Malaysia: The FBM KLCI (-0.1%) remained in the red for the fourth straight session as investors remain concern over the downgrade of economic growth by financial institutions. Consequently, the key index fell 1.3% WoW, marking its third consecutive weeks of decline. The lower liners also retreated after erasing all their intraday gains, while the broader market finished mostly lower.

Global markets: US stockmarkets endured another rout as the Dow sank 2.8% on backtrack of reopening of economy in Texas and Florida following fresh record high of Covid-19 cases nationwide. European stockmarkets finished mostly lower after sinking into the negative territory in the final trading hour, but Asia equities finished mostly higher on last Friday.

The Day Ahead

It was another choppy performance on the key index as the FBM KLCI erased all its intraday gains before finishing mildly lower last Friday. We think that the weakness may prevail owing to the renewed volatility on Wall Street overnight while the selling activities on glove heavyweights due to concern over the implementation of windfall tax may pile pressure on the key index. On a brighter note the extended suspension of intraday short selling (IDSS) till 31st December 2020 will provide some cushion to the volatility.

Sector focus: We believe the safe haven assets like gold and related players will be seen as a safer bet against the unabated market volatility.

The FBM KLCI continues to trade in a range bound manner after inching lower for the fourth straight session as the key index remains below the daily EMA20 level. Amid the unabated volatility, we think that the downward bias momentum may pressure the local bourse towards the support at 1,460 followed by 1,430. Upside will be capped at 1,500 followed by 1,530. The MACD Indicator continues to point lower, while the RSI rebounded marginally above the oversold region.

Company Brief

Malayan Banking Bhd (Maybank) will continue to focus on strengthening the group's liquidity as well as preserving capitals in order to deliver greater efficiency while remaining resilient in the volatile operating landscape. Over 70.0% of Maybank’s loan book is currently under the moratorium or rescheduling and restructuring programmes. Meanwhile, around 88.0% of its outstanding SME loans are under the six-month moratorium. (Bernama)

Malaysian Resources Corp Bhd’s (MRCB) 1QFY20 net profit surged 278.0% YoY to RM15.7m, mainly due to higher contribution from its property and investment segment. Revenue for the quarter rose 75.2% YoY to RM425.78m. (The Edge)

Dutch Lady Milk Industries Bhd’s 1QFY20 net profit fell 33.0% YoY to RM22.7m on lower revenue and amid higher dairy raw material prices. Revenue for the quarter fell 5.2% YoY to RM251.2m. (The Edge)

Kim Hin Joo (M) Bhd has ventured into the toys sector by opening The Entertainer, a UK retailer, in Sunway Pyramid. It is also allocating RM1.6m-1.8m as capital expenditure to open another two outlets by year-end. (The Edge)

APM Automotive Holdings Bhd’s unit in Indonesia is teaming up with Hyundai Motor Company to manufacture and supply automobile seats and related components. The joint venture between PT APM Automotive Indonesia and Hyundai Transys Inc is to support Hyundai’s automobile manufacturing plant in Cikarang, Indonesia, which is expected to be fully operational in 2HFY21. The plant will produce 150,000 units of vehicles a year, half of which would be exported to neighbouring countries in Southeast Asia. (The Edge)

Mynews Holdings Bhd’s 2QFY20 net loss stood at RM2.3m against a net profit of RM8.0m recorded in the previous corresponding quarter, mainly due to the Covid- 19 impact. Revenue for the quarter fell 7.1% YoY to RM123.5m. (The Edge)

AT Systematization Bhd (ATS) is acquiring industrial glove maker Pearl Glove Sdn Bhd (PGSB) for RM22.0m cash. The vendors are Hai Hong Capital Sdn Bhd, P’ng Sim Guan, P’ng Lai Heng, Hai Hong Holdings Sdn Bhd and Aaron Khoo Teng Soon. (The Edge)

IJM Corp Bhd’s 4QFY20 net profit fell 70.4% YoY to RM71.3m, dragged by lower profits across four divisions namely property development, manufacturing and quarrying, plantation and infrastructure. Revenue for the quarter, however, grew 46.7% YoY to RM2.05bn. (The Edge)

IJM Plantations Bhd’s 4QFY20 net loss stood at RM76.4m vs. a net profit of RM13.5m in the previous corresponding quarter, weighed down by RM100.7m net forex loss. Revenue for the quarter, however, rose 18.6% YoY to RM195.4m. (The Edge)

Cypark Resources Bhd’s 2QFY20 net profit fell 4.3% YoY to RM18.5m due to the suspension of on-site work activities of its environmental engineering as well as landscaping and infrastructure divisions as a result of the MCO. Revenue for the quarter fell 25.3% YoY to RM75.78m. (The Edge)

Alliance Bank Malaysia Bhd expects its net interest margin to shrink by 18 basis points as a result of Bank Negara Malaysia’s aggressive 100 basis points cut on the overnight policy rate. The group will address this by repricing its current account savings accounts and growing a higher yield of products. Alliance also expects to incur up to RM60.0m modification loss from the beginning of FY21 as a result of the six-month moratorium on loans for both its individual and small and medium sized enterprises. However the impact of the moratorium is expected to unfold throughout the remaining tenure of the loans, and therefore the net impact to net interest income is expected to be RM25.0 m in FY21. (The Edge)

Source: Mplus Research - 29 Jun 2020