Short Term Pause For Longer Term Uptrend

Market Review

Malaysia: The FBM KLCI (+0.66%) ended higher as the index was lifted by buying pressure in Telco & Media heavyweights as bargain hunting activities emerged, tracking the positive US performance last week. The Utilities (+2.83%) sector was the best performing sector led by YTL-related counters.

Global markets: Wall Street ended mixed as uncertainties persisted following last week’s brutal sell-off. Also, investors could be staying cautious ahead of CPI data that will dictate rate direction in September. Meanwhile, both the European and Asia stock markets ended mixed

The Day Ahead

The local market gained momentum throughout last week following a significant sell-off on Monday, as bargain-hunting activities emerged, forming a strong hammer pattern on the weekly chart. Similarly, in the US stock markets, after experiencing the "Black Monday" sell-off, traders scooped up shares, completely reversing the overall market downturn. We believe buying interest has returned, but traders will monitor upcoming important economic data, including (i) PPI, (ii) CPI, (iii) retail sales, and (iv) the manufacturing index, before committing further to the relief rebound. In the commodity markets, Brent oil traded near USD80 amid the ongoing geopolitical tension in the Middle East, while the gold prices gained momentum, trading above USD2420. The CPO price is in the downtrend phase, below the RM3800

Sectors Focus: All sector indices have recovered into a hammer candle, which should support overall buying interest. We continue to expect the Construction, Property, Building Materials, Utilities, and Technology sectors to benefit from the data center catalyst and the AI theme. Meanwhile, we favor the Consumer, Renewable Energy, Industrial Products, and Shipping sectors due to the stronger ringgit environment, and the Financial sector may be worth accumulating ahead of its results, given its decent dividend yield prospects.

FBMKLCI Technical Outlook

The FBM KLCI index ended higher towards 1,606 level. However, the technical readings on the key index were mixed with the MACD histogram forming another negative bar and the RSI hooked above 50. The resistance is envisaged around 1,621-1,626 and the support is set at 1,586-1,591.

Company Brief

Encorp Bhd (ENCORP), with Felda Investment Corp Sdn Bhd (FIC) holding 67.13% stake, has suspended group chief executive officer Hazurin Harun to facilitate an internal investigation related to allegations involving the Malaysian Anti-Corruption Commission (MACC).

The company did not disclose specifics but confirmed that three officers were arrested by the MACC on August 8. Encorp will support and cooperate with the MACC, continue business as usual, and has appointed group chief financial officer Kamarul Azman Kamarozaman @ Amir as officer in charge during Hazurin's suspension. (The Edge)

Maxis Bhd (MAXIS) and Huawei Technologies (Malaysia) Sdn Bhd have announced a strategic partnership to establish a joint innovation centre focused on developing 5G-advanced technology. The collaboration aims to enhance customer experience, improve operational efficiencies, and support rapid deployment of 5G solutions. The partnership will explore innovations in gigabit capacity, mobile edge computing, network slicing, and AI/ML applications to optimise network performance and advance Malaysia’s position in global telecommunications. (The Edge)

Icon Offshore Bhd (ICON) confirmed that an explosion occurred on its platform supply vessel, Icon Amara, off the coast of Sarawak on Aug 2. The incident, which took place at the Sapar Alpha platform near Bintulu, resulted in two deaths and serious injuries to a third person. (The Edge)

Carlo Rino Group Bhd (CRG) has received approval from Bursa Malaysia for its transfer from the LEAP Market to the ACE Market. The move involves an initial public offering (IPO) with a public issue of 171.87m new shares and an offer for sale of up to 87.98m existing shares, totaling a 26.58% stake available to investors. (The Edge)

Straits Energy Resources Bhd (STRAITS) plans to list its 76.68%-owned subsidiary, TMD Energy Ltd (TMDEL), on the NYSE American, an exchange for growing companies, by the fourth quarter of 2024, instead of Nasdaq as initially planned. The IPO is expected to raise between US$5.69m and US$15m, with issue prices ranging from US$3.25 to US$3.75 per share. TMDEL will use the funds to expand its oil bunkering segment and cover listing expenses, including up to RM50.93m for expansion and RM19.16m for listing costs. (The Edge)

The Employees Provident Fund (EPF) has become a substantial shareholder in SMRT Holdings Bhd (SMRT) for the first time, increasing its stake to 5.017%, or 22.73m shares. This follows the EPF's purchase of 250,000 shares on Aug 7 through Citigroup Nominees (Tempatan) Sdn Bhd. Nevertheless, the transaction price was not disclosed. (The Edge)

Recently-listed Well Chip Group Bhd (WELLCHIP) reported a net profit of RM14.28m in the second-quarter ended June 30,2024(2QFY2024), a 20% increase from RM11.9m in the first quarter. Revenue grew 16.6% to RM63.92m from RM54.82m in the previous quarter. The company, which did not declare a dividend, indicated that RM22.48m or 35.2% of revenue came from pawnbroking services, while RM41.44m or 64.8% was from retail sales and trading of jewellery and gold. (The Edge)

Censof Holdings Bhd (CENSOF) has secured a RM14.6m contract from the Penang Development Corp (PDC) for the provision of an enterprise-wide financial management information system. The development phase, valued at RM7.34m, will span one year starting Sept 1. This will be followed by a five-year maintenance phase worth RM7.3m, ending on August 31, 2031. (The Edge)

The chairman of Karyon Industries Bhd (KARYON) and independent non-executive director of Enra Group Bhd (ENRA), Loh Chen Yook, has become a substantial shareholder in Sycal Ventures Bhd (SYCAL). This follows Loh's purchase of eight million shares on the open market last Friday, increasing his stake to 6.82%. (The Edge)

Kumpulan Kitacon Bhd (KITACON) has secured a RM111.23m contract from Sime Darby Property (Bukit Raja) Sdn Bhd for constructing factories and industrial facilities in Klang, Selangor. The contract, awarded to its subsidiary Kitacon Sdn Bhd, includes building 27 detached factories with two-storey offices, one larger factory with a two-storey office, and two TNB substations with related infrastructure at Bandar Bukit Raja III. The project is set to start on September 2 and is expected to be completed within 23 months. (The Edge)

Mikro MSC Bhd (MIKROMB) plans to acquire TES Productions & Projects Pte Ltd, a Singapore-based sign and advertising display manufacturer, for RM30m in shares. A heads of agreement with Calida Group Pte Ltd was signed on Monday for the purchase. The acquisition will be paid with 134.83m new Mikro shares at 22.25 sen each, a 9.99% discount to the five-day average price. Mikro also proposed to expand into sign design, manufacturing, installation, and interior fit-out services. (The Edge)

Pekat Group Bhd (PEKAT) has secured a RM21.78m contract from Gamuda Engineering Sdn Bhd for installing earthing and lightning protection at a data centre. The subcontract, awarded to Pekat’s wholly-owned subsidiary Pekat E & LP Sdn Bhd (PELP), involves construction, testing, and commissioning of the systems. The work is set to complete by Sept 30, 2025, with the main contract’s substantial completion expected by Feb 27, 2026. (The Edge)

Petroliam Nasional Bhd (Petronas) on Monday introduced a supplier support programme (PSSP) to encourage Malaysia’s oil and gas services and equipment (OGSE) suppliers to adopt sustainability principles. The programme, in collaboration with the Joint Committee for Climate Change (JC3) , Bursa Malaysia, and the UN Global Compact Network Malaysia & Brunei, aims to provide suppliers with tools, training, and financing to enhance their sustainability practices, in alignment with the National Energy Transition Roadmap. (The Edge)

Source: Mplus Research - 13 Aug 2024