Dampened by political instability

Market Review

Malaysia: The FBM KLCI (-0.5%) managed to recoup most of its intraday losses on the back of the eleventh hour bargain hunting in selected index heavyweights. The weakness was dragged by selected banking heavyweights following the extension of loan moratorium to targeted groups, coupled with the renewed political instability. Still, the index rose +6.9% MoM; the biggest monthly gain since October 2011. Both the lower liners and broader market finished mostly lower.

Global markets: US stockmarkets advanced on last Friday as the Dow climbed 0.5% following a string of stronger-than-expected corporate earnings from technology giants such as Apple, Amazon, Facebook and Alphabet which drove the Nasdaq (+1.5%) to close marginally below its all-time high level. European stockmarkets edged lower after erasing all their intraday gains as Eurozone’s 2Q2020 GDP sank 12.1% YoY, while Asia stockmarkets ended mostly lower.

The Day Ahead

Market sentiment was grappled with renewed volatility as investors were quick to offload their holdings after the Malaysia’s political situation took another agenda with the dissolution of Sabah state assembly. We expect the volatility to remain a feature as investors will be brace by a barrage of corporate earnings releases towards the end of the month which takes into account of the full impact of Movement Control Order (MCO).

Sector focus: With the healthcare-related stocks expected remain on the front seat; we see the technology sector keep pace as Nasdaq marched towards near all-time high. The plantation sector may warrant another glance as CPO prices stabilised.

The FBM KLCI formed another hammer candle as the key index is treading around the daily EMA9 level. We continue to see the consolidation taking shape with the 1,615 as the immediate resistance, followed by 1,630. Support is pegged at 1,585, followed by 1,560. Indicators are mixed with the MACD Histogram turning red and remains below the Signal Line, but the RSI remains above 50.

Company Brief

Mah Sing Group Bhd will soon announce plans to venture into the healthcare sector through its plastic products-manufacturing subsidiary. Mah Sing has leveraged on technology and digitalisation through Industry 4.0 to improve its operational efficiency, which includes automation to improve quality checks with about RM16.5m has been invested in the automation of its production lines in Malaysia. (The Star)

AirAsia X Bhd’s (AAX) 1QFY20 net loss stood at RM549.7m vs. a net profit of RM43.3m recorded in the previous corresponding quarter dragged down by foreign exchange losses and wrong hedges against higher crude oil prices. Revenue for the quarter fell 21.0% YoY to RM924.1m. Despite triggering the PN17-status, given its current liabilities exceeded current assets as at 31st March 2020, AAX will not be classified as PN17 due to the PN17 relief measures implemented by Bursa Malaysia that runs until 30th June 2021. (The Edge)

Lotte Chemical Titan Holdings Bhd’s 2QFY20 net profit declined 15.4% YoY to RM88.7m, due to lower revenue, weaker average selling prices and poorer demand. Revenue for the quarter fell 25.9% YoY to RM1.58bn. (The Edge)

Tune Protect Group Bhd’s 2QFY20 net profit increased 17.6% YoY to RM12.6m on lower net claims, management expenses, as well as an increase in unrealised investment gain. Revenue for the quarter, however, fell 18.9% YoY to RM100.9m. (The Edge)

YTL Hospitality Real Estate Investment Trust’s (YTL REIT) 4QFY20 net property income declined 26.5% YoY to RM44.3m on rental variation requested by tenants, by offering a discount of 50% over the next two years in a bid to provide reliefs to tenants during challenging periods. Revenue for the quarter fell 41.2% YoY to RM69.8m. (The Edge)

KPJ Healthcare Bhd is disposing its 80.0% stake in an Indonesian company that owns a hospital in Jakarta for RM28.0m, because of difficulty experienced in complying with the licensing and regulatory requirements. The company, PT Khidmat Perawatan Jasa Medika (KPJM), operates a specialist hospital known as RS Medika Permata Hijau. (The Edge)

Willowglen MSC Bhd has secured a RM12.0m contract from Ekovest Construction Sdn Bhd to supply a traffic control and surveillance system. This marks the group's third contract win for this month, with a total of RM36.8m worth of contract won. (The Edge)

Notion VTec Bhd’s unit Notion Venture Sdn Bhd (NVSB) has been registered with the US Food & Drug Administration (FDA) as a face mask manufacturer that excludes N95 respirator. The company is also in the midst of submitting its N95 respirator samples to the US-based National Institute for Occupational Safety and Health (NIOSH) for approval. (The Edge)

YNH Property Bhd (YNH) has completed the second issuance of perpetual securities with a nominal amount of RM87.0m that carries an initial coupon rate of 6.85% per annum. The group has raised a total of RM350.0m of perpetual securities, following its successful maiden issuance of RM263.0m in August 2019. (The Edge)

Top Glove Corp Bhd hopes to reach a remediation agreement with the US Customs and Border Protection (CBP) within the month of August 2020. The glove maker has been in engagement with the CBP via its headquarters in Malaysia, as well as its US office since 17th July 2020. (The Edge)

Source: Mplus Research - 3 Aug 2020