Review & Outlook

Given the fresh sell signals triggered on daily slow stochastics momentum and MACD trend indicators for the FBM KLCI following last week's profittaking correction, further consolidation will be required this week to neutralize the short-term overbought momentum. Stronger buying momentum and more positive market breadth will be key for the local market to sustain the present uptrend. Meanwhile, worries over further slowdown in China's economic growth momentum and stubbornly high inflation forcing the US central bank to further hike or maintain interest rates at current high levels for longer will tend to cap recovery momentum on the local market.

On the index, immediate chart supports cushioning downside are from the recent low of 1,433, then 1420/1,400, while looking ahead, a convincing breakout above the 1,464 high and 1,470 backed by stronger buying momentum would be key to accelerate rise towards the 1,490/1,500 resistance level, with next upside hurdles seen at 1,517, the 200-week moving average level, and 1,552, which is the 50%FR of the 1,896 high (April 2018) to the 1,207 low (March 2020).

As for stock picks, key oil & gas lower liners such as Bumi Armada, Dialog Group, DNEX, Hibiscus Petroleum, Velesto and Wasco, and construction related counters like Gadang and Sunway Construction should continue to attract investors looking for longer-term recovery ahead.

News Bites

• Malaysia's economy grew 2.9% YoY in the 2Q23, driven mainly by privatesector expenditure amid improving labour market condition, continued increase in domestic demand, and higher tourism activities.

• Malayan Banking Bhd has allocated RM80mn for corporate responsibility programmes this year, which is part of its initiative to drive the environmental, social, and corporate governance agenda.

• CelcomDigi Bhd is confident of achieving its full-year guidance, which includes a targeted capital expenditure intensity ranging between 15% and 18%.

• Yinson Holdings Bhd is collaborating with global investment firm RRJ Capital to jointly develop energy infrastructure and technology projects globally, which will include the provision of US$300mn in financing.

• PIE Industrial Bhd is investing RM30mn to renovate two plants to manufacture box-build and printed-circuit-board assembly products.

• Kelington Group Bhd is confident it will deliver a commendable financial performance in FY23, underpinned by its strong outstanding order book RM1.77bn.

• icapital.biz Bhd will launch an innovative dividend policy to ensure the gap between the fund's share price and net asset value is auto-remedied.

• Iconic Worldwide Bhd is facing a lawsuit over a dispute concerning the installation of glove-dipping machines in its factory.

• CelcomDigi Bhd's net profit for the 2QFY23 jumped 56.1% to RM343.5mn from RM220mn a year ago, as revenue doubled to RM3.1bn from RM1.5bn on higher device sales.

• TIME dotCom Bhd posted a near 20-fold jump in net profit to RM2.3bn for 2QFY2023 from RM118.3mn a year earlier, thanks to a RM2.3bn gain from the divestment of its stakes in AIMS Data Centre Holding Sdn Bhd and AIMS Data Centre (Thailand) Ltd.

• UEM Sunrise Bhd posted a net profit of RM24.7mn in 2QFY2023 up 19.3% from RM20.7mn in 2QFY2022, due to higher share of results from joint ventures and associates.

• Kerjaya Prospek Group Bhd saw a 10.6% increase in net profit to RM31.6mn for 2QFY2023 from RM28.5mn a year earlier due to a record quarterly revenue.

• Kelington Group Bhd's net profit rose 41% YoY to RM19.1mn in the 2QFY23 following significant growth in all its key operating markets.

• Higher finance costs, depreciation and overheads pulled Swift Haulage Bhd's net profit down 26.3% to RM9.7mn in 2QFY2023 from RM13.2mn a year earlier.

• CSC Steel Holdings Bhd's net profit fell 12.7% YoY to RM14.9mn in the 2QFY23 from RM17.1mn, due to the absence of disposal gain of an investment property and lower revenue incurred during the quarter under review.

• Consumer prices in the Eurozone increased by 5.3% in July versus 5.5% in June, extending a downtrend that started last autumn.

Source: TA Research - 21 Aug 2023