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Mplus Market Pulse - 18 Sept 2023

Publish date: Mon, 18 Sep 2023, 08:55 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Focusing on the 3 MOUs

Market Review

Malaysia:. The FBM KLCI (+0.65%) ended higher with higher buying support from the foreign institutions as confidence grew after China’s economic data far exceeded expectations. On the broader market, the Construction sector (+3.54%) lead after rallying from a week of consolidation, meanwhile the Healthcare sector (-0.48%) fell.

Global markets:. Wall Street closed lower and Treasury yields spiked as mixed economic data dampened the sentiment; there is still uncertainty on the Fed’s interest rate direction. Both the European and Asian markets ended positively as China released better-than-expected August data.

The Day Ahead

The FBM KLCI gained momentum on the quadruple witching day in line with the performance of the regional stock markets. Meanwhile, the renewed concerns over the interest rate direction have resurfaced on Wall Street, but we opine that the Fed may keep the interest rate unchanged at least for the next FOMC meeting which will be taking place on the 19-20th of September. Despite Wall Street ending weaker last Friday, we think overall sentiment will remain positive on the local bourse given the 3 MOUs worth a total of RM19.84bn were signed with China companies over the weekend. Commodities wise, the Brent crude oil has maintained above the USD93/bbl level, while the CPO prices closed above the RM3,800/MT level.

Sector focus:. Despite the selldown on Wall Street, we believe the traders may focus on the 3 MOUs signed over the weekend and shift the attention to the waste-toenergy, warehousing and logistic, and the plantation sectors for trading opportunities. Meanwhile, we still like the energy sector given the firm Brent oil prices above USD93/bbl.

FBMKLCI Technical Outlook

The FBM KLCI surpassed the 1,450 psychological level with a bullish candle. Also, the technical readings on the key index were positive with both the indicators heading upwards. The MACD Histogram has formed a rounding bottom formation, while the RSI has crossed above 50. The resistance is located around 1,465-1,470 and the support is envisaged around 1,430-1,440.

Company Brief

Ramsay Health Care Ltd announced a sale process has commenced resulting in the receipt of a number of non-binding indicative offers for Ramsay Sime Darby Health Care Sdn Bhd, its JV with Sime Darby Bhd. A select few parties are now in a due diligence process expected to conclude towards the end of October. (The Edge)

In response to a query from Bursa Malaysia, UEM Sunrise Bhd, which is selling a 4.01-acre plot in Kiara Bay here to Melati Ehsan Holdings Bhd in a related-partytransaction, said the sale will enable the group to monetise the land at its current market value while allowing it to retain control over the land's development via a development rights agreement with Melati Ehsan. The proceeds from the sale will be used as working capital by its subsidiary Mega Legacy (M) Sdn Bhd (MLSB) to develop the land, with 20% of the profit entitlement going to Melati Ehsan. (The Edge)

Astro Malaysia Holdings Bhd via its wholly-owned subsidiary, Astro Productions Sdn Bhd (APSB), is acquiring Basecamp Films Sdn Bhd to establish a new division called Astro Sound+Vision. It has entered into an asset purchase agreement with the visual post-production studio, which will be integrated into APSB. (The Edge)

Handal Energy Bhd is planning to undertake a RM90m capital reduction to eliminate its accumulated losses, followed by a private placement involving up to 40% of its issued shares to raise RM9.7m to repay its borrowings and trade payables, and an issuance of bonus warrants. It involves the issuance of up to 266.43m shares to third-party investors priced at a discount of at most 20% to the company's five-day volume weighted average market price before the price fixing date. (The Edge)

Hibiscus Petroleum Bhd’s wholly owned unit Anasuria Hibiscus UK Ltd has entered into a unitisation and unit operating agreement to develop the Marigold field located in the Central North Sea. Anasuria Hibiscus holds an 87.5% interest in Licence P198 Block 15/13a, which contains the Marigold West field. (The Edge)

