Profit Taking Activities To Spillover To Local Front

Market Review

Malaysia: Following the positive momentum on Wall Street, the FBM KLCI closed higher at 1641.97, gaining support from heavyweights like PBBANK (+9.0 sen) and MAYBANK (+12.0 sen). The Property (+2.51%) sector gained the most, as investors speculated it to be one of the beneficiaries for this Friday’s Budget announcement.

Global markets: Wall Street ended lower following the disappointing results of chip giant ASML (-16.26%), causing NVIDIA (-4.69%) and AMD (-5.22%) to decline after the announcement. Both the European and Asian markets ended lower, led by the energy sector and disappointing trade data.

The Day Ahead

Local stocks traded mixed, despite both the FBM KLCI and FBM Small Cap rebounded ahead of the tabling of Malaysia’s Budget 2025. In the US, profit-taking emerged as markets digested the latest corporate earnings, where technology giants were affected after ASML tumbled 16% following a weaker-than-expected 2025 sales outlook. Looking ahead, traders are expected to closely monitor upcoming economic data, including US core retail sales, US jobs data, and China’s GDP. In the commodity markets, Brent crude oil continues to weaken due to demand concerns and easing tensions in the Middle East. Meanwhile, gold prices remained firm, trading above USD2,660, close to an all-time high. The crude palm oil (CPO) market rebounded, closing near RM4,300.

Sector Focus: With the weaker ringgit position, traders are likely to shift their focus toward export-oriented sectors such as Gloves and Technology. Investors may further add exposure to sectors that could benefit from Budget 2025, including Construction, Property, Building Materials, and Utilities. Besides, some Plantation and Finance stocks with attractive dividend yields may appeal to those seeking defensive plays.

FBMKLCI Technical Outlook

The FBM KLCI index closed higher at the 1,641.97 level. Meanwhile, the technical readings on the key index are improving, with the MACD histogram turned positive, but the RSI trended below 50. The resistance is envisaged around 1,656-1,661, and the support is set at 1,621-1,626.

Company Brief

Renewable energy producer Cypark Resources Bhd (CYPARK) has formed a consortium to jointly explore and develop energy solutions for the 186ha German Technology Park in Ayer Keroh, Melaka. Cypark has signed a memorandum of agreement with its largest shareholder, Jakel Capital Sdn Bhd, and Melaka Corporation to manage the planning, generation and distribution of energy for the park, a project that could cost an estimated RM4bn. Jakel Capital will hold a controlling 51% stake in the consortium, followed by Cypark with 29% and Melaka Corporation with 20%. Jakel Capital also holds 21.47% in Cypark. (The Edge)

Malayan Flour Mills Bhd (MFLOUR) said there will be no second earnout payment from Tyson Foods Inc in relation to the consideration for its 49% equity disposal in Dindings Tyson Group (DTSB) to Tyson Foods. This resulted in the total consideration for the disposal of its 49% equity stake in DTSB amounting to RM289.916m, from its initial payment and the adjusted first earnout consideration, instead of RM420m if all disposal considerations were met. (The Edge)

Construction and property company PLB Engineering Bhd (PLB) has proposed to sell its 60% stake in a solar energy firm for RM19.8m cash to help repay its bank borrowings. The sale of the stake in PLB Green Solar Sdn Bhd — held through PLB's 85.71%-owned subsidiary PLB Terang Sdn Bhd — is expected to generate a profit of RM10.76m for PLB. The purchaser of the 60% stake, Koperasi Sahabat Amanah Ikhtiar Malaysia Bhd, is also buying the other 40% stake in PLB Green Solar from waste management and renewable energy firm Greenviro Solutions Sdn Bhd for RM13.2m. (The Edge)

IT services firm Infomina Bhd's (INFOM) net profit for the first quarter ended Aug 31, 2024 (1QFY2025) grew 10.25% from a year earlier despite a drop in revenue, thanks to a higher gross profit margin. The net profit rose to RM8.01m from RM7.27m, while revenue declined 17.84% year-on-year to RM46.18m from RM56.21m. The company did not declare any dividend for the quarter. (The Edge)

Furniture manufacturer Eurospan Holdings Bhd (EUROSP), which reported a fivefold surge in its first quarter net profit thanks to gains from property and investment disposals, has cautioned that it expects a more challenging business environment for the financial year ending May 31, 2025 (FY2025). The group made a net profit of RM23.34m for its first quarter ended Aug 31, 2024 (1QFY2025), over five times the RM4.13m it made in 1QFY2024. Revenue dropped to RM5.8m from RM6.89m. Eurospan declared a dividend of 20 sen per share for the quarter. (The Edge)

Yinson Holdings Bhd (YINSON) has appointed Lim Poh Seong as its independent non-executive director with immediate effect. Lim, 57, currently serves as the independent non-executive director for biscuit maker Hup Seng Industries Bhd (HUPSENG), renewable energy player Samaiden Group Bhd (SAMAIDEN), and vegetable wholesaler and distributor Farm Price Holdings Bhd (FPHB). (The Edge)

Perdana Petroleum Bhd (PERDANA) has secured a RM7.3m contract for the charter of an anchor handling tug and supply (AHTS) vessel. Perdana has signed the charter party agreement on Aug 30, with an addendum finalised on Oct 10, with RUHM Marine Sdn Bhd, for the deal. Perdana will provide the AHTS vessel, complete with crew and equipment, for continuous 24-hour service. The vessel will assist and support operations related to drilling rigs, offshore installations, derrick barges, towing, and anchor handling in the Sarawak region. (The Edge)

Source: Mplus Research - 16 Oct 2024