Market Thoughts

The U.S. stock market declined on Friday following jitters ahead of the Federal Reserve’s interest rate decision on 20th September. Earlier, European stocks rose after the European Central Bank hinted its latest interest rate hike could be its last.

On the local market, the FBM KLCI surged 9.45 points or 0.65% to 1459.03 points. The FBM KLCI may continue to trade sideways and remain below the resistance level of 1465 points, which has been a barrier for the index since July.

Among stocks to watch are: Handal Energy Bhd is planning to undertake a RM90 million capital reduction to eliminate its accumulated losses, Rapid Synergy Bhd has disposed shares of a parcel of land in Manjung, Perak for RM22.89 million cash, Chung Chee Yang has ceased to be the substantial shareholder in Cypark Resources Bhd after disposing 40 million shares or a 5.10% stake, Solid Automotive Bhd has proposed to sell a 4.05-hectare parcel of land in Johor Bahru for RM48 million, Norges Bank, which manages Norway's Government Pension Fund Global, has emerged as a substantial shareholder of Cahya Mata Sarawak Bhd after acquiring 50.05 million shares or a 5.03% stake, Hibiscus Petroleum’s unit Anasuria to develop Marigold field in the Central North Sea, KKB Engineering initiates arbitration against Shapadu to resolve dispute over hook-up, commissioning projects in Sarawak.

Malaysia News & Highlights

Economics

Miti's investment missions to Singapore achieved RM20b committed FDI for Malaysia

The Ministry of Investment, Trade and Industry (Miti) has secured a total of RM20 billion in committed investments from Singapore since January 2023, with the latest RM7 billion foreign direct investment (FDI) received from investors via the ministry’s recent investment mission, led by Minister Tengku Datuk Seri Zafrul Abdul Aziz, to the neighbouring country. The ministry said several companies including INV New Material Technology, Agrocorp and SIA Engineering Company had collectively committed to investing RM7 billion in Malaysia, and the investments are scheduled to be operationalised within the next three years. “INV New Material Technology is a subsidiary of Senior International (Singapore) and Shenzhen Senior Technology Material, and the parent company is a leading enterprise in the lithium battery separator industry in China,” Miti said in a statement on Saturday.

Jendela: Sarawak gets highest allocation of RM4.46b, says Fahmi

Sarawak has received the highest allocation of RM4.46 billion under the National Digital Network (Jendela) project to boost its connectivity and internet services, said Communications and Digital Minister Fahmi Fadzil. He said the project was implemented by the federal government through the Malaysian Communications and Multimedia Commission (MCMC). "Of the total, RM2.93 billion involves allocations from the government, while the remaining amount of RM1.53 billion is commercially provided by service providers," he said in his speech at the Digital Economy Centre (PEDi) in Krokong here on Saturday.

MAA: Vehicle sales up 13% m-o-m in August on improved supply chain, National Day promotions

There were 71,745 vehicles sold in Malaysia in August this year, 13% more than the 63,676 units sold in July, driven by improved supply chain issues and National Day promotional campaigns by some car companies. According to the Malaysian Automotive Association (MAA), the number of vehicles sold in August this year is also 6% more than the 67,609 it reported a year ago. “In volume terms, this result marked the second highest monthly total industry volume (TIV) for 2023 on record. It was also the second time this year the monthly TIV has exceeded the 70,000 mark,” the association said.

DOSM: Crude oil, natural gas production down 3.3% and 3.7% respectively in 2Q2023

Crude oil and condensate production declined by 3.3% in the second quarter of 2023 (2Q2023), while that of natural gas contracted by 3.7%, said the Department of Statistics Malaysia (DOSM). Chief statistician Datuk Seri Mohd Uzir Mahidin said the first release of Mining of Petroleum and Natural Gas Statistics (2Q2023) presents statistics from 2015, as well as annual and quarterly statistics encompassing production, sales, prices, exports and imports of crude oil and condensate, and natural gas. It also features macroeconomic indicators such as gross domestic product (GDP), industrial production index (IPI), producer price index (PPI), as well as employment and labour productivity statistics,’’ he said in a statement on Friday.
Malaysia's domestic visitor numbers rise 20% y-o-y to 54.5 million in 2Q

