Broader Market Remains Positive

Market Review

Malaysia: The FBMKLCI (+0.38%) ended higher despite the poor performance on Wall Street overnight. The index was likely supported by the local PPI data coming in stronger-than-expectations suggesting resilient economic activities. The Utilities sector (+1.81%) was the leading sector supported by the YTL counters.

Global markets: Wall Street rebounded strongly as the sentiment was lifted after Microsoft and Alphabet posted robust results, which continued fuelling the AI frenzy among investors, despite the flat PCE data, suggesting that the inflation remains sticky. Both the European and Asian stock markets ended higher.

The Day Ahead

After a 1-day pullback, the FBM KLCI regained its upward move and closed at a fresh 52-week high, while the FBM Small Cap is overall bullish as well. Similarly, the uptrend move on Wall Street has returned after Microsoft and Google registered better-than-expected results, while the core PCE data were within consensus estimates. This week, traders will be focusing on earnings from Amazon, Apple, Qualcomm and AMD, which are related to the Technology sector, while Mastercard, McDonald, Starbucks, Coca-Cola will be monitored under the Consumer sector. On the commodity markets, Brent oil remained rangebound along USD87-88, while gold price traded above USD2330 and the CPO is hovering below RM3,900.

Sectors focus: Generally, all the sub-indices have recorded 52-week highs this year, except for the Technology and Telco sector. Hence, we believe they might be playing catch up in view of the positive broader market, coupled with the KL20 summit catalyst, where Malaysia will be focusing on the Technology ecosystem going forward. Also, we like the Construction, Property, Utilities, Solar and Building Material segments on the back of higher demand for renewable energy under NETR, while we expect decent recovery in the mega infra projects this year.

FBMKLCI Technical Outlook

The FBM KLCI index charged higher above the 1570 level. The technical readings on the key index were positive, with the MACD Histogram extending another positive bar, while the RSI maintains above 50. The resistance is envisaged around 1,590- 1,595 and the support is set at 1,555-1,560.

Company Brief

Berjaya Corp Bhd (BCorp) has denied that its founder Tan Sri Vincent Tan Chee Yioun participated in talks to revive a US$100bn (RM477.60bn) Forest City casino resort as reported recently. BCorp said the article had included inaccurate information that misrepresented its supposed involvement in discussions with Prime Minister Datuk Seri Anwar Ibrahim regarding the Forest City project. (The Edge)

Capital A Bhd chief executive officer Tan Sri Tony Fernandes said the corporate exercise to merge AirAsia’s airline businesses under AirAsia X Bhd (AAX) is apparently sufficient to offset all of the RM8.7bn negative equity in the group. Using balance sheet numbers as at Dec 31, 2022 (FY2022), Capital A told Bursa Malaysia that this deal alone would give rise to a minimum positive equity of RM492.8m. “[Using FY2023 numbers] will be even better,” said Fernandes, “because as I said, we are profitable.” (The Edge)

YNH Property Bhd (YNH) said it has remedied the "technical default" involving its sukuk programme that led to a downgrade of the company's rating by MARC Ratings recently, and assured that it will maintain compliance to prevent further technical defaults. "The balance for the second monthly payment due April 26, 2024, has also been met by topping up the fund in the SPA account," YNH said, adding that it has issued a clarification to bondholders via Malaysian Trustee Bhd on the issue, as well as its mall sale proceeds, bond collateral and the appointment of a new auditor. (The Edge)

The Employees Provident Fund (EPF) has emerged as the second largest shareholder of aero-engine components manufacturer Sam Engineering & Equipment (M) Bhd, after Singapore's sovereign wealth fund Temasek Holdings Pte Ltd. The EPF bought one block of 45.09m shares or a 6.661% stake on Tuesday at an undisclosed value. Based on the counter's closing price of RM4.63 on Tuesday, the block of shares would have been worth about RM208.77m. (The Edge)

Doctor-turned-businessman Tan Sri Mohan MK Swami and his partner Datuk Seri Dr Shamir Kumar Nandy agreed on Friday to acquire a 58% stake in property management company Turiya Bhd for RM52.86m from MAA Group Bhd. The acquisition price of 40 sen per share represents a premium of one sen, or 2.6%, to Turiya’s last price of 39 sen. Under Malaysian takeover laws, Swami and Shamir will be required to make a general offer to acquire all the remaining shares not already owned by them. (The Edge)

