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PublicInvest Research
Author: PublicInvest   |   Latest post: Thu, 20 Jul 2023, 9:10 AM

An official blog in I3investor to publish research reports provided by PublicInvest Research team. FEATURED POSTS

All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public 1. I3investor - Meet the new I3investor...
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Blog Headlines (by Date) Blog Index  

1. 2nd Quarter FFB results out! And they
are better than 1st Quarter. Will Palm
oil cos increase dividend payouts?
Calvin Tan
PublicInvest Research Headlines - 20 Jul 2023 THE INVESTMENT APPROACH OF CALVIN TAN

2. Central Europe wants ban on Ukrainian

Author: PublicInvest   |  Publish date: Thu, 20 Jul 2023, 9:10 AM
grain extended, ministers say
Good Articles to Share

Economy
3. Chaos as U.S. soldier Travis King
US: Retail sales rise moderately; economy plodding along. US retail sales rose less than expected in June as bolted into North Korea -witness
receipts at service stations and building material stores declined, but consumers boosted or maintained spending Good Articles to Share
elsewhere, which likely kept the economy on a solid growth path in the second quarter. Overall, the mixed report
painted a picture of consumer resilience, though slowing momentum in spending growth. It did not change expectations 4. Donald Trump loses bid for new trial in
that the Fed would resume raising interest rates this month after keeping them unchanged in June. Retail sales E. Jean Carroll case
increased 0.2% last month. Data for May was revised higher to show sales gaining 0.5% instead of 0.3% as previously Good Articles to Share

reported. Economists polled by Reuters had forecast retail sales gaining 0.5%. Retail sales are mostly goods and are not
adjusted for inflation. They rose 1.5% YoY in June. (Reuters) 5. Pakistan's Imran Khan to face charges
of exposing official secrets - minister
US: Manufacturing output falls in June; rebounds in second quarter. Production at US factories unexpectedly fell Good Articles to Share

in June, but rebounded in the second quarter as motor vehicle output accelerated after two straight quarterly declines.
Manufacturing output dropped 0.3% last month, the Fed said. Data for May was revised down to show production at 6. Visitors to Japan top two million in
factories falling 0.2% instead of edging up 0.1% as previously reported. Economists polled by Reuters had forecast June for first time since Covid
Good Articles to Share
factory output would be unchanged. Production decreased 0.3% on a YoY basis in June. It rebounded at a 1.5%
annualized rate in the second quarter after shrinking at a 0.2% pace in the January-March period. Factory output, which
7. SORRY ! I MADE A BIG MISTAKE ON
had also contracted in the fourth quarter, was boosted by a 36.7% surge in the production of motor vehicles and parts
JAKS RESOURCES CASH FLOW
in the second quarter. (Reuters)
PROJECTION !
Please Explain !
EU: German tax revenues drop sharply in June. Tax revenues of Germany's federal and regional state governments
fell by 7.3% in June compared with the previous year, reflecting tax relief measures to compensate for inflation and a
8. Cyprus excludes new asylum seekers
one-off effect, the finance ministry said. Federal and state governments' tax revenue declined to a total of 86.39bn
from resettlement scheme
euros (USD96.71bn), according to the ministry's monthly report. The ministry said the YoY decrease was amplified by a Good Articles to Share
special revenue-increasing effect in June of last year. When adjusted for that effect, revenues would be down 3.5%, it
said without elaborating further. (Reuters)

UK: High inflation cools, offering some relief to BoE. Britain's high rate of inflation fell by more than expected in
APPS
June and was its slowest in over a year at 7.9%, according to data that will ease some of the pressure on the BoE to
keep on raising interest rates sharply. Sterling weakened and investors scaled back their bets on future increases in
borrowing costs as consumer price inflation growth came in at its lowest since March 2022, although it remained above
the rate in other big, rich economies. Economists polled by Reuters had mostly forecast a smaller slowdown, to 8.2% in
the 12 months to June from May's 8.7%. (Reuters)
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Japan: Companies less confident about business conditions. Confidence at big Japanese manufacturers fell in
July for the first time in six months, the Reuters Tankan survey showed on Wednesday, in a sign of growing exporter
concern about weakening overseas demand. Their index fell to plus 3 in July, from plus 8 in the previous month.
Industries like steel, oil refining and food processing saw particularly large slumps in sentiment. Last month saw Asian
factory activity drop, hurt by sluggish demand from China in particular. (Reuters)
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China: To increase support for private firms to bolster recovery. China on Wednesday pledged to make the
private economy "bigger, better and stronger" with a series of policy measures designed to help private business and
bolster the flagging post-pandemic recovery. China will strive to create a market-oriented first-class business
environment, state news agency Xinhua said, quoting guidelines published by the Communist Party and the cabinet.
(Reuters)
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South Korea: To hike minimum wage by 2.5% in 2024, smallest in three years. South Korea has decided to
raise the minimum wage by a three-year low of 2.5% in 2024, its Minimum Wage Commission said on Wednesday, amid
slowing growth and high inflation. The minimum hourly wage will be raised to 9,860 won (USD7.80) next year, up from  
9,620 won this year, the commission said. The figure was reached after 110 days of discussion, the most number of  
days it has ever taken reach an agreement. It will be the smallest increase since 2021, when the wage was raised by a
record low of 1.5% amid the COVID-19 pandemic. (Reuters)