The number of domestic tourists in Malaysia rose 20% to 54.5 million in the second quarter of 2023 from a year earlier. When compared with 1Q2023, domestic tourism numbers increased 12.2%, said the Department of Statistics Malaysia (DOSM). The number of domestic visitors totalled 171.6 million last year, a 160.1% increase from 66 million in the previous year. In a statement on Friday, DOSM chief statistician Datuk Seri Dr Mohd Uzir Mahidin said overall, Malaysia’s domestic tourism performance in 2022 continued to record positive growth.
Perak MB: Automotive High-Tech Valley investment value rises to RM40 bil

The Perak state government has successfully boosted the investment value in the Automotive High-Technology Valley (AHTV) project in Tanjung Malim to RM40 billion, from RM32 billion previously. Perak Menteri Besar Datuk Seri Saarani Mohamad said the increase was driven by Proton Holdings Bhd’s (Proton) move to relocate its operations from Shah Alam to Tanjung Malim, bringing with it new and existing Proton vendors. “When Proton and Geely said they will manufacture electric vehicles (EV); inadvertently, the move will increase the number of EV vendors,” he told a press conference after officiating the Karnival Mesra Anak Muda (Kamu) 2023 here on Sunday.

Company Development and Outlooks

Siab downsizes rights issue, proposes special issue to support RM122m Taghill acquisition
Siab Holdings Bhd has downsized a proposed rights issue to raise funds for its RM122 million acquisition of Taghill Projects Sdn Bhd. The group also proposed a 100 million special share issue at 12 sen per share or RM12 million to third-party investors, in its bid to part-fund the acquisition of the G7 contractor, which remains a cash and share deal. To recap, Siab announced on July 18 it was looking to acquire Taghill Projects for RM122 million, to be fully satisfied via a combination of RM96 million cash and RM26 million via issuance of 200 million Siab shares at 13 sen each to Taghill’s vendors Wong Yih Ming, Chu Yee Hong Yap Kek Siung.

Handal Energy plans capital reduction, private placement and bonus warrants
Offshore crane services provider Handal Energy Bhd is planning to undertake a RM90 million capital reduction to eliminate its accumulated losses, followed by a private placement involving up to 40% of its issued shares to raise RM9.7 million to repay its borrowings and trade payables, and an issuance of bonus warrants. The group’s accumulated losses as at June 30, 2023 stood at RM102.6 million at the company level, and RM68.1 million at the group level, which it plans to reduce to a loss of RM13.1 million (company level), and a retained profit of RM21.4 million (group level), following the capital reduction. Its proposed placement, which could involve the issuance of up to 266.43 million shares to third-party investors to be identified, would be priced at a discount of at most 20% to the company's five-day volume weighted average market price of its shares immediately before the price fixing date.

UEM Sunrise: Land deal with Melati Ehsan beneficial as we can monetise asset while keeping control of development rights
UEM Sunrise Bhd, which is selling a 4.01-acre plot in Kiara Bay here to Melati Ehsan Holdings Bhd in a related-party-transaction (RPT), said the deal enables 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 (DRA) it has also inked with Melati Ehsan. It also reiterated that the RM85 million proceeds from the disposal will be used for working capital by its subsidiary Mega Legacy (M) Sdn Bhd (MLSB), which will be given the rights to develop the land. UEM Sunrise was responding to a query from Bursa Malaysia about why it is not keeping the land for its own development, and to demonstrate how the disposal and DRA could be more beneficial than undertaking the development directly.

Chung Chee Yang ceases to be substantial shareholder in Cypark, Perkeso raises stake
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 40 million shares representing a 5.10% stake in the group on Thursday. The offload amounts to approximately RM31.80 million based on the closing price of 79.5 sen on that day.

Rapid Synergy sells properties in Perak for RM7 mil gain
Precision tool-making company 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 RM22.89 million cash. The parcel of land comes together with a one-storey commercial shopping complex and a one-storey temporary building comprising a futsal court and a commercial lot. Rapid Synergy said the sale consideration is 23.54% lower than the indicative market value of the apportioned properties of RM29.94 million calculated based on RM98.65 per sq ft, as last appraised in a valuation report by an independent valuer for the management’s internal review and assessment.

