Identifying Budget Beneficiaries

Market Review

Malaysia: Despite the sluggish performance in the regional markets, the FBM KLCI (+0.02%) bucked the trend and extended its gains after a volatile intraday session, as utilities heavyweights like TENAGA and YTLPOWR boosted sentiment on the index, combined with the World Bank’s upgrade of Malaysia’s outlook.

Global markets: Wall Street saw a strong rebound, buoyed by gains in the Magnificent-7, like NVIDIA (+3.0%) and META (+1.39%), later due to the cooling geopolitical tensions in the Middle East, which pressured oil prices lower. Meanwhile, both the European and Asian stock markets ended on a negative note.

The Day Ahead

Despite Hong Kong experiencing a sharp decline after China's stock market reopened following the Golden Week holiday, the FBM KLCI managed to hold gains above the 1,630 level. Similarly, Wall Street rebounded as the risk premium from Middle East tensions eased after Israel delayed its response. This week, traders will be closely watching the release of the FOMC meeting minutes and key inflation data, such as CPI and PPI, to assess the direction of the Federal Reserve’s monetary policy. In the commodities market, Brent crude experienced a sell-off, dropping below USD78, while gold retraced toward the USD2,600 level. Crude palm oil also pulled back below RM4,300 as profit-taking activities emerged.

Sector Focus: Despite the pullback in most commodities, we believe the recent rebound in crude oil and the continued uptrend in crude palm oil will provide support to sectors such as O&G and Plantation. Also, with the ringgit softening to RM4.285/USD (from RM4.11/USD last week), Technology stocks may attract buying interest. Ahead of Budget 2025, traders may also focus on sectors like e-invoicing, Construction, Property, Building Materials, Utilities, and Consumer-related stocks.

FBMKLCI Technical Outlook

The FBM KLCI index ended flat at the 1,635 level. The technical readings on the key index were negative, with the MACD histogram formed another negative bar, and the RSI trended below 50. The resistance is envisaged around 1,650-1,655, and the support is set at 1,615-1,620.

Company Brief

A corporate development is brewing at Public Bank Bhd (PBBANK), sources say, with the country’s third-largest banking group by assets believed to be undertaking a potential acquisition of a related company. While it is not immediately clear which company it is, industry sources say the development may be in relation to LPI Capital Bhd (LPI). Trading in the securities of both companies will be suspended from 9am on Wednesday (Oct 9). Main Market-listed LPI Capital wholly owns Lonpac Insurance Bhd, a leading general insurance provider in Malaysia. LPI Capital’s latest annual report shows that, as at Jan 24, Consolidated Teh Holdings Sdn Bhd held a 42.74% stake (or 170.27m shares) in the insurer. Consolidated Teh Holdings is the private investment vehicle of the late Tan Sri Teh Hong Piow, the founder of Public Bank. Teh passed away in December 2022. (The Edge)

Ireka Corp Bhd (IREKA), a Practice Note 17 (PN17) construction company, has secured a sub-contract worth RM1.07bn for the upgrade of a section of the Pan Borneo Highway in Sabah. The four-year sub-contract, granted by Sabah-based Gammerlite Sdn Bhd, involves the upgrading of the road from Kampung Lomou Baru to Kampung Toupus. (The Edge)

Perdana Petroleum Bhd (PERDANA) has bagged two work orders worth a combined RM19.1m for the provision of two units of accommodation workboat. Perdana Nautika Sdn Bhd, the wholly owned subsidiary accepted the work order from DESN Marine Services Sdn Bhd, a wholly owned subsidiary of Dayang Enterprise Holdings Bhd. The work order is a related party transaction as Dayang is the controlling shareholder of Perdana Petroleum, with a 63.59% stake in the company as at April 5, 2024. (The Edge)

MClean Technologies Bhd (MCLEAN) plans to raise up to RM12.33m via private placement to acquire a plastic injection moulding business as part of its strategy to diversify its service offerings and revenue stream. MClean is also proposing to undertake a share capital reduction of RM35m for the purpose of rationalising the company’s financial position by eliminating its accumulated losses and to appropriately reflect the value of the underlying assets and financial position of the group. (The Edge)

Enest Group Bhd (ENEST), which is seeking a transfer from the LEAP Market to the ACE Market of Bursa Malaysia, has received approval from the exchange to waive the requirement to extend the exit offer to shareholders. Bursa has also granted the company an exemption from the need to appoint an independent adviser for the proposed transfer. The approval is conditional on the undertakings provided by all shareholders in their irrevocable written agreements remaining valid and binding until the completion of the transfer. (The Edge)

Sunsuria Bhd (SUNSURIA) has won the exclusive rights to operate new British international schools in Malaysia, Singapore, Taiwan, Hong Kong, Japan, South Korea, India and other regions across Southeast and South Asia. The rights were granted by Concord College International Ltd, which is owned by a UK-based educational charity that operates Concord College UK, a leading independent international school in Shropshire, England. (The Edge)

Media Prima Bhd (MEDIA) has clarified that Tan Sri Syed Mokhtar Al-Bukhary remains a substantial media group shareholder. This comes after Aurora Mulia Sdn Bhd’s confirmation in a letter that it still holds a direct interest of 353.82m shares, representing 31.9% of Media Prima, and Syed Mokhtar continues to hold his substantial shareholding in the company via Aurora Mulia. (The Edge)

Property developer Seal Inc Bhd (SEAL) said it needs more time to evaluate and negotiate the additional 10% stake buy in MSR Green Energy Sdn Bhd. Seal and the sellers have agreed to extend the deadline to enter into a definite agreement to Oct 30. It did not state the initial deadline for the deal. MSR is currently 20% owned by Seal. The planned purchase of another 10% would be a related party transaction as MSR is 40.8% owned by KVC Corp Sdn Bhd, which is linked to Seal’s 30.7% shareholder Aaron Chen Khai Voon. Separately, Seal has proposed diversifying into the renewable energy business, as the group seeks new business opportunities to improve its business resilience and diversify income sources from the investment in renewable energy. (The Edge)

Sime Darby Bhd (SIME) is expanding its electric vehicle offerings as it is set to bring Denza, a premium sub-brand by BYD, into Malaysia. Sime Darby's unit Sime Darby Auto Imports Sdn Bhd was appointed as the official importer for the Denza brand, while BYD Malaysia Sdn Bhd is the official distributor for Denza. Through Denza, BYD aims to provide Malaysians a more diverse, innovative and premium EV experience. (The Edge)

Source: Mplus Research - 9 Oct 2024