New Zealand: Q2 CPI rises 1.1%, slightly faster than expected. New Zealand's consumer inflation came in
slightly above expectations in the second quarter, driving swap rates higher as the market pushed out expectations for
when the central bank might start cutting the cash rate. Consumer prices rose 6.0% YoY in the second quarter, slower
than the 6.7% increase in the first quarter, Statistics New Zealand said in a statement on Wednesday. It is now below
the three-decade high of 7.3% inflation seen in the second quarter of 2022. The CPI rose 1.1% quarter-on-quarter,
slower than the 1.2% rise in the first quarter. (Reuters)

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7/20/23, 7:24 PM I3investor Blog Post | I3investor
Markets
Genting (Outperform, TP: RM5.50): Receives four offers for Miami property, one exceeding RM5.58bn -
Report . Genting has reportedly received four offers for a Miami waterfront property it owns, which it had originally
wanted to turn into a casino.One of the bids it received reportedly exceeded USD1.23bn (RM5.58bn), Bloomberg
reported. “There’s been no break in the receipt of offers — at and even above the USD1.225bn price (RM5.56bn),”
Avison Young broker Michael Fay was quoted as saying. The property, which spans almost 63,000 square metres, was
the site of the old Miami Herald building, the report said. (Malay Mail)

Muda: Unit sells remaining 16.88% stake in Singapore waste paper company for RM23m . Muda Holdings
70%-owned unit has exercised its put option to sell the remaining 16.88% stake it holds in a Singapore waste paper
recovery and processing company — KL Resources Pte Ltd — for RM23.06m — to realise its investment and generate 419  360  547  957 
funds for working capital. The subsidiary, Intrapac (Singapore) Pte Ltd, inked an agreement to dispose of the stake to
Tansfield Ltd for SGD6.7m. The disposal, which is expected to be completed in 30 days, will result to a proforma gain of Active Gainers Losers
about RM1.91m to Muda Holdings for the financial year ending Dec 31, 2023. (The Edge) Top 10 Active Counters
 Name Last Change 
Builder Siab: Plans to raise RM110m via rights issue to fund Taghill acquisition . Builder Siab Holdings is
acquiring Taghill Projects SB for RM122m to be satisfied via a combination of RM96m cash and RM26m via issuance of  CLASSITA 0.19 -0.04 
Siab shares at an issue price of 13 sen each. Siab also plans to undertake a rights issue to raise up to RM110.34m, of  CLASSITA-WC 0.025 -0.02 
which RM96m will be used to partly fund the cash consideration of the proposed acquisition and the rest for working  ARMADA 0.515 +0.025 
capital. (The Edge)
 UEMS 0.45 +0.06 

Tex Cycle: To sell property in Jalan Kuchai Lama for RM29m . Tex Cycle Technology (M) is disposing of a three-  MSTGOLF 0.78 -0.03 
storey detached industrial building constructed on a piece of leasehold land measuring 4,823 sq m in Jalan Kuchai  BAHVEST 0.31 +0.015 
Lama, Kuala Lumpur for RM29m. The group is selling the property via its wholly owned unit Metro Envy SB to Gorgeous  HSI-CO3 0.165 -0.015 
Arena SB (GASB). Tex Cycle said the divestment, which is expected to be completed by the first quarter of 2024, will
 JAKS 0.205 +0.015 
result in a gain of RM7.1m. (The Edge)
 WIDAD 0.42 0.00 
Solarvest: Partners Singapore companies to expand its geographical reach . Solarvest Holdings is partnering  KNM 0.075 -0.01 
two Singapore companies to advance energy storage solutions or ESS development in solar energy systems, as it
expands its geographical expansion to Singapore and Brunei to capitalise on the growing demand for sustainable energy
solutions, given strong prospects in both the countries. In a statement, it said its wholly owned Solarvest Energy SB has
entered into a MOU with Singapore’s multi-faceted industrial consultant IDA Holdings Pte Ltd (IDA) and Acumon Capital PARTNERS & BROKERS
Pte Ltd (Acumon), a multi-disciplinary real estate developer and manager. (The Edge)

Barakah: Unit receives extension for pan-Malaysia MCM contract . Barakah Offshore Petroleum Bhd's unit, PBJV
Group SB, has received a contract extension for pan-Malaysia maintenance, construction and modification services
under Package A. The group said that the contract from Jadestone Energy (Malaysia) Pte Ltd — formerly Sapura
Exploration and Production (PM) Inc — Hess Exploration and Production Malaysia BV, Petrofac (Malaysia PM304) Ltd and
IPC Malaysia BV, which was due to expire in June this year, has been extended to Dec 31, 2024. (The Edge)

Market Update
The FBM KLCI might open higher today US stocks rose slightly on Wednesday as investors prepared for a pair of
earnings results from big tech groups after the closing bell. On Wall Street, the benchmark S&P 500 pared an early
advance to finish the session with a 0.2% gain, while the tech-focused Nasdaq Composite ended fractionally higher. In
Europe, the region-wide Stoxx 600 closed 0.3% higher, extending gains from the previous session, while France’s Cac
40 edged up 0.1% and Germany’s Dax ended the day 0.1% lower. London’s FTSE 100 jumped 1.8%, its steepest one-
day gain since November, as shares of UK property companies surged following signs that inflation was slowing and
interest rates could peak lower. The moves came after the Office for National Statistics said the UK’s annual consumer
price inflation eased to 7.9% in June, from 8.7% in the previous month, landing below analysts’ forecasts. The reading
ended a four-month streak of UK price growth readings that exceeded expectations, easing the pressure on Bank of
England policymakers who have lifted interest rates to 5%, their highest level since 2008. Meanwhile, the regional
equities slipped, as China’s stalled economic recovery and the government’s slow rollout of stimulus measures weighed
on market sentiment. The Hang Seng index dropped 0.3%, while China’s blue-chip CSI 300 index slipped 0.1%.

