Turning the tide

Market Review

Malaysia: Tracking the gains on Wall Street overnight, the FBM KLCI (+1.1%) rebounded and hovered in the positive region for the entire trading session with only 2 decliners on the FBM KLCI yesterday. The lower liners also extended their gains, while the broader market closed mostly higher led by the rally in technology sector (+3.0%) on the back of the bullish sector outlook.

Global markets: US stockmarkets rallied overnight as the Dow jumped 1.6%, while both the S&P 500 and the Nasdaq finished at another fresh record high levels on the positive developments over Covid-19 vaccine that could be available by end- 2020 or early-2021. European stockmarkets also marched higher, while Asia stockmarket ended mostly higher yesterday.

The Day Ahead

The FBM KLCI appears to have found its footing as the key index staged a much anticipated solid recovery from near the oversold region. We expect the recovery to extend, taking cues from the positive strides over overseas markets as investors are also capitalising on the positive global economic data. At the same time, we continue to see the lower liners remain driven by the ample trading liquidity.

Sector focus: We see the technology continue to lead the winners list on the back of the positive outlook which could transpire in their fundamentals over the foreseeable future. Meanwhile, the healthcare sector (particularly pharmaceutical related stocks) may also advance in light of the positive developments over the potential Covid-19 vaccine.

The FBM KLCI rebounded from around the daily EMA120 level as the key index formed a bullish harami candle yesterday, suggesting a potential recovery pattern from the recent pullback. In view of further recovery to take place, the immediate resistance is now located at 1,540, followed by 1,560. Downside risk is pegged at 1,515, followed by 1,500. Indicators have turned mixed with the MACD Histogram turning green, but the RSI continues to tread below 50.

Company Brief

A unit of MGB Bhd’s wholly-owned subsidiary, MGB Construction and Engineering Sdn Bhd has bagged a contract worth RM122.0m to undertake the construction of serviced apartments and related facilities in Sepang, Selangor. The project will commence on 15th February 2021 and will be completed on 14th May 2022. (The Star)

Vizione Holdings Bhd has entered into a Heads of Agreement (HoA) to acquire a 51.0%-stake in specialty medical gloves maker SSN Medical Products Sdn Bhd for RM5.0m, to venture into the glove-making sector. Upon completion of the proposed acquisition, Vizione intends to add more manufacturing lines to boost SSN's capacity to 1.0 bn gloves per annum from 500.0m now. (The Star)

Tenants who have signed up or are going to sign up under Malaysia Airports Holdings Bhd’s (MAHB) ongoing airport commercial reset programme will get to benefit from a rental reduction of up to 30.0% from the current rate. This is equivalent to a total annual savings of RM45.0m for the participating tenants. (The Edge)

Advancecon Holdings Bhd has bagged two subcontracts worth a total of RM80.8m for the construction of subgrade and related works for the East Coast Rail Link (ECRL) project from China Communications Construction (ECRL) Sdn Bhd. Work will commence on 7th September 2020. The first subcontract, worth RM53.7m, is set to be completed on 6th September 2023 while the second job, worth RM27.1m, is set to be completed by 6th September 2022. (The Edge)

A unit of Inta Bina Group Bhd has bagged an RM52.1m contract to undertake the main building works for the Eco Majestic gated community township in Semenyih, Selangor. The construction period is 22 months. (The Edge)

Iconic Worldwide Bhd is planning to diversify into the manufacturing of personal protective equipment (PPE), including gloves and disposable face masks, involving an estimated investment cost of about RM155.5m. This covers the cost of land, construction of a new facility, installation and commission of production lines, other equipment, and working capital. (The Edge)

MQ Technology Bhd’s (MQ Tech) has entered into a Memorandum of Agreement to acquire a 70.0% stake in rubber and plastic medical products manufacturer Kibaru Manufacturing Sdn Bhd. (The Edge)

LKL International Bhd has bagged a nitrile glove contract worth US$19.0m or RM78.5m to supply nitrile gloves to an unnamed China-based company. (The Edge)

Paramount Corp Bhd remains bullish on the prospects of the property market as low interest rates will help regain demand that was affected during the Movement Control Order period. The group's prospects for 2HFY20 will be boosted by higher property launches, adding that Paramount has an estimated RM640.0m worth of launches in the pipeline — all residential — which is 121.0% more than what the group launched in 1HFY20. (The Edge)

Perdana Petroleum Bhd will be supplying an anchor handling tug supply vessel to ROC Oil (Sarawak) Sdn Bhd for drilling and project activities for RM10.0m. The contract is for duration of up to 210 days, with an option for a 145-day extension. (The Edge)

Teck Guan Perdana Bhd's wholly-owned unit Tawau Cocoa Estate Sdn Bhd is buying a 510.6-ac agriculture land in Tawau for RM11.9m, which will be funded through a mix of external borrowings and internally-generated funds. The land comes with planted fruits, other crops and facilities covering 187.0-ac, while the remaining 323.6-ac is undeveloped. (The Edge)

Source: Mplus Research - 3 Sept 2020