Review & Outlook

Stocks drifted lower Tuesday, as sentiment on the local front remained negative amid lack of positive catalysts, but key regional markets mostly rose as investors look ahead to U.S. economic data that will provide clues to the next steps from the U.S. Federal Reserve. The FBM KLCI lost another 2.47 points to close at 1,435.65, after ranging between high of 1,440.28 and low of 1,430.15, but gainers beat losers 511 to 348 on total turnover of 2.93bn shares worth RM1.94bn.

The overnight rebound on Wall Street should revive the local market today, but undertone remains cautious given rising geopolitical concerns abroad as well as lack of domestic positive catalysts. As for the index, immediate support will be at 1,400, with 1,390, and the end June low of 1,370 acting as crucial supports. Immediate overhead resistance remains at 1,450, with 1,465/1,470, and the 1,490/1,500 area acting as tougher upside hurdles, going forward.

Velesto is attractive to bargain for recovery upside towards the 27/02/23 high (28sen), with a convincing breakout above the 30sen to target the 123.6%FP (34sen) going forward. Crucial support is from the 61.8%FR (20ssen). Likewise, Wasco looks attractive to bargain at current levels for rebound upside towards the 138.2%FP (RM1.10), while a confirmed breakout should aim for the 150%FP (RM1.15) and 161.8%FP (RM1.20) ahead. Support from the 76.4%FR (83sen) and 61.8%FR (77sen) limits downside risk.

News Bites

• Wasco Bhd has bagged a US$33.9mn contract from Schneider Electric France for the supply of prefabricated buildings for a project in Africa.

• Privasia Technology Bhd has clinched a RM42.1mn contract from the Ministry of Education to provide information and communications technology equipment rental services in school computer labs in Perlis, Kedah, and Penang.

• TDM Bhd is acquiring an entire stake in Hospital Bersalin Razif Sdn Bhd, a private maternity hospital situated in Klang, for RM15.0mn cash.

• Duopharma Biotech Bhd has secured another 6-month contract extension until 31 December 2023 for the new approved products list to supply pharmaceutical and non-pharmaceutical products to government hospitals and clinics.

• K-One Technology Bhd has been appointed as the distributor of Norwegian fish oil products in Malaysia by Norwegian Fish Oil AS.

• The Penang Development Corporation will refund the deposit paid by Sunway Bhd's 70%-owned subsidiary Umech Land Sdn Bhd amounting to RM64.6mn, following the former's termination of the joint development agreement for the proposed development of Batu Kawan Industrial Park 2.

• AirAsia X Bhd achieved a sound passenger load factor of 80%, up 7 percentage points YoY, even as capacity surged over 9 times YoY to 1.0mn seats in 3QCY23.

• Bursa Malaysia Bhd is developing the Centralised Sustainability Intelligence Platform, to be used by both public listed companies and non-listed small and medium enterprises to assess their carbon emissions impact, disclose standardised environmental, social and governance data.

• Construction engineering solutions and services provider Plytec Holding Bhd, en route for a listing on the ACE Market of Bursa Malaysia, aims to raise RM37.1mn from its initial public offering.

• LPI Capital Bhd's 3QFY23 net profit increased 23.0% YoY to RM97.4mn as revenue advanced 14.8% YoY to RM498.4mn on higher contributions from the general insurance segment.

• Frontken Corporation Bhd's 3QFY23 net profit declined 23.0% YoY to RM26.7mn, dragged by higher withholding tax and lower foreign exchange gain.

• Globetronics Technology Bhd's 3QFY23 net profit contracted 25.4% YoY to RM9.5mn as revenue fell 25.2% YoY to RM34.6mn on lower loadings and lower forex gain.

• Atrium Real Estate Investment Trust's 3QFY23 net profit fell 4.1% YoY to RM5.1mn on higher finance costs amid the higher interest rate environment.

• China will widen the country's 2023 budget deficit to around 3.8% from a previously set 3% after it approved a 1 trillion yuan sovereign bond issue and passed a bill to allow local governments to frontload part of their 2024 bond quotas.

• S&P Global's flash US composite PMI for October, which captures activity in both the services and manufacturing sectors, came in at 51 in October, up from 50.2 in September.

• S&P Global's purchasing managers' index in the euro area slowed to a three-year low in October, dropping to 46.5.

Source: TA Research - 25 Oct 2023