Source: PublicInvest Research - 20 Jul 2023

Labels: BARAKAH, SLVEST, TEXCYCL, SIAB, MUDA, GENTING

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Technical Buy - DRBHCOM (1619)

Author: PublicInvest   |  Publish date: Thu, 20 Jul 2023, 9:08 AM

https://klse.i3investor.com/blogs/PublicInvest/ 2/10
7/20/23, 7:24 PM I3investor Blog Post | I3investor

Target Price: RM1.50, RM1.59

Last closing price: RM1.44
Potential return: 4.1%, 10.4%
Support: RM1.37
Stop Loss: RM1.30

Possible for sideways breakout. DRBHCOM is potentially staging a breakout from its sideways channel, with
anticipation of continuous improvement in both momentum and trend in the near term. Should immediate resistance
level of RM1.50 be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance
level of RM1.59.

However, failure to hold on to support level of RM1.37 may indicate weakness in the share price and hence, a cut-loss
signal.

Source: PublicInvest Research - 20 Jul 2023

Labels: DRBHCOM

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Technical Buy - JAKS (4723)

Author: PublicInvest   |  Publish date: Thu, 20 Jul 2023, 9:07 AM

Target Price: RM0.210, RM0.230

Last closing price: RM0.190
Potential return: 10.5%, 21.0%
Support: RM0.180
Stop Loss: RM0.160

Possible for sideways breakout. JAKS is potentially staging a breakout from its sideways channel, with anticipation
of continuous improvement in both momentum and trend in the near term. Should immediate resistance level of
RM0.210 be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance level of
RM0.230.

However, failure to hold on to support level of RM0.180 may indicate weakness in the share price and hence, a cut-loss
signal.

Source: PublicInvest Research - 20 Jul 2023

Labels: JAKS

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PublicInvest Research Headlines - 18 Jul 2023

Author: PublicInvest   |  Publish date: Tue, 18 Jul 2023, 9:49 AM

Economy
US: New York Manufacturing Index points to modest growth in July. After reporting a significant turnaround in
New York manufacturing activity in the previous month, the Federal Reserve Bank of New York released a report
showing a pullback in the pace of growth in the month of July. The New York Fed said its general business conditions
index fell to 1.1 in July after surging to 6.6 in June, although a positive reading still indicates growth. Economists had
expected the index to drop to zero. The pullback by the headline index was partly due to a notable slowdown in the
pace of shipment growth, as the shipments index tumbled to 13.4 in July from 22.0 in June. On the other hand, the
number of employees index jumped to a positive 4.7 in July from a negative 3.6 in June, returning to positive territory
for the first time since Jan . (RTT)

US: NY Fed report finds Americans increasingly facing borrowing headwinds. Americans are increasingly
getting shot down when they seek out loans, new data from the New York Fed, released Monday. The bank reported
that in June, across a number of fronts, credit was the hardest to get in years, with fewer people seeking out loans, at
least for now. The report’s findings were compiled as part of the New York Fed’s monthly Survey of Consumer
Expectations, with respondents polled every four months about credit access issues. (Reuters)

EU: German economy may contract slightly in 2023. Germany's economic output may shrink slightly this year due
to the energy price shock and tightening financial conditions, the IMF said. GPD is expected to regain momentum
gradually in 2024 and 2025, as the lagged effects of monetary tightening gradually dissipate and the economy adjusts
to the energy shock, the IMF said in its country report for Germany. last year. Over the medium term, average GDP
growth is expected to fall back below 1% due to accelerating headwinds from population aging and a lack of significant
increases in productivity. (RTT)

EU: Italy inflation unrevised at 14-month low. I taly's consumer price inflation moderated to the lowest level in
more than a year in June, as initially estimated, preliminary data from the statistical office. The CPI, rose 6.4% YoY in
June, slower than the 7.6% rise in May. That was in line with the flash data published on June 28. Further, this was the
weakest inflation since April 2022, when prices had risen 6.0%. The slowdown in inflation was largely due to non
regulated energy products, with price growth easing markedly to 8.4% from 20.3% in May. The inflation was, to a
lesser extent, impacted by a weaker rise in prices for processed food goods, which grew 13.2% in June after an 11.5%
growth in the prior month. (Reuters)

China: Frail Q2 GDP growth raises urgency for more policy support. China's economy grew at a frail pace in the
second quarter as demand weakened at home and abroad, with the post COVID momentum faltering rapidly and raising
pressure on policymakers to deliver more stimulus to shore up activity. Chinese authorities face a daunting task in
trying to keep the economic recovery on track and putting a lid on unemployment, as any aggressive stimulus could fuel
debt risks and structural distortions. (Reuters)

