Shifting Attention Towards Export Sectors

Market Review

Malaysia: In tandem with sluggish overnight performance on the US market, the FBM KLCI (-0.45%) closed lower after hitting an intraday high of 1,643, as PBBANK (-26.0 sen) dragged sentiment down on the local front as there will be shares overhang in view of Teh family reducing PBBANK shareholdings over the next 5 years.

Global markets: In tandem with US inflation slowing further alongside robust job growth in September, Wall Street closed higher, while the Dollar Index continued to climb to 102 level. Also, both European and Asian markets closed mixed, as heightened global trade risk later due to escalating tensions in the South China Sea.

The Day Ahead

The local market conditions stabilized despite the ringgit weakening last week, as traders anticipate a potential recovery ahead of the tabling of Budget 2025 this Friday. In the US, Wall Street saw record highs in the Dow and S&P 500, while the Nasdaq gained momentum after September's PPI data came in cooler-than- expected. This has led to the market pricing in a soft-landing scenario going forward. In the commodities market, Brent crude oil is trading below USD78 per barrel as disappointing Chinese inflation data over the weekend raised demand concerns. Meanwhile, gold prices held steady around USD2,650 as September's easing PPI data supported the metal. Crude palm oil rebounded, closing at RM4,350.

Sector Focus: With Budget 2025 on the horizon, we expect investor interest to concentrate on the Construction, Property, Building Materials, Utilities, and e- invoicing sectors. Additionally, the strengthening US dollar may shift attention toward export-oriented sectors such as Gloves and Technology. We also have a positive outlook on the Plantation sector, as the uptrend in crude palm oil prices remains stable.

FBMKLCI Technical Outlook

The FBM KLCI index closed lower at the 1,633 level. Meanwhile, the technical readings on the key index are improving, with the MACD histogram formed the rounding bottom formation, but the RSI is still trended below 50. The resistance is envisaged around 1,648-1,653, and the support is set at 1,613-1,618.

Company Brief

Less than two weeks after being appointed director of Alliance Bank Malaysia Bhd (ABMB), Tan Sri Amirsham A Aziz has been named the bank’s new chairman. His appointment took effect on Thursday (Oct 10). Amirsham, former president and chief executive officer of Malayan Banking Bhd (MAYBANK), replaces Tan Sri Ahmad Don, who passed away last month. Amirsham first joined Alliance Bank’s board as an independent, non-executive director on Oct 1. (The Edge)

Press Metal Aluminium Holdings Bhd (PMETAL) executive director Datuk Koon Poh Kong has offloaded 6.3m shares, representing 0.08% in the aluminium company, for a total of RM32.04m. The shares were sold on Wednesday (Oct 9) through a direct business transaction at RM5.0853 per share, trimming his stake in the company from 2.082% to 2.006%. (The Edge)

Oil and gas company Barakah Offshore Petroleum Bhd (BARAKAH) announced the resignation of its independent non-executive chairman Datuk Mohd Zaid Ibrahim after five years at the helm. Barakah Offshore said Zaid, 73, has stepped down to "take a rest from work". Zaid was appointed to the board on Oct 14, 2019, and does not hold any shares in Barakah Offshore. (The Edge)

Gadang Holdings Bhd (GADANG) is disposing of a leasehold land in Damansara Perdana for RM65m to partially finance its existing construction projects and repay borrowings. Its wholly-owned unit Gadang Construction Sdn Bhd inked a deal to sell the land, measuring 10,779 sq m, to property developer Opulent Abode Sdn Bhd. (The Edge)

Exsim Borneo Sdn Bhd and a person acting in concert have proposed to acquire a 70% stake in Sabah-based property developer WMG Holdings Bhd (WMG) at 16.5 sen per share, and make a general offer for the remaining shares at the same price. The offer price represents a discount of 70% to WMG’s closing price of 54.5 sen on Friday. Exsim Borneo, which is owned by Lim Aik Hoe and his brothers Aik Kiat and Aik Fu, have entered into an agreement with Syarikat Kretam (Far East) Holdings Sdn Bhd to acquire a 52.5% stake in WMG for a cash consideration of RM75.12m, according to the notice of mandatory takeover offer issued on behalf of Exsim by AmInvestment Bank Bhd. Simultaneously, Ben Kong Chung Vui, a person acting in concert with Exsim, proposed to buy an additional 17.5% in WMG from Syarikat Kretam for RM25m. (The Edge)

Pertama Digital Bhd (PERTAMA), whose share price dived to a more than four-year low on Wednesday, saw its non-independent and non-executive chairman Datuk Ahmad Nazri Abdullah reemerge as a substantial shareholder after raising his stake to 34.3m shares or 7.83% in the company. Pertama Digital said that Ahmad Nazri had bought an additional 4.14m new shares or 0.94% stake on Wednesday (Oct 9). Ahmad Nazri ceased to be a substantial shareholder in the digital services firm on March 15, when his shareholding dropped to 20.91m shares or 4.77% stake — falling below the 5% threshold required for substantial shareholding status. (The Edge)

Pharmaniaga Bhd (PHARMA) has secured funding from the government for research and development (R&D) of vaccines through the National Vaccine Production Development and Strengthening Fund (DPVN). The pharmaceutical group's wholly-owned unit Pharmaniaga Lifescience Sdn Bhd (PLS) has entered into a fund agreement with the National Institutes of Biotechnology Malaysia on behalf of the Ministry of Science, Technology and Innovation (Mosti). The fund agreement is effective from March 1, 2024, until May 31, 2027, or subject to earlier termination. The Practice Note (PN17) company, however, did not mention the value of the fund. (The Edge)

Construction company Fajarbaru Builder Group Bhd (FAJAR) has proposed to dispose of its 44.44% stake in an Australian property development company in a related-party transaction. The 44.14% stake in BFB Project Pty Ltd is being sold to Mayfair International Investments Pty Ltd — which owns the remaining 55.56% stake — for A$4.2m (RM12.11m). BFB director Chan Jiaheng is also the director and shareholder of Mayfair. The other shareholder of Mayfair is Teh En Yee. Chan and Teh are the son and daughter-in-law of Fajarbaru executive chairman Tan Sri Chan Kong Choy. (The Edge)

Oil and gas service provider Steel Hawk Bhd (HAWK) has been awarded an operational pigging supply and services contract by Petronas Gas Bhd (PETGAS). The three-year contract is on a call-out basis and so does not have a fixed value. It expects the contract to contribute positively to its earnings for the financial year ending Dec 31, 2024. (The Edge)

Kerjaya Prospek Group Bhd (KERJAYA) has filed a new lawsuit against Yong Tai Bhd (YONGTAI) and its chief executive officer Datuk Boo Kuang Loon over an alleged unpaid contract sum of RM105.14m related to a construction project in Melaka. Kerjaya Prospek stated that its wholly-owned subsidiary, Kerjaya Prospek (M) Sdn Bhd (KP), has served a writ of summons and statement of claim to Yong Tai and Boo. Yong Tai is being sued under the corporate guarantee, while Boo is being sued under his personal guarantee for the residual contract in dispute, which was signed between KP and Apple 99 Development Sdn Bhd, a wholly-owned subsidiary of Yong Tai, on Feb 25, 2020. In response, Yong Tai has filed another defence and counterclaim, asserting that KP failed to complete the construction work as agreed, leading to significant project delays. (The Edge)

Source: Mplus Research - 14 Oct 2024