Recovery in store

Market Review

Malaysia: The FBM KLCI (+1.0%) staged a strong recovery alongside with gains across regional peers owing to the share buybacks from glove heavyweights that offset the weakness in other key index constituents. Still, the key index fell -0.7% WoW; marking its third straight weekly decline. Meanwhile, the lower liners also rebounded in tandem.

Global markets: US stockmarkets was largely upbeat as the Dow rose 0.5% ahead of the extended weekend break as gains were underpinned by the stronger-than expected consumer price index data that rose 1.3% YoY in August 2020. Earlier, European stockmarkets finished mostly higher on a choppy trading session, while Asia stockmarkets were mostly upbeat.

The Day Ahead

We see signs on changing tides as the FBM KLCI will be largely dictated by the movement in glove maker heavyweights. Gains across overseas markets may provide some stability over the near term, but we do not discount further volatility ahead due to a barrage lingering uncertainties. At the same time, the positive sentiment transpired to gains across the lower liners as investors bargain hunt on the recent selldown.

Sector focus: We see buying interest spilling into the healthcare thematic play as investors bargain hunt on beaten down stocks. Meanwhile, the technology sector is also finding some stability from their recent pullback may warrant another look.

The FBM KLCI has rebounded, forming a bullish engulfing candle as the key index closed above the 1,500 psychological level on last Friday. The buoyant momentum may likely to extended on the local bourse towards the next resistances located around 1,515-1,555. On the flipside, we continue to view the 1,480 as the immediate support, followed by 1,450. Indicators are now mixed with the MACD Histogram turned green, but the RSI remains below 50.

Company Brief

Genting Malaysia Bhd is injecting another US$150.0m (RM625.0m) cash into its US-based subsidiary Empire Resorts Inc. via a subscription agreement for Empire Resorts' Series L Preferred Stocks and the funds will be used for working capital and financing purposes. The equity injection will be funded through internally generated funds and/or bank borrowings. (The Star)

Vizione Holdings Bhd has recently announced a proposed deal to pay RM5.0m cash for a 51.0% majority stake in glovemaker SSN Medical Products Sdn Bhd. The group also expects to inject RM30.0m in capital expenditure (capex) to triple SSN’s production capacity to 1.50bn gloves per year, over the next two years. (The Star)

Mesiniaga Bhd has bagged a contract worth RM24.2m from Tenaga Nasional Bhd (TNB), for the supply, installation, configuration, testing, commissioning and migration of existing services of the TNB Industrial Control System IP/MPLS Network (Phase 2). (The Edge)

MSM Malaysia Holdings Bhd, which has placed its group chief executive officer (CEO) on leave of absence as he was required to explain certain irregularities relating to inventories, clarified that these irregularities pertain to an adjustment to write-off inventories amounting to RM36.6m in MSM Sugar Refinery (Johor) Sdn Bhd. The adjustment to write-off inventories was reported in its financial statements for FY19. (The Edge)

Rubberex Corp (M) Bhd has spent RM8.1m, which is equivalent to 10.6% of its cash pile of RM76.1m as at 30th June 2020, to buy back 1.5m shares at between RM4.82 and RM5.22 after a selldown. (The Edge)

Axiata Group Bhd’s dividend of 2.0 sen per share for 2QFY20 will be paid on 13th October 2020. The counter will go ex on 28th September 2020, while the entitlement date is on 29th September 2020. (The Edge)

QES Group Bhd has proposed to undertake a private placement of up to 75.8m shares to raise up to RM20.5m, which will mainly be used for factory expansion, financing its research and development (R&D) and future working capital. The placement size represents 10.0% of its total issued shares of 758.3m. (The Edge)

Dialog Group Bhd plans to raise up to RM3.00bn via sukuk to fund its investments, acquisitions, debt refinancing as well as working capital requirements. It may also use proceeds raised from the sukuk programme for capital expenditure, repayment of inter-company borrowings and general corporate purposes of the group or its subsidiaries, associates and joint venture companies. (The Edge)

Dagang NeXchange Bhd (DNeX)’s indirectly held PT DNeX Telco Indonesia has inked a preliminary agreement with PT Infrastruktur Telekomunikasi Indonesia (TelkomInfra) to look into establishing a partnership to undertake the business of submarine cable deployment, maintenance and repair within and outside Indonesia. (The Edge)

RHB Bank Bhd plans to issue up to RM10.00bn in senior sukuk murabahah. The proceeds raised from the sukuk will be used within RHB Bank's group of companies for its working capital and general banking purposes of Islamic business activity. (The Edge)

MMAG Holdings Bhd is buying a newly incorporated firm, Maasdots Sdn Bhd that is going to be involved in digital health solutions for RM100,000 from BrilliantID Sdn Bhd. Maasdots has plans to work together with eMedAsia Sdn Bhd — an associate company of MSCM Holdings Bhd — in the implementation of certain services to ensure maximum coverage and network penetration for users. Maasdot, which has yet to commence its business, will be focusing on the management, integration and implementation of an end-to-end health screening system namely Travellers Advanced Health Screening System (TAHSS). (The Edge)

Malaysia Airports Holdings Bhd's (MAHB) network of airports recorded 3.3m passengers for August 2020, a decline of 74.4% YoY. MAHB described the figure as "encouraging", after taking into account the movement curbs and border controls imposed by the Government since March. In the 12-month period ended August 2020, MAHB's total passengers dropped 41.7% YoY to 80.4m. (The Edge)

Luster Industries Bhd plans to undertake a private placement exercise that could raise between RM30.4m and RM47.2m for general working capital including purchase of raw materials and overhead expenses. The private placement entails an issuance of up to 20.0% of the plastic products manufacturer’s total number of issued shares to a third party investor to be identified later. (The Edge)

Source: Mplus Research - 14 Sept 2020