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M+ Morning Market Buzz - 8Jan25

Dow Jones: 42,528.36 pts (-178.20pts, -0.42%)
⬆️ Resistance: 44000
⬇️ Support: 41400

FBM KLCI: 1,629.79 pts (+4.32pts, +0.27%)
⬆️ Resistance: 1680
⬇️ Support: 1600

HSI Index: 19,447.58 pts (-240.71pts, -1.22%)
⬆️ Resistance: 20400
⬇️ Support: 18900

Crude Palm Oil: RM4,365 (+RM5, +0.11%)
⬆️ Resistance: 4620
⬇️ Support: 4200

Brent Oil: $77.05 (+$0.75, +0.98%)
⬆️ Resistance: 79.10
⬇️ Support: 73.30

Gold: $2,648.59 (+$0.87, +0.03%)
⬆️ Resistance: 2720
⬇️ Support: 2570

Source: Bloomberg, M+

M+ Market update – 8Jan25
ITMAX Securing Penang Contract

The local front rebounded after its 3-day losing streak, with strong buying interest seen across the Construction sector led by GAMUDA. In the US, all the 3 major indices closed lower, as ISM services data showed an acceleration, raising concerns about persistent inflation and reducing expectations for rate cuts in 2025 (from 2 rate cuts to 1). In terms of key economic data, traders will also keep track on the (i) Eurozone PPI, (ii) China CPI and (iii) US jobs report this week. In the commodities market, Brent crude oil continued its upward momentum and closed above the USD77, while the gold price traded flat around the USD2,650. Meanwhile, the CPO prices showed marginal gains but still trading below the RM4,400 mark.

Sector Focus: With ITMAX securing an RM11.8m CCTV contract from the Penang City Council, we believe trading opportunities will persist in ITMAX; Penang is also ITMAX’s third local council customer, besides Johor and KL. Meanwhile, we are also bullish on e-invoicing-related counters, as taxpayers with an annual turnover or revenue of more than RM25m to RM100m will have to subscribe to e-invoice service starting 1st January 2025. Lastly, with the formalisation of the Johor-Singapore Special Economic Zone, we are optimistic towards the Johor-related counters.

Stocks to watch:

Technology: *ATECH*, CABNET, *JFTECH*, RAMSSOL, *SMRT *
Utility: *JTGROUP*, *KJTS*
O&G: ARMADA
Construction: SSB8

Source: M+

*JSSEZ - 1+1 > 2: Harnessing the Multiplier Effect*
https://mplusonline.com/research-report/detail/661

• We believe the Johor-Singapore Special Economic Zone (JSSEZ) will generate strong synergies moving forward. Furthermore, it will enhance the region's competitiveness within ASEAN, potentially attracting increased foreign direct investments.
• Drawing inspiration from successful models such as Shenzhen and Suzhou, we believe the JSSEZ will follow a similar concept, creating a wide range of opportunities within various investment themes. In our view, it will drive growth in the Construction, Property, Utilities, Building Materials, and Technology sectors

Stocks that could benefit under these sectors:-
Construction: GAMUDA, IJM, SUNCON, BNASTRA, SSB8
Property: SUNWAY, ECOWLD, AME, UEMS
Utilities: GASMSIA, RANHILL, PEKAT, YTLPOWR, SCGBHD, MNHLDG, SLVEST
High growth, high value segments: PCHEM, DIALOG, ITMAX, CLOUDPT, SMRT, VSTECS

_*Source: Bloomberg, M+ Online*_

08-January-2025

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ITMAX Secures MYR11.8 Million Video-Surveillance Contract

Yesterday, ITMAX System (ITMAX) announced it has secured another MYR11.8 million contract from the Penang Island Town Council to upgrade and maintain selected closed-circuit televisions (CCTV) within the council’s existing video surveillance network.

The contract includes integrating ITMAX’s proprietary traffic-related artificial intelligence features to enhance the system’s capabilities. The maintenance period for the project will span 60 months, commencing on 13 Sep’25.

