Buying Interest May Be Seen In O&G Stocks

Market Review

Malaysia: The FBMKLCI (-0.58%) snapped a 6-day winning streak amid weakened sentiment across regional markets as Industrial Products & Services and Utilities heavyweights, namely PCHEM (-31.0 sen) and TENAGA (-18.0 sen), took a breather. The Energy sector rebounded, benefiting from higher crude oil prices.

Global markets: While the Dollar strengthened amid stronger job data, Wall Street extended its losses, partly weighed down by lackluster results from Tesla; as investors remained cautious in an overstretched valuation environment. Meanwhile, European markets edged higher, while Asian markets retreated.

The Day Ahead

The local front began the year on a softer note, snapping a 6-day winning streak as profit-taking emerged in selected Industrial Products & Services and Utilities heavyweights. Although unemployment claims came in stronger than expected, US stocks extended their losses, partly weighed down by lackluster results from Tesla Inc. Traders will also keep an eye on key economic data, such as the ISM Manufacturing PMI, set to be released later today. In the commodities market, Brent crude oil gained momentum, hovering above USD75, supported by shrinking US crude stockpiles and growing manufacturing activity in China. The gold price edged higher, surpassing USD2,600, while CPO prices retreated below the RM4,400 mark.

Sector Focus: While the local bourse is set to open lower, mirroring the softer tone of the overnight US market, we favour the O&G sector amid the surge in Brent crude oil prices. We also maintain a positive outlook on export-oriented sectors like Glove and Technology as the dollar index continues to edge higher above the 109 level. The breakout in gold prices could present trading opportunities in gold-related counters. Moving forward, we expect data center investments to begin materialising in earnings within the Construction, Building Materials, and Utilities sectors.

FBMKLCI Technical Outlook

The FBMKLCI snapped its 6-days winning street on profit taking. However, the MACD Histogram is positive, and the RSI crossed above 50, indicating positive momentum at the current juncture. Resistance is anticipated around 1,647-1,652, while support is set at 1,612-1,617.

Company Briefs

Awanbiru Technology Bhd (AWANTEC) has secured a one-year extension to its cloud framework agreement (CFA 1.0) with the government, under which it manages and delivers Google cloud services to the government. Awantec said the extension will be effective from Jan 1 until Dec 31, or until the launch of CFA 2.0, whichever comes earlier. The value of the extension was not detailed. The cloud-based service provider initially entered into the agreement with the Malaysian Administrative Modernisation and Management Planning Unit (Mampu) and Google Cloud Malaysia Sdn Bhd in March 2022, to provide the specified service for up to 35 months until Dec 31, 2024. (The Edge)

Pentamaster Corp Bhd (PENTA) has been served with a writ and statement of claim by Ocado Innovation Ltd, a subsidiary of UK-based online grocery technology company Ocado Group, over allegations of patent infringement involving warehouse automation and robotics technologies. In the suit filed at the Kuala Lumpur High Court, Ocado alleges Pentamaster of having developed, used or facilitated the use of such systems that infringe its intellectual property rights. Pentamaster strongly denied the allegations, stating its intention to file an application to strike out the suit, which it considers to be baseless allegations. (The Edge)

Sunway Real Estate Investment Trust (SUNREIT) said on Thursday it has completed the acquisition of Kluang Mall in Johor for RM158m. Kluang Mall is expected to provide an estimated initial net property income yield of 7%. The mall, now rebranded as Sunway Kluang Mall, is nearly fully occupied with over 130 tenants and anchored by Pacific Hypermarket & Department Store. The acquisition expanded Sunway REIT's property portfolio to 28 assets, worth RM10.3bn. The trust now has 13 retail properties, six hotels, five office buildings, an education asset, and three industrial sites. (The Edge)

Velocity Capital Partner Bhd (VELOCITY) sees the emergence of a new majority shareholder yet again. Datuk Fam Chee Way is now the single largest shareholder of Velocity Capital, formerly known as CSH Alliance Bhd, after he bought a 28.79% stake. Fam's vehicle DB Atlantic Capital (M) Sdn Bhd bought out Datuk Liu Han Ming's entire 229.5m shares or 16.61% stake in Velocity Capital and executive director Tan Yip Jiun's 168.17m shares or 12.17% stake via a direct business transaction on Thursday. Bloomberg's off-market data showed some 229.5m shares changed hands at 9.5 sen per share or RM21.8m in total, while another block of 168.17m shares traded at six sen per share or RM10.09m. On aggregate, the blocks were traded for RM31.89m. (The Edge)

Ecobuilt Holdings Bhd (ECOHLDS) has until Jan 8 to submit its annual report for the financial year ended Aug 31, 2024, failing which the trading of its securities will be suspended the following day (Jan 9). The loss-making construction cum property firm has failed to submit the annual report - including its annual audited financial statements, as well as the auditors' and directors' reports - to Bursa Malaysia Securities Bhd, for public release within the stipulated time frame on Dec 31, 2024. Pursuant to Bursa Securities' Main Market listings requirements, trading in Ecobuilt's securities will be suspended if the company fails to issue the 2024 annual report within five market days, that is by Jan 8. (The Edge)

Condom maker Karex Bhd (KAREX) has redesignated its independent director Datuk Dr Adeeba Kamarulzaman as the group's chairperson, effective immediately. The redesignation comes after Datuk Dr Ong Eng Long's resignation from the post on Jan 2 due to "personal commitment". Adeeba has been on the group's board as an independent director since January 2019. (The Edge)

Source: PublicInvest Research - 3 Jan 2025