Highly Volatile Market Environment Expected

Market Review

Malaysia: In spite of sluggish overnight performance in the US, the FBMKLCI (+0.13%) rebounded, with SDG (+35.0 sen) and PBBANK (+4.0 sen) boosting the sentiment on the local front. The Plantation sector gained the most (+2.79%), amid CPO prices spiking to a two-year high.

Global markets: Despite weaker-than-anticipated job growth data, the US market saw a rebound after mega-cap tech stocks like Amazon posted stronger earnings results and heightened likelihood of more Fed’s rate cuts. Meanwhile, European markets closed higher, while Asian markets ended on a mixed note.

The Day Ahead

Last week, sentiment on the local bourse improved, with both the FBMKLCI and FBMSCAP edging higher. While the US NFP data came in weaker than anticipated, potentially influencing the Fed’s decision in the upcoming FOMC meeting, sentiment turned positive in the US as investors digested earnings reports from Apple and Amazon. However, this week we anticipate a volatile market environment ahead of the US Presidential Election and the FOMC meeting. In the commodities market, Brent crude oil surged amid ongoing geopolitical tensions in the Middle East, while gold prices retreated on profit-taking, ending near the USD 2,740 level. Meanwhile, CPO prices continued to rally, reaching a two-year high above the RM 4,700 level.

Sector Focus: Despite the ongoing market volatility, we believe the weaker ringgit at RM4.375/USD could lift sentiment in export-oriented sectors such as Gloves and Technology. Additionally, the Plantation sector is likely to trend positively in line with the CPO price rally, while the O&G sector could benefit from the rebound in oil prices amid unresolved tensions in the Middle East. For defensive plays, we favour the Consumer sector, with companies like MRDIY and 99SMART being attractive options.

FBMKLCI Technical Outlook

The FBM KLCI index ended at the 1,603 level and closed below all the moving average lines. The technical readings on the key index were negative, with the MACD histogram remained negative, and the RSI is approaching oversold level. The resistance is envisaged around 1,618-1,623, and the support is set at 1,583-1,588.

Company Briefs

Gamuda Bhd (GAMUDA) has secured a RM451.4m contract to build a data centre in Cyberjaya. The contract will cover the data centre’s foundational, civil, structural and architectural works. Works are expected to begin by December and be completed in the first quarter of 2026. The contract, a “fast-track project” awarded to a wholly- owned subsidiary of Gamuda by BCEI Malaysia Sdn Bhd, will begin to contribute in the current financial year ending July 31, 2025. (The Edge)

Parkwood Holdings Bhd (PARKWD), via its wholly-owned subsidiary Parkwood Templers Sdn Bhd, has acquired five parcels of freehold land in Rawang, totalling 32.3 acres (13.1ha), for RM30.9m. Parkwood said it has plans to develop this cluster of land into a contemporary landed residential enclave. The development is expected to be launched by the third quarter of 2026. (The Edge)

YNH Property Bhd's (YNHPROP) external auditor has cast doubt on the property developer’s financial statements for the financial year ended June 30, 2024 (FY2024), citing insufficient evidence for certain ventures and contracts. Morison LC PLT noted that during FY2024, certain turnkey contracts were terminated or deemed incomplete, leading to the reclassification of RM66.88m from inventories to other receivables, with the remaining RM1.03bn recorded as inventories. “Despite extensive audit procedures performed by us to address these developments, the outcome of the regulatory authorities' investigation remains unknown and the special independent review by the group is still pending completion,” the auditor said. (The Edge)

Rexit Bhd (REXIT) has appointed a unit of LGMS Bhd (LGMS) as an independent cybersecurity audit firm to reaffirm the company’s data security against breaches. This comes after two of the Software-as-a-Service (SaaS) provider’s major shareholders were sentenced to jail in a Singaporean court for participating in a conspiracy to illegally obtain data of over 9,000 people. Rexit said the appointment of LGMS’ wholly-owned LE Global Services Sdn Bhd serves as an additional pre- emptive measure after Rexit carried out its own internal audit — which it said is comprehensive, detailed and showed no data breaches — while its data security processes remain resilient against any threats. (The Edge)

Techna-X Bhd (TECHNA) now has until Nov 7 to submit its outstanding annual report for the financial period ended June 30, 2024, failing which the trading of its securities will be suspended the following day. The Main Market-listed company has failed to submit its annual report — including its annual audited financial statements, as well as the auditors’ and directors’ reports — to Bursa Malaysia Securities for public release within the stipulated time frame on Oct 31. When Techna-X announced via a bourse filing on Oct 29 that it would not be able to release its annual report by Oct 31, it did not disclose the reason why. (The Edge)

RGT Bhd (RGTBHD) said it is buying two leasehold industrial plots for RM16.8m, located in Simpang Ampat, Penang, to set up dedicated assembly and production lines for new customers and to enhance its production efficiency. The new properties, situated within the same industrial estate — Taman Perindustrian Bukit Minyak — are expected to result in cost savings in logistics and management, said RGT. The company plans to part-finance the purchase via bank borrowings and internal funds. It expects its gearing to increase from 0.39 times to 0.5 times following the purchase. (The Edge)

Bumi Armada Bhd (ARMADA) has secured a £50m (about RM283m) contract to provide a flare gas recovery system in the UK’s North Sea. Its wholly-owned Bumi Armada UK Ltd signed a four-year engineering, procurement, construction, installation, and modification agreement with EnQuest Heather Ltd on Oct 29 for the job. (The Edge)

Kimlun Corp Bhd (KIMLUN) has secured a RM128.52m contract to upgrade a portion of the Senai-Desaru Expressway, following a tender. Its wholly-owned Kimlun Sdn Bhd won the bid to upgrade the stretch of the highway from Jambatan Sg Johor (KM49.3) to Sg. Semenchu (KM58.7). The construction work is expected to be completed in the second quarter of 2027. (The Edge)

Pintaras Jaya Bhd (PTARAS) has secured two piling contracts in Singapore worth about RM175m. The contracts, which are set to commence this month, were secured through Pintary Foundations Pte Ltd, a wholly-owned unit based in Singapore. The name of the client was not disclosed. “The projects are to commence in November 2024 with construction periods of four and 30 months,” said Pintaras Jaya. (The Edge)

MMAG Holdings Bhd (MMAG) announced that its aviation arm MMAG Aviation Consortium Sdn Bhd (MAC) has received regulatory approval to operate a leasing business in Labuan. MMAG said MAC has obtained a letter of approval from the Labuan Financial Services Authority to establish MMAG Skyfleet Ltd, a wholly-owned entity based in Labuan dedicated to the leasing business. This approval will enable MMAG Skyfleet to engage in the leasing of aircraft and to manage the leasing of these assets within the aviation arm of the group. (The Edge)

Source: Mplus Research - 4 Nov 2024