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What Happened This Week

Earnings season week with hundreds of companies releasing their quarter results. Gloves makers share prices trended lower. Bitcoin and crypto selldown. US stock market consecutive days of huge waterfall selldown. US government bond yields increased. Most assets were down for the week.

KLCI ended the week lower by 0.5%. Small Caps suffered more than the broader market, at 1.2% lower.

Consumer Products was the best performing sector. Healthcare is the worst performing sector, with gloves makers seeing substantial drawdowns on the commencement of vaccination in Malaysia. Most sectors saw minor movement.

What We Are Watching For Next Week

We continue to watch earnings releases.

We watch how this current selldown will pan out, how deep is the correction in global markets, and will it result in a market crash as fanaticized by many bears who have been short selling the market.

We watch the take up rate / registration for vaccination in Malaysia. Many Malaysians are still in observation mode / wait-and-see mode. Register for your vaccination, if you have not done so.

This Week Top 25 Most Active Stocks

By Volume

By Value

This Week Top 10 Short Trades Value

Year-to-date (YTD) Top 25 Gainers

Year-to-date (YTD) Top 25 Losers

This Week Earnings Results Released

More than 500 companies announced their latest quarter results. Most were not impressive. A few key ones that caught our attention.

Hextar Global (5151) announced its Q4FY2020 results. Comparing against Q4FY2019, revenue was up 22%, profit was up 48%. Cumulative Free Cash Flow was up 84%. Comparing against the immediate preceding quarter, revenue was down 10%, profit was up 1%. The lower sales was due to year-end holiday season.

Management will continue to intensify its sales and marketing efforts of its agriculture segment to secure more customers locally and oversea in order to boost its market shares and continuous developing of new products to improve its competitive advantage. The Consumer Products segment will be moving into next phase to boost its revenue by market and product development, after returning to breakeven level.

In its new businesses, the company is embarking on using 5G technology in the plantation industry. It has also acquired Hextar Biogas BEE, in November 2020 to provide solutions to the palm oil mill and bring innovative solutions towards environment protections.

Kumpulan Powernet (7130) announced its Q2FY2021 results. Comparing against Q2FY2020, revenue was up 560%, profit was down 399%. Cumulative Free Cash Flow remained negative due to acquisition of a subsidiary. Comparing against the immediate preceding quarter, revenue was up 158%, profit was up 114%. The better performance was due to higher EPCC activities in Lao and Malaysia and other construction related activities in Malaysia.

The company recent acquisitions include Chemtrax, a latex logistic company for the glove-making industry, and Granulab, a medical device manufacturer (halal granular synthetic bone graft products). Management is confident of securing the target orderbook of RM2.0 billion by June 2021.

Frontken (01238) announced its Q4FY2020 results. Comparing against Q4FY2019, revenue was up 14%, profit was up 28%. Cumulative Free Cash Flow was up 4%. Comparing against the immediate preceding quarter, revenue was up 6%, profit was up 9%. The better results was due to positive growth in its semi-conductor business.

The company is looking to expand its capacity in Taiwan by setting up a new state of the art facility in anticipation of increase in the demand for its services due to the 3nm chips expected to be commercially available in 2022. It is currently supporting TSMC in their R&D production stage. It is also exploring the viability of setting up a new facility overseas. Management is cautiously optimistic of its oil and gas division performing better than last year.

ATA IMS (8176) announced its Q3FY2021 results. Comparing against Q3FY2020, revenue was up 35%, profit was up 165%. Cumulative Free Cash Flow was down 99%. Comparing against the immediate preceding quarter, revenue was down 12%, profit was up 2%.

Despite MCO 2.0, Management is of the view that its main customer’s order forecast remains strong and its new customers’ projects will commence in the last quarter. The company expects to increase capital expenditure for the last quarter to increase production capacity to meet the increase in orders.

Home appliances brands owners and manufacturers like Fiamma (6939) and Khind (7062) saw improvement on the top line and bottom line.

Vitrox (0097) announced its Q4FY2020 results. Comparing against Q4FY2019, revenue was up 68%, profit was up 79%. Cumulative Free Cash Flow was up 25%. Comparing against the immediate preceding quarter, revenue was up 29%, profit was up 7%. The higher revenue were due to n. favourable market condition and well market acceptance of new product introduction. However, profit did not grew in tandem due to unfavorable product mix and weaker USD.

Management is cautiously optimistic on 2021. The company encounters longer material lead time due to global shortage of certain raw material. It has started expanding the manufacturing capacity by at least 30% in 2021 to cope with the robust demand in the next few months. Management will continue to focus on market expansion activities, customer relationship building, and product innovation to grow the business further.

