YTL-related May Trade Positively With Ilmu 0.1

Market Review

Malaysia: The FBMKLCI (-0.07%) continued its downward pressure for the fifth day, closing lower at 1602.08 pts. The Healthcare (-1.15%) sector ended for two consecutive days as the worst performing sector, as profit-taking activities were seen in gloves-related counters following their recent share price rallies.

Global markets: Wall Street ended lower following some of the concerns of an overvalued market following the post-election rally. Meanwhile, the European markets also ended lower, while Asian markets ended mostly positive after November's inflation report met expectations.

The Day Ahead

The FBMKLCI trended lower for the fifth consecutive day, with healthcare sector continued to decline. Similarly, the US market ended on a correction following some of the concerns of an overvalued market following last month's US election. The Dow has also fell for a sixth consecutive day, marking its longest losing streak since April. Meanwhile, traders will also continue to monitor for Eurozone industrial production data later today. In the commodities market, Brent crude oil rose settled slightly lower near USD73 a barrel with expectations for a supply glut in 2025 countering geopolitical risks. Gold prices once again retreated below the USD2,700 mark, while the CPO prices continue to trade below the RM5,000 level after the hitting near the resistance along RM5,200.

Sector Focus: With the launching of AI Labs by YTL, also known as "Ilmu 0.1", trading opportunities might continue to emerge across YTL-related counters and AI-related counter like NATGATE. Meanwhile, traders can focus on the data centre midstream industries under the Technology sector, such as IT solutions, cybersecurity, HDD, EMS and OSAT. Lastly, we like East Malaysia related counters given the recovery in their share prices and more IPOs to be seen in the near term.

FBMKLCI Technical Outlook

The FBMKLCI continues to retreat after hitting the 60-day MA line. As the MACD Histogram has performed a rounding top formation and the RSI stayed below 50, suggesting that the momentum is weaker at this juncture. Resistance is envisaged around 1,617-1,622, and support is set at 1,582-1,587.

Company Briefs

Gamuda Bhd's (GAMUDA) net profit climbed 5.31% in the August-October quarter as revenue jumped on improved contributions from all segments. It also achieved a record high order book of RM30bn. Net profit for the quarter ended Oct 31, 2024 (1QFY2025) rose to RM205.39m from RM195.04m in the same quarter last year, while revenue rose 47.47% to RM4.14bn from RM2.8bn. The group declared a first interim dividend of 5 sen per share, to be paid on a date to be fixed. (The Edge)

Eco World Development Group Bhd (ECOWLD) posted a net profit of RM83.42m for the fourth financial quarter ended Oct 31, 2024 (Q4FY2024), a big leap compared with RM3.29m in the preceding financial year. The property developer attributed the improved earnings to a strong 31.5% growth in profit after tax generated by home operations, as well as lower impairment in the carrying values of its investment in EcoWorld International Bhd (EWI) recognised in the quarter under review. Quarterly revenue, however, dropped 24.4% to RM638.45m from RM844.46m a year ago. The group declared a dividend of 2 sen per share. (The Edge)

Hurt by foreign exchange (forex) losses of RM213.06m, Sapura Energy Bhd (SAPNRG) fell into a net loss of RM286.05m in its third quarter ended Oct 31, 2024 (3QFY2025) from a net profit of RM31.79m a year earlier. Earnings were also hit by higher finance costs, which rose 19.9% year-on-year, as well as lower share of profit from SapuraOMV due to reclassification from investment to asset held for sale since 1QFY2025. Revenue for the quarter grew 4.4% y-o-y to RM1.15bn from RM1.1bn, driven by its operations and maintenance and engineering and construction divisions. (The Edge)

Bermaz Auto Bhd (BAUTO) saw a 55% drop in net profit for its second quarter ended Oct 31, 2024 (2QFY2025), marking the third consecutive quarter of declining profitability due to intensified competition in the automotive market. Net profit for the quarter fell to RM40.35m from RM90.1m in the corresponding period last year. Revenue fell 35.76% to RM646.86m from RM1bn, driven by lower sales volumes from Mazda and Kia in its domestic operations. The group declared a second interim dividend of 3 sen per share, payable on Feb 7, 2025. (The Edge)

