Bouncing back

Market Review

Malaysia: The FBM KLCI (+1.5%) recovered all its intraday losses as gloves heavyweights rallied from the recent pullback as investors shrugged off the detention orders placed on Top Glove and focus on further stimulus measures from Europe and US. The lower liners also tagged along the positive momentum across the local bourse, while only the energy sector (-0.1%) underperformed the positive broader market after crude oil prices extended their losses for second day.

Global markets: US stockmarkets finished mixed as the Dow fell 0.2% dragged down by the sluggish consumer sentiment data that fell to 73.2 in July 2020 due to the widespread resurgence of Covid-19 cases, but the S&P 500 gained 0.3%. European equities ended on a mixed tone, while Asia stockmarkets finished mostly higher, recovering from the previous session setback.

The Day Ahead

Following the strong recovery led by gains in glove heavyweights, we expect the positive momentum to continue as investors build onto their position, capitalising on the pullback of healthcare-related stocks. At the same time, the positive market undertone, coupled with the prevailing low interest rate environment may also drive rotational play amongst the lower liners as retail participants continue to adopt the hit-and-run technique in penny stocks.

Sector focus: The record daily new cases of Covid-19 at 237,467 cases across the globe will see demand for healthcare-related products on the rise, which we expect the healthcare sector continue to thrive over the foreseeable future.

The FBM KLCI has snapped a three-day losing streak after recovering all its intraday losses to form a bullish engulfing candle, re-claiming the daily EMA9 level. The bullish candle formation suggest for a potential recovery with the key index may re-test the resistance at around 1,615, followed by 1,620. On the flipside, the support is now pegged at 1,560, followed by 1,530.

Company Brief

Widad Group Bhd saw 180.0m shares traded off market on last Friday at average price of 28 sen. The shares were acquired by its major shareholder Widad Group Sdn Bhd which saw its shareholding increase to 1.65bn shares or 67.2%. The 180.0m shares accounted for 7.3% stake based on its issued shares of 2.45 bn units. (The Star)

LKL International Bhd plans to place out 85.8m new shares to raise up to RM45.5m for its capex and to repay borrowings. The new shares would represent not more than 20.0% of its issued shares, at 53 sen each. It plans to use RM26.5m for capex and expansion, RM6.0m for future investments or projects; RM5.6m to repay bank borrowing; RM6.4m for working capital and the remaining RM1.0m for estimated expenses in relation to the proposals. (The Star)

PDZ Holdings Bhd and precision mould maker Sanichi Technology Bhd will jointly design, develop and manage a regional e-commerce logistics hub on 94.7-ha. of land in Desaru, Johor. The duo had concluded a collaboration agreement that would lead to the formation of a special purpose vehicle to carry out the project, which will facilitate bulk-breaking, packaging and distribution throughout the Southeast Asian region. (The Edge)

FGV Holdings Bhd (FGV) is set to grow its logistics sector’s revenue with a newly added fleet. The additional assets, comprising road tankers, curtainsider trailers and dumper trucks, would boost the company’s logistics arm under FGV Transport Sdn Bhd. (The Edge)

Daya Materials Bhd, a Practice Note 17 (PN17) company, has obtained 75.0% approval in principle from its creditors for its proposed debt restructuring scheme. This was confirmed at a meeting chaired by the Corporate Debt Restructuring Committee, the oil and gas service provider. (The Edge)

Perdana Petroleum Bhd has secured a vessel chartering contract from its major shareholder Dayang Enterprise Holdings Bhd, worth an estimated RM6.5m. Under the contract, it will be chartering an accommodation workbarge (AWB) and an anchor handling tug vessel for Dayang. (The Edge)

Naim Holdings Bhd's wholly-owned unit Petrochemical Hub Sdn Bhd is selling two parcels of vacant land measuring some 405.6-ha. in Bintulu, Sarawak to the Sarawak Economic Development Corp for RM340.0m to enable the seller to unlock the value of the assets and propose a dividend to shareholders. The lands, which have a 99-year tenure each expiring in November 2112, are located at the Kidurong Industrial area off Jalan Sabekas at Tanjong Kidurong, Bintulu. (The Edge)

Boustead Holdings Bhd has unveiled its transformation plan to drive the group forward for the next three years as part of its strategy to strengthen prospects and unlock value. Premised upon the three pillars of Evolve, Efficiency and Excellence, the firm said this will set a course for the transformation of the group into a high performing and sustainable organisation. (The Edge)

Willowglen MSC Bhd's unit has been awarded a contract worth about RM16.3m by Sapura Rail Systems Sdn Bhd to provide supervisory control and data acquisition. The contract was awarded to its wholly-owned Willowglen (Malaysia) Sdn Bhd. The job involves the design, manufacture, supply, delivery, installation, testing and commissioning of the system solution. (The Edge)

Source: Mplus Research - 20 Jul 2020