Malaysia Poised For A Stronger Rebound

Market Review

Malaysia: The FBMKLCI (+0.68%) continued its momentum for the fourth day, closing higher at 1585.17 pts. 12 out of the 13 sectors closed on a positive note, with Transportation & Logistics (+1.21%) sector showing the strongest rally. Meanwhile, REIT (-0.20%) was the only sector that ended in red.

Global markets: Wall Street ended mixed amid slowing employment data, as the number of Americans applying for first-time unemployment benefits came in more- than-expected. Meanwhile, both the European and Asian markets traded higher, as traders brushed off concerns over US-China trade tensions.

The Day Ahead

The local bourse edged higher for the fourth day, buoyed by gains in MAYBANK and PETGAS. In the US, Wall Street closed mixed, with S&P 500 and Nasdaq posting gains, but the Dow ended lower, as initial jobless claims data came in higher-than- expected. All eyes will be on the nonfarm payrolls later today, which will help Fed determine the path of interest rates ahead. In the commodities market, Brent crude oil dipped towards USD74.3 per barrel following Trump's renewed pledge on bringing down oil prices, while gold prices retreated marginally from its all-time high, trading around USD2,856 level. Meanwhile, CPO prices regained momentum and broke above the RM4,400 mark.

Sector Focus: Amid the ongoing US-China trade war, we opine that the local Gloves and Technology counters will benefit from the rising tensions. The trade war could also prompt manufacturers to diversify their production bases, further solidifying the China+1 strategy and strengthening Malaysia's position as a strategic industrial hub, which may benefit the Construction, Building Materials, and Utilities sectors. Lastly, traders can also look into the newly listed solar-related IPO, Northern Solar (M+ TP: RM1.12), which gained 25% on its ACE Market debut yesterday.

FBMKLCI Technical Outlook

The key index surpassed its EMA20 with technical indicators showing positive signs, including a positive MACD histogram just started to form while RSI is trending off its oversold zone. Resistance is anticipated around 1,600-1,605, while support is set at 1,565-1,570.

Company Briefs

IHH Healthcare Bhd's (IHH) unit Northern TK Venture (NTK) is seeking compensation of up to 109.3bn Indian rupees (RM5.7bn) from Japanese drugmaker Daiichi Sankyo Co Ltd over its stake buy in India's Fortis Healthcare. In October 2023, NTK had filed a claim against Daiichi Sankyo saying the latter prevented NTK from proceeding with its open offer to acquire a stake in Fortis Healthcare back in 2018. At that time, NTK had sought an initial claim of ¥20bn (RM653m) that Daiichi Sankyo was ordered to pay as damages in November 2023, together with interest at the rate of 3% per annum. Nevertheless, after a report conducted by NTK-appointed consultant Osborne Partners, the group said that the compensation ranges from RM200m to RM5.7bn, "depending on what relevant parameters are applied". (The Edge)

Lotte Chemical Titan Holding Bhd's (LCTITAN) net loss for the fourth quarter ended Dec 31, 2024 (4QFY2024) widened to RM510.07m from RM186.48m a year earlier, attributed to higher loss to impairment of RM940.23m on property, plant, equipment and right-of-use assets. This was the group's largest quarterly net loss since its listing in 2017. Revenue for the quarter fell 3.37% to RM1.79bn from RM1.86bn. No dividend was declared for the quarter under review. The weak 4QFY2024 performance dragged Lotte Chemical Titan's full-year net loss deeper to RM1.18bn in FY2024 against RM780.29m in FY2023. Cumulative revenue also declined 2.76% to RM7.44bn from RM7.65bn. (The Edge)

British American Tobacco (M) Bhd's (BAT) net profit for 4QFY2024 increased 3.38% to RM48.97m from RM47.36m a year earlier, on higher sales volume driven by year- end seasonal sales but offset by higher tax expenses. Quarterly revenue rose 2.7% to RM653.03m versus RM635.96m. It declared a fourth interim dividend of 15 sen per share, payable on March 6, bringing total dividend payouts for the financial year ended Dec 31, 2024 (FY2024) to 59 sen per share. For FY2024, net profit slipped 5.96% to RM183.14m compared with RM194.75m in FY2023, despite revenue rising marginally by 0.19% to RM2.32bn versus RM2.31bn. (The Edge)

Bank Islam Malaysia Bhd (BIMB) has signed an agreement to set up a joint venture, Finodyn Sdn Bhd, with local firm Reldyn Tech Sdn Bhd to sell finance-related digital technology products and services. The total investment is RM9m cash, of which Bank Islam will contribute 40% of the capital and 60% will be contributed by Reldyn Tech. Bank Islam said Finodyn will adopt a business-to-business model, focusing on delivering financial and banking platforms that offer Shariah-compliant financial solutions, consulting, maintenance, and support services to diverse businesses and organisations. (The Edge)

Zecon Bhd (ZECON) has signed a non-binding pact with Sabah state-owned firm Petrosabah Sdn Bhd to explore joint development of a large-scale floating solar project in Lahad Datu. Under the terms of the Memorandum of Understanding (MOU), Zecon will hold a 70% stake in a company to be formed, and Petrosabah will have 30%. The MOU is valid for six months or until a formal joint venture agreement is signed. During the period, parties will explore the long-term potential of their partnership and seek opportunities for mutually beneficial collaboration on the project. (The Edge)

Notion VTec Bhd (NOTION) is acquiring a four-hectare piece of vacant freehold agricultural land in Kapar, Klang, for RM29.62m as part of the expansion of its manufacturing operations. The expansion plans include the construction of a large new factory to accommodate growing production needs. The company said the land's strategic location near its existing extrusion plant provides a natural extension for future development. (The Edge)

Bina Puri Holdings Bhd (BPURI) is in the midst of restructuring its loan with Export- Import Bank of Malaysia Bhd (Exim Bank) following a winding-up petition from the bank on Tuesday. Bina Puri said the restructuring negotiations were warranted due to the escalation of the US dollar against the ringgit and the increase of interest rates from 4% to 11%. The property developer had taken a US$7.65m (RM33.93m) loan, with an initial interest rate of 4%. Throughout the loan tenure, the company had paid US$5.1m, with an inclusive interest of US$2.35m. It added that proposals for restructuring the loans were discussed with Exim Bank, and the bank had in principle agreed to the restructuring to be finalised no later than end-February 2025. (The Edge)

Scomi Energy Services Bhd (SCOMIES) is set to be delisted from Bursa Malaysia on Feb 12, following the company's failure to submit its regularisation plan on time. Bursa Securities dismissed Scomi Energy's bid for an extension of time to submit its regularisation plan, keeping the deadline on Jan 31. The company's shares are to be removed from the official list effective Feb 12. (The Edge)

MN Holdings Bhd (MNHLDG) has terminated its partnership with cybersecurity solutions company Intelligent Pie Consulting Sdn Bhd aimed at securing tenders for operational technology cybersecurity projects. MN Holdings said the termination, in the form of letting the MOU lapse, was due to the weak flow of tenders and no successful tenders secured up to date. (The Edge)

ATA IMS Bhd's (ATAIMS) chief operating officer (COO) Dharma Rajan Nadarajah has stepped down, effective Wednesday. Dharma Rajan, 55, resigned from the post he held since May 2022 "to pursue personal interest". Meanwhile, ATA IMS announced that it has appointed AV Kamaraj Vellapan as the group's new COO. (The Edge)

Source: PublicInvest Research - 7 Feb 2025