OneTech Solutions’ board dismisses major shareholder's requisition for EGM to limit directors' salary, re-audit financials
Software solutions provider OneTech Solutions Holdings Bhd, a LEAP Market listee, 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. In a letter responding to the request from Lau King Yew, who holds a 45% stake in the company and was formerly its MD, OneTech, citing its board of directors who deliberated on his request and the proposed resolutions, said the salary and benefits in kind of its executive director Koh Kean Mum and MD Tan Yuh Pei do not require shareholders' approval as they are salaried executive/management with their respective employment contracts entered with the group's major subsidiary, ONE ERP Solutions Sdn Bhd. Therefore, it said the proposed resolutions to adjust their salaries and benefits in kind to a limit of RM5,000 appear to be "not justifiable and not in necessity".

Solid Automotive to dispose of JB land for RM48 mil
Solid Automotive Bhd has proposed to sell a 4.05-hectare parcel of land in Johor Bahru for RM48 million, using the proceeds for investment purposes, capital expenditure (capex) and working capital. In a filing to Bursa Malaysia, the company said that its wholly-owned subsidiary Solid Autotech Sdn Bhd has entered into a sale and purchase agreement (SPA) with Ferrotec Power Semiconductor Malaysia Sdn Bhd in respect of the proposed disposal. The disposal consideration of RM48 million represents a premium of RM5 million or 11.63% from the market value of RM43 million, it said.

Norges Bank emerges as substantial shareholder of Cahya Mata
Norges Bank, which manages Norway's Government Pension Fund Global, has emerged as a substantial shareholder of Cahya Mata Sarawak Bhd (CMS) after acquiring 50.05 million shares or a 5.03% stake in the Sarawak-based cement manufacturer. According to CMS’ filings with Bursa Malaysia, Norges Bank bought the shares on Sept 8, but it did not reveal the purchase price. Based on the company’s closing price of RM1.05 on Sept 8, a back-of-the-envelope calculation indicates that Norges Bank could have acquired the stake for about RM56.75 million.

KKB Engineering initiates arbitration against Shapadu to resolve dispute over hook-up, commissioning projects in Sarawak
KKB Engineering Bhd said its 60.81%-owned OceanMight Sdn Bhd (OMSB) 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 the projects. According to KKB Engineering's bourse filing Friday, OMSB alleged that Shapadu Energy had breached its contractual obligations, leading to the takeover of the projects by OMSB. OMSB awarded the contracts to Shapadu Energy — a wholly-owned unit of Shapadu Corp Sdn Bhd — in December 2019 and January 2020. Hence, OMSB is claiming from Shapadu Energy the costs for the completed projects, loss of profits, all other losses and expenses incurred.

Hibiscus Petroleum’s unit Anasuria to develop Marigold field in the Central North Sea
Hibiscus Petroleum Bhd’s wholly owned unit Anasuria Hibiscus UK Ltd (AHUK) has entered into a unitisation and unit operating agreement (UUOA) to develop the Marigold field located in the Central North Sea. AHUK holds a 87.5% interest in Licence P198 Block 15/13a, which contains the Marigold West field, with Caldera Petroleum (UK) holding the remaining 12.5%, having joined forces with Ithaca Oil and Gas Ltd to jointly develop the field. British oil and gas company Ithaca Energy (UK) Ltd holds 100% in Licence P2158 Block 15/18b, adjacent to the Marigold West field and containing the Marigold East field.

Fertility care specialist Alpha IVF plans ACE Market listing to set up new medical centres
Fertility care specialist Alpha IVF Group Bhd is planning an initial public offering (IPO) on the ACE Market on Bursa Malaysia to fund new medical centres, as well as expand and upgrade its existing ones. According to its draft prospectus on Bursa Malaysia, the exercise will involve a public issue of 364.50 million new shares, or 7.5% based on the enlarged share total of 4.86 billion after the IPO, and an offer for sale of 1.09 billion shares, representing 22.5% of its enlarged share total. Under its public issuance, 121.50 million shares will be made available via retail offering, of which 48.60 million shares each will be offered to Bumiputera and non-Bumiputera members of the Malaysian public via balloting, while 24.30 million shares will be allocated for eligible persons.

S P Setia to launch Banyan landed homes in Setia EcoHill 2 on Sept 16
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 RM84 million 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. Its intermediate units comprise four bedrooms and three bathrooms, while corner units offer four bedrooms and four bathrooms. The selling price of the homes start from RM678,000 and the project is expected to be completed in 4Q2025. In a statement on Friday, S P Setia divisional general manager Koh Sooi Meng said: “Banyan presents a remarkable opportunity, especially for aspiring young homeowners and upgraders seeking a new home within an affordable price range, without compromising on innovation and sustainability with our Setia i-Home features”.

