Renewable Energy Remains On The Radar

Market Review

Malaysia: The FBMKLCI (-0.67%) mirrored its regional selloffs trend and closed lower at 1577.20 pts, with banking heavyweights dragging the key index lower. All sectors ended negatively with Energy (-1.45%) sector declining the most, except REIT (+0.10%).

Global markets: Wall Street ended higher following Trump's World Economic Forum speech that he is looking at lower interest rate environment going forward, pressuring the central bank. The European market closed higher as well, while Asian market ended mixed with Beijing urging institutional investors to buy stocks.

The Day Ahead

The local bourse snapped its 4-days winning streak, with all eyes focusing on KOPI's IPO surge of more than 100% before closing at 87.5 sen. In the US, markets rose after President Trump's World Economic Forum speech, where he announced plans to urge OPEC nations to lower oil prices to curb inflation and would then push for further interest rates cut, boosting optimism on Wall Street. Investors will also be monitoring BoJ's interest rate decision today, whereby BoJ governor had signalled potential rate hikes. In the commodities market, Brent crude oil remains below the USD80 mark following Trump's speech. Gold price traded flat along USD2750 level, while CPO prices rebounded marginally above the RM4,200 level.

Sector Focus: With YTL and YTLPOWR's recent plan for bonus warrant issuances, together with YTLPOWR's secured access to Nvidia chips despite US export curbs, we believe that bargain-hunting opportunities will emerge within the YTL-related counters. Meanwhile, we expect the ongoing NETR and LSS projects, coupled with the data center boom are expected to drive higher electricity demand, providing an upside for the Renewable Energy segment. Lastly, given its strong popularity in town, trading interest within the newly listed KOPI is likely to persist.

FBMKLCI Technical Outlook

The index retraced after hitting the MA20. However, the technical indicators are showing recovery signs, with RSI rebounded off the oversold zone, while MACD Histogram closed at its positive territory. Resistance is anticipated around 1,592- 1,597, while support is set at 1,557-1,562.

Company Briefs

YTL Corp Bhd (YTL) and YTL Power International Bhd (YTLPOWR) have each proposed a bonus issue of free warrants, on the basis of one free warrant for every five shares held in the respective companies. The warrants are planned to be exercised at a discount to the share prices of each company - at 37% discount for YTL Corp, and a 39.5% discount for YTL Power based on their closing prices on Thursday. If fully exercised, the warrants will bring in RM3.4bn to YTL Corp, and RM2.2bn to YTL Power. YTL Corp owns a 54.94% stake in YTL Power. (The Edge)

Café chain operator Oriental Kopi Holdings Bhd (KOPI), which gained 99% in its ACE Market debut on Thursday, is scaling up its product offerings in the fast-moving consumer goods segment, targeting the launch of over 20 products by year end. Its managing director Datuk Calvin Chan Jian Chern said during a press conference that the company is now engaging with major supermarkets to expand distribution channels, providing broader access to its products. The counter settled the day at 87.5 sen, more than doubled than its initial public offer price of 44 sen. (The Edge)

Westports Holdings Bhd (WSPRTS) reported a record-high net profit of RM256.7m for the fourth quarter ended Dec 31, 2024 (4QFY2024), a 25% increase from RM206.1m a year ago, driven by higher container revenue. Quarterly revenue grew 22% to RM675.4m, compared to RM554.1m in the previous corresponding period. The group declared a dividend of 10.86 sen per share, payable on Feb 21. Separately, Westports announced a slew of boardroom changes, including the redesignation of Ruben Emir Gnanalingam as executive chairman, and the appointment of Lee Mun Tat as group managing director. (The Edge)

Malaysian Resources Corp Bhd (MRCB) is partnering Ipoh Sentral Sdn Bhd (ISSB) to jointly develop the Ipoh Sentral project, with an estimated gross development value of RM6.25bn. ISSB, a joint venture between Railway Assets Corporation's (RAC) subsidiary Railway Assets Holding Sdn Bhd (RAHSB) and Silver Smart Sdn Bhd, owned by the Perak State Secretary (Incorporated), operates under a 50:50 shareholding structure. The collaboration was formalised via the signing of a memorandum of agreement on Thursday for a transit-oriented development (TOD) project on RAC-owned land. While the land size was not disclosed, MRCB revealed that RAC is in the process of transferring the land ownership to RAHSB. This announcement confirms The Edge's report on Tuesday that MRCB has secured the bid for the Ipoh Railway Station Integrated Development Plan (iRide). (The Edge)

