MFY2024) to 8.20 sen, compared to 7.77 sen in 9MFY2023. (The Edge)

PGF Capital Bhd (PGF), which mainly manufactures insulation products, saw its net profit more than double for the second financial quarter ended Aug 31, 2024 (2QFY2025), primarily attributed to its insulation segment, driven by strong demand from the Oceania market. Net profit for 2QFY2025 jumped to RM7.03m from RM2.94m in the corresponding quarter last year. Quarterly revenue stood 40.6% higher at RM42.38m, compared with RM30.14m previously, mainly driven by higher sales contribution from the insulation business. The group declared a first interim dividend of two sen per share, payable Nov 29. This will translate to a dividend payout of about RM3.9m. (The Edge)

ICT Zone Asia Bhd (ICTZONE) has filed for an initial public offering (IPO) as part of the information and communications technology (ICT) solutions provider’s listing transfer to the ACE Market from the LEAP Market. The IPO involves a public issue of 133m new shares and an offer for sale of up to 54.91m existing shares, according to its draft prospectus filed with Bursa Malaysia. The listing would offer investors a 23.62% stake at an undisclosed price in the company that has been listed on the LEAP Market since Dec 15, 2020. Its shareholders have approved the listing transfer following an extraordinary general meeting on June 21. (The Edge)

Source: Mplus Research - 29 Oct 2024