China: Rolls over medium-term policy loans, rate unchanged. China's central bank rolled over maturing medium-
term policy loans and kept the interest rate unchanged as expected on Monday, however markets expect authorities will
need to unleash more stimulus to support slowing economic growth. The economic recovery has lost momentum after
an initial burst in the first quarter, prompting monetary authorities to lower key policy rates last month. (Reuters)

India: Needs to grow at 7.6% a year for 25 years to be a developed nation. India will need to grow at a rate of
7.6% annually for the next 25 years to become a developed nation, according to a research paper published by the
central bank in its monthly bulletin. India's per capita income is currently estimated at USD2,500, while it must be more
than USD21,664 by 2047, as per World Bank standards, to be classified as a high-income country. (Reuters)

Markets
IJM Corporation (Outperform, TP: RM2.10): Undertakes logistic hub development. IJM has entered into a joint
venture (JV) agreement with FMM Elmina SB to develop two logistics hubs in the City of Elmina, Shah Alam. (StarBiz)
Comments: We believe the JV will add to the Group’s recurring income through the leasing of logistic hubs once
completed and also replenish the its construction orderbook which currently stands at about RM5.2bn. We estimate that
the construction works for the 2 logistic hubs could cost approximately RM79.4m assuming RM1,708 per sqm (based on
recent similar jobs undertaken by IJM). Details are still sketchy currently and hence we keep our earnings estimates
unchanged for now. All told, we retain our forecasts and TP of RM2.10 unchanged, pending further development of the
JV. Reinterate Outperform .

CelcomDigi (Neutral, TP: RM3.80): Partners Huawei, ZTE for network integration, modernisation. CelcomDigi
is partnering with Huawei Technologies (Malaysia) SB and ZTE (Malaysia) Corporation SB for the purchase of network
services, solutions and equipment for its nationwide network integration and modernisation project. The company
commenced its full-scale programme to build Malaysia’s future digital network recently - integrating and modernising
the largest 4G network in the nation with the latest LTE (long-term evolution) and 5G-ready technologies. "The exercise
will entail upgrades and site consolidation of almost 25,000 existing Celcom and Digi sites nationwide. (StarBiz)

Ni Hsin: Signs letter of intent with UniKL to promote electric motorcycles . Ni Hsin Group announced that its
wholly owned subsidiary Ni Hsin EV Tech SB (NH EV Tech) has signed a letter of intent (LOI) with Universiti Teknikal
Mara SB (UniKL) to promote electric Ebixon EV motorcycles. The premium cookware manufacturer said NH EV Tech and
UniKL signed the LOI on July 16, with both parties agreeing to exercise their best efforts to explore various potentials
within any field related to the electric motorcycle industry that are beneficial to the parties. “The collaboration shall
cover the areas of education, research and development (R&D), project management, social and culture and aims to
establish the industrialmanship programme in UniKL,” it said. (The Edge)

NationGate, Ewein: Independent adviser says NationGate MD’s Ewein takeover offer not fair, not
reasonable. The unconditional mandatory takeover offer on Ewein by NationGate Holdings MD and major shareholder
Ooi Eng Leong is "not fair and not reasonable" and shareholders should reject the offer, says independent adviser UOB
Kay Hian Securities (M) SB (UOBKH). UOBKH said the offer price of 60 sen per share is not fair as it represents a

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7/20/23, 7:24 PM I3investor Blog Post | I3investor
discount of 44 sen or 42.31% to the estimated value of Ewein shares derived using the sum-of-parts valuation
methodology of RM1.04. (The Edge)

Al-Salam REIT: Ink MoU to build pedestrian bridge . Al-Salam REIT and Mass Rapid Transit Corporation SB (MRT
Corp) via its subsidiary Malaysia Rapid Transit System SB (MRTS) have inked a MoU to construct a pedestrian overhead
bridge (POB) worth between RM10m and RM15m. Johor works, transportation and infrastructure committee chairman
Mohamad Fazli Mohamad Salleh said the 42-metre-long air-conditioned POB connecting Komtar JBCC to the planned
bridge of the Bukit Chagar Link Rapid Transit System (RTS) station is expected to be opened in 2027. (StarBiz)

Market Update
The FBM KLCI might open higher today after Wall Street stocks rallied on Monday as investors weighed the outlooks for
the world’s two biggest economies and prepared for this week’s wave of US corporate results. Wall Street’s benchmark
S&P 500 closed 0.4% higher, driven by tech and financial stocks, while the tech-focused Nasdaq Composite gained
0.9%. Helping boost US equities at the opening bell was a manufacturing index compiled by the Federal Reserve Bank
of New York that came in well above expectations, in a sign that businesses remain resilient to rising interest rates. The
index fell to 1.1 in July but remained well above the minus 4.3 consensus forecast. Europe’s region-wide Stoxx 600
gave up 0.6%, led lower by declining cyclical stocks, as investors fretted that low consumer spending in China could
damp demand for the region’s exports. France-based luxury groups LVMH and Hermès International both lost about
4%, taking the Cac 40 index down 1.1%. Swiss company Richemont dropped 10.4%. The declines for those stocks
came after official data on Monday showed China’s gross domestic product rose 0.8% quarter on quarter in the April to
June period. The reading was well below the 2.2% recorded in the previous three months.

