China Stimulus Packages To Shore Up Sentiment

Market Review

Malaysia: The FBM KLCI (+0.30%) rebounded despite a volatile trading session as Utilities heavyweights, namely TENAGA, boosted sentiment on the local front after securing a new deal to supply 100 MW to Singapore. Also, China's new economic stimulus program improved the sentiment in the Asian markets.

Global markets: The Nasdaq extended its gains, buoying Wall Street as NVIDIA shares jumped 3.79%, while traders largely shrugged off grim consumer confidence data. Meanwhile, both the European and Asian stock markets also closed on a positive note following China’s new economic stimulus policy.

The Day Ahead

The FBMKLCI rebounded after a 2-day sideways movement, as sentiment turned more bullish following China's release of a slew of stimulus packages to boost its struggling economy and markets. Meanwhile, the US stock markets brushed aside weaker-than-expected data from both (i) consumer confidence and (ii) the Richmond Manufacturing Index. Traders continued to push the markets higher, ending the session on a firmer note, with both the Dow and S&P500 charging toward record closings. In the commodities market, Brent oil rebounded above USD 75, while crude palm oil prices surged above RM4,000, driven by China's stimulus measures. Gold prices also rose, climbing above the USD2,650 zone.

Sector Focus: Given the positive sentiment from China, we expect a rebound in overall demand for commodities. Upside potential is likely within commodities- related sectors such as Oil & Gas, Plantation, and Building Materials. Additionally, strong buying support on Wall Street may spill over to local stocks, especially small- cap companies. We also see opportunities in Construction, Property, Consumer, and Manufacturing sectors amid the strong ringgit environment.

FBMKLCI Technical Outlook

The FBM KLCI index closed higher towards the 1,670 level. Also, the technical readings on the key index were positive, with the MACD histogram extended another positive histogram, and the RSI stayed above 50. The resistance is envisaged around 1,690-1,695, and the support is set at 1,650-1,655.

Company Brief

Petroliam Nasional Bhd (Petronas) said that it is not considering legal action against the Sarawak government or Petroleum Sarawak Bhd (Petros) over gas distribution. A joint statement from the Sarawak premier's office, following a meeting between the parties, confirmed that ongoing discussions are likely to be concluded soon, with all parties agreeing to respect both federal and state laws. (The Edge)

Magma Group Bhd (MAGMA) is acquiring a 2.26-acre plot of land in Kuala Lumpur’s Persiaran Dutamas area for RM80m from Skyload Express Sdn Bhd, a company linked to its executive chairman Datuk Seri Lee Hock Seng. The acquisition, facilitated through a conditional sale and purchase agreement by Magma's wholly- owned subsidiary, Magma Kiara Sdn Bhd, is deemed a related-party transaction due to Hock Seng controlling 44% of Skyload by virtue of his 80% interest in Empire Solaris Sdn Bhd, which owns 55% in Skyload. The other 45% in Skyload is held by former national badminton player Datuk Wira Lee Chong Wei. Magma plans to fund the purchase with RM8m in cash and by issuing 120m new ordinary shares priced at 20.24 sen each, along with redeemable non-convertible preference shares (RPS) priced at RM1 each. Following the acquisition and assuming full conversion of the RPS, Hock Seng's shareholding in Magma will increase to 28.35%, while Chong Wei will become a substantial shareholder with a 14.37% stake. (The Edge)

Retail convenience store chain operator MyNews Holdings Bhd (MYNEWS) posted a net profit of RM2.63m for the third quarter ended July 31, 2024 (3QFY2024), reversing a net loss of RM2.16m in the same period last year. This was partly helped by improved profit margin and higher share of profit in its jointly controlled entity. Revenue also rose 11.67% to RM207.47m from RM185.79m. The company declared an interim dividend of 0.5 sen per share, amounting to RM3.75m for the quarter under review. (The Edge)

Jewellery maker Poh Kong Holdings Bhd (POHKONG) closed FY2024 with record earnings of RM116.9m, a 49% increase from RM78.4m in FY2023, driven by rising gold prices. Annual revenue rose 11.7% to RM1.64bn from RM1.47bn. Net profit in the fourth quarter ended July 31, 2024 (4QFY2024) surged over fourfold to RM22m from RM4.98m, supported by strong demand for gold jewellery and investment products, while revenue grew 8.5% to RM342.5m from RM315.7m. The company has proposed a final dividend of three sen per share. (The Edge)

