Data Center Theme Remains Relevant

Market Review

Malaysia: The FBMKLCI (+0.28%) traded positively, extending its winning streak to 6-days in the final day the year; as gains in Telco & Media and Healthcare heavyweights boosted sentiment on the local bourse amid window dressing activities.

Global markets: Wall Street closed lower, weighed down by losses in the Nasdaq, while Treasury yields continued to climb as investors remained cautious and reduced their positions in an overstretched valuation environment. Meanwhile, European markets edged higher, while ASEAN markets closed on a mixed note.

The Day Ahead

The local bourse traded positively, extending its six-day winning streak on the final trading day of 2024, driven by a surge in buying interest during the second session. However, the Nasdaq continued to weigh on Wall Street sentiment, as losses persisted following the Fed's move to temper expectations of imminent rate cuts. Traders will also keep track of key economic data, including US unemployment claims and the ISM Manufacturing PMI. In the commodities market, buying interest was seen in Brent crude oil, hovering above USD74 after data showed China's manufacturing activity expanded in December. Gold price traded sideways along USD2620. CPO prices retreated below RM4,500 mark.

Sector Focus: The local front is set to open lower, tracking the weaker tone of the overnight US market, which may cap the upside for the Technology sector for now. Meanwhile, we favour the O&G sector, given the rebound in Brent crude oil prices, and maintain a positive outlook on Glove stocks as the ringgit continues to hover around RM4.47/USD. Looking ahead, we anticipate a potential surge in Construction, Building Materials and Utilities earnings, driven by data center investments.

FBMKLCI Technical Outlook

The FBMKLCI extended its gains after breaking above the EMA60. The MACD histogram is positive, and the RSI has crossed above 50, indicating positive momentum at the current juncture. Resistance is anticipated around 1,657-1,662, while support is set at 1,622-1,627.

Company Briefs

LYC Healthcare Bhd (LYC) plans to list two of its subsidiaries - HC Orthopaedic Surgery Pte Ltd (HCOS) and T&T Medical Group Pte Ltd - on the Nasdaq Capital Markets through a listing vehicle, LYC Healthcare (Cayman) Ltd. The proposed listing aims to raise between US$5m (RM22.33m) and US$15m, with a minimum share price of US$4. LYC Healthcare itself will not receive any direct cash proceeds, as the listing does not involve selling existing shares. After the listing, LYC Healthcare's stake in HCOS and T&T will be diluted from 64.5% to at least 50%, ensuring continued control over the subsidiaries. (The Edge)

Bintulu Port Holdings Bhd (BIPORT) has been granted approval to continue operating the Bintulu Port, Sarawak's main port for liquified natural gas (LNG), for another 12 months. A third interim agreement has been formalised between Bintulu Port's wholly owned unit Bintulu Port Sdn Bhd, the Ministry of Transport, and Bintulu Port Authority for the group to continue operating the port from Jan 1 to Dec 31, 2025. This follows the initial interim agreement for the group's operations of the Bintulu Port for six months from Jan 1 to June 30, 2023, a second interim agreement for a year from July 1, 2023, to June 30, 2024, and an exercised six-month extension option until Dec 31, 2024. These interim agreements came as the federal government agreed to transfer regulatory powers over Bintulu Port to the Sarawak state government, resulting in the port's status going from a federal port to a state port. (The Edge)

Hextar Retail Bhd (HEXRTL) has terminated an agreement to acquire a 51% stake in a shoes and clothing company Redina Malaysia Sdn Bhd for RM35.7m, cash. The termination was due to Redina posting an unaudited loss after tax for the nine months ended Sept 30, 2024. "Redina confirmed that it is unlikely to attain the guaranteed PAT (profit after tax) for the first year of the guaranteed period," Hextar Retail said. The acquisition, which came with a total profit guarantee of RM12m for two years - from Jan 1, 2024 to Dec 31, 2025 - was supposed to provide Hextar Retail with an additional income stream in the near term. (The Edge)

Cypark Resources Bhd (CYPARK) has returned to profitability with a net profit of RM2.28m for the second quarter ended Oct 31, 2024 (2QFY2025). Compared to a year ago, the group's net profit more than doubled from RM992,000. The increase in earnings was mainly due to a RM30.09m one-off reversal on a provision that had been made previously. Previously, the group incurred a net loss of RM27.98m in 3QFY2024, followed by RM57.92m in 4QFY2024 and RM18.07m in 1QFY2025. (The Edge)

Penang Deputy Chief Minister II Jagdeep Singh Deo has been removed from the board of Penang's water service provider, PBA Holdings Bhd (PBA), with immediate effect. Jagdeep, 53, vacated his post as a non-independent and non-executive director "pursuant to Paragraph 15.05(3)(c) of the Main Market Listing Requirements of Bursa Malaysia Securities Bhd," according to PBA's filing with the local stock exchange. Under this listing requirement, the office of a director becomes vacant if the director is absent from more than 50% of the total board of directors' meetings held during a financial year. (The Edge)

KLCC Property Holdings Bhd's (KLCCP) (KLCC) wholly owned unit Suria KLCC Sdn Bhd has upsized its sukuk murabahah programme to RM2bn from RM600m. This came after the programme's RM600m issuance on Dec 31, 2014 matured on Tuesday. On the same day, Suria KLCC issued a fresh RM600m sukuk under the expanded programme. The newly issued sukuk has a tenure of 10.5 years with a profit rate of 4% per year. The programme has a perpetual tenure and has been accorded a long-term rating of AAA by RAM Rating Services Bhd, according to KLCCP. (The Edge)

Datuk Foong Wei Kuong, managing director and controlling shareholder of JF Technology Bhd (JFTECH), is now a substantial shareholder of Cosmos Technology International Bhd (COSMOS). Foong's stake crossed the 5% threshold after acquiring 13.946m shares on Dec 16, which raised his stake to 24.07m shares in the integrated water solutions provider. He went on to acquire another 7.6m shares on Dec 17. According to Bloomberg data, Foong bought the two blocks of shares at 39.4 sen per share or RM8.49m in total. (The Edge)

MBSB Bhd (MBSB) has appointed Datuk Seri Diraja Nur Julie Gwee Ariff as chief executive officer of its subsidiary MIDF Amanah Investment Bank Bhd, effective Jan 1, 2025. The appointment of Nur Julie, currently deputy CEO of MIDF Amanah, will strengthen the bank and unlock new growth opportunities, MBSB said in a statement. She replaces Datuk Dominic Silva, who stepped down in October after nearly six years serving the investment bank. (The Edge)

Cahya Mata Sarawak Bhd (CMSB) has aborted its joint venture project to build a four-star hotel and serviced apartments in Kuching Isthmus, a business district in Kuching, Sarawak, with its joint venture (JV) partners. Shareholders of the JV company, Isthmus Developments Sdn Bhd, mutually decided to abort the project as it is "no longer desired by the shareholders", CMSB said. The JV agreement shall cease to be valid and effective from Dec 31, 2024. (The Edge)

Source: PublicInvest Research - 2 Jan 2025