Back home, the FBM KLCI ended lower on Monday, weighed by profit-taking in heavyweights amid a mixed regional
market performance. At the closing bell, the FBM KLCI fell 5.99 points, or 0.42%, to 1,406.10 from 1,412.09 at last
Friday’s close. China’s benchmark CSI 300 index extended the trend, slipping 0.8%, while Hong Kong’s stock exchange
suspended trading owing to a weather warning. Japanese markets were closed for a holiday.

Source: PublicInvest Research - 18 Jul 2023

Labels: ALSREIT, NATGATE, NIHSIN, CDB, IJM

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KGW Group Bhd - Logistics Services And Warehousing Provider

Author: PublicInvest   |  Publish date: Tue, 18 Jul 2023, 9:48 AM

Through its subsidiaries, namely KGW Logistics (M) S/B and Mattroy Logistics (Malaysia) S/B, KGW Group Bhd (KGW)
provides logistics services including ocean freight services, air freight services and freight forwarding services. KGW
Logistics (M) S/B focuses on logistics services for cargo shipments to and from the US while Mattroy Logistics (Malaysia)
S/B focuses on those to and from other countries. The group's customers for logistics services are exporters, importers
and other freight forwarders, both local and foreign. Supplementing its overall revenue model, through KGW Medica
S/B, KGW is also involved in warehousing and distribution operation within Malaysia. As at 31 May 2023, KGW's
customers for warehousing and distribution are local distributors of healthcare-related products and devices. KGW has
completed the purchase of a property in Dec 2022 for a total purchase consideration of RM20.2m. Having a total built-
up area of c. 53,400 sqft, the property is a freehold 3-storey office building with an annexed 2-storey warehouse
located at Hicom Glenmarie Industrial Park (collectively known as Property). KGW plans to relocate and centralise its
entire operations currently housed under multiple rented offices in Ara Damansara to the Property by the 4QFY23. We
derive a fair value of RM0.24 based on a c.8.0x PE multiple to its FY24F EPS of 3.0sen. The IPO is expected to raise
approximately RM16.7m from the issuance of 79.7m new shares. Besides utilising 12.0% and 4.4% of the proceeds for
renovation of the Property and working capital, respectively, 59.8% of the proceeds are allocated for repayment of bank
borrowing (term loan obtained to facilitate the completion of its purchase of the Property).

Growth drivers. KGW’s growth will be driven by: i) centralisation of its entire operations, ii) enlargement of its
marketing and business development teams, iii) enhancement of its warehousing and distribution capabilities, iv)
expansion of its customer base, and v) provision of e-commerce solutions.

Competitive strengths. KGW’s competitive strengths include: i) long track record of shipping to and from the
US, ii) diversified and growing customer base, iii) long-standing relationships with existing customers, iv)
established network of suppliers from different regions of the world, v) experienced key senior management
team, and vi) certified quality management system.

Catalysts. Key drivers may include: i) increasing trade volumes across the globe, ii) growing prominence of e-
commerce, iii) growth in the manufacturing sector, iv) broad range of end-user markets, v) supportive
Government initiatives, and vi) Malaysia’s position as a strategic logistics hub.

Key risks. Key downside risks, among others, include: i) competition, ii) customers’ direct engagement with
carriers, iii) fluctuation in ocean freight rates, iv) dependency on other freight forwarders and its suppliers, v)
shortage of ocean cargo space, and vi) fluctuation in foreign exchange rates.

Source: PublicInvest Research - 18 Jul 2023

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Technical Buy - AIMFLEX (0209)

Author: PublicInvest   |  Publish date: Tue, 18 Jul 2023, 9:47 AM

Target Price: RM0.180, RM0.190

Last closing price: RM0.165
Potential return: 9.0%, 15.1%
Support: RM0.160
Stop Loss: RM0.145

Possible for sideways breakout. AIMFLEX is potentially staging a breakout from its sideways channel, with
anticipation of continuous improvement in both momentum and trend in the near term. Should immediate resistance
level of RM0.180 be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance
level of RM0.190.

However, failure to hold on to support level of RM0.160 may indicate weakness in the share price and hence, a cut-loss
signal.

Source: PublicInvest Research - 18 Jul 2023

Labels: AIMFLEX

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Technical Buy - LYC (0075)

Author: PublicInvest   |  Publish date: Tue, 18 Jul 2023, 9:46 AM

Target Price: RM0.230, RM0.245

Last closing price: RM0.215
Potential return: 6.9%, 13.9%
Support: RM0.210
Stop Loss: RM0.190

Possible for sideways breakout. LYC is potentially staging a breakout from its sideways channel, with anticipation of
continuous improvement in both momentum and trend in the near term. Should immediate resistance level of RM0.230
be broken with renewed buying interest, it may continue to lift price higher to subsequent resistance level of RM0.245.

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7/20/23, 7:24 PM I3investor Blog Post | I3investor
However, failure to hold on to support level of RM0.210 may indicate weakness in the share price and hence, a cut-loss
signal.

