Market Review

Malaysia: The FBM KLCI (+0.03%) finished on a flattish note after recovering all its intraday losses as bargain hunting activities took precedence from the earlier volatility. Despite that, the key index fell 0.6% WoW. The lower liners remained in the red, while the energy sector (+0.1%) outperformed the negative broader market as Brent oil prices rebounded ahead of the market close.

Global markets: US stockmarkets extended their losses as the Dow slipped 0.6% after enduring a choppy trading session as technology stocks remain under pressured that offset the firmer unemployment data that fell to 8.4% in August 2020 with 1.4m jobs added for the month. Both the European and Asia stockmarkets closed in the red.

The Day Ahead

After last week’s dour performance, we think that volatility will remain on the table, although any potential recovery will be measured for the time being in view of the lack of fresh leads. Investors may turned more risk averse as demonstrated by the slower trading activities, waiting for stability to kick-in. We are also cautious on the falling trading activities that indicate investors turning more risk averse for the time being.

Sector focus: We see selective buying to take precedence amid the renewed volatility, focusing on plantation stocks with CPO prices remained elevated with Indonesia biodiesel B40 programme remain on track. We also see furniture-related stocks on the move on the rising adoption of work from home.

The FBM KLCI ended unchanged as the key index found some stability around the 1,500 psychological level. Still, the local bourse remained closed below the daily EMA120 level. We continue to think that the 1,500 will serve as the immediate support, followed by 1,480. Resistances, meanwhile, are located at 1,555, followed by 1,580. Indicators turned mixed with the MACD Histogram turning green, while the RSI is treading near the oversold region.

Company Brief

AirAsia X Bhd (AAX) has been hit with a US$23.0m (RM95.3m) suit in the UK for alleged breach of contract. AAX and its indirect wholly-owned subsidiary AAX Leasing Two Ltd have received a letter detailing a legal claim by BOC Aviation Ltd (BOCA), which alleged that AAX Leasing Two had breached its obligations under the lease agreements. There were also breaches under the leases' respective guarantees dated 28th December 2018. (The Edge)

PPB Group Bhd expects its financial performance to remain resilient in 2HFY20, supported by its grains and agribusiness, as well as its consumer products segment. The grains and agribusiness segment was not significantly impacted by the COVID-19 pandemic, as it is in the production and distribution of essential food products. The consumer products business is also expected to maintain sales growth momentum by focusing on food services and other channels via the e commerce marketplace. However, the group's film exhibition and distribution business is expected to continue to be affected by the COVID-19 pandemic, while most movie title releases have been deferred to 2021. (The Edge)

Inix Technologies Holdings Bhd is in early talks with parties developing a COVID-19 vaccine. Inix is poised to build a medical rubber glove plant in Perak via a joint venture with a State-owned company there. (The Edge)

Ipmuda Bhd's subsidiary has bagged a contract worth RM78.0m to design and build a 100MW alternating current photovoltaic solar generation facility in Marang, Terengganu. Its wholly-owned Ipmuda Rensol Sdn Bhd executed the engineering, procurement, construction and commissioning (EPCC) contract with Coara Marang Sdn Bhd today. (The Edge)

Fintec Global Bhd is planning a rights issue with free warrants — on a five rights issue with four free warrants for every five existing Fintec shares held to raise funds to venture into the manufacturing of medical grade nitrile gloves with the initial setting up of a factory with 12 glove-dipping lines, which will cost RM81.9m. At an indicative price of 8 sen per share, the technology incubator hopes to raise at least RM15.0m from the cash call. To meet the minimum subscription level, Fintec has procured an undertaking from its executive director Tan Sik Eek, to apply and subscribe in full for his rights entitlement, and any additional rights shares not taken up by other entitled shareholders to the extent that at least RM15.0m is raised from the exercise. (The Edge)

RHB Bank Bhd is suing Ageson Bhd over an RM33.0m term loan obtained by its wholly-owned subsidiary Ageson Development Sdn Bhd. It had signed a corporate guarantee and indemnity under which it agreed to pay RHB for the amount owed by Ageson Development. RHB had used RM662,689.50 from the debt service reserve account maintained by Ageson Development to reduce the indebtedness under the loan. RHB is seeking RM20.8 m as at 31st July 2020, 3.5% interest per annum above the bank’s base lending rate on daily basis with monthly rests from 1st August 2020 until the date of full settlement. (The Edge)

Source: Mplus Research - 7 Sept 2020