Profit Taking Activities May Emerge

Market Review

Malaysia: The FBMKLCI (+0.10%) advanced further, closing at 1,615, as Banking heavyweights, namely PBBANK (+4.0 sen) and MAYBANK (+4.0 sen), lifted sentiment on the local front; the latter was driven by commendable performance in the recent quarterly earnings.

Global markets: After jobless claims showed an increase, the Dollar slipped, and Wall Street lost momentum as investors traded cautiously ahead of key economic data set to be released today. Meanwhile, the European markets closed higher while Asean markets ended the day on a negative note.

The Day Ahead

The FBMKLCI rebounded further after GAMUDA and 99SMART were announced to be added into the key index. Meanwhile, Wall Street closed lower ahead after jobless claims rose 9,000 to 224,000 from last November, which may influence the Fed’s rate cut decision in the upcoming FOMC meeting. Traders will be monitoring non- farm employment change and unemployment rate later today. In the commodities market, Brent crude oil slipped further following OPEC+ decision to delay the restart of its oil production cuts by three months. Gold edged lower despite overall economic data this week pointing to a potential rate cut. Meanwhile, CPO prices advanced further, closing above the RM5,100 level.

Sector Focus: While the profit taking activities may emerge on the local bourse, tracking the Wall Street’s overnight negative performance, we believe buying interest will emerge in the Utilities, Construction, and Building Materials sectors, driven by earlier data center investments and AI-driven trades, which should positively impact their earnings. Besides, we like the Technology sector as NATGATE will be the first in Malaysia to manufacture AI servers. Also, we expect continued buying in Plantation stocks as we enter a seasonally lower production period for palm oil, which should further support prices.

FBMKLCI Technical Outlook

The FBMKLCI closed higher at the 1,615 level. Meanwhile, the MACD histogram formed another positive bar, and the RSI hooked above 50, indicating that the momentum is positive at this juncture. Resistance is envisaged around 1,630-1,635, and support is set at 1,595-1,600.

Company Briefs

Deleum Bhd (DELEUM) said it is exploring more acquisition opportunities after firming up a 70% stake purchase in an Indonesian valve solutions provider that could triple its addressable control and pressure relief valve market size. The ambition is to go beyond Malaysia and Indonesia, said Deleum group chief executive officer Ramanrao Abdullah, who noted that the natural development would be to look at Thailand and Vietnam for its next acquisition. (The Edge)

T7 Global Bhd (T7GLOBAL) has won a contract from Petrofac (Malaysia-PM304) Ltd for the provision of pan-Malaysia maintenance, construction, modification (MCM) and hook-up and commissioning (HUC) services for Package B3. The contract, won by T7's wholly-owned unit Tanjung Offshore Services Sdn Bhd, is for a primary period of five years. It also has two extension options for three years and two years respectively. (The Edge)

NationGate Holdings Bhd (NATGATE) has launched its latest artificial intelligence (AI) servers catering for clients from start-ups to hyperscale data centres. The launch sees NationGate emerging as the first in Malaysia to manufacture the servers. The servers will be powered by industry-leading graphics processing units (GPUs). NationGate added that it is an original equipment manufacturer partner to the industry-leading GPUs' manufacturer. (The Edge)

Dialog Group Bhd (DIALOG) said that it has won a contract with Petroliam Nasional Bhd (Petronas) to assume 100% participating interest and the role of operator in the RAJA Cluster small field asset production sharing contract (PSC), located offshore Peninsular Malaysia. Dialog said its wholl- owned subsidiary Dialog Resources Sdn Bhd has entered into an agreement with Malaysia Petroleum Management that would include the pre-development study, development and production of discovered resources over the full life of the RAJA Cluster SFA PSC, followed by abandonment upon its expiry. (The Edge)

Fiamma Holdings Bhd (FIAMMA) is forming a joint venture company to bring heating, ventilation and air conditioning (HVAC) solutions under the VINO brand into Malaysia. Fiamma said the JV company will be named VINO Air-Conditioning (M) Sdn Bhd, with Fiamma holding a 70% equity stake and Hong Kong-based Great Trillion Investment Ltd holding the remaining 30% stake. Great Trillion is a unit of China-based Zhuhai Samyou Environmental Technology Co Ltd. (The Edge)

Pavilion Real Estate Investment Trust (PAVREIT) has proposed to buy two hotels in Kuala Lumpur for an aggregate RM480m and undertake a private placement to raise up to RM552m to fund the acquisitions. It said its trustee, MTrustee Bhd, has entered into agreements to acquire Banyan Tree KL for RM140m from Lumayan Indah Sdn Bhd, and buy Pavilion Hotel KL for RM340m from Harmoni Perkasa Sdn Bhd. The deals are deemed related-party transactions as both Lumayan and Harmoni Perkasa are indirectly wholly-owned by Pavilion REIT major unitholder Tan Sri Lim Siew Choon. (The Edge)

HB Global Ltd (HBGLOB) said it has partnered with a company belonging to the Regent of Pahang to jointly develop artificial intelligence (AI) technology-driven agriculture activities on 500 acres of land in Pekan, Pahang. The joint venture entity, HB Global Capital Sdn Bhd, will be 55%-owned by HB Global and 45% by HIS Holdings Sdn Bhd, whose sole shareholder is Tengku Hassanal Ibrahim Alam Shah ibni Al- Sultan Abdullah. Tengku Hassanal Ibrahim Alam Shah is also the owner of the 500- acre land. (The Edge)

Destini Bhd (DESTINI) said it is acquiring Australia-based rail component remediation services provider Trovon Group Pty Ltd, in a bid to strengthen its rail maintenance capabilities and expand its global presence. Destini will pay A$100 (RM285) for the acquisition, and assume A$3.25m of Trovon’s outstanding debt and inject an additional A$1m for working capital. Destini said it sees potential expansion opportunities into Singapore, Dubai and China through its existing Techno Fibre group network. (The Edge)

Source: Mplus Research - 6 Dec 2024