Gadang Holdings Bhd has secured an RM280m contract to design and develop the Klang Valley Data Centre Block 2 in Cyberjaya from TM Technology Services Sdn Bhd. The contract was awarded to its wholly-owned unit, Gadang Engineering (M) Sdn Bhd, for two years from April 24, 2024 to April 23, 2026. (The Edge)

Software company Microlink Solutions Bhd said it has secured a contract worth RM56.45m to implement and maintain a new core banking system for Bank Islam Brunei Darussalam Bhd. Microlink’s unit Microlink System Sdn Bhd signed three agreements for software supply, service and maintenance for the project. The project is expected to be implemented in one year, beginning April 24, 2024. (The Edge)

Nestle (Malaysia) Bhd is slated to raise prices for 22 of its products starting July 1, according to the Federation of Sundry Goods Merchants Associations of Malaysia (FSGMAM). Among the products facing price hikes are Milo, Nescafe and Maggi Tomato Ketchup. FSGMAM president Hong Chee Meng noted that while the extent of price increases varies for each product, based on a back-of-the-envelope calculation, the overall increase stands at approximately 5% to 6%. (The Edge)

Wiradani Development Sdn Bhd — a property developer linked to the son of former finance minister Tun Daim Zainuddin — has filed a fresh winding-up petition against SPNB Aspirasi Sdn Bhd, a wholly-owned subsidiary of Syarikat Perumahan Negara Bhd (SPNB). The application will be heard by the High Court of Kuala Lumpur on May 21, 2024. This is despite a settlement having been reached between the two parties in October last year whereby both agreed that a sum of RM28m is to be set off against the RM37.89m owed to Wiradani. (The Edge)

D&O Green Technologies Bhd, which mainly makes automotive light-emitting diodes (LEDs), is optimistic of an at least 10% revenue growth this year and plans to build another facility in anticipation of “significant growth” over the next decade. The third plant, spanning one million square feet, is expected to generate annual revenue of RM2.0bn once fully operational. Construction is slated to begin in 2024 for two years for RM200m. (The Edge)

Homeritz Corporation Bhd’s net profit surged by 65.9% in the second quarter ended Feb 29, 2024 (2QFY2024) to RM9.24m due to increased sales volume and a stronger US dollar. Revenue surged 44.6% year-on-year to RM57.57m from RM39.8m. While it expects to remain profitable for FY2024, it has flagged that it is operating amid global economic uncertainties and facing increases in production costs and fluctuations in foreign exchange rates. For 6MFY2024, the group reported a 54% increase in net profit to RM18.29m, from RM11.88m a year earlier. Revenue increased 41.4% year-on-year to RM111.33m from RM78.74m. (The Edge)

Unisem (M) Bhd kicked off the financial year with its first-quarter earnings down 14%, compared to the year prior, dragged by a lower gross profit margin, foreign exchange losses and lower income from scrap sales. Net profit for the first quarter ended March 31, 2024 (1QFY2024) was lower at RM8.46m, compared with the RM9.86m it recorded for 1QFY2023. This was despite its quarterly revenue inching up 3% to RM364.77m, from RM354.05m previously, due to higher sales volumes, as well as an appreciation of the US dollar against the ringgit. (The Edge)

KNM Group Bhd said the oil and gas group and its wholly-owned unit KNM Process Systems Sdn Bhd filed an application on Friday to obtain the High Court’s nod for a new scheme of arrangement, and for a fresh restraining order against the scheme creditors. The PN17 group is also seeking a further extension of time to submit its regularisation plan. (The Edge)

KUB Malaysia Bhd has extended the deadline for its mandatory general offer for Central Cables Bhd (CCB) a second time to May 20 from April 30. The group, however, did not reveal its rationale for the extension. As of Friday, KUB controls a 97.34% stake comprising 51.59m shares in CCB. Last year, it said the acquisition would enable the group to venture into the manufacturing of power cables and wires. (The Edge)

Source: Mplus Research - 29 Apr 2024