Commodities Related Sector To Trend Firmer

Market Review

Malaysia: The FBM KLCI (+0.59%) ended higher, despite with the negative performance in the regional stock markets, boosted by selected Banking and Telco heavyweights. On the broader market, the Property sector (+1.20%) was the leading sector, while the Plantation sector (-0.32%) declined.

Global markets: Wall Street ended lower as due to a broad selloff in Tehcnology stocks as inflationary pressures weakened investors’ sentiment, meanwhile traders will be eyeing the upcoming FOMC meeting this week. Both the European and Asian stock market ended lower.

The Day Ahead

The FBM KLCI ended significantly higher for Friday led by a spike in most of the heavyweights; TM rose 8.51% for the session. Meanwhile, 3 of the major indices in the US closed lower on Triple Witching Day; Technology sector led the decline. This week, we believe the overall market conditions may turn cautious ahead of the Fed’s FOMC meeting. Also, traders could be monitoring some upcoming data such as (i) unemployment claims, and (ii) Flash Manufacturing and Services PMI. Despite the softer trading tone in the US, we expect the momentum to sustain on the local front, in view of the positive rebound in the regional markets lately. On the commodity markets, Brent oil trended firmer last week above the USD85/bbl level fuelled by stronger-than-expected US demand.

Sectors focus: With the positive commodities trend in crude oil and palm oil recently, we expect traders to focus on the O&G and Plantation sectors for the upcoming week. Also, resurfacing of the KL-SG HSR, albeit without any conclusion, could see higher trading activities within the Construction, Property, Utilities and Building Materials sectors. Besides, we like selected Technology stock as they have been gradually recovering in the recent quarterly results.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher for the 2nd consecutive day. However, the technical readings on the key index were mixed, with the MACD Histogram hovering flattish along 0, while the RSI is above 50. The resistance is envisaged around 1,565-1,570 and the support is set at 1,535-1,540.

Company Brief

Petroliam Nasional Bhd (Petronas), the country’s state-owned oil and gas (O&G) company, posted a net profit of RM16.6bn for the fourth quarter of 2023 (4QFY2023), down 32% from RM24.4bn a year earlier, due to lower average realised prices. Quarterly revenue dropped 12% to RM91.7bn from RM104.2bn. For FY2023, Petronas’ net earnings dropped 20.6% to RM80.7bn from a record high of RM101.6bn in FY2022, as revenue fell 7.7% to RM343.6bn from RM372.3bn. For FY2024, it plans to give out RM32bn as dividend and spend between RM50bn and RM60bn for capital expenditure. (The Edge)

Petronas Gas Bhd (PetGas) has made the final investment decision for the development of a new compressor station costing up to RM650m in Jeram, Selangor. The project involves construction of a two-unit gas compressor to boost capacity of the Peninsular Gas Utilities (PGU) pipeline network to meet rising demand for gas starting from 2026. This project is targeted to be completed in 2026. It is part of the PGU III expansion and falls under the incentive-based regulation framework, which will play a crucial role in determining the cost recovery of the project through the transmission pipeline tariff. (The Edge)

Binastra Corp Bhd has secured a contract worth RM369.95m from Exsim Jalil Sdn Bhd to build three blocks of apartments comprising 1,558 units, along with related facilities in Bukit Jalil, Kuala Lumpur. The project is set to be completed in 41 months. (The Edge)

Fajarbaru Builder Group Bhd has been awarded a minor works contract worth RM13.81m together with Avionics Pty Ltd, a wholly-owned unit of Avionics Holdings Pty Ltd for the partial delivery phase (early works) of redeveloping military facilities at the Royal Malaysian Air Force (RMAF) base in Butterworth, Penang. The total contract is RM13.81m, of which Fajarbaru's portion is RM11.04m, while Avionics’ portion is RM2.77m. The contract was awarded by the Australian Department of Defence. (The Edge)

Boost Bank Bhd, a digital bank venture by RHB Bank Bhd and Boost Holdings Sdn Bhd, an indirect subsidiary of Axiata Group Bhd, has received an additional RM8.5m from its shareholders. RHB Bank contributed RM3.4m to maintain its 40% stake, while Boost Holdings added RM5.1m to keep its 60% stake. This funding will support Boost Bank’s operational and capital expenditures for the first half of 2024 and ensure compliance with Bank Negara Malaysia’s minimum capital requirements. Following the transaction, Boost Bank’s paid-up capital stands at approximately RM215m. Boost-RHB is one of five consortiums awarded digital banking licenses by Bank Negara in April 2022. (The Edge)

Microlink Solutions Bhd plans to raise up to RM89.37m via a rights issue of redeemable preference shares (RPS) with detachable warrants to repay its bank borrowings and finance working capital. The issue will offer up to 89.37m redeemable preference shares (RPS) at RM1 each, with 268.1m free detachable warrants, on a basis of one RPS and three warrants for every 12 existing shares. The tenure of the RPS is five years and it has a dividend rate of 6% per annum based on the issue price. (The Edge)

CelcomDigi Bhd has proposed to change its auditor to PricewaterhouseCoopers PLT (PwC), replacing its retiring auditor Ernst & Young PLT. It also announced several boardroom changes, including the redesignation of the Telenor group's representative Haakon Bruaset Kjoel from his post as the group's non-independent and non-executive director to being its non-independent and non-executive deputy chairman. It also appointed Kasper Wold Kaarboe as its non-independent and non- executive director to fill the vacancy left by Kjoel. (The Edge)

Datuk Ahmad Nazri Abdullah, the non-executive chairman of Pertama Digital Bhd, has ceased to be a substantial shareholder after selling a 0.23% stake, or onem shares, valued at RM2.6m. This transaction reduced his shareholding to 4.77%, below the 5% threshold for substantial shareholding status. Known for the MyPay app and eJamin website app, Pertama Digital's current largest shareholders are Sim Tze Shiong, who holds a 23.04% stake in the company via Perfect Hexagon Commodity & Investment Bank Ltd, and executive director Sabri Ab Rahman, with a direct 2.33% stake and an indirect 10.04%. (The Edge)

KPJ Healthcare Bhd's Datuk Md Arif Mahmood will step down as its non- independent and non-executive chairman upon the completion of his two-year tenure on March 31. The 61-year-old assumed the position of chairman on April 1, 2022, just as the country was transitioning into the endemic phase of Covid-19. Md Arif will be leaving to pursue other interests, adding that the announcement regarding the appointment of the new chairman will be made in due course. (The Edge)

Underground utilities and substation engineering outfit MN Holdings Bhd has appointed Tenaga Nasional Bhd’s former chief executive officer Datuk Seri Baharin Din as its independent non-executive chairman. Baharin served as CEO of the national utility giant for three years from March 2021 to February 2024. He was also the managing director of Sabah Electricity Sdn Bhd from March 2007 to November 2011. His appointment as MN Holdings’ chairman is effective immediately. (The Edge)

Source: Mplus Research - 18 Mar 2024