Buying Support To Spillover To Local Front

Market Review

Malaysia: The FBM KLCI (-0.21%) closed lower, dragged down by selling pressure in Industrial Products & Services and Banking heavyweights, namely SUNWAY (-2.0 sen) and CIMB (-1.0 sen), bucking the mostly positive performance in the regional markets.

Global markets: The Wall Street extended its gains as investors took cues from several Fed officials which were more dovish, despite softer manufacturing PMI data. Meanwhile, both the European and Asian stock markets also closed on a positive note as investors digested the BoJ and China's monetary policy.

The Day Ahead

Bursa Malaysia started the week on a negative note as profit-taking emerged following Friday’s rebalancing activities. Meanwhile, US stock markets traded higher (Dow and S&P500 charged to new all-time highs), boosted by remarks from several Fed policymakers, who suggested that the recent 50 bps rate cut was timely, with further dovish measures potentially coming within the next three months. In economic data, the US manufacturing PMI indicated contraction, while the services PMI remained above 50, signalling growth. In the commodities market, Brent oil fell below USD 74 due to weaker demand from China and a surprise slowdown in European manufacturing, dampening market sentiment. Gold prices stayed above USD 2,600, while crude palm oil surged to an 11-week high.

Sector Focus: With positive momentum on Wall Street, we expect buying support to spill over into the local market, particularly in the oversold Technology sector and small-cap stocks. The Construction, Building Material, and Property sectors may also see positive movement, driven by potential developments around the revival of the KL-SG HSR and the JB-SG SEZ following the return of the Malaysia King from the 4-day China visit. Additionally, the strong ringgit should benefit Consumer, Utilities, Financials, and Automotive stocks.

FBMKLCI Technical Outlook

The FBM KLCI index closed towards the 1,665 level. However, the technical readings on the key index were positive, with the MACD histogram turned into the positive territory, and the RSI stayed above 50. The resistance is envisaged around 1,680- 1,685, and the support is set at 1,645-1,650.

Company Brief

After a long wait, Sarawak will finally formalise a deal to raise its stake in Affin Bank Bhd (AFFIN) to around 30%. The state will ink a sale and purchase agreement with two of Affin Bank’s shareholders — Lembaga Tabung Angkatan Tentera (LTAT) and Boustead Holdings Bhd — in Kuching on that day, according to a media invitation to the event. LTAT currently has a 28.88% stake in Affin Bank, while Boustead, which is wholly owned by LTAT, owns about 20%. Sarawak is to acquire Boustead’s entire 20% stake in Affin Bank, as well as part of LTAT’s, thus enabling it to overtake LTAT as the lender’s largest shareholder with a stake of around 30%, The Edge reported back in Jan 31, citing sources. Sarawak currently holds just a 4.8% stake in Affin Bank. (The Edge)

Capital A Bhd’s (CAPITALA) aviation arm AirAsia Bhd expects its expanded domestic network and additional seats to boost revenue for the year by 10%. AirAsia is adding 2,000 weekly domestic flights and 150,000 seats across 40 key routes by the end of the year. The company hopes that AirAsia’s domestic market share would increase to 64% from 53% currently, with a total of 1.7m seats available for booking by December 2024. "This expansion is not just about increasing our capacity, but should reflect our ongoing commitment in making air travel accessible and affordable for all," said AirAsia Malaysia MD Datuk Captain Fareh Mazputra. (The Edge)

Pharmaniaga Bhd (PHARMA) has announced the resignation of PricewaterhouseCoopers PLT (PwC) as its external auditor. It had received a notice dated Sept 20, 2024 from PWC of its resignation voluntarily, pursuant to Section 281 of the Companies Act 2016. “The board noted that PwC has served as the external auditor for the company for the past 19 years, and the board agrees that the resignation and the subsequent appointment of new external auditors would allow a fresh perspective for the board and the company. The change is also intended to align with the group-wide approach to streamline its external auditors,” it said. Meanwhile, its board had approved the appointment of Ernst & Young as its auditor for the financial year ending Dec 31, 2024 (FY2024). (The Edge)