ACE-bound pawn broker Evergreen Max Cash Capital says IPO oversubscribed by 53 times
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. This is from the 14,568 applications it received for 3.01 billion shares worth RM722.66 million from the Malaysian public, it said in a statement. Of that, 4,596 applications for 656.83 million shares were received for the Bumiputera portion, representing an oversubscription rate of 22.58 times.

Tropicana completes RM2.5m renewal of R&R centre in Langkawi
Tropicana Corp Bhd, in a collaboration with the Langkawi Municipal Council Tourism City, has completed the RM2.5 million renewal of the 0.49-acre Pantai Kok rest and recreation (R&R) centre in Langkawi, according to the developer’s press release on Friday. The initiative saw the upgrading of existing facilities including eight commercial lots, enhanced washroom and surau facilities, and the allocation of more than 70 parking bays for cars, motorcycles and bicycles, to cater for the needs of travellers and visitors and in support of Langkawi’s tourism segment. In the statement, Tropicana’s group executive director Jared Ang said the renewal of the Pantai Kok R&R centre showcases not just Tropicana’s commitment to building a vibrant and sustainable township in Langkawi but also the group’s targeted approach to social outreach.

Change in Boardroom and Management

Former Petronas VP/CFO Manharlal Ratilal joins Hong Leong Bank’s board
Hong Leong Bank Bhd (HLB) has appointed Datuk Manharlal Ratilal, the former executive vice president and group chief financial officer (VP/CFO) of Petroliam Nasional Bhd (Petronas), as its independent and non-executive director. His appointment takes effect from Friday, according to the banking group’s filing. Ratilal held the VP/CFO post in Petronas where he was also a member of the board and executive leadership team of the national oil and gas company and sat on the boards of several subsidiaries of Petronas until his retirement in late 2018.

Foreign News

Wall Street ends sharply lower as chipmakers and megacaps slide
US STOCKS ended sharply lower on Friday (Sep 15) as chipmakers dropped on concerns about weak consumer demand, while rising Treasury yields pressured Amazon and other mega-cap growth companies. Chip equipment makers Applied Materials, Lam Research and KLA all dropped more than 4per cent after Reuters reported TSMC had asked its major vendors to delay deliveries. The S&P 500 dropped 1.22 per cent to end at 4,450.32 points. The Nasdaq declined 1.56 per cent to 13,708.34 points, while the Dow Jones Industrial Average fell 0.83 per cent to 34,618.24 points.

Europe: Shares log weekly gains on China optimism, hopes for pause at ECB
EUROPEAN shares marked weekly gains on Friday (Sep 15), as better-than-expected Chinese data lifted luxury firms while investors took comfort from signs that the European Central Bank (ECB) is nearly done raising interest rates. The pan-European Stoxx 600 rose 0.2 per cent to close at a five-week high, with luxury, mining and autos leading the sectoral gains.

Oil gains for third straight week on tight supply, China optimism
Oil prices hit a 10-month high on Friday and posted a third weekly gain as supply tightness spearheaded by Saudi Arabian production cuts combined with optimism around Chinese demand to lift crude. Brent crude futures rose 23 cents, or 0.3%, to settle at $93.93 a barrel, while U.S. West Texas Intermediate futures was up 61 cents, or 0.7%, to close at $90.77 a barrel. Both contracts traded at 10-month highs on Tuesday for the fifth consecutive session, and gained about 4% on a weekly basis.

Gold rises 1% on U.S. dollar weakness, safe-haven demand
Gold jumped 1% on Friday, helped by a weaker dollar and safe-haven buying after United Auto
Workers union kicked of strikes at three automakers in Detroit, while hopes around a likely pause in U.S. interest-rate hikes lent further support. Spot gold was up 0.9% at $1,927.79 per ounce. Bullion has risen 0.6% so far this week. U.S. gold futures gained 0.9% to $1,949.70.

Asia markets rise as parts of China’s economy showed further recovery; Japan stocks
near 33- year high
Asia-Pacific markets largely climbed, bolstered by a slew of China’s economic data for August that were better than market expectations. China’s August retail sales and factory output beat
expectations, but the print for fixed asset investment came in slightly below expected. Home prices slipped 0.1% in August from the year before.