Attempting 1,600 again

Market Review

Malaysia: The FBM KLCI (+0.4%) recovered most of its previous session losses, boosted by gains in selected banking heavyweights as the key index hovers mostly in the positive territory yesterday. The lower liners also rebounded amid the positive market undertone, while the broader market ended mostly higher.

Global markets: US stockmarkets managed to hold onto their gains as the Dow and S&P 500 climbed 0.6% and 0.2% each, but the Nasdaq fell 1.1% after Senate Majority Leader Mitch McConnell does not expect another stimulus bill to pass in the next two weeks. European stockmarkets ended higher after EU leaders agreed €2.1tn rescue package spur economic growth, while Asia stockmarkets closed higher yesterday.

The Day Ahead

Financial institutions in Malaysia have declared that extension of loan moratorium is off the table, with options for repayment to targeted groups; suggests that the potential spike in non-performing-loans in the final quarter of the year will be contained and the nation is on track for recovery. Further stimulus from central banks across (EU and Japan) and positive developments vaccine for Covid-19 may further contribute to the positive sentiment.

Sector focus: Long-term investors could also capitalise on the recovery in financial sector as financial institutions perceived that the impact from the end of loan moratorium is not as negative as expected, while energy stocks will also be favourable after crude oil prices jumped to the highest level since March 2020.

The FBM KLCI eked out some gains as the key index continues to be supported above the daily EMA9 level. The recovery may see gains to build-up over the near as the key index looks to re-test the immediate resistance at around 1,615, followed by 1,620. The support is pegged at 1,560, followed by 1,530. Indicators remain slightly positive as the MACD Line is still above the Signal Line, while the RSI remains above 50.

Company Brief

Marine & General Bhd has disposed of 40.0% equity interest in its JM Sutera 8 chemical tanker to Muhibbah Engineering (M) Bhd (MEB) for RM21.8m. M&G Sutera 8 had last year made payment of RM32.8m to MEB to partially settle the contract amount of RM54.6m. The settlement of the outstanding sum will significantly reduce the utilisation of Marine & General funds as capital expenditure towards the JMS8 vessel. (The Star)

Sime Darby Plantation Bhd will get back its 185.5-ac. of land in Jasin, Melaka from the state authorities which they had compulsorily acquired. Sime Plantation and the State Land and Mines Department, Jasin District Land Administrator and the Melaka Government had reached an amicable settlement and they had recorded a consent order in the High Court. (The Star)

Prestariang Bhd is planning to issue 79.6m new shares to its founder Datuk Dr Abu Hasan Ismail at 35 sen each. The new shares to be issued represented 15.0% of the company's total issued share capital that would raise RM27.9m. (The Star)

Puncak Niaga Holdings Bhd has agreed to the lower contract sum for a regional sewerage treatment plant project in Kuantan, Pahang secured two years ago. The new contract value was revised to RM432.7m effective 21st July 2020. (The Star)

The Ministry of Human Resources has announced that the headquarters of Top Glove Corp Bhd in Meru, Klang was raided by enforcement officials last Monday to investigate matters relating to breach of Movement Control Order (MCO) rules and cramped quarters provided to foreign workers. The minister, however, reported no offences involving elements of forced labour were found. (The Edge)

CIMB Group Holdings Bhd's 94.8% indirectly held subsidiary CIMB Thai Bank PCL reported a 52.4% YoY rise in its 2QFY20 net profit to 306.0m baht (about RM41.1m), helped by a rise in net interest income and gains on financial instruments. Net interest income climbed 1.0% YoY to 2.92bn baht. (The Edge)

CapitaLand Malaysia Mall Trust's 2QFY20 net property income fell 61.5% YoY to RM19.4m, impacted by significant rental waivers and rebates to tenants affected by phases of lockdown. Gross rental income declined 35.1% YoY to RM42.9m. (The Edge)

TAS Offshore Bhd is expected to lose RM70.0m for cancelling two contracts with two shipbuilders, namely Guangzhou Hangtong Shipbuilding and Shipping Co Ltd as well as Jiangmen Hangtong Shipbuilding Co Ltd, in China to build 16 units of offshore support vessels. TAS Offshore wholly-owned subsidiary TA Ventures (L) Ltd had earlier entered into the shipbuilding contracts with the two shipbuilders. (The Edge)

Tenaga Nasional Bhd (TNB) has commenced legal proceedings against the Inland Revenue Board (IRB) over a RM1.81bn tax assessment dispute between the two parties. The additional assessment notice from IRB was similar to the notices it had received in past years. (The Edge)

Komarkcorp Bhd has set up Komark Mask (M) Sdn Bhd to carry out the manufacture and sale of face masks. It also anticipates the face mask venture to contribute to 25.0% or more of the net profit of the group through manufacturing the commonly used three-ply surgical face masks and KN95 masks. (The Edge)

Zecon Bhd has received approval from its shareholders for its proposed rights issue to address its current funding requirements to meet short-term obligations and liabilities, as well as strengthen its financial position. Zecon announced on 28th February 2020 that it was planning to raise between RM19.4m and RM46.1m via a renounceable rights issue of up to 576.4m of irredeemable convertible preference shares at an issue price of eight sen each and a conversion rate of 16 sen.(The Edge)

Sime Darby Property Bhd has reported that Phase 1 of Elmina Green Three located within its City of Elmina in Shah Alam has been fully taken up and 65 units of Phase 2 have been sold. The Elmina Green Three project was first previewed in early June 2020, comprising a total of 218 units for Phase 1 and 109 units for Phase 2. (The Edge)

SBC Corp Bhd will delay filing its annual report for the financial year ended 31st March 2020 by another one month to 31st August 2020, after having considered the challenges the group has been facing during the MCO period and the current situation. The construction and property development company was due to issue the annual report by 31st July 2020. (The Edge)

Practice Note 17 company APFT Bhd said its group CEO Siva Kumar Kalugasalam, 50, is stepping down effective 30th July 2020 to pursue his personal interests. (The Edge)

Source: Mplus Research - 22 Jul 2020