Market Review

The FBM KLCI closed lower on Friday at 1,633.6 (-0.5%), pulled down by losses, particularly from Public Bank. Among the index constituents, the top decliners were Public Bank (-5.7%), Sime Darby (-2.4%) and YTL (-2.0). Sector-wise, the negative performance was led by Financial Services (-0.6%) and Technology (-1.2%). Overall, the broader market breadth was negative, with 546 losers outweighing 420 gainers.

Economics

Malaysia: August wholesale and retail trade sales growth rate decelerates to 14-month low

Malaysia’s wholesale and retail sales grew at its slowest pace in 14 months in August amid deceleration in all subsectors, according to official data released on Friday. Wholesale and retail trade rose 4.7% to RM149.2bn in August, the Department of Statistics Malaysia said in a statement. The rate is the lowest since June 2023, and markedly slower than July’s 6.7% year-on-year increase. On a month-on-month basis, distributive trade edged 0.1% higher.

The overall growth in August was supported by a 5.9% increase in retail trade to RM64.1bn versus 6.4% expansion in July. The increase was primarily driven by non-specialized stores which climbed 7.8%. The wholesale trade expanded by 3.7% to RM66.2bn against a 5.5% gain a month earlier, mainly supported by sales of agricultural raw materials and live animals, which registered a 7.8% increase. The motor vehicle segment grew by 4.1% to RM18.9bn, decelerating sharply compared to the 12.2% growth in July. The segment was aided by a 9% increase in the maintenance and repair of motor vehicles despite a 0.5% decline in motor vehicle sales. (The Edge)

Malaysia: Manufacturing sales value rises 7.7% to RM163.9bn in August

The manufacturing sector’s August 2024 sales value reached RM163.9bn, reflecting a year-on-year (y-o- y) increase of 7.7%, versus a decline of 3.3% in the same month last year, according to the Department of Statistics Department (DOSM). However, the sector’s sales value moderated compared to the 9.1% growth observed in the preceding month. Chief statistician Datuk Seri Mohd Uzir Mahidin attributed the increase primarily to the double-digit growth in the food, beverages, and tobacco sub-sector at 16.1% (July 2024: 16%), and in electrical and electronics products at 10.4%. (Bernama)

US: Producer prices flat in September; details mixed

US producer prices were unchanged in September as a modest rise in the cost of services was offset by cheaper goods, pointing to a still-favourable inflation outlook and supporting views that the Federal Reserve would cut interest rates again next month. The unexpected flat reading reported by government on Friday followed data on Thursday showing consumer prices increased slightly more than expected last month. But some components that go into the personal consumption expenditures (PCE) price indexes were a bit firmer. The US central bank tracks the PCE price indexes for its 2% inflation target. (Reuters)

China: Flags more fiscal stimulus for economy, leaves out key details on size

China pledged on Saturday to "significantly increase" debt to revive its sputtering economy, but left investors guessing on the overall size of the stimulus package, a vital detail to gauge the longevity of its recent stock market rally. Finance Minister Lan Foan told a press conference Beijing will help local governments tackle their debt problems, offer subsidies to people with low incomes, support the property market and replenish state banks' capital, among other measures. These are all steps investors have been urging China to take as the world's second-largest economy loses momentum and struggles to overcome deflationary pressures and lift consumer confidence amid a sharp property market downturn. (Reuters)

Companies

Glostrext: Diversifies into power supply system with RM4.2m acquisition

Glostrext Bhd has proposed diversifying its business to include the trading of electrical appliances, generators, alternators and related products through the acquisition of a 70% stake, or 3.5m shares, in Powertecs System Sdn Bhd. Glostrext has signed a deal to purchase the shares from Powertecs’ shareholders Chen Song Wie and Ng Chuee Choo in a transaction that involves a combination of cash and shares, with a total purchase consideration of RM4.2m. According to the group’s bourse filing, RM2.1m will be settled in cash. The remaining will involve the issuance of 10m new shares in Glostrext, or 2.4% of its enlarged share capital, at an issue price of 21 sen per share. (The Edge)

Fajarbaru: To sell 44.4% stake in Australian property company

Construction company Fajarbaru Builder Group Bhd has proposed to dispose of its 44.4% stake in an Australian property development company in a related party transaction. The 44.1% stake in BFB Project Pty Ltd is being sold to Mayfair International Investments Pty Ltd — which owns the remaining 55.6% stake — for A$4.2m (RM12.1m), Fajarbaru said in an exchange filing. The sale was conducted on a "willing- buyer, willing-seller basis", with consideration given to an indicative valuation by KPMG Corporate Advisory Sdn Bhd, which valued the equity in the range of A$4.0m to A$4.3m, said Fajarbaru. (The Edge)

