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Mplus Market Pulse - 6 Jun 2023

Publish date: Tue, 06 Jun 2023, 09:00 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

All materials published here are prepared by Malacca Securities. For latest offers on Malacca Securities trading products and news, please refer to: https://www.mplusonline.com.my

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Negative momentum persisted

Market Review

Malaysia:. The FBM KLCI (-0.1%) bucked the mostly positive regional peers to edge lower for the 4th straight session, dragged down by weakness in consumer and banking heavyweights. The lower liners also advanced, while the technology sector (+1.2%) outperformed the mostly positive sectorial peers.

Global markets:. Wall Street pullback from the previous session rally as the Dow fell -0.6%, dragged down by profit taking activities in mega cap technology heavyweights. The European stockmarkets also retreated, but Asia stockmarkets closed mostly upbeat.

The Day Ahead

The FBM KLCI remained bearish as investors selling pressure in banking and selected consumer heavyweights, while investors piled into small and mid-cap stocks. We deem the pullback on Wall Street overnight as a healthy consolidation, while the local bourse may track regional markets’ uptrend move and bargain hunting activities may emerge. Investors may monitor Japan’s and Eurozone’s GDP, as well as China’s inflation rate to gauge the aggressiveness of global interest rate hikes. Commodities wise, the Brent crude oil traded above US76 per barrel, while the CPO traded above RM3,350.

Sector focus:. The financial sector may see a rebound following last week’s selldown. Besides, renewable energy could continue to be the trend in line with government’s initiative to expand renewable energy use in Malaysia. Besides, the property related counters may shine amid optimism over economic recovery.

FBMKLCI Technical Outlook

The FBM KLCI dipped for the fourth straight session, closing just above the 1,380 level. Technical indicators remained negative as the MACD Histogram extended a negative bar, while the RSI hovered below 50. Support is located at 1,370, while resistance is envisaged along 1,400-1,440.

Company Brief

Yinson Holdings Bhd’s indirect wholly-owned subsidiary, Yinson Bouvardia Holdings Pte. Ltd (YBHPL) plans to acquire the entire equity interest in AFPS BV from Atlanta Field B.V. via a call option for a maximum price of USD87.9m (RM405.6m). Following the proposed acquisition, AFPS will be an indirect whollyowned subsidiary of Yinson, via its indirect holding of equity interest in YBHPL. AFPS is the owner of the floating production, storage and offloading unit (FPSO) currently known as FPSO Atlanta, which is currently undergoing the process of the redeployment to modify, upgrade and extend its design life. (The Star)

IOI Properties Group Bhd has redesignated Lee Yeow Seng as its chief executive officer effective 1st July 2023. Yeow Seng, who is currently the group's executive vice-chairman, replaces Datuk Voon Tin Yow, who will be retiring on the same day. Yeow Seng joined the board of IOI Properties on 23rd February 2013 as an executive director. (The Edge)

Sime Darby Plantation Bhd, Sime Darby Bhd and Sime Darby Property Bhd have renewed their donation agreement with Yayasan Sime Darby. The 3 companies had entered into the agreement with Yayasan Sime Darby in August 2017, under which they agreed to make cash donations to the foundation from time to time. The agreement expired on 29th November 2022. The foundation and donors have agreed to continue with their obligations under the 2017 agreement for a further term of 4 years commencing from 2nd June 2023 by entering into the new donation agreement. (The Edge)

Malaysia Airports Holdings Bhd (MAHB) has appointed Ministry of Finance (MOF) deputy secretary general (policy) Datuk Zamzuri Abdul Aziz as a non-independent non-executive director effective 5th June 2023. Datuk Johan Mahmood Merican resigned as a non-independent and non-executive director after he ceased to be MOF’s nominee on MAHB’s board upon assuming the position of treasury secretary general 2 weeks ago. (The Edge)

The Employees Provident Fund (EPF) has ceased to be a substantial shareholder in YTL Power International Bhd, after disposing of 6.0m shares or a 0.1% stake in the utility group. The shares were disposed of on 30th May 2023. This reduced the pension fund’s stake in YTL Power to 4.9% (398.4m shares). From 26th April 2023 to 2nd June 2023, EPF had disposed of a total of 41.8m shares in YTL Power. (The Edge)