Uchi Technologies (7100) announced its Q4FY2020 results. Comparing against Q4FY2019, revenue was up 36%, profit was up 64%. Cumulative Free Cash Flow was up 2%. Comparing against the immediate preceding quarter, revenue was up 33%, profit was up 36%.

Management does not expect any significant changes in its principal geographical areas of distribution and product group contributions. The company is wary of factors that will affect its performance - fluctuations in USD, material shortages or fluctuations in material prices and increasing labour costs.

D&O Green Technologies (7204) announced its Q4FY2020 results. Comparing against Q4FY2019, revenue was up 39%, profit was up 119%. Cumulative Free Cash Flow remained negative. Comparing against the immediate preceding quarter, revenue was up 32%, profit was up 105%.

Management believes its comprehensive product portfolio and traction gained with Tier 1 automotive customers has position the company well to benefit from the EV market growth, and achieve sustainable earnings growth in 2021.

Inari (0166) announced its Q2FY2021 results. Comparing against Q2FY2020, revenue was up 42%, profit was up 140%. Cumulative Free Cash Flow was flat. Comparing against the immediate preceding quarter, revenue was up 24%, profit was up 88%.

Management anticipates positive demand for the 5G smartphones to continue for subsequent quarters. It will continue to improve its production capacity tapping on the strong growth momentum in 5G mobile phones, and to add automation processes to generate higher operating margins and revenue. Management is also cognizant of the on-going shortages in certain sectors of the semi-conductor market and have taken steps to secure on a risk management basis our requirements for raw materials supplies ahead.

Malaysian Pacific Industries (3867) announced its Q2FY2021 results. Comparing against Q2FY2019, revenue was up 17%, profit was up 51%. Cumulative Free Cash Flow was down 66%. Comparing against the immediate preceding quarter, revenue was up 10%, profit was up 25%. Management sees resilient growth in the semiconductor industry and expects the financial year performance to be satisfactory.

P.I.E. Industrial (7095) announced its Q4FY2020 results. Comparing against Q4FY2019, revenue was up 53%, profit was up 220%. Cumulative Free Cash Flow turned negative. Comparing against the immediate preceding quarter, revenue was up 9%, profit was up 197%. Higher revenue was due to increased demand for EMS, raw cable & wire products, wire harness products segments. Profits increased much more due to accounting adjustments.

Management expects its EMS orders to increase from existing and potential new customers through its fully built-up vertical integrated manufacturing facilities. It started production at full capacity in Q3 and cleared the backlog of orders. In Q4, the company obtained customer approval for production of new product.

Time Dotcom (5031) announced its Q4FY2020 results. Comparing against Q4FY2019, revenue was up 7%, profit was up 25%. Cumulative Free Cash Flow was up 23%. Comparing against the immediate preceding quarter, revenue was up 2%, profit was up 21%. Profit was higher due to lower forex losses.

Management will continue to focus on strengthening and improving its existing domestic fibre network infrastructure, and expanding its coverage footprint throughout the country. The company will also work to increase market share by delivering fast, reliable and unparalleled quality network experience at competitive prices. It will be launching its new data centre in Cyberjaya.

Serba Dinamik (5279) announced its Q4FY2020 results. Comparing against Q4FY2019, revenue was up 33%, profit was up 44%. Cumulative Free Cash Flow remained negative. Comparing against the immediate preceding quarter, revenue was up 21%, profit was up 38%. The better performance was due to increase in O&M and EPCC activities.

The proceeds from its RM100 million private placement will be utilised over 24 months to rejuvenate the multiple workshops at Teluk Ramunia Tard, into a hybrid and efficient centre with autonomous Artificial Intelligence (“AI”) element. The company has identified several contracts from its existing orderbook to begin modular structure fabrication works using this facility.

This Week Key Economic Data Releases

In the latest Q1 2021 Business Tendency Statistics, businesses are forecasting challenging business performance in Q1 2021 by registering a confidence indicator of -11.3% against -10.8% in Q4 2020. 25.5% of respondents predict their gross revenue to increase in Q1 2021, 36.5% expect reduction, 38.0% anticipate their gross revenue to persist.

Malaysia’s trade in January 2021 increased by 4.1% to RM162.6 billion, as compared to the same month in the previous year. Exports were stronger than imports.

Producer Price Index (PPI) improved with a negative 0.1% growth in January 2021 as compared to a negative 2.1% in December 2020. 

Consumer Price Index (CPI) declined 0.2% in January 2021 to 122.1 as against 122.4 in the same month of the preceding year, mainly due to decline in Transport segment.

Malaysia’s Leading Index (LI) posted 108.8 points in December 2020 vs 101.6 points in December 2019, a growth of 7.1% since November 2020, mainly contributed by Bursa Malaysia Industrial Index, Health Care Index, and Transportation & Logistic Index. 

Next Week Key Economic Data Releases

Thursday - Malaysia January 2021 External Trade Indices

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