Positive Sentiment May Take A Pause

Market Review

Malaysia: The FBM KLCI (+0.60%) closed higher, in line with the mostly positive performance of the regional markets, due to buying pressure in selected Banking, Plantation and Telco heavyweights. On the broader market, the Plantation sector (+1.35%) was the leading sector, while the Healthcare sector (-0.75%) declined.

Global markets: Wall Street closed higher as strong corporate earnings boosted the buying pressure, while traders will be eyeing the upcoming 2-day FOMC meeting. Meanwhile, both the European and Asian stock markets ended higher; the latter traded off their intraday highs on the back of the liquidation order on Evergrande.

The Day Ahead

The FBM KLCI closed above the 1,500 psychological level with high conviction price action, continuing its winning streak for the sixth session led by the banking heavyweights. Also, the US stock markets marched stronger for the session ahead of the FOMC meeting as well as earnings releases from the Technology giants this week. However, as the Hong Kong court orders liquidation of China’s Evergrande Group, we believe it may cause the overall sentiment to turn negative at least for the near term, translating to potential profit taking mode on the local front. Meanwhile, on the commodity markets, Brent oil maintained above the USD80/bbl amid the ongoing tension in the Middle East region, but the upside was capped due to the liquidation order of Evergrande.

Sectors focus: Profit taking activities may emerge within the recent strong rally sectors such as the Construction and Property sectors following Evergrande episode. However, with YTL winning another contract in Singapore, that should provide support towards the Utilities sector. We expect the buying interest to build up within the Plantation sector with firmer CPO prices recently. Also, the O&G sector is likely to be on the radar as the Brent oil price is above USD80/bbl.

FBMKLCI Technical Outlook

The FBM KLCI ended higher for the 6th consecutive session. The technical readings on the key index were positive, with the MACD Histogram extending another positive bar, while the RSI maintains above the 50 level. The resistance is envisaged around 1,520-1,530 and the support is set at 1,490-1,480.

Company Brief

YNH Property Bhd is planning to sell its Mont Kiara shopping mall, 163 Retail Park, to Sunway Real Estate Investment Trust (Sunway REIT) for RM215m, cash. Of the proceeds, RM110.94m will be used to redeem the property from its chargee, Public Bank Bhd. Another RM74.06m will be used for the group's working capital, while RM30m will go towards the repayment of borrowings. The proposed disposal is expected to be completed by the second quarter of 2024 (2Q2024), subject to approval being obtained at the group’s forthcoming extraordinary general meeting. (The Edge)

YTL PowerSeraya Pte Ltd, a unit of YTL Power International Bhd, has won the right to build, own and operate a hydrogen-ready combined cycle gas turbine unit with a capacity of at least 600 megawatts in Singapore. This follows a request for proposal called by the Energy Market Authority (EMA) of Singapore in July 2023. The power plant is estimated to cost S$800m (RM2.82bn) and is targeted to be completed by Dec 31, 2027. (The Edge)

Lotte Chemical Titan Holding Bhd (LCTitan) booked its seventh consecutive quarter in the red in the quarter ended Dec 31, 2023 (4QFY2023), which saw its losses narrow year-on-year amid lower feedstock costs and forex gains. Quarterly net loss came in at RM186.48m or 8.19 sen per share, from RM333.64m or 14.65 sen per share in 4QFY2022. The lower losses came despite a 10.26% decline in quarterly revenue to RM1.86bn, from RM2.07bn, which LCTitan attributed to lower sales volume amid slower economic activities in the region. Nonetheless, LCTitan’s FY2023 results saw its full-year net loss widen to RM780.29m, from RM731.06m, with a 23.68% drop in full-year revenue to RM7.65bn, from RM10.19bn. (The Edge)

Ireka Corp Bhd is transferring its 30% stake in two associates linked to The RuMa Hotel and Residences to joint venture partner Aseana Properties Ltd, as part of a settlement to a suit filed by Aseana Properties’ subsidiary last October. Ireka will also transfer back its 19.55% stake in Aseana as part of the settlement to the RM109.8m suit filed by ASPL M9 Ltd, in relation to a JV agreement signed between Ireka, ASPL and Urban DNA Sdn Bhd for the RuMa project development back in 2009. The shares represent a 19.55% stake in Aseana, and will leave Ireka Corp with 3.52% in the London-listed property player, from 23.07% currently. Together, the settlement is expected to result in a net financial impact of RM15.2m on the local-listed property player. (The Edge)

TMC Life Sciences Bhd has suspended the employment of Wan Nadiah Wan Mohd Abdullah Yaakob as its group chief executive officer (CEO), and as CEO of its subsidiary Thomson Hospitals Sdn Bhd. The powers, authorities and functions vested in her as CEO are suspended with effect from Monday until further announcement by the board, it said, without disclosing any reason for the suspension. The company will continue its business as usual and during the period of suspension, one of its directors, Dr Heng Jun Li Melvin, will be appointed as the acting group CEO, who will temporarily assume the duties and functions of group CEO. (The Edge)

Baskin-Robbins ice cream brand franchisee Scoop Capital Sdn Bhd has secured 78.42% of Apollo Food Holdings Bhd shares at the closing date of its takeover offer on Monday. In a statement on behalf of the company, AmInvestment Bank Bhd said the company had acquired 27.11% or 21.69m Apollo shares from other shareholders who had accepted the offer, while 0.37% or 293,200 shares are pending verification. Scoop Capital made an offer of RM5.80 per share, a premium to Apollo's closing price of RM5.62 on Monday. Apollo closed 14 sen or 2.43% lower, for a market capitalisation of RM449.6m. (The Edge)

Source: Mplus Research - 30 Jan 2024