Shifting Attention Back To Technology

Market Review

Malaysia: The FBMKLCI (-0.36%) entered its fourth day of losing streak and closed lower at 1603.20 pts, mainly dragged down by heavyweights like IHH and SUNWAY. Healthcare (-1.69%) sector declined the most, following the recent issues on insurance premium hike.

Global markets: Both the S&P500 and Nasdaq ended higher following inflation data that supported expectations for an interest rate cut this month. The European markets ended higher, while Asian markets ended mixed as investors are waiting for key policy meeting in China.

The Day Ahead

The FBMKLCI trended lower for the fourth consecutive day, with healthcare sector declining the most. In contrast, both the S&P500 and Nasdaq ended higher as the November CPI data came in within expectations, and traders now anticipating further rate cut in the FOMC meeting next week. Other key economic events to be monitored this week include (i) US unemployment claims, (ii) ECB rate decision and (iii) Eurozone industrial production data. In the commodities market, Brent crude oil rose above the USD73 level, as Biden administration considers imposing new sanctions on Russia's oil industry. Gold prices have surged above the USD2,700 level, influenced by the recent inflation data release. Meanwhile, the CPO prices remain below RM5,000 as the momentum has paused after the sharp recent pullback.

Sector Focus: Given the rise in oil prices due to the possibility of new tension by US towards Russia's oil trade, there might be a rebound in the O&G related counters. Meanwhile, traders can focus on the data centre midstream industries under the Technology sector, such as IT solutions, cybersecurity, HDD, EMS and OSAT, spurred by the ongoing construction of data center facilities. Besides, we like selected Utility, Industrial Products and Consumer stocks within the uptrend phase.

FBMKLCI Technical Outlook

The FBMKLCI further retreated after hitting the 60-day MA line. Although the MACD Histogram expanded positively, the RSI stayed below 50, indicating that the momentum is mixed at this juncture. Resistance is envisaged around 1,618-1,623, and support is set at 1,583-1,588.

Company Briefs

Axiata Group Bhd (AXIATA) has signed a definitive agreement with Sinar Mas to proceed with the proposed merger of PT XL Axiata Tbk (XL Axiata) and two other companies in Indonesia. The merged entity will be named PT XLSmart Telecom Sejahtera Tbk (XLSmart), where Axiata and Sinar Mas will remain as joint controlling shareholders with a 34.8% ownership stake each. Public shareholders will hold the remaining 30.4%. The merger involves the effective transfers of PT Smartfren Telecom Tbk (Smartfren) and Smartfren's subsidiary - PT Smart Telcom (SmartTel) - to XL Axiata, where XL Axiata will issue 5.07bn new ordinary shares at an issue price of 2,350 rupiah (65.57 sen) per share to acquire the entities, for a total purchase consideration of 11.917 trillion rupiah (RM3.325bn). (The Edge)

Astro Malaysia Holdings Bhd (ASTRO) made a net profit of RM46.94m for its third quarter ended Oct 31, 2024 (3QFY2025) as opposed to a net loss of RM47.05m incurred in 3QFY2024. This was due to lower net financing costs from favourable unrealised foreign exchange gains on unhedged lease liabilities, and lower intangible asset amortisation. Quarterly revenue slipped 9.52% to RM749.7m, compared with RM828.55m a year earlier, primarily due to lower subscription revenue and advertising revenue. No dividend was declared. (The Edge)

Property developer Eco World International Bhd (EWINT) has declared a final dividend of 5 sen per share for its FY2024 to be paid in January next year, as it managed to reduce its losses for the fourth quarter ended Oct 31 (4QFY2024) to a third of what it incurred in the previous year's corresponding quarter. The group's net loss fell to RM12.21m in 4QFY2024, from RM37.69m in 4QFY2023, despite revenue dropping to RM1.33m from RM28.55m, as it recorded lower losses from its joint venture in the UK, lower administrative expenses due to ongoing cost optimisation initiatives, and lower marketing expenses as its projects in Australia are almost fully sold out. (The Edge)

Mara Inc and ACE Market-listed Privasia Technology Bhd (PRIVA), a business process outsourcing company, are teaming up to develop and operate a data centre in Bagan Datuk, Perak. Mara Inc, the strategic investment arm of Mara Corp, inked a memorandum of agreement with Privasia's wholly owned Privabytes Sdn Bhd for the project. Privasia is also involved in information and communications technology. The project's first phase, comprising 10MW, is expected to be completed by October 2026. Under the preliminary agreement, Mara and Privasia are to form a special purpose vehicle for the project, which is to lease a 49.9-acre land in Bagan Datuk from Felcra. Mara Corp, and in turn Mara Inc, is under the purview of the Ministry of Rural and Regional Development. (The Edge)

MyEG Services Bhd's (MYEG) Zetrix blockchain platform and Astron-Xinghuo BIF have partnered to offer Chinese nationals and business entities digital identification cards and business registration services for verification outside of China. The services, known as ZID, digitises official Chinese national or business registration IDs as Web3 verifiable credentials (VCs) which enable real-time fraud-proof identity verification. The e-services provider said in the case of business registration IDs, each unique VC can be presented to any third party overseas - be it government or commercial entity or a private individual - who are then able to use the VC to verify the legitimacy and authenticity of the business in real time. (The Edge)

After two months of maintenance shutdown, Petron Malaysia Refining & Marketing Bhd (PETRONM) announced that its Port Dickson refinery has resumed operations in full. The oil refiner said furnace repairs at the site had been completed. The refinery had been under maintenance shutdown for furnace repairs since Oct 9. Petron, however, did not disclose any financial impact from the temporary shutdown as it was previously said the cost of the repair would not be considered material. (The Edge)

AE Multi Holdings Bhd (AEM) has proposed a share capital reduction to wipe out up to RM156m of the company's accumulated losses. The proposed share capital reduction will enhance the company's ability to declare and pay dividends out of the retained earnings in the future and provide a better financial platform for the group's future growth moving forward. As of Dec 2, AEM has an issued share capital of RM167.25m, consisting of 216.35m ordinary shares and 32.45m units of options that are eligible for its employees' share option scheme. These options are exercisable into an equivalent number of new shares at an exercise price of 7.5 sen per share. (The Edge)

Source: PublicInvest Research - 12 Dec 2024