Focus Remains on RE and Data Center Themes

Market Review

Malaysia: The FBMKLCI (+0.46%) bucked the regional selloffs' trend and closed higher at 1587.80 pts, with gains in CIMB (+12.0 sen) and TENAGA (+20.0 sen) leading the key index. The Transportation & Logistics (+0.66%) sector performed the best, while Technology (-1.11%) sector saw the largest decline.

Global markets: Wall Street edged up for the third trading day, as investors were excited about several execution orders under Trump's administration. The European market closed higher as well, while Asian market ended lower after President Trump suggested that China's tariff could come into effect next month.

The Day Ahead

The local bourse continued to close higher, supported by Malaysia's CPI growth of 1.7% for December (below consensus estimate of 1.8%), coupled with BNM's decision to keep the OPR unchanged. In the US, markets closed higher, driven by optimism about potential tax cuts and a relatively stable economic outlook under President Trump as well as Netflix's blowout quarterly results. Investors will also access the initial jobless claims later today. In the commodities market, Brent crude oil stayed below the USD80 mark, while gold price traded flat along USD2750 level. Meanwhile, CPO prices have crossed below RM4,200 level.

Sector Focus: With PM Anwar reiterating that Malaysia is still committed to the Paris Agreement despite the US's exit from the climate pact, coupled with Malaysia serving as the ASEAN 2025 chair and various government RE initiatives, we remain optimistic about the Renewable Energy sector. Besides, the upcoming CNY festive season and the commencement of Sumbangan Tunai Rahmah cash payments will benefit the Consumer, Aviation, and Tourism sectors. On the data center theme, we expect a continuation of the rebound this week after last week's sell-off.

FBMKLCI Technical Outlook

Despite the recent rebound, the index is currently resisted by MA20. However, the technical indicators are showing recovery signs, with RSI rebounded off the oversold zone, while MACD Histogram forming its rounding bottom formation. Resistance is anticipated around 1,602-1,607, while support is set at 1,567-1,572.

Company Briefs

Sunway Bhd (SUNWAY) has started the ball rolling for the initial public offer (IPO) of its healthcare unit Sunway Healthcare Group, according to sources. Maybank Investment Bank Bhd and AmInvestment Bank Bhd are said to be the front-runners as principal advisers for the IPO, while Affin Hwang Investment Bank Bhd and CIMB Investment Bank Bhd have been shortlisted as joint book runners. Sunway Healthcare Holdings Sdn Bhd (SHH) is 90.26%-owned by Sunway City Sdn Bhd, which is in turn wholly owned by Sunway, while the other 9.73% in SHH is owned by Greenwood Capital Pte Ltd, an indirect unit of Singapore's sovereign wealth fund GIC Pte Ltd. The listing of SHH has to occur by October 2027 based on a shareholders' agreement with GIC, said Sunway Healthcare Group president Datuk Lau Beng Long to The Edge in an interview in 2023. (The Edge)

CapitaLand Malaysia Trust (CLMT) posted a 15% rise in its net property income (NPI) for the fourth quarter ended Dec 31, 2024 (4QFY2024) to RM72.49m from RM63.02m on higher revenue contribution from the majority of CLMT's properties, supported by stronger retail sentiment. Gross revenue grew 10.6% to RM119.98m from RM108.51m on positive rental reversions and higher occupancy. It announced a distribution of 1.22 sen per unit. Looking ahead, CLMT said it will continue to seek acquisition opportunities in industrial and logistic assets across Penang, Johor and the Klang Valley this year. (The Edge)

Sentral REIT (SENTRAL) posted a flat 1.25% increase in NPI for 4QFY2024 to RM36.71m from RM36.26m. Revenue increased 5.54% to RM47.38m from RM44.89m, while property operating expenses rose 10.52% to RM11.5m versus RM10.4m a year earlier. Sentral REIT declared a final distribution per unit (DPU) of 3.15 sen, payable on Feb 28. Despite the flat 4QFY2024 earnings, NPI for the full year ended Dec 31, 2024 (FY2024) was still up 20.4% to RM150.37m from RM124.87m previously, as revenue rose 18.6% to RM191.15m versus RM161.15m. (The Edge)

AME Real Estate Investment Trust (AMEREIT) reported a 1.4% increase in NPI for the third quarter ended Dec 31, 2024 (3QFY2025) to RM11.71m from RM11.55m, thanks to contributions from a newly-acquired property and tenancy renewals at higher rates. Revenue increased by 3% to RM12.73m, from RM12.36m, mainly attributed to the inclusion of industrial property i-Park@Indahpura in its portfolio. The trust declared an interim income distribution of 1.89 sen per unit, payable on Feb 28. (The Edge)

Jentayu Sustainables Bhd (JSB) said the Securities Commission Malaysia (SC) has denied the group's bid for an extension of time up to March 26, 2025, to complete its acquisition of three RE firms proposed in 2021. Jentayu said its board will be convening a special board meeting to decide on its next course of action. The companies, Telekosang Hydro One Sdn Bhd and Telekosang Hydro Two Sdn Bhd own and operate the 40MW Telekosang Hydro power plant project in Sabah, while Jentayu Solar Sdn Bhd owns and operates a 5.99MW solar power plant in Pokok Sena, Kedah. The acquisitions are deemed related-party transactions as the companies are owned by Jentayu executive chairman Datuk Beroz Nikmal Mirdin and his wife, Datin Nurhaida Abu Sahid. (The Edge)

Power Root Bhd (PWROOT) has been slapped with a lawsuit from Export-Import Bank of Malaysia Bhd (EXIM Bank) for RM7.39m over an alleged loan default. EXIM Bank is demanding repayment of RM675.51m for funds disbursed to its subsidiaries, namely Power Root (M) Sdn Bhd, Power Root Manufacturing Sdn Bhd and Power Root ME Free Zone Company. The bank is also claiming RM6.72m linked to another loan agreement involving the same subsidiaries. Both loan agreements were executed in 2012. Power Root, however, denies all claims and allegations in their entirety. (The Edge)

Source: PublicInvest Research - 23 Jan 2025