Return of foreign funds

Market Review

Malaysia: The FBM KLCI (-0.3%) started off the week on another dour note despite recovering most of its intraday losses as weakness remain prevalent within the glove heavyweights. The lower liners, however, rebounded, while the broader market closed mostly higher with the telecommunications and media sector (+2.0%) taking the lead.

Global markets: US stockmarkets ended mixed as the Dow (-0.3%) retreated on the failure of agreement for new stimulus bill from both the Democrats and Republicans, but the Nasdaq (+1.1%) finished at record high. European stockmarkets rebounded, while Asia stockmarkets finished mixed.

The Day Ahead

While the FBM KLCI is attempting to find stability, rotational play amongst the lower liners will keep trading activities at a healthy level, particularly the recovery from technology sector. At the same time, the return of foreign funds in recent days is a testament of the resilient demand of Malaysia equities on the expectations of economic recovery.

Sector focus: The technology sector may continue its recovery supported by record closing of Nasdaq on Wall Street overnight, while the rebound in crude oil and crude palm oil prices may provide some impetus on the energy and plantation stocks. Additionally, the higher gold prices owing to the uncertainty over global economic recovery provided fresh legs for gold-related players for a recovery play.

After recovering most of its intraday losses, the FBM KLCI has formed a hammer candle above the daily EMA60 level. Although it is still premature to think that a recovery may take shape, the resistance is located at 1,600, followed by 1,615. On the downside, the immediate support remained pegged at 1,550, followed by 1,540. Indicators are still weak with the MACD Line continues to tread below the Signal Line, while the RSI remains below 50

Company Brief

MISC Bhd has accepted a letter of intent from Petroleo Brasileiro to provide a floating production storage and offloading facility (FPSO), offshore Rio de Janeiro, and also operations and maintenance services. The charter will last 22.5 years, with operations to start in 1H2024. (The Star)

OCB Bhd’s subsidiary, Enigma Sinar Sdn Bhd is acquiring 36.9-ac of land in Kapar for RM56.3m for a warehousing and distribution hub. The acquisition would provide the group an opportunity to acquire strategic landbank near Port Klang, the busiest container port in Malaysia. 80.0% of the purchase will be funded through bank borrowings, with the balance to be serviced with internally-generated funds. The purchase is expected to be completed in 12 months. (The Star)

Ajinomoto (Malaysia) Bhd’s 1QFY21 net profit rose 9.8% YoY to 15.0m following lower advertising and sales promotional expenses. Revenue for the quarter, however, fell 5.5% YoY to RM95.1m. A first and final dividend of 49.3 sen, payable on 28th October 2020 was declared. (The Edge)

Dayang Enterprise Holdings Bhd bagged a contract from Sarawak Shell Bhd and Sabah Shell Petroleum Company Ltd for the provision of topside major maintenance services, effective from 23rd July 2020 until the completion of work this year. The contract’s value is based on work orders issued. (The Edge)

Eco World Development Group Bhd is selling 16.3-ac of industrial land at its Eco Business Park V project to Baosteel Can Making (Malaysia) Sdn Bhd, an indirect subsidiary of China Baowu Steel Group Corp Ltd for RM53.3m. (The Edge)

Innature Bhd’s 2QFY20 net profit fell 38.6% YoY to RM3.1m, as its retail business was impacted by the Covid-19 lockdown. Quarterly revenue fell 28.7% YoY to RM31.4m. (The Edge)

Inta Bina Group Bhd has been appointed by Tropicana Corp Bhd as contractor for a multi-facility apartment project in Subang Jaya for RM199.0m. Work will commence 24th August 2020 and schedules for completion within 39 months. (The Edge)

LPI Capital Bhd’s 2QFY20 net profit rose 9.4% YoY to RM77.4m resulted from higher gross premiums earned from the general insurance segment. Quarterly revenue climbed 3.3% YoY at RM399.6m. A first interim dividend of 28 sen per share, payable on 11th September 2020 was declared. (The Edge)

Nexgram Holdings Bhd is partnering Falze Holdings Sdn Bhd (FHSB) for a subcontract under the Central Spine Road project. The contract, which was awarded by main contractor Pembinaan Jaya Zira Sdn Bhd, is for Section D, Package 3 of the CSR project from Bulatan Gua Musang to Mentara, Kelantan, worth RM145.0m. Nexgram’s portion of the contract is valued at RM118.4m, while FHSB’s cut is RM26.6m, which is inclusive of a RM14.6m provisional sum. (The Edge)

Sino Hua-An International Bhd is to be the exclusive distributor for Guangxi Aerospace Beidou New Energy Industry Technology Co Ltd’s ultra-capacitors and super batteries outside of China. The exclusive master distribution agreement between the two will last 10 years and is subject to 10 year renewal periods, if sales increase by a minimum of 10.0% at the end of each 10-year term. (The Edge)

Source: Mplus Research - 18 Aug 2020