VS Industry Bhd (VS) reported a 107% increase in net profit for the fourth quarter, rising to RM126.66m from RM60.96m a year earlier, largely due to a one-off gain of RM46.7m from the partial disposal of its equity interest in a subsidiary and increased orders. Revenue also grew by 5.6% to RM1.21bn. The group declared a fourth interim dividend of 0.6 sen per share to be paid on Oct 26. (The Edge)

Harn Len Corp Bhd (HARNLEN) has signed an agreement to sell a land parcel in Johor Bahru for RM55m to Starsea Resources Sdn Bhd. The sale will generate a net gain of RM33.6m, as the land's net book value is RM16.8m. Harn Len plans to use RM29.4m for capital expenditure, including plantation and infrastructure improvements, and RM20m for operational costs. (The Edge)

Pesona Metro Holdings Bhd (PSONA) has secured a RM321.09m contract from Sime Darby Property (Golfhome) Sdn Bhd, which is wholly owned by Sime Darby Property Bhd (SIMEPROP), to carry out superstructure works for three condominium blocks in Jalan Bukit Kiara, Kuala Lumpur. The project will begin on October 11 and is expected to be completed within 27 months. (The Edge)

Digistar Corp Bhd (DIGISTA) is looking to raise up to RM9m via a private placement of 30% of its share base to fund its new pay-TV venture and repay bank borrowings. (The Edge)

Scientex Bhd (SCIENTX) saw its net profit rise by more than 18% year-on-year (y-o- y) to RM135.8m in the fourth quarter ended July 31, 2024 (4QFY2024), up from RM114.89m, driven by higher contributions from its packaging and property segments. Revenue increased to RM651.3m from RM619.7m in the same quarter last year, mainly due to its industrial packaging products. The company declared a final dividend of six sen per share for 4QFY2024, to be paid on Jan 17, 2025. This brings the total dividend for FY2024 to 12 sen per share, up from 10 sen in FY2023. (The Edge)

Asia Poly Holdings Bhd (ASIAPLY) has reduced its stake in Dolphin International Bhd (DOLPHIN) to below substantial shareholder status after selling 10m shares on Sept 23. This transaction, which represents a 7.47% stake, leaves Asia Poly with 4.09m shares, or 3.05%. While the transaction price was not disclosed, the shares are valued at RM1.75m based on Dolphin's closing price of 17.5 sen on that date. (The Edge)

Yinson Renewables, a subsidiary of Yinson Holdings Bhd (YINSON), has fully launched its 97MWp Matarani Solar Plant in Peru. The plant, operational since July 2024, is now the second-largest solar energy producer in the country. It generates 260GWh annually, powering 62,000 households and reducing carbon emissions by over 56,000 tonnes per year. The facility comprises nearly 150,000 solar panels spread across 750,000 square meters. (The Edge)

Shah Alam-based fibreglass-reinforced plastic manufacturer WF Holding Ltd has filed for a Nasdaq listing to raise up to US$10m (RM42m) through an IPO. The IPO will offer twom new shares priced between US$4 and US$6 each, representing up to 8% of its enlarged share base. The funds will be used to expand production capacity, grow its workforce and support working capital. (The Edge)

Trading in Ecobuilt Holdings Bhd's (ECOHLDS) shares will resume on Sept 25 after the Court of Appeal ruled in the company's favour regarding a winding-up petition. Trading activity had been suspended since Aug 9 due to the petition filed by S-Form System Formwork, which was dismissed after Ecobuilt agreed to pay RM670,596 plus interest. Ecobuilt said that the ruling also means the winding-up petition has been permanently set aside and is no longer in effect. (The Edge)

Steel products manufacturer Eonmetall Group Bhd (EMETALL) is looking to raise RM8.64m by placing out up to 10% of its share base to fund its working capital. The group plans to issue up to 27.7m shares to independent third parties at an issue price to be determined, according to the group’s bourse filing on Tuesday. (The Edge)

Source: Mplus Research - 25 Sep 2024