KKB Engineering Bhd’s 60.81%-owned OceanMight Sdn Bhd has initiated arbitration proceedings against Shapadu Energy Services Sdn Bhd, which it subcontracted to undertake certain hook-up and commissioning projects in Sarawak, to resolve a dispute between them over said projects. OceanMight alleged that Shapadu Energy had breached its contractual obligation and is claiming the costs for the completed projects, loss of profits, all other losses and expenses incurred. (The Edge)

Solid Automotive Bhd via wholly-owned subsidiary Solid Autotech Sdn Bhd has proposed to sell a 4.05-hectare parcel of land in Johor Bahru for RM48m. It has entered into a sale and purchase agreement with Ferrotec Power Semiconductor Malaysia Sdn Bhd for RM48m representing a premium of RM5m or 11.63% from the market value of RM43m. It expects a pro forma gain of RM34.23m. (The Edge)

Rapid Synergy Bhd has disposed of 6,653/10,000 undivided share of a parcel of land in Manjung, Perak, measuring 303,487 sq ft, to Yokado Sdn Bhd for RM22.89m cash. The sale consideration is 23.54% lower than the indicative market value of the apportioned properties of RM29.94m. It is also lower than the company's original cost of investment of RM26.62m in January 2006. However, it is expected to report a gain of RM7m from the proposed disposal. (The Edge)

Norges Bank, which manages Norway's Government Pension Fund Global, has emerged as a substantial shareholder of Cahya Mata Sarawak Bhd after acquiring 50.05m shares or a 5.03% stake. The bank bought the shares on Sept 8, but did not reveal the purchase price. A back-of-the-envelope calculation indicates that Norges Bank could have acquired the stake for about RM56.75m. (The Edge)

OneTech Solutions Holdings Bhd has dismissed its major shareholder's requisition for an extraordinary general meeting to vote on four resolutions, including salary and benefit limits for directors and the managing director, and to re-audit the group's financials, saying the requested meeting and proposed resolutions are invalid and so cannot be held or tabled. (The Edge)

Siab Holdings Bhd has downsized a proposed rights issue to raise funds for its RM122m acquisition of Taghill Projects Sdn Bhd. With the revised rights issue, Siab expects to raise RM103.98m, from the RM110.34m estimated previously. The vendors, it said, have guaranteed a net profit of RM24m from Taghill over a two-year period in FY2024 and FY2025. Taghill’s fair value stood at between RM99.54m and RM129.72m as appraised by Eco Asia Capital Advisory Sdn Bhd, it added. Barring any unforeseen circumstances, the proposals are expected to be completed by end- 2023, Siab said. Siab’s shares closed 0.5 sen or 4.00% higher at 13 sen, valuing the group at RM61.20m. (The Edge)

Chung Chee Yang has ceased to be the substantial shareholder in Cypark Resources Bhd, one year after emerging as the single largest shareholder in the company. In a bourse filing, Cypark said Chung has disposed of 40m shares representing a 5.10% stake in the group on Thursday. The offload amounts to approximately RM31.80m based on the closing price of 79.5 sen on that day. Meanwhile, Pertubuhan Keselamatan Sosial or Perkeso has purchased 2.9m additional shares in the group, after acquiring 1.40m shares in the open market on Sept 13 and another 1.50m shares on Sept 14. (The Edge)

S P Setia Bhd is launching Banyan, comprising 113 units of freehold double-storey terraced homes, in its Setia EcoHill 2 township development in Semenyih, Selangor, this weekend (on Saturday, Sept 16). Banyan has a gross development value (GDV) of RM84m and is the sixth and final phase of the SEHati Collection. Banyan will offer homes with land size of 20ft (feet) by 70ft, and built-ups ranging from 1,777 sq ft (square feet) to 1,901 sq ft. The selling price of the homes start from RM678,000 and the project is expected to be completed in 4Q2025. (The Edge)

Evergreen Max Cash Capital Bhd (EMCC), an ACE Market-bound pawn broking services provider that is also involved in the trading of gold and luxury products, announced on Friday that its initial public offering (IPO) has been oversubscribed by 53.06 times by the Malaysian public. The group, scheduled to be listed on the ACE Market on Sept 26, is raising approximately RM64.2m. (The Edge)

Source: Mplus Research - 18 Sept 2023

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