Accumulation Zone Is Near

Market Review

Malaysia: The FBM KLCI (+2.47%) rebounded strongly as the index was lifted by the buying pressure in Utilities and Financials, partly reversing from Monday's brutal sell- off; more than 90% of the KLCI heavyweights ended on a positive note. All sectors were positive, with the Construction sector (+4.83%) rising the most.

Global markets: Wall Street ended higher lifted mainly by Tech stock as bargain hunting emerged, reversing the huge sell-off from the previous session. Traders will be monitoring the upcoming earnings season to reposition into the stock markets. Meanwhile, both the European and Asia stock markets ended mostly higher.

The Day Ahead

As expected, the market rebounded significantly with the emergence of bargain hunting activities after significant oversold conditions; the FBM KLCI jumped 2.47%. Meanwhile, the US stock markets ended positively but were still unable to close the earlier gap down move, rising around 0.76-1.04% on the three major indices. Still, we believe the market will focus on the Japanese Yen reverse carry trade incident and trade cautiously, thus upside could be limited for now. In the commodity markets, Brent oil extended its decline below the significant support of USD77, while gold price fell below USD2400, and the FCPO price trended sideways along USD2400, and the FCPO price trended nearer to RM3700.

Sectors Focus: We like the strongest rebound observed within the Construction, Property, and Technology sectors, which are riding along the data center secular theme amid oversold conditions, translating to heavy bargain hunting activities. Also, we favour selected Finance stocks within the uptrend phase. Besides, the improved results from Harta could provide decent buying support for the glove industry; note that Harta has started to reward shareholders with dividends after stopping for two years.

FBMKLCI Technical Outlook

The FBM KLCI index rebounded higher towards 1,574 level. However, the technical readings on the key index were mixed with the MACD histogram forming another negative histogram bar and the RSI rebounded from the oversold zone. The resistance is envisaged around 1,589-1,594 and the support is set at 1,554-1,559.

Company Brief

Hartalega Holdings Bhd (HARTA) posted a net profit of RM31.9m or 0.94 sen per share for its first quarter ended June 30, 2024, a turnaround from the RM52.5m loss recorded in the previous financial year’s corresponding quarter. Quarterly revenue increased by 33% to RM584m from RM440m recorded in the corresponding quarter last year. It proposed a dividend of 0.35 sen per share. The group’s improved performance for the quarter was primarily due to a recovery in sales volume and increased average selling prices. (The Edge)

S P Setia Bhd (SPSETIA) officially launched the third phase of the Ferrous series of its Setia Alam Impian township development located in Shah Alam last Saturday (Aug 3). Dubbed Ferrous 3, it consists of 101 freehold units of two-storey terraced homes situated in Setia Alam Impian's Industrial Arts precinct. The homes have built- ups ranging from 1,950 to 2,204 sq ft and are priced from RM915,000 to RM1.42m. (The Edge)

I-Bhd (IBHD) on Tuesday broke ground for SkyCity in I-City, Shah Alam. It is a 60- metre tower featuring a 600-metre glass slide that is poised to be a new tourist attraction. The property developer said that with the addition of SkyWalk in i-City, the accelerated growth of bleisure — business and leisure — activities in Shah Alam, such as the opening of DoubleTree by Hilton last year and existing attractions in i- City, will continue to draw local and international travellers. (The Edge)

Chin Hin Group Bhd (CHINHIN) is acquiring a 65% stake each in two companies — an engineering and construction firm and a facilities and project management outfit — for RM51.51m in a cash and share deal. Chin Hin is acquiring the stakes in CSS Engineering & Construction Sdn Bhd (CEC) and Critical System Specialist Sdn Bhd (CSS) from two individuals, with total cash of RM26.51m and 7.91m shares at RM3.16 apiece of RM25m. (The Edge)

KPJ Healthcare Bhd (KPJ) said that it is not in a rush to inject more assets into Al- A’qar Healthcare REIT to raise fresh capital for its expansion plans. While the private hospital operator is exploring potential mergers and acquisition (M&As), president and managing director Chin Keat Chyuan pointed out that KPJ still has substantial financial resources available, noting that the company issued RM555m sustainability sukuk wakalah last year. (The Edge)

Keyfield International Bhd (KEYFIELD) said on Tuesday it has secured a contract worth US$10m (RM44.3m) to supply a maritime vessel for two years. The contract, which commences this September, is for subsidiary Keyfield Offshore Sdn Bhd (KOSB) to provide one unit of an 80MT bollard pull anchor handling tug supply (AHTS) vessel for Carigali-PTTEPI Operating Company Sdn Bhd, it said. The contract comes with a one-year extension option for another US$5m (RM22.2m). (The Edge)

Johor Plantations Group Bhd (JPG) is planning to raise up to RM3b through a seven- year Islamic Commercial Papers (ICP) Programme and a perpetual Islamic Medium Term Notes (IMTN) Programme based on the shariah principle of Wakalah Bi Al- Istithmar. JPG said the funds raised from the two sukuk programmes will be used to refinance any existing borrowings or shariah-compliant financings and for working capital, acquisitions, investments, capital expenditure and general corporate purposes. (The Edge)

Source: Mplus Research - 7 Aug 2024