The EPF has decided to vote against MR DIY Group (M) Bhd’s proposed renewal of authority for the company to purchase its own shares, in its annual general meeting. The company should utilise their cash balance to pay higher dividend to shareholders rather than share buy-back, said EPF. According to Bloomberg’s data, EPF is a substantial shareholder and the 3rd largest shareholder of MR DIY with a 5.4% stake or 507.2 m shares. (The Edge)

SMTrack Bhd, together with 3 listed companies have mutually agreed not to extend the Heads of Agreement (HOA) pertaining to their 5G venture, following the expiry of the HOA on 24th May 2023. These three companies are Jiankun International Bhd, Sersol Bhd and MQ Technology Bhd. Notably, the consortium had initially started out with 6 companies back in January 2022. Back then, SMTrack which was heading the consortium, together with Jiankun, Sersol, MQ Tech as well as Country Heights Holdings Bhd and Techna-X Bhd signed the HOA with 5G Infra Tech Solution Sdn Bhd. (The Edge)

Southern Score Builders Bhd has inked a Memorandum of Understanding (MOU) with 2 parties with the intention of forming a partnership to implement and develop robotic construction technologies in Malaysia. The two parties are MCC Overseas (M) Sdn Bhd (MCC) and Guandong Bright Dream Robotics Co Ltd (GBDR). The three companies agreed to construct 5,000 units of houses in Malaysia using robotic construction technologies. (The Edge)

Rex Industry Bhd expects to recognise a provision for retrenchment costs amounting to RM2.0m and other decommissioning expenses following the decommissioning of its production facility in Bukit Minyak Industrial Park, Seberang Perai Tengah, Penang. It estimates the decommissioning exercise to commence at the end of July 2023 and is expected to be completed by 1QFY24. The decision to decommission the 7.7-ac facility is part of the company’s business rationalisation plan, which aims to reduce overall business operating costs and improve its financial position, whereas the warehouse located within the said production facility will be maintained for inventory storage purposes. (The Edge)

Bumi Armada Bhd has reported that its Armada Kraken floating production storage and offloading (FPSO) vessel operating in the UK North Sea has been shut-in due to a technical failure, and is expected to have a material impact on its financials. The shut-in comes after the vessel’s prolonged period of top-quartile production and operational performance. Key maintenance activities, originally scheduled for execution within 2 periods of single-train operations in 3Q23, are being executed during the period of shut-in. (The Edge)

Careplus Group Bhd has signed a term sheet with GoAuto Group Sdn Bhd to explore the business of selling and manufacturing electric vehicles (EV) as joint venture partners. The two companies intend to collaborate to build an EV manufacturing and assembly hub on a 74-ac piece of land in Chembong, Negeri Sembilan. It is also exploring the purchase of 30.0% in a unit of GoAuto by issuing 25.0m new Careplus shares, in order to import the Neta brand EV which is said to be the cheapest EV in Malaysian market at below RM100,000 currently, via exclusive distribution here. (The Edge)

Citaglobal Bhd’s wholly-owned unit has served a notice of adjudication against IJM Construction Sdn Bhd, claiming RM20.8m allegedly owed for work done in constructing part of the West Coast Expressway. Citaglobal Land Sdn Bhd had performed the work under a subcontract awarded in October 2015 to build part of WCE’s Section Nine mainline works from Kampung Lekir Interchange to Changkat Cermin Interchange. IJM Construction, wholly-owned by IJM Corporporation Bhd, has allegedly refused, failed and/or neglected to pay the outstanding sum despite Citaglobal Land completing its contractual obligations. (The Edge)

Crest Builder Holdings Bhd has reported that an arbitration tribunal has awarded its subsidiary RM18.4m in relation to its RM31.1m counterclaim against Saujana Triangle Sdn Bhd in a payment dispute. The money was awarded to Crest Builder Sdn Bhd (CBSB) for certified sums, costs of idling and dayworks and retention sum. The tribunal rejected the RM94.7m sought by Saujana against CBSB in the main claim. (The Edge)

Source: Mplus Research - 6 Jun 2023

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