Source: PublicInvest Research - 18 Jul 2023

Labels: LYC

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PublicInvest Research Headlines - 17 Jul 2023

Author: PublicInvest   |  Publish date: Mon, 17 Jul 2023, 10:13 AM

Economy
Global: IMF sees 'pockets of resilience', slowing momentum in global economy. The IMF said that first quarter
global growth slightly outpaced projections in its April forecasts, but data since then has shown a mixed picture, with
"pockets of resilience" alongside signs of slowing momentum. The IMF said in a briefing note for a G20 finance leaders
meeting in India next week that manufacturing is showing weakness across G20 economies and global trade remains
weak, but the demand for services is strong, particularly where tourism is recovering. The IMF did not indicate any
changes to its April 2023 global GDP growth forecast of 2.8% - down from 3.4% in 2022 - but said that risks were
"mostly" tilted to the downside. (Reuters)

US: Consumer sentiment near two-year high in July. U.S. consumer sentiment jumped to the highest level in
nearly two years in July as inflation subsided and the labor market remained strong, a survey showed on Friday. The
University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 72.6 this month, the
highest reading since September 2021, compared to 64.4 in June. Economists polled by Reuters had forecast a
preliminary reading of 65.5. Sentiment climbed for all demographic groups except for lower-income consumers. The
sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor
markets. (Reuters)

EU: Trade gap narrows on rising exports. The eurozone trade deficit declined sharply in May reflecting a notable
growth in exports amid a fall in imports. The trade deficit fell to a seasonally adjusted EUR 0.9bn in May from EUR
8.0bn in April. Exports posted a monthly increase of 2.9%, while imports decreased 0.1% in May. On a yearly basis,
exports of goods slid 2.3%. At the same time, imports registered a more marked decline of 12.8%. Consequently, the
trade deficit dropped to EUR 0.3bn from EUR 30.3bn a year ago. During January to May period, extra-EU exports
advanced 4.5% from the last year, while imports slid 7.8%. (RTT)

UK: Asking prices for homes slip as Bank of England's rates rises bite, survey show. Asking prices for
residential homes in Britain fell in July as rising mortgage costs and increasing buyer affordability constraints prompted
sellers to tempered their price expectations. Property website Rightmove said average asking prices of homes coming
onto the market declined by 0.2% last month, compared with the 0% norm for this time of the year. Tim Bannister,
director of property science at Rightmove, said stubborn inflation and further mortgage rate rises contributed to the fall
in prices and number of agreed sales. (Reuters)

China: June new home prices flat in weakest showing this year. China's new home prices were unchanged in
June, the weakest result this year, increasing pressure on policymakers for more stimulus as economic recovery falters.
The flat result from a month earlier, with rises slowing nationwide, was below May's 0.1% gain. Prices were also
unchanged from a year earlier, retreating from a 0.1% increase in May. The property sector, accounting for one-fourth
of activity in the world's second-biggest economy, slumped sharply last year as developers defaulted on debts and
suspended construction of presold housing projects. The central and local governments and regulators have announced
a slew of policies over the past year to prop up the sector. (Reuters)

India: June trade deficit in line with expectations. India's merchandise trade deficit in June was in line with
expectations at USD20.1bn. Merchandise exports stood at USD32.97bn, while imports were USD53.1 bn in June. In the
previous month, merchandise exports were USD34.98 bn, while imports stood at $57.1bn. Economists expected a June
trade deficit of USD20.1bn, according to a Reuters poll. India's exports remained weak for several reasons including a
slowdown in the world's major economies. Services exports in June were USD27.1bn, while imports were USD15.9 bn.
In May, services exports were USD25.3bn and imports were USD13.5bn. For the April-June period, services and
merchandise exports fell 7.3% YoY to USD182.7bn, while imports fell 10.2% to USD205.3bn. India and Britain were
expected to soon reach agreement on five contentious issues in their negotiations on a free trade agreement. They
have been struggling to conclude their free trade talks because of differences on some tariff lines and investment
protection rules. (Reuters)

Australia: Expects unemployment rate to rise as global economy slows. Australian Treasurer Jim Chalmers said
that he expected the nation's jobless rate to lift from near a 48-year low on the back of higher interest rates and
slowing global growth. "As the Reserve Bank forecasts and the Treasury forecasts have inflation moderating over the
coming months, they do have a tick up in unemployment as well," said Chalmers. Amid stubbornly high inflation, the
unemployment rate in May edged lower to 3.6%, when analysts had expected a steady 3.7%.The RBA this month kept
the cash rate at an 11-year high of 4.10%, having lifted rates by 400 bps since May last year, but warned that further
tightening might be needed The decision came after June data from the Australian Bureau of Statistics showed
Australia's economy grew at the weakest pace in 1-1/2 years in the last quarter, while emerging signs pointed to further
softness ahead. (Reuters)

Singapore: Dodges recession after slight growth in Q2. Singapore's economy narrowly escaped a recession in the
second quarter as global demand weakened and China's slowdown dragged on trade flows, leading some economists to
cut their growth forecasts for the year. The Southeast Asian economy grew a seasonally adjusted 0.3% QoQ, following a
0.4% contraction in the first three months, preliminary government data showed on Friday. Four economists with
quarterly estimates had forecast growth of 0.3% in a Reuters poll. China's reopening had fuelled hopes for a sustained
recovery in commerce and tourism for the region, especially Singapore's export-dependent economy, but demand has
weakened in the wake of higher interest rates and strong inflationary pressures. On an annual basis, the economy

