USD Strength Will Be The Key Focus

Market Review

Malaysia: The FBMKLCI (+0.03%) eked out marginal gains after the Fed's outlook for a slower easing cycle next year weakened sentiment in the global markets. Utilities (+3.19%) outperformed, led by YTL-related counters, after the group announced that the MACC had cleared its case related to the 1BestariNet project.

Global markets: The Dollar surged to multi-week highs, sending Wall Street into a mixed trading session after the Fed's hawkish stance anticipated next year. Meanwhile, both European and ASEAN markets ended the day in negative territory as sentiment weakened, while the BoJ kept its rate steady.

The Day Ahead

The local bourse eked out marginal gains, closing at the key 1,600 psychological level. In the US, following growing concerns on inflationary pressures, driven by the expected higher tariffs imposed under the Trump administration-which could result in a slower easing cycle by the Fed next year. We believe the overall tone on the stock markets will remain volatile until Trump's inauguration in Jan-25. Meanwhile, Core PCE Price Index data is set to be released later today. In the commodities market, Brent crude oil continued to retreat, hovering around USD72 per barrel, as the stronger dollar limited the upside potential. Gold prices remained flat below the USD2,600 mark, while CPO prices declined for another session, trading below the RM4,500 level

Sector Focus: Despite expectations of a mixed trading session on the local bourse influenced by sentiment on Wall Street, we expect buying interest to focus on the export-oriented sectors like Technology and Glove stocks, supported by the Fed's hawkish pivot. Also, we remain positive on stocks linked to the data center supply chain and the Construction, Utility, Building Material sectors, as supported by the data center investments earlier this year.

FBMKLCI Technical Outlook

The FBMKLCI gain momentum, closing above key 1,600 psychological level. However, as the MACD histogram has formed a new negative bar and the RSI has trended below 50, this suggests that the momentum is negative at the current juncture. Resistance is anticipated around 1,615-1,620, and support is set at 1,580- 1,585.

Company Briefs

Malaysian Resources Corp Bhd (MRCB) confirmed it has withdrawn from a Berjaya- led consortium which is bidding for the multi-billion-ringgit Kuala Lumpur-Singapore high-speed rail (HSR) project. The group issued a notice of termination to consortium partner Berjaya Rail Sdn Bhd, an indirect unit of Berjaya Corp Bhd (BJCORP), to terminate the teaming agreement for the submission of a non- binding conceptual proposal to MyHSR Corporation Sdn Bhd in relation to the project. The statement came after Berjaya Group announced MRCB's decision to exit the consortium on Wednesday. (The Edge)

Pentamaster Corp Bhd (PENTA) has proposed to privatise its 63.9%-owned Hong Kong-listed Pentamaster International Ltd (PIL) with a partner in an exercise that would raise its stake to 71%. The exercise entails Main Market-listed Pentamaster and partner Puga Holdings Ltd acquiring a 7.1% and 29% stake, respectively, in the HK unit, at HK$0.93 per share (RM0.54), a premium of 16.25% to its last traded price of HK$0.80 (RM0.46) before its trading suspension on Dec 4. Shareholders are also getting a special dividend of HK$0.07 per share, giving them a total of HK$1 upon exit. The announcement confirms The Edge Malaysia's report on Dec 9, quoting a market observer, that the Penang-based automated test equipment company was mulling taking PIL private. (The Edge)

The Court of Appeal has granted UEM Sunrise Bhd's (UEMS) wholly-owned unit, UEM Land Bhd, leave to challenge the Inland Revenue Board's (IRB) additional tax assessment and penalty of RM8.49m. The appellate court, in its decision on Thursday, allowed UEM Land's appeal against the High Court's decision in March last year to dismiss the company's leave for a judicial review application and stay on payments of the additional taxes and penalty. The RM8.49m additional taxes and penalty were for years of assessment 2013 to 2018 and relate to the removal of Bumiputera quota and low-cost requirements at the company's selected developments in Iskandar Puteri, Johor. (The Edge)

Property developer Mah Sing Group Bhd (MAHSING) has acquired 5.99 acres of land in Taman Pelangi, Johor, from S P Setia Bhd (SPSETIA) for RM156.8m to develop a premium serviced apartment project. The premium serviced apartment, to be named as M Grand Minori, will have a gross development value of RM1.5bn. The land is located 3km from the upcoming Johor-Singapore Rapid Transit System Link's Bukit Chagar Station. (The Edge)