WMG: To acquire 70% stake in WMG, undertake general offer for remaining shares

Exsim Borneo Sdn Bhd and a person acting in concert have proposed to acquire a 70% stake in Sabah- based property developer WMG Holdings Bhd at 16.5 sen per share and make a general offer for the remaining shares at the same price. The offer price represents a discount of 70% to WMG’s closing price of 54.5 sen on Friday. Exsim Borneo, which is owned by Lim Aik Hoe and his brothers Aik Kiat and Aik Fu, have entered into an agreement with Syarikat Kretam (Far East) Holdings Sdn Bhd to acquire a 52.5% stake in WMG for a cash consideration of RM75.1m, according to the notice of mandatory takeover offer (MTO) issued on behalf of Exsim by AmInvestment Bank Bhd. (The Edge)

Rexit: Executive chairman resigns after six weeks on the job

Software-as-a-Service (SaaS) provider Rexit Bhd has announced the resignation of its executive chairman, Datuk Seow Gim Shen, just six weeks after taking on the role. Seow, 42, stepped down due to "personal commitments and the growth of his other new business ventures", Rexit's bourse filing on Friday showed. Seow still remains the company’s largest shareholder with a 23.3% stake. Seow was appointed executive chairman just last month, succeeding Datuk Ng Kam Chiu, who retired on the same day. Prior to that, he had served as Rexit's chief executive officer from early March, following the resignation of Datuk Chung Hon Cheong. (The Edge)

Barakah Offshore: Chairman Zaid Ibrahim resigns, founder Nik Hamdan steps in

Oil and gas company Barakah Offshore Petroleum Bhd announced the resignation of its independent non- executive chairman Datuk Mohd Zaid Ibrahim after five years at the helm. Barakah Offshore said Zaid, 73, has stepped down to "take a rest from work", according to its bourse filing on Friday. Zaid was appointed to the board on Oct 14, 2019, and does not hold any shares in Barakah Offshore. Zaid is a former Cabinet minister, having served under the administration of Tun Abdullah Ahmad Badawi as a minister in the Prime Minister’s Department, where he was responsible for legal affairs and judicial reform. (The Edge)

PUC: Announces another sale of software, IP rights

PUC Bhd has proposed to dispose of more of its software and intellectual property (IP) rights for RM19.5m cash, as part of its strategy to streamline operations and focus more viable and profitable ventures. The company said its subsidiary Presto Technology Sdn Bhd signed an agreement on Friday to sell the assets, which include patents, copyrights, trade secrets, and other proprietary rights, to IT consultancy and services firm Grenapps Solution Sdn Bhd. This comes after PUC announced in July that Presto Technology selling some of its software and IP rights for RM22m to G Solution Tech Sdn Bhd. (The Edge)

Alliance: Appoints Amirsham Aziz as new chairman

Less than two weeks after being appointed director of Alliance Bank Malaysia Bhd, Tan Sri Amirsham A Aziz has been named the bank’s new chairman. His appointment took effect on Thursday (Oct 10). Amirsham, former president and chief executive officer of Malayan Banking Bhd, replaces Tan Sri Ahmad Don, who passed away last month. Amirsham first joined Alliance Bank’s board as an independent, non- executive director on Oct 1. (The Edge)

Gadang: To sell leasehold land in Damansara Perdana for RM65m

Gadang Holdings Bhd is disposing a leasehold land in Damansara Perdana for RM65m to partially finance its existing construction projects and repay borrowings. “The key rationale for the proposed disposal is to strengthen Gadang Group's cash flow position and to reallocate its cash flow to its ongoing and future construction projects. It is also in line with Gadang Group’s strategy to pare down its existing borrowings to improve its gearing level,” the group told Bursa Malaysia. Of the gross proceeds of RM65m, RM49.7m will be allocated to part-financing of existing construction projects, RM13.7m for repayment of bank borrowings and RM1.6m for incidental expenses in relation to the proposed disposal. (The Edge)

Press Metal: Founder sells 6.3m shares for RM32.0m

Press Metal Aluminium Holdings Bhd executive director Datuk Koon Poh Kong has offloaded 6.3m shares, representing 0.1% in the aluminium company, for a total of RM32.4m. The shares were sold on Wednesday (Oct 9) through a direct business transaction at RM5.0853 per share, according to a filing with Bursa Malaysia. Following the stake disposal, Koon’s stake in the company was reduced from 2.082% to 2.006%. He is one of the key founders of Press Metal together with his brothers, group chief executive officer Tan Sri Datuk Koon Poh Keong, executive chairman Koon Poh Ming and executive directors Koon Poh Weng and Datuk Koon Poh Tat. (The Edge)

Source: Mercury Securities Research - 14 Oct 2024