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Mplus Market Pulse - 4 Apr 2023

Publish date: Tue, 04 Apr 2023, 09:07 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Starting off April with a blast

Market Review

Malaysia:. The FBM KLCI (+0.8%) started off the month on a strong footing, driven by gains in more than two-thirds of the key index components. The lower liners also advanced, while the energy sector (+3.5%) emerged as top performer amongst its sectorial peers following OPEC and its allies surprise output cut.

Global markets:. Wall Street extended its gains after the ISM Manufacturing PMI decreased to 46.3 in March of 2023; the lowest since May of 2020 suggests that interest rate upcycle is nearing to an end. The European stockmarket, however, ended mixed, while Asia stockmarkets closed mostly positive.

The Day Ahead

The FBM KLCI rebounded as rallies on Wall Street coupled with China’s future investment in Malaysia boosted sentiment. Although sentiment appeared to improve on the global front, risk may not abate yet as rising crude oil price may again trigger fears over inflation in the US and Europe. Nevertheless, buying interest on the local bourse should be supported by climbing crude oil prices as well as a better economic outlook following the reopening of China borders. Commodities wise, the Brent crude oil price rallied, trading above USD84 per barrel mark, while the CPO price hovered above RM3,890.

Sector focus:. Buying interest in the energy sector may sustain over the near term with the crude oil price remaining firm above USD84. Besides, sectors in the spotlight may include construction, building material, and green energy in view of their brighter outlook following the Prime Minister’s visit to China.

FBMKLCI Technical Outlook

The FBM KLCI extended its rebound to close above its daily EMA20 level. Technical indicators turned positive as the MACD Histogram extended a positive bar, while the RSI climbed above 50. Resistance is pegged along 1,445-1,460, while the support is positioned at 1,380-1,400.

Company Brief

Nextgreen Global Bhd’s wholly-owned subsidiary Nextgreen Biomass Sdn Bhd has inked a shareholders’ agreement to construct and manage 20 oil palm waste collection and processing centres throughout Malaysia. The agreement aims to establish a joint-venture (JV) via a special purpose vehicle (SPV) called GTC Biomass Bhd which will see Nextgreen Biomass owning 65.0% equity interest, GTMASB 10.0%, KOOP Sahabat 18.0% and Koperasi Perkhidmatan Setia Bhd 7.0%. GTC Biomass is targeting to build the first four plants in next 2 years. Each of the centre will have the capacity to hold up to 450,000 tonnes of processed empty fruit bunches per annum. (The Star)

Sunsuria Bhd is exploring a collaboration with China's IAT Automobile Co Ltd to undertake research and development in electric vehicle (EV) and EV-related products. The tie-up would involve the creation and manufacturing of Malaysia's own brand of EV with cutting-edge technological advances. The MOU is part of the series of foreign direct investments with total commitment of RM170.00bn in investments from China, which was secured in conjunction with Prime Minister Datuk Seri Anwar Ibrahim’s visit to China. (The Star)

MN Holdings Bhd is partnering with China's Shanghai DC-Science Co Ltd to develop Shanghai DC-Science's first high-performance data centre outside China. The project is estimated to have a value of over USD600.0m (RM2.65bn) and will boost MN Holdings’ future order book, which stood at RM325.9m as at 20th January 2023. (The Edge)

Berjaya Land Bhd’s application for a 6-month extension to comply with its approved public shareholding spread requirement of 20.0% was rejected by Bursa Malaysia. Its public shareholding spread stood at 13.8% as at end-March 2023, a shortfall of 6.2% or 307.0m shares. (The Edge)

DRB-Hicom Bhd’s 50.1%-owned Proton Holdings Bhd expects to launch a new electric vehicle in the country by 4Q23 under its new energy vehicle segment. Proton’s wholly-owned subsidiary Proton New Energy Technology (Pro-Net) is expected to introduce “smart #1”, which is a sport utility vehicle segment EV developed by Zhejiang Geely Holding Group with Mercedes-Benz. (The Edge)

Ranhill Utilities Bhd’s unit Ranhill Capital Sdn Bhd (RCSB) has been notified by the Energy Commission (EC) that its consortium with Sabah Energy Corporation Sdn Bhd (SEC) has won the bid for a 100.0MW power plant at the West Coast of Sabah. The project involves the design, construction, ownership, operation and maintenance of a 100.0MW gas-fired combined-cycle gas turbine (CCGT) power plant on a build, own, operate and transfer basis. (The Edge)

Creador founder and chief executive officer Brahmal Vasudevan has exited MR DIY Group (M) Bhd's board of directors. Brahmal resigned as non-independent and non-executive director as he is no longer the board representative for Hyptis Ltd, a unit of Creador. (The Edge)

