Waiting For The Dust To Settle

Market Review

Malaysia: The FBMKLCI (+0.26) extended its gains, as Banking heavyweights, namely MAYBANK (+10.0 sen) and CIMB (+8.0 sen), boosted sentiment on the local front. However, upside is limited at this juncture, given the upcoming US Presidential Election and the FOMC meeting this week.

Global markets: Ahead of key global events, Wall Street ended the day on a stronger note, buoyed by gains in the Magnificent-7, such as NVIDIA (+2.84%), and robust corporate earnings from AI-related companies. Meanwhile, the European markets closed higher, while Asian markets ended mixed.

The Day Ahead

In tandem with the positive performance in Asian markets, the FBMKLCI gained momentum and closed higher. Wall Street also closed firmer, buoyed by gains in NVIDIA (+2.84%) and Palantir; the latter posted stronger-than-expected results, highlighting significant growth in AI-driven earnings. We believe the market will closely watch the US Presidential Election and the upcoming FOMC meeting, which could introduce significant volatility and help determine overall market direction. In the commodities market, Brent crude oil continued its rally as OPEC+ postponed production cuts and ongoing geopolitical tensions in the Middle East, contributing to stronger oil trading. Meanwhile, gold prices remained flat in the USD 2,730–2,740 range, while CPO prices retreated on profit-taking, ending below the RM 4,800 level.

Sector Focus: With the positive close on Wall Street overnight, we anticipate buying support may spill over to the local bourse, particularly within the Technology sector in the near term. Meanwhile, we favour the O&G sector given the rebound in crude oil prices, and we maintain a positive view on glove stocks as the ringgit continues to trend around RM 4.34/USD. Looking ahead to earnings, we expect a potential spike in Construction earnings driven by booming data center investments.

FBMKLCI Technical Outlook

The FBM KLCI index closed higher towards the 1,620 level. However, the technical readings on the key index were negative, with the MACD histogram remained negative, and the RSI is hovering below 50. The resistance is envisaged around 1,635-1,640, and the support is set at 1,600-1,605.

Company Briefs

Fraser & Neave Holdings Bhd's (F&N) net profit for the fourth quarter ended Sept 30, 2024 (4QFY2024) dropped 38.21% YoY to RM84.99m from RM137.56m, impacted by higher tax expenses and increased withholding taxes on dividends repatriated from its Thailand operations. The higher tax expense followed the expiration of a Board of Investment incentive for F&N’s Thailand food and beverage (F&B) division in 3QFY2024. Quarterly revenue was 1.61% higher at RM1.26bn from RM1.24bn, driven by higher domestic sales in both its F&B Malaysia and F&B Thailand segments, despite external challenges like geopolitical tensions affecting global trade and logistics, as well as unfavourable THB/MYR currency translation. F&N declared a final dividend of 33 sen per share. (The Edge)

Logistics service firm Xin Hwa Holdings Bhd (XINHWA) said its cargo transport unit’s licence to transport goods has been suspended by authorities, which it expects to adversely impact its operations. The Johor Bahru Land Public Transport Agency (Apad) suspended the licence of its wholly owned subsidiary, Xin Hwa Trading & Transport Sdn Bhd (XHTT), due to its failure to comply with safety requirements, specifically in ensuring that all goods vehicles under its operation were maintained in a condition deemed safe for use by the director general of Road Transport. “The suspension will take effect from Nov 13, 2024, to Feb 10, 2025, or until XHTT achieves full compliance with the Code of Practice for Industrial Safety (ICOPKeselamatan),” the group said. (The Edge)

IOI Corp Bhd (IOICORP) has allocated part of its aged plantation landbank in Johor to build a solar power plant, in a move to venture into the renewable energy sector, according to its managing director and CEO Datuk Lee Yeow Chor. The group did not disclose the land size, saying the project is still in its early stages. IOI Corp's total landbank in Johor spans 23,961ha, according to the group's latest annual report. Lee said the solar power project will be developed through a consortium comprising three or four partners, he told reporters after the group’s annual general meeting. The project is expected to generate additional revenue streams for the group, which is Malaysia’s second-largest palm oil producer. (The Edge)

T7 Global Bhd (T7GLOBAL) has secured a contract from ExxonMobil Exploration and Production Malaysia Inc for the provision of pan-Malaysia offshore maintenance, construction, modification (MCM) and hook-up commissioning (HUC) services. The contract is for Package B2 — Guntong and awarded to its wholly owned unit Tanjung Offshore Services Sdn Bhd. The contract is effective from Dec 1, 2024 for five years, with an optional extension of three years, followed by another two years. While the group did not disclose the contract value, it envisages that the award will contribute positively to its earnings and net assets during the tenure of the contract. (The Edge)

TCS Group Holdings Bhd (TCS) has secured a RM86.38m contract from Sime Darby Property Bhd (SIMEPROP) for the construction of 60 units of two-storey semidetached factories at the Elmina Business Park in Sungai Buloh. The two-year contract will commence in December, said TCS, adding it will fund the works via internal funds and borrowings. In a statement, TCS managing director Datuk Tee Chai Seng said this new job further supports the company's growth momentum, providing strong earnings visibility for the next two to three years. (The Edge)

Construction firm Aneka Jaringan Holdings Bhd (ANEKA) has secured a RM39m contract to undertake earthwork, piling, pile caps and contiguous bored piling works in Jalan Pantai Sentral, Kuala Lumpur. The three-phase contract was awarded to its wholly owned subsidiary, Aneka Jaringan Sdn Bhd, by GDP Architects Sdn Bhd on behalf of Murni Lapisan Sdn Bhd. The contract is set to commence on Nov 7, 2024, with completion expected by Mar 6, 2026. (The Edge)

Source: Mplus Research - 6 Nov 2024