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expanded 0.7% in the second quarter compared with 0.4% growth in the prior quarter and a 0.6% expansion forecast
in a Reuters poll. (Reuters)

Markets
Reservoir Link (Neutral, TP:RM 0.39): Awarded three-year contract for slickline perforation works. Reservoir
Link Energy said its unit Reservoir Link Sdn Bhd (RLSB) has been awarded a Letter of Award (LOA) from Hibiscus Oil &
Gas Malaysia Ltd for the provision of slickline perforation and specialised services at an undisclosed value. The LOA was
dated June 23, 2023, and will last for a three-year period effective from July 3 this year to July 2, 2026. Based on the
LOA, RLSB’s scope of work includes but is not limited to the supply of specialised slickline equipment and technically
qualified personnel. (The Edge)

Comment: This is a call-out contract with the compensation varied based on the actual works completed and in
accordance with prices and rates in the contract. Although this is positive to the company, we are neutral on the
contract as the previous one awarded had minimal works executed and was insignificant towards its bottomline.
Meanwhile, the Group has shifted its focus towards the renewable energy (RE) segment, with multiple new business
ventures in the pipeline. We retain our Neutral call and TP RM0.39 as we remain cautious on the execution of scaling up
its RE segment with its liquidity constraints.

Malakoff (Outperform, TP:RM0.95): Seals RM975m financial close in relation to RP Hydro project. Malakoff
Corp has achieved financial close in relation to RP Hydro (Kelantan) SB's RM975.0m in nominal value Asean Green SRI
Sukuk Wakalah issuance. It said the Asean Green SRI Sukuk Wakalah will be used to part-finance a project with an
aggregate installed capacity of 84MW to be developed along Sungai Galas in the district of Kuala Krai, Kelantan. The
project will be financed through a combination of Asean Green SRI Sukuk Wakalah and shareholders’ equity contribution
based on a finance-to-equity ratio of up to 80:20. (The Edge)

Comment: To reiterate our report dated 22 nd March, the expected project cost is about RM1.23bn with 80% funded
with sukuk, and expected to command high single digit IRR. We are positive on this development as the financial close
indicates the project has met all precedent conditions to drawdown the sukuk and commence the construction works.
The project is on track to achieve commercial operation date by 4Q 2025. Although the Group slipped into net losses in
the recent financial quarter due to temporary setbacks on negative fuel margins, we maintain our Outperform call and
TP RM0.95 as we continue to like the Group’s long-term prospects.

Iris Corp: Proposes capital reduction, 4-to-1 share consolidation . Iris Corporation has proposed a capital
reduction to set off its accumulated losses. The tech group said the exercise entails the cancellation of up to RM450m of
its issued share capital, which totalled RM610.7m as of June 30. The corresponding credit arising from the cancellation
will be used to set off against the group's accumulated losses of RM444.27m, while any remaining balance will be
credited to retained earnings. (The Edge)

AEON Credit: Signs deal with AFS to undertake digital Islamic banking business . AEON Credit Service (M) said
the group and Tokyo-listed AEON Financial Service Co Ltd (AFS) have entered into a shareholders’ agreement to
undertake the digital Islamic banking business through ACS Digital, which is preparing to be licensed as a digital Islamic
bank with an investment of RM175m each. (The Edge)

Market Update
The FBM KLCI might open lower today after Wall Street stocks reversed earlier gains as investors combed through the
latest quarterly results from some of the country’s biggest banks. Wall Street’s benchmark S&P 500 was down 0.1% on
Friday, but added 2.4% in the week. The tech-heavy Nasdaq Composite gave up 0.2% on Friday, but its 3.3% gain over
the past five sessions marked its biggest weekly jump since the end of March. Shares in JPMorgan rose 0.6% after it
reported a 67% jump in year-on-year net income to $14.47bn, far ahead of analysts’ estimates of $11.9bn. Wells
Fargo, which was down 0.3%, said its net income surged 57% from a year ago to nearly $5bn. Citigroup’s profits fell
more than a third in the second quarter, sending its shares down 4%, while State Street fell by 12.1 % on rising costs.
European stocks wavered, with the region-wide Stoxx 600 ending 0.1% lower, ending a run of five consecutive positive
sessions, its best streak since mid-April. France’s Cac 40 added 0.1%, Germany’s Dax fell 0.2% and London’s FTSE 100
lost 0.1%.

Back home, Bursa Malaysia maintained its uptrend to close higher on Friday, supported by persistent buying of most
heavyweights, led by telecommunications and media as well as financial services counters, in line with positive
sentiment on regional bourses. At the closing bell, the FBM KLCI had jumped 15.86 points, or 1.14%, to 1,412.09, from
1,396.23 at Thursday’s close. The regional markets were mixed. South Korea’s Kospi advanced 1.4%, Hong Kong’s
Hang Seng index rose 0.3% and China’s CSI 300 was flat. Japan’s Topix fell 0.2%.