ITMAX shares rose 2.7% yesterday; concurrently ITMAX-CL climbed 10.3%. Investors bullish on ITMAX may consider ITMAX-CL!

#DailyHighlights

Economists positive on Johor-S'pore Special Economic Zone, but call for clarity on tax incentives and infrastructure progress
https://theedgemalaysia.com/node/740171

*Corporate news*

KWAP, and its affiliates have disposed of 119.3m shares, or a 7.2% stake in *Malaysia Airports Holdings Bhd* (MAHB), pursuant to the takeover offer by Gateway Development Alliance Sdn Bhd (GDA). According to MAHB’s filing with Bursa Malaysia, the shares were disposed of on 6 Jan, at RM11 apiece. (The Edge Malaysia)

*ITMAX System Bhd* said on Tuesday 7 Jan that it has secured a second contract worth RM11.8m from the Penang Island City Council, to deliver video surveillance services. (The Edge Malaysia)

*Infomina Bhd* has secured a three-year contract worth RM22.4m from the Road Transport Department to provide maintenance and support for the Automated Awareness Safety System. (The Edge Malaysia)

*UUE Holdings Bhd*, via its wholly owned subsidiary Kum Fatt Engineering Sdn Bhd, has secured contract extensions and renewals worth a total of about RM36.5m from Komasi Engineering Sdn Bhd. The contracts cover underground cable installation and commissioning works within *Tenaga Nasional Bhd*’s distribution network. (The Edge Malaysia)

*Nestcon Bhd*’s wholly owned subsidiary Nestcon Infra Sdn Bhd (NISB) has secured a RM25.0m contract for earthworks and erosion control in Johor’s Senai Airport City. (The Edge Malaysia)

Agribusiness firm *FGV Holdings Bhd* has signed an agreement with the Malaysian Palm Oil Board (MPOB), to increase awareness and provide comprehensive support to independent smallholders in meeting global sustainability standards and regulations. (The Edge Malaysia)

*Swift Haulage Bhd* has announced plans to expand into cold chain logistics to diversify its revenue streams through a JV investment. The company signed a JV agreement with its major shareholder, Singapore-based JWD Asia Holding Pte Ltd (JAH), to establish Swift Cold Chain Sdn Bhd, which will operate and manage a temperature-controlled warehouse and transport business. (The Edge Malaysia)

*Cypark Resources Bhd* said on Tuesday 7 Jan that it has achieved the commercial operation date (COD) for one of its two 60MW floating solar plants at Danau Tok Uban (DTU), Kelantan. In a statement, Cypark said that the water body, dubbed DTU2, with a generation capacity of 30MW, has been confirmed by the single buyer, which is Tenaga Nasional Bhd, as ready for commercial operations. (The Edge Malaysia)

National oil and gas company *Petronas*, said on Tuesday 7 Jan it is embarking on a study to explore untapped resources in the Malay Basin off the coast of Peninsular Malaysia. (The Edge Malaysia)

*EA Technique (M) Bhd* said on Tuesday 7 Jan that it will get an undisclosed payoff as part of an amicable settlement with national oil-and-gas company Petronas over the lease of a floating storage unit vessel. (The Edge Malaysia)

*KUB Malaysia Bhd* is acquiring a building materials company from *CI Holdings Bhd* in a related party transaction deal for RM20m cash, as part of the group's strategy to broaden its revenue base. (The Edge Malaysia)

Target 1 Sdn Bhd — one of the parties seeking to take *South Malaysia Industries Bhd* private said on Tuesday that the Securities Commission Malaysia (SC) has approved a further extension for the despatch of its offer document to SMI shareholders. The extension allows Target 1, and the parties acting in concert, to deliver the mandatory takeover offer documentation by 14 Jan, an extension by seven days from the deadline of 7 Jan previously. (The Edge Malaysia)

