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Author: MalaccaSecurities   |   Latest post: Fri, 27 Nov 2020, 11:03 AM

 

Mplus Market Pulse - 6 Oct 2020

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Still ascending 

Market Review

Malaysia: The FBM KLCI (+0.8%) started off the week on a positive note on easing concerns about US President Donald Trump’s health conditions, in tandem with Asia stockmarkets, which ended mostly in green. The lower liners closed higher, while the broader market also ended mostly in green, led by the healthcare sector (+3.1%).

Global markets: US stockmarkets advanced overnight as the Dow climbed 1.7% on the back of improved Institute for Supply Management (ISM) Services data that rose to 57.8, as well as US President Donald Trump return to the White House. European stockmarkets finished higher.

The Day Ahead

With the local bourse turned slightly bullish on amid the resurgence of buying momentum in glove heavyweights following the spike in Covid-19 cases, we believe the FBM KLCI movement will now be dictated by the glove heavyweights again. In the meantime, government authorities have quashed rumours for re implementation of Movement Control Order (MCO) provided some alleviation to the economic recovery progress. Similarly, the lower liners and broader market are on a recovery mode as investors capitalise on the rising trading activities.

Sector focus: We believe that the healthcare sector may continue to flourish following the record high new daily cases of Covid-19 that appears to be unabated in coming weeks. The plantation sector is also gaining traction with CPO prices attempting to find stability around RM2,700/MT.

 

The FBM KLCI gapped up and subsequently lingered mostly in the positive territory, forming a bullish candle to close above the daily EMA20 level. We believe short term buying momentum may induce the local bourse towards the immediate resistances at 1,520, followed by 1,540. The support, meanwhile are remained at 1,480, followed by 1,450. Indicators are mixed as the MACD Histogram has extended another green bar, but the RSI remains below 50.

Company Brief

AirAsia Group Bhd is ceasing its Japanese operations immediately as the airline has been notified that the AirAsia Japan (AAJ) board of directors have taken a decision to cease operations. The group respect and have agreed to the decision made by AAJ as this would reduce the cash burn of AAJ amid the highly challenging operating conditions in Japan which have been aggravated by the COVID-19 pandemic. (Reuters)

7-Eleven Malaysia Holdings Bhd's (SEM) 75.0%-owned subsidiary, Caring Pharmacy Retail Management Sdn Bhd is eyeing an expansion in the northern region of the peninsula through the proposed acquisitions of equity interests in retail pharmacies and certain business assets. Caring has signed several conditional agreements with various vendors to undertake the proposed acquisitions worth RM48.9m.

Based on the proforma revenue of the Caring group for FY19, the proposed acquisitions will increase the consolidated revenue of Caring by about 48.8% from RM573.2m to RM852.9m. The proposed acquisitions are expected to be completed by the end-2020. (The Star)

MSM Malaysia Holdings Bhd has sacked group chief executive officer Datuk Khairil Anuar Aziz with effect from 5th October 2020 after finding his clarification on the irregularities pertaining to the adjustment to write-off inventories amounting to RM36.6m in MSM Sugar Refinery (Johor) Sdn Bhd in FY19 unacceptable. Fakhrunniam Othman, the group investment officer of parent company FGV Holdings Bhd remained as officer-in-charge at MSM until the company has identified a suitable replacement. (The Star)

UEM Sunrise Bhd has proposed to merge with Eco World Development Group Bhd (EcoWorld) in a deal that will entail an exchange of securities. Under the deal, holders of shares and warrants in EcoWorld will swap the securities for new shares and warrants in UEM Sunrise, whereby new shares in UEM Sunrise will be issued at a proposed 44.3 sen each to holders of EcoWorld shares. Upon completion of the proposed merger, EcoWorld will become a wholly-owned subsidiary of UEM Sunrise and be delisted. (The Edge)

LFE Corp Bhd is planning to raise up to RM39.3m; equivalent to 87.4% of its market capitalisation of RM44.9m through a rights issue, mainly to fund its 51.0% stake acquisition in Cosmo Property Management Sdn Bhd (CPMSB) and for working capital. (The Edge)

JF Technology Bhd has proposed a bonus issue with free warrants on the basis of three bonus shares and two free warrants for every one existing share held at an entitlement date to be announced. (The Edge)

Guan Chong Bhd plans to raise up to RM800.0m from the issuance of Islamic medium-term notes (sukuk wakalah) to support the group's ongoing expansion of its international operations. (The Edge)

Hil Industries Bhd is venturing into the face mask and medical devices industry in a bid to capitalise on the Covid-19 pandemic play. Its unit Hil Medic Sdn Bhd has received approval from the Medical Device Authority, which is part of the Ministry of Health, for the manufacturing of its three-ply surgical grade face mask and face shields. (The Edge)

MSCM Holdings Bhd, which will be known as Hong Seng Consolidated Bhd, is partnering with a pharmaceutical company, RP Integrated Bhd, to pursue distributorship and opportunities relating to medical drugs and vaccines from China. (The Edge)

Westports Holdings Bhd subsidiary has been slapped with a RM120.6m bill by the Inland Revenue Board for additional tax liabilities, inclusive of penalties, for years of assessment from FY13 to FY18. The additional tax assessment is in relation to the annual lease payment made by wholly-owned subsidiary Westports Malaysia Sdn Bhd to the Port Klang Authority, totalling RM299.9m for the six years. It also involves the deferred revenue of RM8.0m in FY18. (The Edge)

Source: Mplus Research - 6 Oct 2020

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