Source: PublicInvest Research - 17 Jul 2023

Labels: AEONCR, IRIS, MALAKOF, RL

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Mi Technovation - Light at the End of the Tunnel

Author: PublicInvest   |  Publish date: Mon, 17 Jul 2023, 10:11 AM

We had a meeting with management of Mi Technovation last week, which provided some relief after the tough period
experienced in 1H 2023. Management stressed that the worst is over for the Group and it sees better performance in
the 2H compared to 1H, with no orders cancelled in the past but only deferred due to slower capital expenditure by
customers. Nevertheless, we cut our FY23 earnings forecast by 21% to reflect weaker performance for both equipment
and solder ball businesses in the 1HFY23 but retain our forecasts for FY24-25F in view of the bullish semiconductor
outlook for the next 3 years. The Group’s 2QFY23 results are scheduled to be released in mid-Aug.
Maintain Outperform call with an unchanged TP of RM2.57.

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7/20/23, 7:24 PM I3investor Blog Post | I3investor
Seeing signs of recovery for SEBU. Based on recent enquires and purchase orders, management expects the
demand for the Semiconductor Equipment Business Unit (SMBU) in Korea, Southeast Asia and China to pick up in
2H, led by i) mobile device & telecommunication, ii) computer & accessories iii) AI, HPC & data centre and iv)
automotive segments. For Mi Equipment Malaysia, management has high expectation on the Mi28 series die
sorting machine that is equipped with artificial intelligence features. For Mi Equipment Suzhou China (MISC), it
has set its sights on two testing platforms, namely, Ambient Light Sensor (ALS) for sensor application (has
supplied 6 machines to its 25.5%-owned Talentek) and Known Good Die (KGD) for power module. The increasing
demand for Silicon Carbide used in electric vehicles will drive more orders for its KGD, which is required for
power module testing. In-short, management expects to see double-digit quarterly sales growth in 3QFY23 with
its associate OSAT company, Talentek expecting to turnaround this year while MISC and Mi Equipment Korea are
targeted to turnaround in 2024.

Eyeing higher capacity utilization for SMBU. The Semiconductor Material Business Unit (SMBU) recorded
capacity utilization of 40%-60% in 2QFY23 for the solder ball plant in Tainan, Taiwan and is projected to hit 80%
utilization in 3QFY23. Meanwhile, three production lines (2 lines for big solder ball and 1 line for small solder ball)
have been installed at the new plant in Ningbo, China. Management plans to expand capacity with an addition of
2 production lines. On an even more positive note, US chipmaker, Micron Technology has already qualified their
products though it will have to undergo some restructuring due to the recent ban by China.

Mi Equipment Korea is riding on the AI boom. The 70%-owned Korean operation has seen a technological
breakthrough for its Laser Compression Bonding (LCB) and Laser-Assisted Bonding (LAB) machines, currently
pending the greenlight from the customer after delivering a demo machine. We understand that the LCB machine
is meant to eventually replace the conventional thermo-compression bonding machine as it has a far better
performance when it comes to High Performance Computing chip packaging. Riding on the global AI boom, it has
received various enquiries from Korea and Taiwan. Management believes that it can secure the maiden LCB
purchase order by next year.

Source: PublicInvest Research - 17 Jul 2023

Labels: MI

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Maxis Berhad - Proposed Execution Of Access Agreement

Author: PublicInvest   |  Publish date: Mon, 17 Jul 2023, 10:10 AM

After months of deliberation and postponement, Maxis Bhd (Maxis) has finally announced the signing of 5G access
agreement with Digital Nasional Bhd (DNB). This marks a significant milestone for the industry as Maxis was the only
mobile network operator that had yet to sign a wholesale agreement with DNB. Maxis is expected to incur operating
expenses of approximately RM360m a year, which equates to 24-26% of our FY24-25F earnings forecasts. Although this
may be partially offset by future cost savings from the cessation of 4G network as well as earnings contribution from
the provision of 5G services in the future, we believe the group’s earnings will still be negatively impacted in the initial
years. Maxis is seeking shareholders’ approval for this proposed transaction at an extraordinary general meeting (EGM)
to be convened in the third quarter of this year. We maintain our Neutral rating on Maxis.

Recap. On 20 January 2023, Maxis announced its decision to postpone the seeking of shareholders’ approval to
execute the access agreement with DNB until after the finalisation of 5G implementation by the new
administration following the 15th General Election. On 3 May 2023, the government announced the transition to
a dual network model after DNB reaches 80% population coverage. As a commitment to support the acceleration
of 5G to be in line with the government’s digital ambition, Maxis is now agreeing to sign the access agreement
with DNB, subject to receiving shareholders’ approval at an upcoming EGM.

Salient terms. The agreement is a 10-year commitment but it may be terminated earlier, among others, if the
government determines that DNB will no longer be the single wholesale provider of 5G services in Malaysia or
another operator is entitled to re-deploy its existing/acquire spectrum to provide 5G services. These terms are
essentially to protect Maxis against the penalty of termination should the country transition to a dual wholesale
network prior to the expiry of the 10-year commitment. However, delivery risks are still present in the event of
poor quality of 5G services provided or a potential delay in rollout by DNB.

Near-term earnings likely to be adversely impacted. Maxis is expected to incur operating expenses of
approximately RM360m a year, though this may be partially offset by future cost savings from the cessation of
Maxis’ existing 4G network and the incremental income to be generated through the provision of 5G services in
the future. Nevertheless, we believe there will still be downside risk to its future earnings in the next 1-2 years.
The operating expenses equate to 24-26% of Maxis full-year FY24-25F earnings estimates (before taking into
account cost savings and incremental earnings from 5G).

Source: PublicInvest Research - 17 Jul 2023

Labels: MAXIS

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