Still on ascend

Market Review

Malaysia: The FBM KLCI (+1.3%) extended its upward momentum for the third straight session, mainly boosted by gains in selected glove and banking heavyweights, coupled with the solid retail sales and industrial production data from China. The lower liners also advanced, while the broader market saw only the REIT sector (-0.3%) underperformed its peers.

Global markets: US stockmarkets finished on a mixed note after coming off from their intraday high; the Dow added 0.1%, but both the S&P 500 and Nasdaq slipped 0.5% and 1.3% each on weakness in technology stocks, whilst the US Federal Reserve kept benchmark interest rate at record low level. Meanwhile, both the European and Asia stockmarkets also ended mixed.

The Day Ahead

We see the positive sentiment to take charge over the foreseeable future as investors returned to bargain hunt on beaten down stocks, but we caution that significant gains would likely to be choppy. The positive momentum continues to be spurred by the stronger-than-expected economic data worldwide. At the same time, the impending release of Top Glove Corporation Bhd’s quarterly financial performance may also provide fresh legs to extend the upside.

Sector focus: We favour the plantation sector with CPO prices advancing beyond RM2,900/MT, while the construction sector will remain in the recovery mode. The surge in crude oil prices owing to the unexpected decline in US inventory level and the shutdown in US offshore production due to Hurricane Sally may drive trading interests within the energy sector.

The FBM KLCI has formed another bullish candle to strengthen its position above the daily SMA200 level. With the positive momentum taking shape, the immediate resistance is now located at 1,555, followed by 1,580. Support, meanwhile, is pegged at 1,500, followed by 1,480. Indicators remain mixed with the MACD Histogram extended another green bar, while the RSI is approaching 50.

Company Brief

Astro Malaysia Holdings Bhd's 2QFY21 net profit fell 21.1% YoY to RM133.6m due to a drop in EBITDA margin arising from higher merchandise costs, and decline in revenue owing to a decrease in subscription and advertising revenues. Revenue for the quarter dipped 11.8% YoY to RM1.09bn. A dividend of 1.5 sen, payable on 14th October 2020 was declared. (The Star)

Omesti Bhd’s 51.0% owned Formis Network Services Sdn Bhd (FNS) subsidiary has secured a RM14.4m 18-month contract from the Road Transport Department (RTD) for its automated awareness security system (AwAS) project, starting immediately until 13th March 2022. The scope of work to be carried out by FNS includes provision of data centre services for the ICT infrastructure and AwAS application systems, as well as set-up and maintenance of data communications for the system core and camera network that links the AwAS data centres with the existing 45 cameras around the country. (The Star)

MMAG Holdings Bhd’s unit MMANTAP Sdn Bhd had entered into an exclusive partnership agreement with manpower consultant JR Joint Resources Holdings Sdn Bhd to provide ICT, worker transport and logistics services to China Communications Construction (ECRL) Sdn Bhd (CCCECRL), which is the main contractor for the East Coast Rail Line (ECRL) megaproject. (The Star)

Star Media Group Bhd will be embarking on a retrenchment exercise to cut its headcount after its Mutual Separation Scheme (MSS) failed to yield the expected headcount reduction. The retrenchment exercise will commence in 4QFY20. (The Edge)

T7 Global Bhd’s unit Tanjung Offshore Services Sdn Bhd had received a letter of award dated 28th August 2020, worth RM16.9m from the East Coast Economic Region Development Council (ECERDC) to build the Endau-Mersing Fish Processing Park in Endau, Johor. The project runs from 9th September 3030 to 8th March 2022. (The Edge)

DRB-Hicom Bhd's 51.1%-owned unit Proton Holdings Bhd started taking orders for its X50 crossover sport utility vehicle (SUV) yesterday. The X50 rolled off the production line at Proton's Tanjung Malim plant for the first time on 15th September 2020. The plant saw a RM1.20bn extension in 2019. (The Edge)

Brahim's Holdings Bhd has parted ways with its white knight MRI VC Bhd, which inked a heads of agreement in December 2019 with Brahim's to help the company with its regularisation plan. The deal was called off after taking into consideration current uncertainties surrounding the group's business, global economy and financial markets. (The Edge)

Source: Mplus Research - 17 Sept 2020