Improved sentiment

Market Review 

Malaysia: The FBM KLCI (+0.1%) managed to hold onto its gains as foreign funds turned net buyers for the first time in 13 trading days. The key index was traded in a tight range after recovering all its intraday losses on the back of late gains in gloves heavyweights. The lower liners edged higher spurred by rotational play, while the broader market finished mixed.

Global markets: US stockmarkets rebounded (Dow gained 0.4%) from a two-day pullback lifted by gains in technology shares, whilst waiting for further stimulus package. However, European stockmarkets finished mostly lower, while Asia stockmarkets ended mixed as China’s industrial profits data rose 11.5% YoY in June 2020; marking the fastest pace of growth since May 2019.

The Day Ahead

We expect the consolidation on the local bourse to prolong as any gains will be punctuated by quick profit taking activities. Nevertheless, the sustainable high trading volumes suggest that trading opportunities are still prevalent within the broader market and lower liners, particularly FBM-ACE listed stocks as investors continue their quest to seek for high yield investments.

Sector focus: Given the number of new Covid-19 cases remain on the rise; we think that buying momentum within the gloves-related and healthcare stocks may anticipate further room for upside. At the same time, we reckon that technology stocks may garner further interests, taking cue from the gains on Nasdaq (+1.7%) that finished mildly below the record high level.

The FBM KLCI was traded mildly higher as the key index retained its positon above the daily EMA9 level. With the consolidation remains in place, we continue to view the 1,615 as the immediate hurdle, followed by 1,630. Supports remain pegged at 1,560, followed by 1,530. Indicators are mixed with the MACD Histogram extended another red bar, but remains above the zero level, while the RSI remains above 50.

Company Brief

Green Packet Bhd, which in 2014 sold a controlling interest in its mobile business to Telekom Malaysia Bhd (TM), has entered into an agreement with the latter to divest its remaining interest in the asset that would leave the company debt free to pursue its current objectives. Both parties had come to an agreement to swap MTN issued by Green Packet and held by TM in return for all the securities and debt instruments that Green Packet held in WeBe. Green Packet will recognise a fair value gain of approximately RM63.1m from the deal. (The Star)

Ranhill Utilities Bhd was awarded a contract for mechanical and electrical works at the project to expand a water treatment plant in Melaka. The contract worth RM14.7m is expected to be completed within twenty four months. (The Star)

United Plantations Bhd's 2QFY20 net profit rose 62.7% YoY to RM123.6m on higher revenue and better performance posted by its plantation segment. Revenue for the quarter increased 8.8% YoY to RM294.3m. (The Edge)

XOX Bhd's unit XOX Media Sdn Bhd has teamed up with a Shanghai-based venture capital and advisory firm to form a partnership with a 5G technology provider in China. The group has signed a heads of agreement with Jiangsu Sulian Asset Management Co Ltd to link up with an undisclosed Chinese telecommunication firm, to explore a regional 5G mobile network deployment. (The Edge)

ManagePay Systems Bhd is forming a joint venture (JV) company, through its wholly-owned subsidiary ManagePay Services Sdn Bhd (MPSB) together with Singapore-based Passion Venture Capital Pte Ltd (PVC) to participate in digital banking in Malaysia. MPSB will hold a 51.0% stake in the JV company, while PVC will hold the remaining 49.0%. Investment in the JV company will be fully funded by PVC. (The Edge)

Parkson Holdings Bhd's unit, Parkson Haipong Co Ltd, has proposed to dispose of Parkson TD Plaza Shopping Center in Hai Phong, Vietnam for S$13.1m (RM42.m). The consideration, however, is below the property's book value of US$13.7m, resulting in a S$700,000 loss after VAT and transaction costs. (The Edge)

Affin Bank Bhd has not rule out the possibility of listing its asset management unit, Affin Hwang Asset Management as the bank is keen to unlock the value of the unit. Affin Hwang Asset Management is the second largest asset management firm in the country in terms of assets under management. (The Edge)

TH Heavy Engineering Bhd has appointed Mohamed Niza Abu Bakar, 45, as its new executive director, effective 30th July 2020. Mohamed Niza has served top managerial roles in a number of companies in the fields of manufacturing including pharmaceuticals, healthcare products, as well as metal and plastic parts. (The Edge)

Boustead Holdings Bhd (BHB) has received a notice from Lembaga Tabung Angkatan Tentera that the latter had been granted more time, until 27th October 2020, to announce its firm intention in relation to taking BHB private. (The Edge)

Khazanah Nasional Bhd has exited its investment in semiconductor testing firm Aemulus Holdings Bhd by disposing of its remaining 29.3m Aemulus shares, representing a 5.3% stake. (The Edge)

SC Estate Builder Bhd wholly-owned unit SC Estate Industries Sdn Bhd has agreed to accept 21 pieces of freehold land with buildings as settlement for a RM2.8m debt. Following this, SC Estate Industries agreed to withhold taking legal action against Sigmagate Capital for the debt, which arose due to failure to make payments for the supply of various construction materials on credit. (The Edge)

IJM Land Bhd has unveiled an ownership campaign titled "Now You Can" for prospective homebuyers in the current challenging financing environment due to the Covid-19 pandemic. The campaign ongoing until 31st October 2020 aims to instil confidence in customers and provide them with an opportunity to own a home of their dreams with ease. (The Edge)

AME Elite Consortium Bhd intends to invest RM25.0m in capital expenditure to build two new blocks of i-Stay @ Indahpura workers' dormitories to increase the accommodation capacity by 54% to approximately 5,900 persons, in order to support the requirements of customers in its i-Park @ Indahpura industrial park. (The Edge)

Ageson Bhd has entered into a JV agreement with Menteri Besar Kedah Inc to undertake the mining, supply and exportation of silica sand in Kedah. Seperately, Ageson has accepted the letter of intent from South Korean glass manufacturer company Techpack Solutions Co Ltd for a five-year silica sand supply contract for US$79.5m (RM339.0m). (The Edge)

Source: Mplus Research - 28 Jul 2020