Inching higher

Market Review

Malaysia: The FBM KLCI (+0.4%) started off the week on a fine footing as the key index extended its gains in tandem with the mostly positive performance across regional peers. Gains on the big board were largely underpinned by the recovery in gloves heavyweights. The lower liners also marched higher, while the broader market was mostly positive with the healthcare sector (+6.5%) leading the pack.

Global markets: US stockmarkets extended their gains overnight as the Dow climbed 1.2% to close marginally below the 28,000 psychological level on the renewed positive developments over the potential vaccine for Covid-19. European stockmarkets finished mixed, while Asia stockmarkets were mostly higher yesterday.

The Day Ahead

The FBM KLCI remained upbeat with investors continue to seek for higher yields in the equities markets. Tracking the gains on Wall Street overnight, the positive momentum may spill over to the local bourse. Meanwhile, the robust trading sentiment will continue to see rotational play on the table over the near term. However, we also see bouts of quick profit taking activities ahead of the mid-week break.

Sector focus: We continue to favour the healthcare sector as valuations have turned more compelling at current juncture. Meanwhile, the construction sector also playing catch-up with the recovery across the broader market in view that contract flows to accelerate as we approach the final quarter of the year.

The FBM KLCI has gapped up to extend its gains as the key index returned to close above the daily SMA200 level, despite coming off from its intraday high. We reckon that the short-term upward bias will continue to take shape with 1,515 serving as the immediate resistance, followed by 1,555. Downside risk is pegged at 1,480, followed by 1,450. Indicators remain mixed with the MACD Histogram extended another green bar, but the RSI remains below 50.

Company Brief

Petronas Chemicals Group Bhd (PetChem) had recently entered into a shares sale and purchase agreement with Germany’s PCC SE to acquire 50.0% of the latter’s shares in its Malaysian subsidiary, PCC Oxyalkylates Malaysia Sdn Bhd (PCC-OM), marking its entry into the growing oxyalkylates market. The group and PCC plan to build an oxyalkylates plant in the Kertih Integrated Petrochemical Complex, Terengganu to produce ethoxylates and polyether polyols. (The Star)

George Kent (Malaysia) Bhd’s 2QFY21 net profit fell 20.9% YoY to RM8.7m due to weaker contribution from its construction division as its construction activities had ceased completely during the Movement Control Order (MCO). Revenue for the quarter dropped 28.2% YoY to RM70.2m. An interim dividend of 1.0 sen per share, payable 22nd October 2020 was declared. (The Star)

Macpie Bhd’s largest shareholder has exited the company after disposing of a 24.5% stake in the company on 11th September 2020. It had received notifications from its executive director Ng Chee Heng and the latter's private vehicle SEG Capital Intelligence Sdn Bhd that SEG Capital had disposed of 86.7m Macpie shares via the open market at 33.0 sen apiece. (The Edge)

Willowglen MSC Bhd's unit Willowglen Services Pte Ltd has been awarded a contract worth RM6.1m by Singapore’s SP PowerAssets Ltd for the comprehensive maintenance of a cable oil pressure monitoring system, as well as the system's migration. The job started yesterday and will be completed by 13th September 2025. (The Edge)

LKL International Bhd has finally revealed the identity of the Chinese company, namely Weihai Textile Group Import and Export Co Ltd that granted it the RM78.5m nitrile glove supply contract. (The Edge)

Global Oriental Bhd’s wholly-owned unit Global Nano Innovation Sdn Bhd has entered into a memorandum of understanding (MoU) with a South Korean firm, Fawoo Nanotech Co Ltd to explore opportunities in the distribution of the latter’s nano bubble products in Malaysia and Singapore. (The Edge)

LBS Bina Group Bhd (LBS) has unveiled affordable landed homes Ritma Perdana, the fourth phase of township Alam Perdana in Selangor. Due to encouraging response to its previous phases in the township, LBS pushes forward with the new phase, which has a gross development value of RM611.0m. (The Edge)

Green Packet Bhd has teamed up with German reinsurer Hannover RE for a commercial fleet usage-based insurance telematics programme in Malaysia. The group had inked an agreement with Hannover Re SE Malaysia branch, to provide Hannover Re with commercial fleet telemetry technology that collects data and delivers driver behaviour-based scores for analysis. (The Edge)

Source: Mplus Research - 15 Sept 2020