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

 

Mplus Market Pulse - 9 Sep 2020

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Re-testing 1,500

Market Review

Malaysia: Once again, the eleventh hour buying support in selected index heavyweights lifted the FBM KLCI (+0.2%) to close in the positive territory alongside with the performances across regional peers yesterday. The lower liners, however, extended their losses, while broader market closed mixed with the healthcare sector (-4.0%) remained downbeat.

Global markets: European stockmarkets rallied on expectations that the European Central Bank will keep its dovish stance this week, while the British Pound sank against the Euro Currency on concern over UK is preparing for a no-deal Brexit. Asia stockmarkets ended mixed, while US stockmarkets were closed for the Labor Day public holiday with futures markets pointing higher.

The Day Ahead

We see the consolidation to linger over the near term on the FBM KLCI as gains will be measured by the weakness from glove heavyweights. For now, any strong recovery will be tempered by quick profit taking activities. The lower liners may continue to endure a rough ride on the back of the negative market breadth, although there are some pockets of opportunities for a rebound play.

Sector focus: Following the recent volatility, we now stay defensive, opting for stocks that offer better fundamental footing such as the REIT and utilities sector. Both the aforementioned sectors are touted defensive in nature and offer stable dividend yields over the long run.

FBMKLCI Technical Outlook

The FBM KLCI recovered all its intraday losses to form a hammer candle yesterday. Still, the key index remained closed below the daily EMA120 level. We continue to view the 1,500 as the immediate support, followed by 1,480. Resistances, meanwhile, are located at 1,555, followed by 1,580. Indicators remained mixed with the MACD Histogram extended another green bar, while the RSI is threading near the oversold region.

Company Brief

Mudajaya Corporation Bhd (MCB) and Apollo Ventures Co. Ltd have mutually agreed to terminate their share sales and purchase agreement (SSPA) for the proposed disposal of MCB’s 7.1% stake in RKM Powergen Pte Ltd to Apollo. The SSPA entails the proposed disposal of MCB’s 140.0m ordinary shares in RKM to Apollo for a total cash consideration of US$19.5m (equivalent to approximately RM76.6m). (The Star)

Yi-Lai Bhd has entered into an agreement with TechBase Solution Sdn Bhd controlled by its new executive director and major shareholder Au Yee Boon, to collaborate for the purpose of establishing its new IT solutions business, which specialises in the provision of blockchain and system integration services. (The Star)

MSM Malaysia Holdings Bhd’s group chief executive officer (CEO) has been placed on a seven-day leave of absence and that he is required to explain certain irregularities relating to inventories of MSM Sugar Refinery (Johor) Sdn Bhd. (The Star)

AT Systematization Bhd has become a substantial shareholder of AE Multi Holdings Bhd after acquiring an 18.2% stake in the latter on 7th September 2020. Its wholly-owned unit AT Precision Tooling Sdn Bhd bought the stake in an off market transaction for RM15.7m. (The Edge)

HeiTech Padu Bhd confirmed it is one of the bidders for the government's National Integrated Immigration System (NIIS) project. The firm also launched its next generation Security Operation Centre as-a-service (SOCaaS) in collaboration with RSA Security to provide cybersecurity management for mid-tier companies in the Malaysian market. (The Edge)

Latitude Tree Holdings Bhd was slapped with an UMA query by Bursa Securities, after the company’s share price rose as much as 30.0% on 7th September 2020. The company is unaware of any corporate development that could have contributed to the unusual market activity (UMA) regarding its share price. (The Edge)

Magni-Tech Industries Bhd's 1QFY21 net profit fell 12.3% YoY to RM26.8m as the pandemic-driven sharp economic contraction had significantly impacted practically all business sectors across the globe. Revenue for the quarter dropped 10.8% YoY to RM292.0m. A 2.0 sen per share interim dividend, payable on 8th October 2020 was declared. (The Edge)

Gets Global Bhd is jumping on the glove-making bandwagon, following the emergence of Teong Lian Aik as a new substantial shareholder. It plans to venture into the manufacturing, sale and marketing of gloves and other related activities. To fund this new venture, the group has also proposed a private placement of 158.0m new shares at 55.0 sen per share to its major shareholder ADA Capital Investments Ltd as well as Beh Boon Seong, Tan Chai Chek and Chua Choy Guan. Barring any unforeseen circumstances, the company's board anticipates its glove business to contribute 25.0% or more to the group's net profit. (The Edge)

Source: Mplus Research - 9 Sept 2020

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