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Author: MalaccaSecurities   |   Latest post: Fri, 23 Oct 2020, 9:24 AM

 

Mplus Market Pulse - 26 Aug 2020

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Market Review

Malaysia: The FBM KLCI (-0.9%) was weighed down by the extended selling pressure among glove heavyweights as the key extended its losses after hovering in the negative territory for the entire trading session yesterday. The lower liners also retreated, while the broader market closed mostly in red with the technology sector (-2.2%) taking the worst hit.

Global markets: US stockmarkets ended mixed as the Dow fell 0.2%, but both the S&P 500 (+0.4%) and Nasdaq (+0.8%) notched fresh record high closing boosted by the positive progress over US-China trade relations as both parties agreed to review the phase 1 trade deal. European finished mostly lower after erasing all their intraday gains as Germany’s 2Q20 GDP contracted -9.7% QoQ, while Asia stockmarkets finished mostly higher.

The Day Ahead

Investors are using this opportunity as an excuse to lock in recent gains on the back of the sluggish quarterly financial performance, in general. We reckon that the downward bias consolidation may linger but weakness will be cushioned by the higher crude oil prices. The negative momentum on Bursa Malaysia may also keep any strong gains at bay with quick profit taking activities in the horizon.

Sector focus: We continue to favour for a rotational play on the pharmaceutical related stocks amid the string of positive developments surrounding the potential vaccine for Covid-19. The energy sector will be boosted by the rally in crude oil prices, hitting 5-months high due to the shutdown of production at Gulf of Mexico ahead of Hurricane Laura.

FBMKLCI Technical Outlook

The FBM KLCI remained downbeat as the key index gapped down to form another bearish candle and remained below the daily EMA20 level. The downward bias momentum may pressure the key index towards the immediate support at 1,550, followed by 1,540. On the flipside, the 1,590 will serve as the immediate resistance, followed by 1,600. Indicators remain weak with the MACD Histogram in the red, while the RSI remains below 50.

Company Brief

Nestle (M) Bhd’s 2QFY20 net profit slipped 32.7% YoY to RM105.5m as revenue was impacted by the Movement Control Order (MCO) on the hotel, restaurant & café (HORECA) channels. Revenue for the quarter fell 8.7% YoY to RM1.22bn. A dividend of 70.0 sen per share, payable on 8th October 2020 was declared. (The Star)

Kossan Rubber Industries Bhd’s 2QFY20 net profit soared 134.5% YoY to RM131.1m on expanding production capacity and rising average selling prices. Revenue for the quarter rose 27.5% YoY to RM701.7m. A one-for-one bonus issue was announced. (The Star)

AirAsia Group Bhd’s 2QFY20 net loss stood at RM992.9m in vs. a profit of RM17.3m recorded in the previous corresponding quarter as the group faced the full brunt of the pandemic outbreak. Revenue for the quarter shrank 95.9% YoY to RM118.96 m. (The Edge)

IOI Corp Bhd's 4QFY20 net profit leapt 411.4% YoY to RM238.3m, thanks to higher crude palm oil and palm kernel prices realised in the quarter. Revenue for the quarter increased 17.0% YoY to RM2.04bn. A second interim dividend of 4.0 sen per share, payable on 18th September 2020 was declared. (The Edge)

Velesto Energy Bhd’s 2QFY20 net loss stood at RM15.3m vs. a net profit of RM11.9m recorded in the previous corresponding quarter as it attributed its quarterly loss to an additional RM10.9m expenses in relation to the Covid-19 pandemic and the lower contributions by its drilling and oilfield services segments. Revenue for the quarter fell 10.3% YoY to RM141.0m. (The Edge)

Tan Chong Motor Holdings Bhd’s 2QFY20 net loss stood at RM79.4m vs. a net profit of RM19.4m recorded in the previous corresponding quarter as the Covid-19 pandemic significantly affected the group's automotive division's performance. Revenue for the quarter fell 52.1% YoY to RM512.9m. (The Edge)

Sunway Bhd’s 2QFY20 net loss stood at RM6.7m vs. a net profit of RM246.5m recorded in the previous corresponding quarter as most of its business segments had to cease operations during the Covid-19 lockdown. Revenue for the quarter declined 48.3% YoY to RM556.6m. (The Edge)

Pos Malaysia Bhd's 2QFY20 net loss stood at RM19.0m on top of revenue of RM606.1m. No comparison was made due to change in financial year end to 31st December 2020. (The Edge)

Affin Bank Bhd's 2QFY20 net profit declined 56.8% YoY to RM67.4m due to higher overhead expenses of RM50.7m, recognition of modification losses on loan financing moratorium accounts of RM79.7m, lower Islamic banking income of RM31.8m, lower gain on sales of financial instruments of RM20.3m and lower net interest income of RM16.2m. Revenue for the quarter, however, grew 3.0% YoY to RM513.0m.

GD Express Carrier Bhd’s (GDex) 2QFY20 net profit dropped 42.0% YoY to RM18.8m due to the recognition of gain on redemption of convertible bonds in the last financial year, as well as the impact of Malaysian Financial Reporting Standard 16 (MFRS 16) leases assessment and adjustments. Revenue for the quarter, however, rose 15.7% YoY to RM363.0m. (The Edge)

Syarikat Takaful Malaysia Keluarga Bhd's 2QFY20 net profit fell 7.2% YoY to RM75.1m, mainly due to lower sales generated by family takaful business. Revenue for the quarter dropped 23.4% YoY to RM515.7m. (The Edge)

Kenanga Investment Bank Bhd’s 2QFY20 net profit surged 265.0% YoY to RM20.5m after retail trading swelled during the quarter. Revenue for the quarter jumped 24.1% YoY to RM209.7m. (The Edge)

Petronas Dagangan Bhd’s (PetDag) 2QFY20 net profit plunged 98.0% YoY RM3.5m, in line with the top line which dropped 61.5% YoY to RM2.93bn. An interim dividend of 5.0 sen per share, payable on 24th September 2020 was declared. (The Edge)

TCS Group Holdings Bhd has secured a contract worth RM68.4m from a wholly owned unit of Sime Darby Property Bhd for the construction of 218 units of houses in Elmina Green Three in Sungai Buloh. The contract is for the construction of the double-storey link houses, together with a power sub-station with other infrastructure works. (The Edge)

Tex Cycle Technology (M) Bhd’s subsidiary has signed the renewable energy power purchase agreement with Tenaga Nasional Bhd for a feed-in-tariff (FiT) concession period of 21 years. This is in relation to electricity generated from 4MW biomass at its renewable energy power plant in Gurun, Kedah. (The Edge)

Lagenda Properties Bhd is buying five parcels of leasehold agriculture land in Tapah, Perak that it plans to develop into an affordable housing township. (The Edge)

Source: Mplus Research - 26 Aug 2020

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