The FBM KLCI remained under pressure amid persistent cautious sentiment without significant fresh catalyst. Nevertheless, following the passing of US debt ceiling bill and the subsequent rebound on Wall Street, bargain hunting activities may emerge on the local bourse. Still, cautiousness may prevail with the spotlight turning towards the release of US jobs data that may dictate the interest rate direction, Investors may prefer stocks with defensive characteristics towards the end of earnings season.

Orderbook update. With the incorporation of the newly secured contract, orderbook replenishment for financial year-to-date (YTD) now stands at RM266.7m, which slightly exceeded our expectations of RM200.0m for FY23f. We note that YTD wins already surpassed FY22 wins at c. RM155.6m. The successful completion of the previous Cambodia project will be a testament for ECONBHD to cement their position in Cambodia over the long run.

The poultry segment saw higher revenue (+4.1% YoY) arising from higher ASP and sales volume of DOC and eggs in Malaysia, as well as favourable sales volume of dressed chickens in Philippines. Nevertheless, EBITDA declined 83.0% YoY for the segment due to margin compression stemming from elevated feed costs coupled with lower ASP of DOC in Indonesia.

The FBM KLCI slumped for the second session along with regional markets as investors took profit after the contraction in China’s factory activity dampened hopes for global economic recovery. Investors may continue to watch the debate for US debt ceiling while taking a cautious trading approach. At the same time, the labour market tightness and stubbornly high recent inflation data may continue to sap trading interest in the equities market.

Carimin Petroleum Bhd (CARIMIN) was established in 1989 and specialised in the provision of technical and engineering support services in the oil and gas industry in Malaysia. To-date, CARIMIN has amassed and completed projects, valued more than RM1.00bn with notable clients include PETRONAS Carigali, Shell, Murphy Oil, Repsol, Exxon Mobil, New Field, Petrofac, HESS and Nippon Oil.

As at 1QFY23, OCK owns and manages over 5,300 telco sites across Vietnam, Myanmar, and Malaysia that will provide recurring income stream over the long term. We remain sanguine over the group’s on-going expansion plans in Vietnam and Myanmar to subsequently register more than 6,000 telco sites in FY23f. The group aims to beef up their tower portfolio by additional 1,000 towers in Vietnam as well as 200 towers each across both Myanmar and Malaysia in 2023.

The FBM KLCI drifted below the key 1,400 level as investors took profit ahead of the passing of US debt ceiling deal. Whilst global sentiment remained mixed, we believe bargain hunting activities may emerge on the local front in undervalued stocks. Meanwhile, the renewable energy theme may come into investors’ focus as the government target to roll out its Energy Transition Roadmap, as well as to reveal the renewable energy export guidelines in June.

Meanwhile, we continue to like the recyclable consumer and food ware division with potential to expand overseas. We expect a better margin in this division as the group is in a transition period of moving from lower margin items to bigger items such as storage box, furniture range, cabinets etc.