Malpac Holdings Bhd wholly-owned subsidiary has received claims totalling RM78.6m in connection with a High Court order on assessment of damages against the firm. Malpac Capital Sdn Bhd (MCSB) received an affidavit from Yong Toi Mee and Cheang Kim Leong on the matter on 31st March 2023. They are seeking a RM73.6m refund on management fees from MCSB for the management of a palm oil mill and RM4.9m in legal costs. (The Edge)

Dynafront Holdings Bhd has accepted a contract from an Indonesian consultancy business to develop and implement 2 software components for insurance-related business. The group’s wholly-owned subsidiary Dynafront Systems Sdn Bhd (DSSB) accepted the contract from PT Bangun Cipta Masa Depan (BCMD) for the design and maintenance of an online agency management system, and leads generation mobile app for sale of insurance policies. The contract is effective from 3rd April 2023 until 31st December 2050. (The Edge)

Heng Huat Resources Group Bhd through its wholly-owned subsidiary HH Northern Point Sdn Bhd has entered into a sale and purchase agreement with All Cables Sdn Bhd to dispose of a piece of land for a cash consideration of RM10.5m. The disposal of the leasehold land, together with a building erected in Seberang Perai Tengah, Penang, is expected to bring a gain of approximately RM3.7m. The net proceeds from the disposal will be utilised for repayment of working capital of the company and its subsidiaries. (The Edge)

Reach Energy Bhd has been categorised as a Practice Note 17 (PN17) company after its shareholders’ equity fell below 50.0% of its share capital as at FY22. The company triggered the PN17 criteria after announcing its 4QFY22 results slightly over a month ago on 28th February 2023. (The Edge)

Lay Hong Bhd has proposed to acquire the remaining 51.0% equity interest in its joint venture (JV) with NH Foods Ltd (NH Foods), Japan, as the Japanese food processing group exits its Malaysian operation. (The Edge)

Affin Bank Bhd announced that the merger between its general insurance arm AXA Affin General Insurance Bhd (AAGI) with Generali Asia NV was completed on 1st April 2023. Affin Bank currently holds a 30.0% stake in the enlarged insurance company, while Generali will control the remaining 70.0%. (The Edge)

Encorp Bhd has received a take-up rate of 70.0% for Iris, the second last phase property launch for the Encorp Cahaya Alam township in Shah Alam. Following the good response, the developer is also eyeing to launch its final phase, Akasia 2, in this quarter. With a gross development value of RM59.0m, Iris comprises 59 units of two-storey super-link homes. Iris is expected to be completed by February 2025. (The Edge)

Top Glove Corp Bhd clarified that the impact of the fire at its Lukut factory in Negeri Sembilan is minimal, affecting only about 1.0% of the group's capacity. The fire occurred at around 5.10pm last Thursday in Block A of Lukut Factory 27. Orders had been diverted from production lines in Block A of Plant 27 to Block B, as well as to another Top Glove plant in Klang. (The Edge)

AirAsia X Bhd shareholders who attended the airline’s 13th annual general meeting on 26th June 2019 will still be able to redeem their complimentary flight vouchers until the end of June 2023. Its board of directors had approved the extension of the redemption and travel validity period of the shareholders’ benefit programme. (The Edge)

PLS Plantations Bhd has entered into a partnership agreement with China's largest food manufacturer Cofco Food Import Co Ltd to develop and implement food security initiatives. Yhe scope of the agreement includes agriculture development, food reserves, food safety, poverty alleviation, food production, food imports and food pricing. (The Edge)

The property division of PPB Group Bhd, PPB Properties, has unveiled the Lumina Bedong township development in Bedong, Kedah. The township has an estimated gross development value of RM900.0m and is expected to be completed by 2035. Sitting on a 228-ac of freehold land, the entire township will have an approximate of 1,500 units of affordable landed homes with a commercial hub spanning across 23.0-ac and recreational facilities such as jogging and cycling tracks, reflexology path and children play area in a 5.6-ac central park upon its completion. (The Edge)

Bonia Corp Bhd has redesignated Datuk Seri Chiang Fong Seng, son of its founder and group executive chairman Chiang Sang Sem, as group chief executive officer, effective 1st April 2023. Fong Seng, better known as Daniel Chiang, was previously the executive director of the company. The 37-year-old was appointed to the board in Jan 2014 and has held the position of group executive director since then. Daniel holds 6.2m shares or a 3.1% stake in the company. (The Edge)

Source: Mplus Research - 4 Apr 2023

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