Back above 1,600

Market Review 

Malaysia: Gains on glove heavyweights, coupled with the solid exports data in June 2020 that rose 8.8% YoY spurred the FBM KLCI (+1.2%) to re-claim the 1,600 psychological level after the key index hovered in the positive territory throughout the entire trading session yesterday. The lower liners extended their gains, while the broader market closed mostly higher with the exception of REIT (-0.4%) and telecommunications & media (-0.2%) sector.

Global markets: US stockmarkets erased all their previous session gains as the Dow slipped 0.8% after the Republican Party continued deliberations on its fiscal relief plan, coupled with weaker-than-expected earnings from McDonald’s and 3M. Meanwhile, both European and Asia stockmarkets ended mixed.

The Day Ahead

The FBM KLCI delivered a solid performance and that looks to persist over the near term as the market was brighten up again by the rally in glovemakers stocks. At the same time the stronger ringgit against the Greenback may provide some impetus for further gains. Despite that, we caution that gains will be capped by the weakness on Wall Street overnight, while investor will monitor for developments surrounding the two-day US Federal Reserve monetary policy meeting.

Sector focus: We reckon that buying momentum in healthcare sector to remain unscathe as the number of Covid-19 cases across the globe remained on the rise. Amid the renewed market volatility, safe haven-related stocks will also be in focus, particularly after gold prices recorded its eighth straight winning streak.

The FBM KLCI gapped up and subsequent formed a bullish candle to close above the daily EMA9 level. Despite the positive momentum, we continue to think that the 1,615 to be a difficult hurdle, with next resistance located at 1,630. Support is pegged at 1,560, followed by 1,530. Indicators are turning slightly positive with the MACD Histogram turned green, but remains below the Signal Line, while the RSI remains above 50.

Company Brief

Bursa Malaysia Bhd’s 2QFY20 net profit jumped 86.1% YoY to RM86.2m, underpinned by the strong performance from the securities market as trading volume had surged to fresh historic highs. Revenue for the quarter increased 45.0% YoY to RM179.8m. An interim dividend of 17 sen per share, payable on 26th August 2020 was declared. (The Star)

Dagang Nexchange Bhd (DNeX) is planning to raise as much as RM109.0m by selling new shares, with the bulk of the proceeds earmarked for new investment. DNeX has proposed to issue up to 496.0m new shares, or 20% of the company's enlarged share capital, via a private placement exercise at an indicative issue price assumed at 22 sen per share. (The Star)

Cycle and Carriage Bintang Bhd’s 2QFY20 net loss narrowed to RM9.4m vs. a net loss of RM11.6m recorded in the previous corresponding quarter, owing to a plunge in sales. Revenue for the quarter fell 55.1% YoY to RM139.3m. (The Edge)

Syarikat Takaful Malaysia Keluarga Bhd and its subsidiary Syarikat Takaful Malaysia AM Bhd have entered into two service agreements with RHB Islamic Bank Bhd, a wholly-owned subsidiary of RHB Bank Bhd, for a combined facilitation fee of RM151.0m. Under the agreement, RHB Islamic will sell, distribute and promote family credit takaful products developed by Syarikat Takaful. In return, Syarikat Takaful will pay a facilitation fee of RM145.0m to RHB Islamic. (The Edge)

Sunway Bhd is buying a leasehold land in Kota Baru, Kelantan from Liziz Standaco Sdn Bhd for RM28.7m, to construct a 200-bed hospital. This marks the group's healthcare maiden expansion into the east coast region. (The Edge)

Green Ocean Corp Bhd saw its second-largest shareholder Khoo Chee Siang exit the group after disposing of all his shareholdings, representing some 9.8% stake in the company. The group also saw two of its directors — independent and nonexecutive director Fong Shin Ni and non-independent and non-executive director Shelly Chiau Yee Wern resign with immediate effect. Meanwhile, Green Ocean has planned to raise RM5.4m via private placement, for repaying bank borrowings and for general working capital. (The Edge)

Press Metal Aluminium Holdings Bhd's subsidiary Press Metal (Labuan) Ltd launched invitation to buy corporate notes it has issued, up to a maximum aggregate principal amount of US$200.0m (RM849.9m). The offer is part of its policy to actively manged its balance sheet liabilities while optimising its costs of financing. (The Edge)

XOX Bhd's largest shareholder Key Alliance Group Bhd is increasing its equity holdings in XOX by converting 248.6m irredeemable convertible preference shares in XOX into an equal number of new ordinary shares, in light of recent developments concerning XOX's expansion into microfinancing and emergence of new substantial shareholder involving Hong Kong national Daniel Tam Ping Kuen. (The Edge)

Sime Darby Plantation Bhd sees rising costs for sustainable practices and foresees the trend is unlikely to reverse anytime soon. The cost to produce sustainable palm oil varies between US$4 and US$12 per tonne of crude palm oil. At the group level, the group's cost stood at around US$32 per hectare. (The Edge)

Axiata Group Bhd’s business-to-business unit Axiata Enterprise has inked a strategic partnership agreement with Spanish multinational telecommunications firm Telefónica to leverage off each other's scale, expertise and market presence in their respective regions. The agreement will see Axiata Enterprise join the Telefónica Partners Programme, an initiative launched in 2011 as part of Telefónica Tech, as the only Asian partner covering 11 markets in the region. (The Edge)

ConnectCounty Holdings Bhd has ceased all negotiations pertaining to the possible reverse takeover (RTO) exercise involving S5 Systems Sdn Bhd. This comes after it was reported last Monday that Ancom Logistics Bhd had proposed an RTO exercise which entailed the acquisition of the entire share capital in S5 Holdings Inc — the parent company of S5 Systems. (The Edge)

Ranhill Utilities Bhd has received a letter of acceptance from the mayor of Bandung for its proposal to build, operate and transfer a water treatment plant in the Indonesian city, subject to negotiations with the relevant government agencies. The group will be involved in the operations and maintenance of the 30-m-litre-aday treatment plant for 30 years, with the water tariff set at 3,200 rupiah per cubic metre. (The Edge)

AWC Bhd is partnering with Techkem Utilities Sdn Bhd to jointly explore waterrelated project opportunities in Malaysia and the Asean region. The MoU shall come into force from the date of execution and is valid for 12 months unless terminated by the parties. (The Edge)

Bursa Malaysia Securities Bhd has publicly reprimanded Bertam Alliance Bhd for failing to make timely announcements over several land transactions that took place in 2015 and 2016, as well as for failing to obtain shareholders' approval prior to one of the deals. Also reprimanded were seven directors of the company at the material time; two were also fined a total of RM75,000.

Bertam failed to make timely announcements for the transaction that involved 26 plots of contiguous vacant agricultural land. In addition, Bertam also failed to obtain prior shareholders’ approval on one of the transactions that took place in 2015, and only obtained shareholders’ ratification in 2018. (The Edge)

Businessman Au Yee Boon has emerged as the second largest shareholder of YiLai Bhd, after acquiring 7.7m shares or a 5.3% stake in the ceramic and tile manufacturing company. Following the purchase of the block of shares on 24th July 2020, Au now has a direct interest of 5.9% and an indirect interest of 8.6% in the company.

Apart from that, Au’s vehicle Techbase Solution Sdn Bhd has also emerge as a substantial shareholder of Yi-Lai, after buying 9.6m shares or a 6.6% stake in the company on the same date. Au’s spouse Lim Lee Wheng has also emerged as the substantial shareholder, as she is deemed to own an indirect interest of 11.9% and a direct stake of 2.0% in the company. (The Edge)

Source: Mplus Research - 29 Jul 2020