Directors of *MN Holdings Bhd* trim their stake as the share price has surged to a record high recently. The company’s MD Datuk Toh Eng Keat, plus two executive directors Datuk Loy Siong Hay and Datuk Dang Siong Diang, have collectively sold 18m shares, equivalent to a 3.7% stake, to institutional funds via a direct business deal, according to the company’s bourse filing. (The Edge Malaysia)


*8th Jan 2025*

Disclaimers: This distribution is by CGS International Securities Malaysia Sdn. Bhd. (“CGS MY”) in Malaysia only. The views are our own as of this date and subject to change.

*Trading Stocks today:*

For *Trendspotter*, please click on this link: < https://tinyurl.com/3x3w5dr7 > to view the report.

Or please logon to your account on http://www.cgsi.com.my/ and click on <Research> Tab.

*Malaysia*:
*Sunway Construction Group (5263)* (RM5.12): Technical Buy
Targets: RM5.45, RM5.66
Stop: RM4.62

*ITMAX System (5309)* (RM3.80): Technical Buy
Targets: RM4.02, RM4.18
Stop: RM3.56


*Fundamental Report(s):*

*Oriental Kopi Holdings IPO* - A potent recipe for growth (Trading Lens - Non-rated) https://tinyurl.com/mwu8m5u


Join CGS International Securities Malaysia's Official Telegram Channel https://t.me/cgsi_my

*8th Jan 2025*

Disclaimers: This distribution is by CGS International Securities Malaysia Sdn. Bhd. (“CGS MY”) in Malaysia only. The views are our own as of this date and subject to change. No further distribution is allowed without our prior written consent. CGS MY, its related corporations, affiliates and business partners make no recommendation, offer or invitation to transact in any securities, futures contracts or other instruments. Please make your independent evaluation, consider your own investment objectives and financial situation and consult your own professional advisers before participating in any transaction.

*Oriental Kopi Holdings IPO – A potent recipe for growth* (Trading Lens- Non-rated) https://tinyurl.com/mwu8m5u

☕️🍜Oriental Kopi Holdings (OKH) is a homegrown café-chain operator with its first _“Oriental Kopi”_ café established in Johor in 2020. To-date, OKH has established 20 _“Oriental Kopi”_ outlets in Malaysia, including the newly-opened outlet in Sarawak and its first jointly-owned overseas outlet in Singapore (30%-stake).

*Is the company profitable?*
◾️The group posted a commendable 3-year revenue CAGR of 280% in FY21-24, supported by both café chain operations (+275%) and distribution of consumer-branded packaged foods (505%). The group’s 3-year average GP and net profit margins stood at 31% and 17% respectively in FY22-24.

◾️FY24 net profit surged by a robust +115% yoy to RM43m – a record high, in line with the +118% yoy growth in revenue. Key factor attributable to the higher number of cafés in operations (17 outlets in FY24 vs. 11 outlets in FY23), coupled with higher average revenue per store of RM15.3m in FY24 (+34% yoy vs. RM11.5m in FY23).

◾️Notably, Klang Valley region achieved the highest average revenue per store at RM16.4m in FY24 (+26% yoy) as compared to Johor - RM14.7m (+68% yoy) and Penang - RM6.4m (first outlet incorporated in FY24).

*Key growth drivers*:
1) Café chain expansion both locally and regionally,

2) Improve retail and tourism footfall, and

3) Higher margin product mix.

*Valuation?*
🔸The IPO price of RM0.44 (RM880m market cap) values Oriental Kopi Holdings at FY24 P/E of 20.4x – 11% discount to its peers’ average 12-month trailing P/E of 23x (see front page). Meanwhile, KLCSU FY24 P/E stands at 14.5x, according to Bloomberg.

⏳The closing date for the IPO application will be on 10 January 2025. The group will be listed on the ACE Market on 23 January 2025.

Regards,
CGS MY Retail Research