Building momentum

Market Review

Malaysia: The FBM KLCI (+1.1%) regained its footing after lingering mostly in the positive territory yesterday. Gains were largely underpinned by the recovery in glove-heavyweights after the US FDA unveiled a list of PPE shortage. The lower liners also advanced, while the broader market ended mixed with the healthcare sector (+9.9%) outperforming its peers.

Global markets: US stockmarkets ended mixed as the Dow (-0.2%) extended its losses as the negotiations over the next stimulus bill remain in standstill, but both the S&P 500 (+0.2%) and Nasdaq (+0.7%) closed at record high levels. European stockmarkets retreated after erasing all their intraday gains, while Asia stockmarkets closed mostly higher.

The Day Ahead

With the FBM KLCI attempting to find stability, we reckon that the sentiment will remain largely dictated by the movement of glove-heavyweights. Still, we think that further gains will be choppy owing to the quick profit taking activities as investors have now turned cautious on the recent volatility. Meanwhile, the improved trading sentiment alongside with trading activities will continue to ensure liquidity and sustain the historically higher-than-average retail participant rate.

Sector focus: We reckon that traders could build on their previous session gains amongst the beaten down healthcare-related stocks. Meanwhile the extended gains on gold prices (re-claimed above the US$2,000 per ounce level overnight) will see gold-related companies remain on track for further upside.

The FBM KLCI has formed a bullish candle as the key index re-tested the daily EMA9 and EMA20 level. While the local bourse attempting to find stability, the resistance remains located at 1,600, followed by 1,615. On the downside, the immediate support remained pegged at 1,550, followed by 1,540. Indicators have turned mixed with the MACD Line continues to tread below the Signal Line, but the RSI has risen above 50.

Company Brief

Malakoff Corp Bhd's 2QFY20 net profit has jumped 101.0% YoY to RM105.0m, boosted by increased earnings from Tanjung Bin Energy Sdn Bhd (TBE) and contribution from Alam Flora Sdn Bhd. Revenue for the quarter, however, declined 17.0% YoY to RM1.51b. A dividend of 2.8 sen per share, payable on 16th October 2020 was declared. (The Star)

Berjaya Sports Toto Bhd’s 4QFY20 net loss stood at RM43.3m on top of revenue of RM475.1m. No comparison was made due to change in financial year end to 30th June 2020. A third interim share dividend of one treasury share for every 100 existing ordinary shares, to be transferred on 24th September 2020 was declared. (The Star)

Green Packet Bhd has inked a collaboration agreement with Tencent Cloud to set up a joint internet data center in Malaysia, for the deployment of Tencent Cloud Services locally. Tencent Cloud will provide cloud solutions, technical support and expertise, while Green Packet will be tasked to develop the data center. The service is expected to go live in the first half of 2021 with the Malaysian node being part of Tencent Cloud’s network. The exclusive collaboration is expected to bring immense benefit to Malaysian businesses, providing access to the latest innovation through the products and services offered by Tencent Cloud in Malaysia. (The Star)

Bonia Corp Bhd is buying two parcels of land in Bukit Bintang for RM49.4m cash, in anticipation of capital appreciation and rental income from the assets. One parcel is occupied by One Seafood Restaurant, in which Bonia's 30.0%-owned unit Paris RCG Sdn Bhd holds a stake. (The Edge)

Can-One Bhd has agreed to sell the entire stake in sweetened creamer and evaporated creamer manufacturer F&B Nutrition Sdn Bhd to Asia Dairy Creations Sdn Bhd for RM1.00b — equivalent to the maximum price under the sale and purchase agreement inked in June 2019. The disposal of F&B Nutrition allows it to unlock the value and monetise its investment in F&B Nutrition and recognise a gain on disposal of RM810.8m. It plans to utilise the gross proceeds from the sale to pare down its bank borrowings. (The Edge)

Dialog Group Bhd's 4QFY20 net profit grew 11.3% YoY to RM156.7m, mainly due to the strong performances of its Malaysian operations. Revenue for the quarter rose 20.2% YoY to RM539.9m. A final dividend of 1.9 sen per share was recommended. (The Edge)

Focus Dynamics Group Bhd, has proposed a one-for-three share split together with a rights issue of two irredeemable convertible preference shares for every six split shares held — together with free warrants. The group seeks to raise up to RM102.2m from the rights issue, which will be used to part-fund its mixeddevelopment project "The Arch" which is located along Jalan Tun Razak near nightlife centre TREC. (The Edge)

Inari Amertron Bhd is forming a 51:49 joint venture (JV) in Malaysia with Singapore's MIT Semiconductor Pte Ltd to undertake the supply of customised semiconductor process tools. The JV will tap into MIT's expertise and technical know-how in providing semiconductor manufacturing solutions customised to Inari Group's OSAT and/or EMS requirements. Meanwhile, Inari has the opportunity to venture into the segment as part of its diversification efforts. (The Edge)

Press Metal Aluminium Holdings Bhd's 2QFY20 net profit fell 12.5% YoY to RM90.1m on higher tax and as it contended with the impact of the Covid-19 pandemic. Revenue for the quarter fell 18.8% YoY to RM1.73b. A dividend of 1.0 sen per share, payable on 28th September 2020 was declared. (The Edge)

Sarawak Consolidated Industries Bhd has bagged three engineering, procurement, construction and commissioning contracts worth a combined RM707.2m in Abu Dhabi, Malaysia and Indonesia. Two of the three jobs came from subsidiaries of Serba Dinamik Holdings Bhd and are considered recurrent related-party transactions as Serba Dinamik's group managing director cum chief executive officer and major shareholder Datuk Dr Mohd Abdul Karim Abdullah is also Sarawak Consolidated's chairman and major shareholder. (The Edge)

Sunway Construction Group Bhd's (SunCon) 2QFY20 net profit sank 93.4% YoY to RM2.2m on margin squeeze. Revenue for the quarter fell 68.2% YoY to RM140.2m. A dividend of 1.25 sen per share, payable on 24th September 2020 was declared. (The Edge)

VS Industry Bhd has signed an agreement with Victory Innovations Company Inc to manufacture and supply cordless electrostatic sprayers on a box-built basis. VS Industry's unit Guardian Southeast Asia Pte Ltd will provide manufacturing, supply chain and logistic services to Victory in accordance with the specifications and purchase orders. However, no contract volume or amount was specified. (The Edge)

Source: Mplus Research - 19 Aug 2020