Mynews Holdings Bhd (MYNEWS) reported a significant jump in net profit to RM3.76m for the fourth quarter ended Oct 31, 2024 (4QFY2024), a nearly fourfold increase compared to RM947,000 in the same period last year. Revenue for the quarter grew by 12% year-on-year to RM208.44m, up from RM186.16m previously, driven by a combination of increased store count and improved in-store sales. Mynews, which operates convenience store chains under brands such as myNEWS, CU and WHSmith, attributed the improved performance to the addition of 29 new outlets during the year and enhanced operational efficiency. (The Edge)

UWC Bhd's (UWC) net profit rose 49.2% to RM6.5m in the first quarter ended Oct 31, 2024 (1QFY2025) from RM4.35m a year ago, lifted by increasing orders from the semiconductor industry. Contributions from its acquired subsidiaries, MCE Technologies Sdn Bhd (MCET) and MCT (Thailand) Co Ltd, also added to the earnings. Quarterly revenue almost doubled to RM89.42m, from RM45.46m a year ago. (The Edge)

Aeon Credit Service (M) Bhd (AEONCR) reported a 27.44% drop in net profit for the third quarter ended Nov 30, 2024 (3QFY2025), primarily dragged by a share of its associate's loss and increased interest expense. Net profit for the quarter under review fell to RM62.07m from RM85.55m in 3QFY2024, despite a 15.51% increase in revenue to RM562m from RM486.51m. Aeon Credit's bottom line was significantly impacted by the share of loss incurred by its 50%-owned Aeon Bank (M) Bhd, amounting to RM15.18m. It jointly owns the digital bank with its Japanese parent, Aeon Financial Service Co Ltd. (The Edge)

United Malacca Bhd's (UMCCA) net profit more than doubled for its second quarter ended Oct 31, 2024 (2QFY2025), driven by higher average crude palm oil (CPO) and palm kernel (PK) prices. The group recorded a net profit of RM30.92m for 2QFY2025 - up 125% from RM13.72m in 2QFY2024. It is the group's highest quarterly profit in four years since 2QFY2021, when it recorded a net profit of RM36.1m on revenue of RM143.85m. Revenue for 2QFY2025 jumped 26.9% to RM183.44m from RM144.51m in 2QFY2024, its bourse filing showed. (The Edge)

Construction company Vestland Bhd (VLB) has secured a RM70m contract to build a 59-storey office building along Jalan Mayang, Kuala Lumpur. The contract was awarded to Vestland's wholly-owned subsidiary Vestland Resources Sdn Bhd (VRSB) by Sg Besi Construction Sdn Bhd. The construction is expected to last over two years, commencing on Thursday and scheduled to be completed on Dec 15, 2027. (The Edge)

Uzma Bhd (UZMA) has been awarded a sub-contract by Samaiden Sdn Bhd, a unit of Samaiden Group Bhd (SAMAIDEN) for the development of a 13.42 megawatt AC (MWac) solar photovoltaic plant in Sungai Petani, Kedah. The contract, secured on a lump sum fixed price basis, encompasses the development of the solar generating facility, including interconnection and other works The project is scheduled for completion within eight months and 14 days, with the commercial operation date set for Aug 30, 2025. (The Edge)

Fashion retailer Bonia Corp Bhd (BONIA) is venturing into the health and wellness market with a joint investment in fitness centre operator Macroverse Sdn Bhd (MVC). Bonia signed a shareholders' agreement with Peak Physique Health & Fitness Sdn Bhd (PPH) on Thursday to jointly subscribe to threem new shares in MVC, representing its entire equity. Bonia will hold a 50% stake, valued at RM1.8m, financed by internal funds. (The Edge)

Catcha Digital Bhd (CATCHA) has announced its acquisition of a 70% stake in Tastefully Malaysia Sdn Bhd for RM7.6m, cash, to strengthen its position in the integrated digital and offline advertising space. Catcha Digital said the RM7.6m cash consideration will be paid in four tranches over 36 months, contingent on achieving profit after tax targets of RM0.5m, RM1.1m, RM1.4m and RM1.6m across the respective periods. The acquisition would create cross-selling opportunities by integrating its digital advertising capabilities with Tastefully's established in-person advertising solutions. (The Edge)

Malacca Securities Sdn Bhd has advised minority shareholders of Southern Steel Bhd (SSTEEL) to vote in favour of the company's proposed issuance of new shares to Singapore-based steel firm Green Esteel Pte Ltd. The independent adviser opined that the proposal is "fair and reasonable". This issuance, which will raise approximately RM315.86m for Southern Steel, provides "a degree of certainty" of the fundraising. It also lauded the impending plant upgrades from the fundraising, as well as synergies between Southern Steel and Green Esteel, which will emerge as a 50.1% shareholder post-issuance. (The Edge)

Source: PublicInvest Research - 20 Dec 2024