Focusing On Buy-On-Dip Opportunity

Market Review

Malaysia: The FBM KLCI (+0.17%) ended higher lifted by the buying pressure in Plantation heavyweights, namely SDG (+20.0 sen) and KLK (+60.0 sen) as Malaysia gets India's backing in combating the anti-palm oil campaign; thus, investors were buying into the local Plantation sectors.

Global markets: Wall Street ended lower shedding about $900bn in market value despite the growing expectations of the interest rate cuts as investors were reducing their exposures from tech heavyweights following the global tech outage last Friday. Meanwhile, both European and Asia stock markets ended lower.

The Day Ahead

Still, the FBM KLCI managed to eke out marginal gains as foreigners remained net buyers for the 15th consecutive day, with cumulative buying value standing at RM1.74bn. In contrast, the US stock markets ended on a negative note after a global cyber outage triggered by Crowdstrike’s update contributed to selling pressure on technology-related stocks. Additionally, President Joe Biden decided to quit the election race and endorsed Kamala Harris as the Democratic nominee. This week, investors will be monitoring Flash Manufacturing and Service PMI, unemployment claims, core PCE, and US GDP data. In the commodity markets, Brent oil trended sideways in a consolidation phase around USD83, while gold prices dipped towards the USD2400-2410 range. The CPO price rebounded off RM3900 and traded with a positive bias.

Sectors Focus: With negative US overnight performance, we believe profit-taking activities may emerge in our local Technology sector. However, we believe this consolidation phase could be healthy for investors looking for buy-on-dip opportunities, targeting stocks within the Construction, Utilities, Building Materials, and Property sectors amid the ongoing data center catalysts. We also favour selected stocks in the Shipping sector amid the ongoing Red Sea tension, and Consumer, O&G and Telco.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher towards the 1,636 level. The technical readings on the key index were positive with the MACD histogram formed another positive histogram bar, and RSI continues to trend above 50. The resistance is envisaged around 1,651-1,656 and the support is set at 1,616-1,621.

Company Brief

Press Metal Aluminium Holdings Bhd (PMETAL) has inked a collaboration agreement with China’s Xi’an Jiaotong University to research and develop a carbon capture and utilisation model involving its manufacturing process. The agreement follows a memorandum of understanding signed between the two parties in August last year. The collaboration aims to develop an economically viable carbon capture and utilisation model, adding that the intellectual property rights will be jointly owned by both parties. (The Edge)

Sunway Construction Group Bhd (SUNCON), which in March won a RM747.8m contract from a US-based multinational technology corporation for the construction of a data centre in Selangor, announced the award of a sub-contract relating to the project worth RM417.8m. The sub-contract for the construction of the project's mechanical and electrical system was awarded to Sunway Engie DC Sdn Bhd, a joint venture company between Sunway Engineering Sdn Bhd (70% stake) and Engie Services Malaysia Sdn Bhd (30% stake). Sunway Engineering is a wholly-owned subsidiary of Sunway Construction Sdn Bhd, which is in turn an indirect wholly- owned subsidiary of SunCon. (The Edge)

Genting Plantations Bhd (GENP), in which Genting Bhd (GENTING) owns a 55.4% stake, is planning to buy two plots of land in Indonesia for RM593m, for property development. The plots, measuring 152ha, are located in Sentul City, in the Bogor Regency of the West Java Province in Jakarta. Its indirect subsidiaries had inked separate sale and purchase agreements with three vendors — PT Sentul City Tbk, PT Aftanesia Raya and PT Primatama Cahaya Sentosa — to buy the plots. (The Edge)

Automotive parts manufacturer MCE Holdings Bhd (MCEHLDG) has clinched a RM19.6m contract to supply electronic and mechatronic components for Perusahaan Otomobil Kedua Sdn Bhd's (Perodua) first electric vehicle. The components include multimedia display unit, instrument panel cluster, advanced driver assistance system, functional switches and interior lightings. (The Edge)

Fima Corp Bhd (FIMACOR) has secured a RM93.92m contract from the Ministry of Education to print and supply confidential documents to the ministry. The group, which is involved in manufacturing, plantation and property management, said the two-year contract was awarded to its wholly-owned subsidiary Percetakan Keselamatan Nasional Sdn Bhd. (The Edge)

EG Industries Bhd (EG), an electronics manufacturing services provider, has secured a confirmed purchase order valued at US$117m (RM545.67m) for 5G photonics related products. Its wholly-owned subsidiary SMT Technologies Sdn Bhd secured the PO from an unnamed existing key customer. (The Edge)

Trading of securities in Grand Central Enterprises Bhd (GCE) will be suspended on Monday (July 22) pending the release of a material announcement. The group is principally engaged in hotels and service apartments, the provision of limousine services and hotel management. It currently owns and manages five hotels under the Hotel Grand Continental brand. It also manages Hotel Grand Crystal, which is owned by an affiliated company. (The Edge)

CIMB Thai Bank PCL, 94.83%-owned by CIMB Group Holdings Bhd (CIMB), registered a net profit for the second quarter ended June 30, 2024 (2QFY2024) of 668.46m baht (RM86.27m), growing 24% from 538.75m baht in the same period a year earlier, driven by gains on financial instruments, investments and higher operating income. Gains on financial instruments climbed fourfold to 290.06m baht from 71.59m baht, while gains on investments soared to 175.26m baht from 34.86m baht. Total operating income rose by 5.52% to 3.51b baht from 3.33b baht. (The Edge)

Construction company Ingenieur Gudang Bhd (INGENIEUR) reported a net profit of RM6.48m for the second quarter, driven by gains from asset disposals and higher construction revenue. Net profit for the quarter ended June 30, 2024 was over 27 times higher than the RM234,000 it made for 2QFY2023. Revenue for the quarter more than doubled to RM12.29m — its highest since 4QFY2020 — from RM4.57m in 2QFY2023, due to new project acquisitions and improved progress recognition in the construction segment. (The Edge)

Malaysia Steel Works (KL) Bhd (MASTEEL) plans to raise up to RM31.69m by placing out 10% of its enlarged share base, primarily to fund its working capital. The company intends to issue up to 90.55m shares to third-party investors who will be identified later. The sum to be raised is based on an indicative issue price of 35 sen per share, a discount of 6.52% (or 2.44 sen) to the stock's five-day volume-weighted average price of 37.44 sen as of July 12. (The Edge)

Source: Mplus Research - 22 Jul 2024