Investors had associated Globetronics Technology Bhd (GTRONIC) with the fate of another company following its auditor's resignation, which sent its stock tanking, erasing 38% of the company's market value in the past one month, according to executive chairman Kent Liaw Way Gian. The cessation of institutional funds as substantial shareholders in Globetronics were "understandable" following company guidance of lower dividend ahead, but the market selldown was sharper than expected, Liaw told The Edge. “One of the reasons for the shares’ sharp selldown is that investors associated us with Serba Dinamik due to KPMG's resignation [as the companies' external auditor], which is not the same but [this had] exacerbated the selling,” Liaw, who is also executive director of APB said. (The Edge)

Three directors have stepped down from APB Resources Bhd’s (APB) board amid a sharp fall in the company’s share price. The trio — independent and non-executive chairman Datuk Seri Abd Rahim Jaafar, independent and non-executive directors Chuah Seong Eng and Tan Teik Hsiung — did not seek re-election at the company’s annual general meeting held on Monday. Chuah, who was appointed to the board on March 1, 2024, holds a 0.34% stake in the company. Meanwhile, Abd Rahim and Tan were appointed to the board on June 14 and 15 last year respectively. The stock, which succumbed to heavy sell-down, has lost 59% this month alone. YTD, the stock has fallen 79% to 55 sen on Monday, a level it has not seen since February 2021. The sharp sell-down in APB share price was said to be triggered by the heavy selling in Globetronics’ (GTRONIC) shares recently since APB is the largest shareholder in Globetronics with a 10.37% stake. (The Edge)

ITMAX System Bhd (ITMAX) has been appointed by the Segamat Municipal Council (MPS) to operate 7,637 street parking in Johor's Segamat district, marking its fourth such contract in the state. The 15-year contract will see ITMAX's 65%-owned subsidiary secure 70% of the revenue generated from parking collections and parking compounds under a revenue-sharing model, with the MPS entitled to the remaining 30%. Aside from Segamat, ITMAX operates parking for the district of Kulai, Tangkak and Iskandar Puteri in Johor. (The Edge)

Apollo Food Holdings Bhd (APOLLO) reported a 26.66% year-on-year jump in its first quarter net profit, lifted by higher revenue amid an increase in domestic and export sales. It made a net profit of RM9.67m for its first quarter ended July 31, 2025 (1QFY2025), up from RM7.64m a year ago, while revenue grew 23.55% to RM72m from RM58.28m. Earnings per share rose to 12.1 sen from 9.55 sen a year before. No dividend was declared for the quarter under review. (The Edge)

KJTS Group Bhd (KJTS) has secured a contract worth RM23.75m for sub-contract work for a data centre in Sedenak Tech Park, Johor. The building support services provider said its unit, KJ Technical Services Sdn Bhd, had accepted the Letter of Award from Sunway Engie DC Sdn Bhd. It involves the commissioning and comprehensive maintenance of air-conditioning and mechanical ventilation pipework for the data centre. (The Edge)

Alliance Bank Malaysia Bhd (ABMB) announced the appointment of Tan Sri Amirsham A Aziz, former president and chief executive officer of Malayan Banking Bhd (MAYBANK), to its board. Amirsham will officially assume his position as an independent and non-executive director on Oct 1. He will also serve as a member of the executive committee. Amirsham, who is also the former chairman of Bursa Malaysia Bhd (BURSA), brings over 30 years of experience in the financial services industry. (The Edge)

Hamburg-based chemical marketing firm Helm AG is subscribing for shares of Ancom Nylex Bhd (ANCOMNY) that will give it control of 9.47% of the agricultural machinery manufacturer's shares through a private placement. Helm, whose sole shareholder is its chief executive officer Stephan Schnabel, is taking up 96.22m new Ancom Nylex shares at an issue price of RM1 under a conditional placement agreement inked on Monday, according to Ancom Nylex's filing to the local stock exchange on Monday. Ancom Nylex expects that the emergence of Helm as its substantial shareholder will enhance its presence in Europe, as well as in the North and South American markets. (The Edge)

Fiamma Holdings Bhd (FIAMMA) saw Casa Holdings Ltd cease to be its substantial shareholder after disposing of its entire stake in the electrical home appliance distributor. Fiamma said Casa had disposed of 14.12% or 74.89m shares in the company. However, the transaction price was not disclosed. The block of shares would have earned Casa over RM85.37m based on Fiamma's closing price of RM1.14 on Sept 19. (The Edge)

Source: Mplus Research - 24 Sep 2024