Maintenance and upgrading works led to a decline in net property income (NPI) for IGB Real Estate Investment Trust (REIT) (IGBREIT) and IGB Commercial REIT (IGBCR) in their 4QFY2024. IGB REIT, which focuses on retail properties, with key assets being Mid Valley Megamall and The Gardens Mall, reported that its NPI for 4QFY2024 fell 6.4% to RM107.88m from RM115.24m in the same period last year. Revenue was largely unchanged at RM158.3m during the quarter under review, versus RM158.47m previously. The REIT's distribution per unit (DPU) dipped to 2.5 sen from 2.7 sen in the same period last year. IGB Commercial REIT, meanwhile, saw its NPI fall 14.2% to RM28.19m from RM32.86m in 4QFY2023. Revenue for the quarter under review grew 5.7% to RM60.19m from RM56.92m, lifted by higher occupancy and rental rates. The REIT declared a DPU of 0.75 sen for the quarter under review, to be paid on Feb 28. (The Edge)

Axis REIT's (AXREIT) NPI for 4QFY2024 rose 15.39% to RM76.35m compared to RM66.16m a year earlier, thanks to its newly acquired properties, new tenancies from its logistics warehouse Axis Mega Distribution Centre (Phase 2), as well as positive rental reversion from the existing portfolio. Besides, Axis REIT also realised a RM66,000 net gain from the sale of Axis Steel Centre@SiLC, which was completed in December 2024. Revenue climbed 16.16% to RM87.76m from RM75.56m. Axis REIT has proposed a final income distribution of 1.27 sen per unit for the quarter under review, with the book closure and payment dates to be announced later. (The Edge)

KIP Real Estate Investment Trust (KIPREIT) unitholders have approved the acquisition of four industrial properties associated to its largest shareholder, Datuk Eddie Ong Choo Meng, for a total purchase price of RM98.3m. At the company's extraordinary general meeting (EGM), the four acquisition resolutions were passed with shareholders and proxies attending the meeting holding 99%, voting in favour of the related party transaction. The REIT's chief executive officer Valerie Ong Pui Shan shared that all four industrial properties have met the minimum hurdle rate of 6.5%, with rental yields ranging from 6.6% to 7.6%. Additionally, these properties come with a rental reversion of 11%-12% upon renewal at the end of their three-year terms. (The Edge)

Destini Bhd (DESTINI) has managed to stay in the black for a second consecutive quarter as revenue more than doubled, mainly due to the delivery of trains and equipment by its mobility and aviation sectors, as well as cost-cutting measures undertaken by the company. The engineering services provider reported a net profit of RM6.07m for its second quarter ended Dec 31, 2024 (2QFY2025) compared with a net loss of RM3.93m a year earlier. Revenue surged 196% to RM83.56m from RM28.22m, its bourse filing showed. No interim dividend has been paid or declared for 2QFY2025. (The Edge)

Citaglobal Bhd (CITAGLB) has secured two subcontracts worth a combined RM36.26m for station works and other works as part of the Kuching Urban Transportation System (KUTS) project in Sarawak. The first subcontract was awarded by Marquris Holdings Sdn Bhd for Package 2 station works under Phase 1 of the infrastructure works, and has a value of RM29.54m. The second subcontract, which was awarded by 38 Marque Sdn Bhd, is for steel structure materials purchase for the same project phase, with a contract value of RM6.72m. (The Edge)

T7 Global Bhd (T7GLOBAL) has secured a contract with Hess Exploration and Production Malaysia BV for the provision of pan-Malaysian offshore maintenance, construction, modification and hook-up commissioning services. The oil and gas company said the contract, awarded to its wholly owned Tanjung Offshore Services Sdn Bhd, was for B3 Package. However, the value of the contract, which was awarded in November 2024, was not disclosed. (The Edge)

Econframe Bhd (EFRAME) is buying Ipoh-based manufacturer and seller of wooden doors Ivory Pearl Sdn Bhd (IPSB) for RM56m, in a move to expand its footprint in the UK and Australian markets. Econframe is paying RM46.67m in cash - to be funded via a combination of internally generated funds and bank borrowings - to buy IPSB from the major shareholders, which include Yeong Chew Tet and Lee Kok Choy, who owned 31.5% stake and 17.1% stake in the company, respectively. The remaining RM9.33m will be settled through the issuance and allotment of 16.5m consideration shares at an issue price of 56.53 sen per share. This will result in Yeong and Lee becoming substantial shareholders in Econframe post-acquisition, expected to be completed by the second quarter of 2025. (The Edge)

Unitrade Industries Bhd (UNITRAD), a building material wholesaler and distributor, says its 51%-owned subsidiary Intergreen Metal Sdn Bhd is acquiring a controlling stake in metal recycling specialist Kien San Metal Sdn Bhd (KMSB) for RM42m to expand its business to Sabah and Sarawak. Intergreen has inked a share sale agreement with KMSB's sole shareholder Hong Ching Chung on Thursday to take up a 51% stake in KMSB. The acquisition will give Unitrade an effective 26.01% stake in KSMB on completion of the acquisition in the second quarter of this year. (The Edge)

Source: PublicInvest Research - 24 Jan 2025