Market Review

Malaysia: The FBM KLCI (-0.2%) edged lower after a choppy trading session on Wednesday ahead of the mid-week break as traders were quick to book in profits from the previous session gains. Meanwhile, both the lower liners and FBM ACE finished mixed with the latter having the technology sector (+1.9%) leading the pack following the record high close on Nasdaq.

Global markets: US stockmarkets managed to recover all their intraday losses to finish mildly higher as the Dow added 0.2% while the Nasdaq (+1.1%) closed at another fresh record high level boosted by gains in technology shares. Both European and Asia stockmarkets were painted in red on the back of uncertainty of economic recovery.

The Day Ahead

We see the consolidation on the local bourse remain in shape for longer as investors remain cautious on the current market undertone. On a brighter note, the signs of positive developments between US and China trade talks may provide some fresh impetus on the recent consolidation. Also, the higher-than-average trading liquidity will continue to spur rotational play amongst the lower liners, keeping the market undertone on healthy level.

Sector focus: The technology sector will anchor the winners list on the rising adoption of digitalisation, coupled with the implementation of 5G. Expectations over introduction and extension of stimulus measures to combat the property overhang from Budget 2021 may also provide an impetus to the property sector.

FBMKLCI Technical Outlook

The FBM KLCI has formed a doji candle after pared off some of its previous session gains as the key index remain above the daily EMA20 level. We continue to see the 1,600 serving as the immediate resistance, followed by 1,615. On the downside, the immediate support remained pegged at 1,550, followed by 1,540. Indicators remain mixed with the MACD Line continues to tread below the Signal Line, while the RSI treads slightly above 50.

Company Brief

Thong Guan Industries Bhd’s 2QFY20 net profit jumped 48.6% YoY to RM20.5m due to more premium product mix in its plastic packaging products, favourable exchange rates and lower raw material prices. Revenue for the quarter, however, slipped 0.7% YoY to RM228.0m. A second interim dividend of 2.0 sen, payable on 15th October 2020 was declared. A one-for-one bonus issue exercise was proposed. (The Star)

Pharmaniaga Bhd’s 2QFY20 net profit increased 7.5% YoY to RM10.0m, boosted by higher sales of personal protective equipment (PPE) due to the COVID-19 pandemic. Revenue for the quarter grew 7.3% YoY to RM645.8m. A second interim dividend of 2.5 sen per share, payable on 6th October 2020 was declared. (The Star)

Guocoland (M) Bhd’s 4QFY20 net loss widened to RM19.4m, from net loss of RM11.9m reported in the previous corresponding quarter due to fair value loss of RM20.0m on its investment in DC Mall and provision of tax amounting to RM21.8m. Revenue for the quarter, however, climbed 42.6% YoY to RM186.2m. (The Edge)

Kuala Lumpur Kepong Bhd’s 3QFY20 net profit soared 658.0% YoY to RM368.7m, largely due to forex gains in the quarter, and in absence of a sizeable impairment booked in 3QFY19. Revenue for the quarter edged higher by 0.2% YoY to RM3.71bn. (The Edge)

The performance also translated to the increase in Batu Kawan Bhd’s 3QFY20 net profit by 318.4% YoY to RM212.7m. Revenue for the quarter, however, inched lower 0.1% YoY to RM3.82bn. (The Edge)

MBM Resources Bhd’s 2QFY20 net loss stood at RM5.2m vs. a net profit of RM74.0m recorded in the previous corresponding quarter following operations halt during the Movement Control Order, which also took a toll on auto sales through the quarter. Revenue for the quarter dropped 53.7% YoY to RM258.6m. (The Edge)

MSM Malaysia Holdings Bhd’s 2QFY20 net loss narrowed to RM21.6m, from net loss of RM67.3m reported in the previous corresponding quarter as it booked higher margins and lower costs. Revenue for the quarter fell 5.4% YoY to RM448.8m. (The Edge)

Petronas Chemicals Group Bhd’s (PChem) 2QFY20 net profit sank 83.4% YoY to RM186.0m on lower sales following deferred shipment in the period. Revenue for the quarter dropped 26.7% YoY to RM3.18bn. A dividend of 5.0 sen per share, payable on 25th September 2020 was declared. (The Star)

Petronas Gas Bhd’s (PetGas) 2QFY20 net profit rose 8.8% YoY to RM547.1m, thanks to higher gross profit and forex gains. Revenue for the quarter increased 1.4% YoY to RM1.40bn. A second interim dividend of 16.0 sen per share, and a special interim dividend of 50.0 sen per share, both payable on 1st October 2020 were declared. (The Edge)

Pos Malaysia Bhd is selling 51.0% of its air cargo business in East Malaysia — Pos Asia Cargo Express to Asia Cargo Network Sdn Bhd (ACN) for RM40.0m cash. The deal leaves Pos Malaysia with a 49.0% stake in the unit, which will be renamed World Cargo Airlines (WCA). (The Edge)

Source: Mplus Research - 21 Aug 2020