Attempting for a rebound

Market Review

Malaysia: The eleventh hour buying support in selected index heavyweights nudged the FBM KLCI (+0.03%) to recover all its intraday losses on a choppy trading session yesterday. The lower liners, however, edged lower, while broader market closed mixed with the healthcare sector (-2.9%) underperformed on the back of extended profit taking activities despite the 7-day moving average confirmed Covid- 19 cases has been on the rise.

Global markets: European stockmarkets rallied on expectations that the European Central Bank will keep its dovish stance this week, while the British Pound sank against the Euro Currency on concern over UK is preparing for a no-deal Brexit. Asia stockmarkets ended mixed, while US stockmarkets were closed for the Labor Day public holiday with futures markets pointing higher.

The Day Ahead

The lack of fresh leads kept investors at bay as the recent batch of corporate earnings offers little direction on the prospects of swift economic recovery. For now, we reckon that a consolidation on the local bourse remain on course over the foreseeable future. At the same time, the negative market sentiment is deterring the sustainability of the buoyant trading momentum, as traders brace themselves towards the impending end of the blanket loan moratorium.

Sector focus: We remain upbeat on furniture-related stocks premised to the rising adoption of work from home. The plantation sector will be supported by the resilient CPO prices that sustained above RM2,800/MT, while the construction sector is deemed as a laggard play on re-vitalising the economic recovery.

FBMKLCI Technical Outlook

The FBM KLCI closed on a flattish note after recovering all its intraday gain to form a doji candle. Still, the key index remained closed below the daily EMA120 level. We continue to view the 1,500 as the immediate support, followed by 1,480. Resistances, meanwhile, are located at 1,555, followed by 1,580. Indicators remained mixed with the MACD Histogram extended another green bar, while the RSI is threading near the oversold region.

Company Brief

Iris Corp Bhd has received a letter of intent (LOI) from India Security Press for the procurement of 15.0m International Civil Aviation Organisation (ICAO) compliant contactless inlays and its operating system, which is required for the manufacture of Indian e-passports, worth US$27.5m. (The Star)

Comfort Gloves Bhd's 2QFY21 net profit jumped 501.1% YoY to RM42.8m on stronger sales and higher margin. Revenue for the quarter rose 68.3% YoY to RM198.0m. An interim dividend of 1.5 sen per share had been paid on 28th August 2020. (The Star)

Ageson Bhd, which is being sued by RHB Bank Bhd over a loan default was of the view that it was entitled to a moratorium on the repayments of the loan during the Movement Control Order period. However, the group said RHB did not take into consideration on granting the moratorium to the company in regard to the loan repayments. (The Edge)

Dancomech Holdings Bhd’s 55.0%-owned subsidiary has bagged a sub-contract worth S$12.0m (RM36.5m) at Jurung Port in Singapore. The sub-contract forms part of the main contract for the construction, completion and maintenance of the proposed Ready Mixed Concrete Ecosystem Project at Jurong Port. (The Edge)

Lien Hoe Corp Bhd’s wholly-owned subsidiary Christine Resort Sdn Bhd has on 4th September 2020 entered into a conditional sale and purchase agreement with Countryland Realty Sdn Bhd to sell a parcel of freehold land in Bandar Seri Alam, Johor for either RM88.7m in cash — which is more than its current market capitalisation, or for a reduced price of RM64.6m, if certain conditions are not met. (The Edge)

GHL Systems Bhd has proposed a bonus issue of up to 381.0m new shares on the basis of one bonus share for every two shares held. (The Edge)

Ho Wah Genting Bhd has submitted a research protocol to the Ministry of Health (MoH) to evaluate the effectiveness of oral polio vaccine as a preventive protection against the SARS-CoV-2 virus. The plan is to assess the cross-reactivity between the poliovirus vaccination-induced antibodies and SARS-CoV-2 virus and evaluate the effectiveness of OPV as a preventive protection against Covid-19. (The Edge)

LKL International Bhd cannot disclose the name of the China-based customer, which is acting as a distributor in relation to the supply of nitrile gloves due to "confidentiality and sensitivity" (The Edge)

Mesiniaga Bhd has bagged a RM42.0m contract from the Royal Malaysian Customs Department for the provision of MYGST maintenance services and licence renewal services from 2020 to 2022. (The Edge)

GFM Services Bhd is looking to enlarge its portfolio of concession assets to include a rest and service area along PLUS Malaysia Bhd's North-South Expressway via the proposed acquisition of up to 70.0% equity interest in Amzass (M) Sdn Bhd. It has entered into a heads of agreement (HoA) with the shareholders of Amzass for the proposed acquisition. Amzass was awarded a conditional approval by the Malaysian Highway Authority (MHA) to upgrade the existing facilities of the Northbound and Southbound Bemban lay-bys, which are located along the PLUS North-South Expressway. (The Edge)

Nylex (Malaysia) Bhd has obtained the green light from the Malaysian Investment Development Authority to double its ethanol production capacity to a total of 10.0m litres per year. Ethanol is used mainly in the manufacture of sanitisers and disinfectants. (The Edge)

Top Glove Corp Bhd has submitted an audit report to the US Customs and Border Protection, in relation to the alleged forced labour issue filed against the glove maker. The report was prepared by an independent consultant and entails virtual interviews of about 1,100 of the company’s migrant and local workers across various locations. (The Edge)

Nova MSC Bhd’s indirect subsidiary EyRIS Pte Ltd has bagged a five-year contract from Singapore’s Ministry of Health for the deployment of SELENA+, EyRIS’ first artificial intelligence (AI)-based product. SELENA+ will be part of Singapore’s national screening programme and is expected to deliver a “tremendous” recurring income for the group over the long run. (The Edge)

Source: Mplus Research - 8 Sept 2020