Export-Oriented and Palm Oil Regain Their Shine

Market Review

Malaysia: The FBMKLCI (+0.07%) ended marginally higher, as gains in Industrial Products & Services and Plantation heavyweights were offset by losses in Health care heavyweights, namely IHH Healthcare, despite its strong prospects and robust earnings, which have spurred selling pressure in the sector.

Global markets: Treasury yields advanced, the dollar rebounded, and Wall Street extended its gains after the ISM PMI data showed positive growth in orders for the first time in eight months. Meanwhile, both the European and Asian markets ended closed on a negative note.

The Day Ahead

The FBMKLCI began the week on a soft note as healthcare stocks were sold off. However, we believe upward momentum could emerge during the window-dressing period. Meanwhile, the US markets were traded mostly higher, with the S&P500 and Nasdaq briefly hitting record highs, buoyed by gains in the Magnificent-7, while traders pricing in another December rate cut. The ISM PMI data showed that activity improved, with orders growing for the first time in eight months. Moving forward, traders will monitor key economic indicators, including (i) labour market updates (JOLTS, ADP employment, unemployment rate, and non-farm payrolls), and (ii) weekly unemployment claims. In the commodities market, Brent crude oil and gold prices traded flat, around USD 71-72 per barrel and USD 2,638 per ounce, respectively while CPO prices retreated marginally below the RM 5,000 mark.

Sector Focus: Following the positive performance in the US markets, we anticipate that buying interest could spill over into the local bourse, especially in (i) export- oriented stocks, which could benefit from the strengthening of USD, (ii) plantation stocks supported by earnings and momentum in CPO prices, and (iii) entertainment and aviation segments as the holiday season kicks off, such as Genting and AirAsia. Meanwhile, we like consumer stocks given their defensive characteristic and solid earnings seen in the recent quarterly results.

FBMKLCI Technical Outlook

The FBMKLCI is hovering below the 1,595 level, and all the moving average lines. The MACD Histogram, however has turned positive, but RSI is still trending below 50, indicating that the momentum is mixed at this juncture. The resistance is envisaged around 1,610-1,615, and the support is set at 1,575-1,580.

Company Briefs

Sime Darby Property Bhd (SIMEPROP) has signed an agreement for a 20-year lease of data centre facilities to Pearl Computing Malaysia Sdn Bhd for up to RM5.6bn, beginning as early as 2027. The property group is currently developing the additional data centre facilities at its 77-acre site at Elmina Business Park — which it described as Klang Valley’s largest freehold industrial business hub. The deal is also in line with Sime Darby Property’s strategy to increase its recurring income, and expand its investment and asset management (IAM) segment’s assets under management. The IAM segment contributed RM95.83m or just under 3% of its RM3.27bn revenue in the nine months ended Sept 30, 2024. (The Edge)

Yinson Holdings Bhd’s (YINSON) 49%-owned joint venture with PetroVietnam Technical Service Corp (PTSC) has executed a provision, charter, operation and maintenance contract with a unit of Murphy Oil Corp for a floating, storage and offloading vessel in Vietnam. The 500,000 barrels of oil equivalent capacity FSO, to be built for operations from 4Q2026, will be chartered for a firm period of 10 years. The contract comes with options to extend for up to five years, it said. In total, the contract has a value of up to US$416m (RM1.8bn). The two parties, through joint ventures, have been operating FSO PTSC Bien Dong 01 since 2013, and the floating production storage and offloading vessel PTSC Lam Son since 2014. PTSC Lam Son has a bare boat charter contract until the end of this year, while PTSC Bien Dong 01 has a firm charter until mid-2028, with options to extend up to 2033. (The Edge)

T7 Global Bhd (T7GLOBAL) won a contract from Jadestone Energy (M) Pte Ltd for the provision of Pan-Malaysia maintenance, construction, modification (MCM) and hook-up and commissioning (HUC) services for Package B3. The contract, won by T7's wholly-owned unit Tanjung Offshore Services Sdn Bhd, commenced from Oct 17 and will last five years until Oct 16, 2029. For T7, this is its third such contract having received two similar five-year awards, namely one from ExxonMobil Exploration and Production Malaysia Inc for Package B2 (Guntong), and another from IPC Malaysia BV for Package B3. (The Edge)

