Focusing On Ringgit Direction And Budget 2025

Market Review

Malaysia: Despite the positive overnight performance in the US market, the FBM KLCI (-0.04%) pullback marginally after reaching an intraday high of around 1,642, as PCHEM (-20.0 sen) and PMETAL (-19.0 sen) weighed on sentiment in the local market. Additionally, the Construction sector (+1.90%) was the best performer.

Global markets: In spite of key economic data set to be released today, Wall Street extended its gains, as traders remained confident in the US economy amid the better- than-anticipated job growth combined with the easing Middle East tensions. Meanwhile, European markets closed higher, while Asian markets ended mixed.

The Day Ahead

Overall, trading activity on the Bursa Exchange was mildly negative, with both the FBMKLCI and FBM Small Cap closing in negative territory, but attention was shifted towards the Construction and REIT sectors. Meanwhile, the US stock markets rallied, with both the Dow and S&P 500 reaching new all-time highs, and the Nasdaq breaking out as traders assessed the FOMC meeting minutes from September. Meanwhile, we expect traders to focus on the upcoming CPI and PPI data over the next two trading days to gauge the direction of the Federal Reserve’s monetary policy. In the commodities market, Brent crude oil saw another sell-off, falling below USD77 due to higher-than-expected crude oil inventories, while gold prices continued to retrace toward the USD2,600 level. Crude palm oil traded lower but holding firmly above RM4,200.

Sector Focus: As we approach Budget 2025, we expect investors to position themselves ahead of the event by trading in e-invoicing, Construction, Property, Building Materials, Utilities, and Consumer-related stocks. Also, the ongoing rally in CPO prices may lead to a positive trading sentiment in Plantation stocks. Moreover, with the ringgit showing a weakening bias compared to last week, sentiment could shift toward export-related stocks.

FBMKLCI Technical Outlook

The FBM KLCI index ended flat at the 1,634 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 1,649-1,654, and the support is set at 1,614-1,619.

Company Brief

Sapura Resources Bhd (SAPRES) is extending the leave of absence placed on its managing director Datuk Shahriman Shamsuddin for another month, according to sources. Shahriman, who together with his brother Tan Sri Shahril Shamsudin hold an indirect 51.47% in Sapura Resources, has been put on garden leave since Sept 11. He would have been on garden leave for one month by Thursday. (The Edge)

Souqa Fintech Sdn Bhd is mulling to take legal action against HeiTech Padu Bhd (HTPADU), following the latter's decision to terminate a deal to subscribe to new shares in the fintech company. HeiTech Padu’s unit Synergy Grid Sdn Bhd had on Monday aborted a plan to acquire a block of shares, equivalent to a 30% stake, in Souqa Fintech that operates the payment gateway PayHalal for RM16.17m. The proposal was announced by HeiTech’s board on Bursa Malaysia 10 days prior to that on Sept 27. (The Edge)

Atlan Holdings Bhd's (ATLAN) net profit rose 5.27% for the second quarter ended Aug 31, 2024 (2QFY2025), driven by higher revenue contributions from all business segments. Net profit for 2QFY2025 came in at RM3.98m or 1.57 sen per share, compared to RM3.78m or 1.49 sen per share in 2QFY2024. Revenue rose by 12.26% to RM118.93m, compared to RM105.94m over the same period last year. Atlan also declared a second interim dividend of 3.75 sen per share. (The Edge)

Berjaya Food Bhd (BJFOOD) has signed a master franchise agreement that would allow the company to exclusively operate Paris Baguette stores in Brunei and Thailand. The company has plans to open an unspecified number of stores across both markets by quarter three of 2025. Paris Baguette, which mainly sells French- inspired bakery products, is the flagship brand of South Korean food company SPC Group. (The Edge)

Fuel retailer Petron Malaysia Refining & Marketing Bhd (PETRONM) said its Port Dickson refinery in Negeri Sembilan will undergo an eight-week maintenance shutdown for furnace repairs. Despite the temporary closure, Petron assured that the supply of its petroleum products to Petron-branded petrol stations, liquefied petroleum gas customers, and commercial accounts will remain uninterrupted, ensuring no shortage in the market. (The Edge)

Property developer Tropicana Corp Bhd (TROP) has inked an agreement to dispose of 38.527 acres of freehold land in Johor to a data centre company for RM239.99m, marking its second land sale for such development in the region this year. Tropicana Firstwide Sdn Bhd, the group's wholly owned subsidiary, has entered into a sales and purchase agreement with Computility Technology (Malaysia) Sdn Bhd for the asset disposal. Computility Technology is principally involved in the provision of infrastructure for hosting, data processing services and related activities. (The Edge)

SkyWorld Development Bhd (SKYWORLD) and Perbadanan PR1MA Malaysia (PR1MA) have signed a joint development agreement to build PR1MA homes in Brickfields, Kuala Lumpur. The affordable housing comprises 491 units of apartments, where each unit will come with a built-up area of 900 sq ft. The project, known as SkyAwani Prima, will be built on a 1.97-acre leasehold land and will have a gross development value of RM191.49m. (The Edge)

Property developer LBS Bina Group Bhd (LBS) has awarded renewable energy company Solarvest Holdings Bhd (SLVEST) a contract to build a 43-MWp solar farm in Senawang, Negeri Sembilan, valued at RM104m. The solar farm is owned by Suria Hijauan Sdn Bhd, a consortium comprising Setara Armada Sdn Bhd which holds a 51% stake, MWG Solar Energy Sdn Bhd (29%) and Ocean Solar Energy Sdn Bhd (20%). Setara Armada is a wholly owned subsidiary of LBS Bina. (The Edge)

Construction firm Kumpulan Kitacon Bhd (KITACON) has secured a contract worth RM64.05m to undertake main building works for a proposed double-storey houses in Shah Alam, Selangor. Kumpulan Kitacon's wholly owned subsidiary Kitacon Sdn Bhd received the project from S P Setia Eco-Projects Management Sdn Bhd, a unit of property developer S P Setia Bhd (SPSETIA). The project involves the development of Phase 3 of Arundina which consists of 130 units of double-storey semi-detached houses and a unit of Tenaga Nasional Bhd (TENAGA) substation located specifically in Setia Alam. (The Edge)

Home furniture specialist Ecomate Holdings Bhd (ECOMATE) has proposed to acquire a single-storey factory in Muar, Johor, along with machinery and components, from SWS Capital Bhd (SWSCAP). It is part of the company’s plans to establish a new factory and warehouse, while securing permanent premises to support its business expansion. Ecomate will be buying the factory, situated on 8,217 square metres of leasehold industrial land, for RM7m, and pay another RM1.85m for the machinery and components. (The Edge)

Guan Chong Bhd (GCB) is seeking to take up a 25% stake in Ivory Coast-based cocoa manufacturing outfit Transcao Côte d'Ivoire (Transcao CI). Guan Chong’s unit GB Cocoa Singapore Pte Ltd has inked a memorandum of understanding with Transcao CI’s shareholders — Conseil Du Café (CCC) and its subsidiary Transcao Negoce, which underline exclusive negotiation rights for three months. If it goes through, the deal will see Asia’s largest manufacturer of cocoa-derived food ingredients further extend its footprint into Ivory Coast, the world’s largest cocoa bean origin country whose annual cocoa bean production of twom tonnes accounts for 40% of global supply. (The Edge)

Source: Mplus Research - 10 Oct 2024