Market Review

Malaysia: The FBM KLCI (-0.7%) extended its losses in tandem with the weakness across global equities. Despite the intraday bargain hunting, the key index fell for its first weekly decline in five weeks, falling -0.7% WoW. The lower liners also retreated after recovering most of their intraday losses, while the REITs (+1.6%) and industrial products & services sector (+1.1%) outperformed the negative broader market.

Global markets: US stockmarkets rebounded from their previous two sessions’ selloff as the Dow gained 1.9% on bargain hunting activities, coupled with the stronger University of Michigan consumer sentiment index that rose to 78.9 in June 2020, from 72.3 recorded last month. European markets also advanced, while Asia equities finished on a mixed note.

The Day Ahead

Although the key index retreated on last Friday, quick bargain hunting on beaten down stocks lifted the key index to close at its’ intraday high. The recovery suggest that investors buying appetite are still on the table, waiting to pounce on any opportunity. The FBM KLCI may edge higher taking cue on Wall Street’s recovery as investors’ confidence return to the fore.

Sector focus: The unrelenting concern over the rising number of Covid-19 cases implies that the healthcare sector may see renewed trading opportunities after taking a breather over the past two weeks.

We think that the recovery may prolong towards the start of the week as investor were quick to brush off the knee-jerk sell down and focus on the re-opening of economy. As it is, the general trend on the FBM KLCI is still positive. For now, we think that any recovery will be mild with upsides located at the 1,600 psychological level. Downside risk is located 1,530 level followed by the 1,510 level.

Company Brief

Berjaya Land Bhd (BLand)-owned Berjaya Tioman Resort will cease operations from 15th June 2020 as the over 50-year-old resort was hit by the Covid-19 outbreak and to make way for a redevelopment on site. Following this, the resort management will undertake a retrenchment exercise to compensate all affected employees, amounting to more than RM8.0m. (The Edge)

Dialog Group Bhd’s co-founder and chairman Tan Sri Dr Ngau Boon Kiat sold 44.0m shares, which is equivalent to a 0.8% stake in the company, on 10th June 2020. The shares changed hands via off market transactions for RM161.5m or RM3.67 per share. After the sale, Ngau holds an 18.1% stake in the oil and gas storage tank services provider. (The Edge)

Careplus Group Bhd is proposing a private placement to fund new production lines. The group intends to raise up to RM83.0m by issuing up to 53.1m shares, equivalent to 10.0% of its outstanding share capital. The shares will be placed to independent third party investors to be identified later, at an issue price that will also be determined later. The issue price will not be priced at a more than 10.0% discount to the five-day volume weighted average market price of its shares immediately before the price fixing date. (The Edge)

Ekovest Bhd’s 3QFY20 net profit slipped 71.3% YoY to RM8.4m, dragged by weaker performance across all three business segments, which more than offset the lower net finance costs and taxes paid. Revenue for the quarter, however, rose 4.3% YoY to RM344.9m. (The Edge)

Malaysian Resources Corp Bhd (MRCB) is raising up to RM5.0bn from a sukuk issuance to fund business growth and to meet future funding requirements. It plans to utilise the proceeds for general working capital, capital expenditure and other general corporate purposes, which are shariah compliant. (The Edge)

Source: Mplus Research - 15 Jun 2020