Pesona Metro Holdings Bhd (PESONA) has secured a RM181.8m contract for the construction of two blocks of 28-storey condominiums in Cyberjaya. The developer of the project, comprising 606 units of condominiums on Persiaran Semarak Api in Cyber 11, is Lakefront Residence Sdn Bhd, a wholly-owned subsidiary of Avaland Bhd (AVALAND). As of end-September, the group had an outstanding order book of RM2.3bn, comprising nine ongoing projects. (The Edge)

Datasonic Group Bhd (DSONIC) has clinched two contract extensions worth a combined RM81.24m from the Home Ministry. The first extension, valued at RM21.39m, inclusive of 8% sales and service tax (SST), covers comprehensive maintenance services for card personalisation centres at the National Registration Department (JPN). The second contract extension, valued at RM59.85m and exempt from SST, involves the supply of MyKad, MyTentera, MyPOCA raw cards and consumables for JPN. (The Edge)

Willowglen MSC Bhd (WILLOW) has clinched a RM79.2m contract from Singapore’s Public Utilities Board. The contract was awarded to its wholly-owned subsidiary Willowglen Services Pte Ltd. It involves the supply, design, installation and commissioning of supervisory control and data acquisition (SCADA) and telemetry systems, alongside construction and maintenance services. Set to commence on Dec 23, 2024 and conclude on June 22, 2032, this eight-year contract is expected to deliver steady revenue growth and strengthen Willowglen’s financial position, contributing positively to earnings in 2025 to 2032. (The Edge)

CapitaLand Malaysia Trust (CLMT) has entered into an agreement to acquire its first automated logistics property, Elmina Logistics Hub, for RM180m — expected to be completed in the first half of 2025. Among others, it has 19 loading bays with hydraulic dock levelers and a storage capacity for 30,000 pallets. The freehold property will be fully leased to Projek Tetap Teguh Sdn Bhd, a subsidiary of PTT Synergy Group Bhd, for 10 years upon completion. The lease, which includes built-in rent escalations, is expected to generate a gross annual rent of RM12.3m, offering a first-year gross yield of about 6.8% and brings CLMT’s portfolio to 11 properties, increasing the proportion of logistics and industrial assets to 6% from 3% of its total portfolio under management. (The Edge)

Annum Bhd (ANNUM), a Practice Note 17 (PN17) company, said it will work closely with its potential external auditor to resolve opening balance issues during the subsequent audit for the financial year ending Dec 31, 2024 (FY2024). This follows an independent assessment by Parker Russell, conducted in response to concerns raised by the company’s previous external auditor, SBY Partners PLT, which issued a disclaimer of opinion in Annum's audited financial statements for the 18-month period ended June 30, 2023. The disclaimer of opinion contributed to Annum, formerly known as Cymao Holdings Bhd, being classified as a PN17 company in May this year. The wood products manufacturer now has a five-month deadline to submit its regularisation plan. (The Edge)

Sunway Bhd (SUNWAY) founder and executive chairman Tan Sri Jeffrey Cheah Fook Ling and his private vehicle Sungei Way Corp Sdn Bhd have sold a combined total of 100m shares in the diversified company for RM485m or RM4.85 per share. Cheah sold 50m shares, reducing his direct stake in Sunway to 9.98% from 10.97% previously. Sungei Way Corp, which Cheah controls alongside his daughter Sarena Cheah Yean Tih and son Evan Cheah Yean Shin, also disposed of 50m shares. Following the transaction, Sungei Way's stake in Sunway dropped to 44.08% from 45.41%. Earlier this year, the founder of Sunway sold a portion of his shares while Sungei Way Corp placed out 150m shares in January at RM2.30 per share and 200m shares in May at RM3.52 per share. (The Edge)

Source: Mplus Research - 3 Dec 2024