Steel manufacturer Hiap Teck Venture Bhd (HIAPTEK) reported a net profit of RM34.7m for its first quarter ended Oct 31, 2024 (1QFY2025), compared to a net loss of RM9.43m a year earlier. This was due to a profit contribution of RM41.98m from its joint venture entity, compared to a loss of RM16.61m previously. Quarterly revenue, however, slipped 1.4% to RM401.72m from RM407.51m in 1QFY2024, impacted by lower average selling prices. (The Edge)

Uni Wall APS Holdings Bhd (UNIWALL) has inked two separate agreements with Menteri Besar Kedah Inc-owned investment company Permodalan Kedah Bhd (PKB) to develop three university projects with a combined gross development value of RM2.30bn. Uni Wall Properties will finance and develop the project and is entitled to receive 85% of the project's GDV that is worth RM2bn, while PKB will receive 15% under the first memorandum of agreement (MOA). For the other two agreements, Uni Wall Properties will develop and operate both Desasiswa@USM and Gerbang@USM at its own cost and expenses for up to 21 years, with the option to extend for another nine years. The GDV for both projects will reach RM298m over the next 30 years. (The Edge)

GDB Holdings Bhd (GDB), which specialises in high-rise construction projects, has bagged a RM298m contract to build a logistics warehouse in Bandar Bukit Raja 2, Klang. The contract was awarded to its subsidiary, Grand Dynamic Builders Sdn Bhd by SDPLOG1 (My Holdings) Sdn Bhd, a joint venture between Sime Darby Property Bhd (SIMEPROP) and LOGOS SE Asia Pte Ltd. (The Edge)

Paramount Corp Bhd (PARAMON) is acquiring a 18,317 sq m leasehold land together with a residential development comprising 93 units of low-rise luxury condominium in Taman U-Thant, Kuala Lumpur for RM145m, cash. Its wholly-owned Tanah Bayumas Sdn Bhd has signed a sale and purchase agreement with Prismaworld Embassyview Sdn Bhd to purchase the land and six blocks of five- storey condominium buildings with a sub-basement one-storey car park. The acquisition is to replenish its land bank. (The Edge)

Upholstery furniture manufacturer Homeritz Corp Bhd (HOMERIZ) reported a fire at one of its production facilities in Muar, Johor, and is evaluating the financial impact of the incident. The incident that started at 8am on Thursday, affected one of the spraying lines and work-in-progress inventory while damage from the incident was confined to one block of the furniture factory building. (The Edge)

Dataprep Holdings Bhd (DATAPRP) has proposed a share capital reduction to wipe out up to RM100m its accumulated losses, followed by a private placement involving up to 30% of its issued shares to raise RM30.2m to fund project expenditures, raise working capital and repay its borrowings. The information technology service provider's accumulated losses as at Sept 30, 2024 stood at RM99.71m at the group level, and RM86.78m at the company level, which it plans to reduce to a loss of RM463,000 (group level) and a retained profit of RM12.47 (company level), following the capital reduction. As for the proposed placement, it could involve the issuance of up to 226.7m shares to third-party investors to be identified. (The Edge)

Kerjaya Prospek Property Bhd (KPPROP) will redeem the outstanding 1.72bn redeemable convertible preference shares (RCPS) issued in 2019 by the investment vehicle of its controlling shareholder Datuk Tee Eng Seng for RM292.07m on Jan 9. The redemption at 17 sen per share is to be funded via a combination of RM290m in bank borrowings and RM2.07m in internal funds. The redemption of the RCPS is to pre-empt the mandatory conversion of the RCPS on a five-to-one basis on the maturity date to maintain the company's compliance with the bourse's public spread requirement. The RCPS, with a five-year tenure and fixed dividend rate of 2% per year, are due for maturity on Jan 10, 2025. (The Edge)

Source: PublicInvest Research - 13 Dec 2024