Focusing On Tech and Gloves Amid USD Strength

Market Review

Malaysia: The FBMKLCI (+0.72%) extended its gains to close higher at 1,606.96 pts, with all the sectors ended positively except Energy and Transportation & Logistic. The KLCI index was mainly supported by utilities heavyweights like YTLPOWR (+25.0 sen) and YTL (+14.0 sen).

Global markets: Wall Street ended mixed ahead of key economic data set to be released later this week, while the Dollar strengthened after JOLTS data pointed to a reduced likelihood of a rate cut by the Fed. Meanwhile, both the European and Asian markets ended closed on a positive note.

The Day Ahead

The FBMKLCI extended its gains, closing above the key 1,600 psychological level. As the earnings season concludes, we anticipate the upward momentum to sustain with the start of the window-dressing period. Meanwhile, US markets traded mixed, with the S&P 500 and the Nasdaq briefly hitting record highs; JOLTS job opening exceeded expectations, indicating a stronger labour market. Going forward, traders will monitor key indicators like the unemployment rate, NFP, weekly unemployment claims, and commentary from the Fed. In the commodities market, Brent oil rose above USD73 driven by Iran crude sanctions and ahead of OPEC+ meeting. Gold traded flat following strong US jobs data, which hinted at a cautious approach to rate cuts by the Fed. CPO prices gained momentum and closed above the 5,100 level.

Sector Focus: with higher CPO prices and strong earnings from plantation stocks, we foresee trading opportunities in the Plantation sector. We anticipate the USD could strengthen further following the robust jobs data, which may benefit export- oriented stocks, such as Technology and Gloves. Also, we like selected industrial products, shipping and building material stocks, the latter of which may benefit as data center investment may materialise into earnings.

FBMKLCI Technical Outlook

The FBMKLCI ended higher, closing above the 1600 psychological level. Meanwhile, the MACD histogram formed another positive bar, yet the RSI is still trending below 50, indicating that the momentum is mixed at this juncture. Resistance is envisaged around 1,621-1,626, and support is set at 1,586-1,591.

Company Briefs

Binastra Corp Bhd (BNASTRA) said it has bagged a building contract worth RM327.74m to build two blocks of a 58-storey serviced apartment for The Vividz @ Bukit Jalil project. The company said the contract will commence on Dec 9, 2024, and construction works are to be completed within 42 months. With the latest win, Binastra has secured RM3.13bn worth of new contracts for FY2025, boosting its total outstanding order book to RM3.83bn. (The Edge)

Mah Sing Group Bhd (MAHSING) is acquiring 59.12 acres (23.93 hectares) of prime land in the Pulai district of Johor Bahru for RM62.98m, on which it wants to develop super-linked homes with an estimated gross development value (GDV) of RM463m. Mah Sing's unit Loyal Sierra Development Sdn Bhd has entered into sale and purchase agreements with Hau Enterprise Sdn Bhd and its shareholders — Chia Kim Heng, Chia Teck Heng, Low You Chone and Wong Moi Yong — to acquire the freehold land. This is the group’s fifth land purchase this year and third acquisition in Pulai, following the acquisition of land for M Tiara 2 (100.4 acres) in April 2024 and M Tiara (75.7 acres) in June 2023. (The Edge)

T7 Global Bhd (T7GLOBAL) has proposed to undertake a bonus issue of up to 197.35m warrants, on the basis of one warrant for every five shares held by shareholders. The entitlement date and the exercise price of the warrants will be announced later, the company said in an exchange filing on Tuesday. (The Edge)

JF Technology Bhd (JFTECH) is set to begin selling and distributing its products in the US by January 2025, following a cross-licensing agreement signed with US- based Ironwood Electronics in July. Instead of going directly into the market on its own, the company has opted for a cross-licensing agreement that allows Ironwood to promote and sell JF Tech's products across the US, Europe and other global markets. (The Edge)

VS Industry Bhd’s (VS) latest quarterly net profit dropped 37.53% from the previous year's corresponding quarter mainly due to lower sales orders from existing customers, unfavourable forex rates and higher labour costs as a result of an increase in headcount. Net profit for the first quarter ended Oct 31, 2024 (1QFY2025) fell to RM30.6m or 0.79 sen per share, from RM48.98m or 1.27 sen per share in 1QFY2024. Revenue slipped 2.58% to RM1.11bn from RM1.14bn. The group declared its first interim dividend of 0.4 sen per share, payable on Dec 31. (The Edge)

Solarvest Holdings Bhd (SLVEST) has proposed to acquire a 30% stake in Penang- based SIW Manufacturing Sdn Bhd (SMSB) to expand its presence in the clean energy and sustainable technology ecosystems. The group on Tuesday signed an agreement with the two shareholders of SMSB, Chan Chee Wei and Voon Sin Choo, to acquire the firm for RM36m. The acquisition will be funded through a combination of internally generated funds and debt financing. (The Edge)

Magni-Tech Industries Bhd (MAGNI), another cash-rich company on Bursa Malaysia, has declared a special dividend with the release of its latest second quarter results, which saw net profit rising 18.74% on higher revenue. It plans to pay a special dividend of 20 sen per share, along with a second interim dividend of three sen per share — as opposed to an interim payout of 2.2 sen in the corresponding 2Q last year — to shareholders on Dec 27. Magni-Tech said the higher second interim dividend was mainly "due to higher profit attributable to shareholders of the company" in its second quarter ended Oct 31, 2024 (2QFY2025). The group recorded a net profit of RM25.87m in 2QFY2025, or an earnings per share of 5.95 sen, up from RM21.79m in 2QFY2024 or 5.03 sen per share, largely driven by stronger earnings from its garment business, which was partly offset by lower performance in its flexible plastic packaging and corrugated carton segments. Revenue jumped 22% to RM350.83m from RM287.6m. (The Edge)

Financially distressed MMAG Holdings Bhd (MMAG) has taken a step forward in its recovery efforts by securing a partnership with Malaysia Airlines Bhd. The company has, through its subsidiary MJets Air Sdn Bhd, accepted a letter of award (LOA) from the national carrier to serve as the dedicated narrow-body freighter operator for MAB Kargo Sdn Bhd (MASKargo) from Jan 1 to Dec 31 next year. MASKargo is the air cargo arm of Malaysia Airlines. Both companies are units of the Malaysia Aviation Group Bhd. (The Edge)

Source: Mplus Research - 4 Dec 2024