Rebound taking a pause

Market Review

Malaysia: The FBM KLCI (-1.2%) snapped a three-day losing streak, mirroring the weakness across regional peers after the US Federal Reserve painted a grim economic outlook with interest rate likely to remain low till 2023. The lower liners retreated, while the energy (+0.04%) and consumer products & services (+0.2%) sectors outperformed the negative broader market.

Global markets: US stockmarkets edged lower as the Dow fell 0.5% overnight as investors were concern over the sluggish economic outlook remarks from the US Federal Reserve, while jobless benefits claims remain elevated at 860,000 Americans last week. Both the European and Asia stockmarkets were battered.

The Day Ahead

After marching higher for three consecutive days, the FBM KLCI appears to have taken a breather, allowing earlier gains to be digested whilst re-asses the current market condition. We reckon that a consolidation may take shape in view of the lack of fresh leads. The renewed volatility will keep traders on their toes as quick profit taking activities may limit any significant upsides over the near term.

Sector focus: We see consumer stocks on a recovery path with consumer spending picking up in recent months, particularly furniture-related players that are on the roll, premised to the improved demand following the adoption of work-from home. Meanwhile, the improved CPO and crude oil prices may garner some trading interest within the plantation and energy stocks.

The FBM KLCI gapped up to re-test the daily EMA60 level before coming off from its intraday high as the key index formed a bearish candle to close lower. With the lack of follow through buying interest, a consolidation may come into the picture. On the local bourse, the immediate resistance is located at 1,540, followed by 1,555. 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 tethering slightly below 50.

Company Brief

Daibochi Bhd’s 4QFY20 net profit stood at RM11.2m on top of revenue of RM155.8m. No comparison was made due to change in financial year end to 31st July 2020. A final dividend of 3.0 sen per share, payable on 15th January 2021 was declared. (The Star)

Petronas Gas Bhd’s 65.0%-owned subsidiary Pengerang LNG (Two) Sdn Bhd (PLNG2) had lodged the latter’s proposed Islamic bonds under the sukuk murabahah programme of up to RM3.00bn with the Securities Commission. The group intends to raise funds for, among others, repayment of shareholders’ advances. (The Star)

Top Glove Corp Bhd’s 4QFY20 net profit soared 1642.0% YoY to RM1.29bn stemmed from a global surge in demand for gloves on the back of the COVID-19 pandemic. Revenue for the quarter surged 161.5% YoY to RM3.11bn. A final dividend of 8.5 sen per ordinary share, payable on 1st December 2020 was declared. The group is planning a listing in Hong Kong by 2021 to enhance the rubber glove manufacturer's investor reach and diversify its investor base. On another note, the group also expects to resolve the detention order imposed by the US Customs on its subsidiaries by the end 2020. (The Edge)

UEM Sunrise Bhd achieved more than RM400.0m in sales and bookings in less than two months after the launch of its ‘The Happy Chase’ campaign, which will run until 31st May 2021. The campaign is the group’s response to the enhancement of the Government’s reintroduction of the Home Ownership Campaign as part of the Short-Term Economic Recovery Plan (Penjana) following the Movement Control Order to curb the spread of the COVID-19 pandemic. (The Edge)

Sapura Energy Bhd’s wholly-owned subsidiaries and joint venture (JV) have been awarded contracts and contract extensions with a combined value of approximately RM840.0m across Mexico, Brazil and Ivory Coast. The Mexico and Brazil contracts involve engineering and construction work while the Ivory Coast contract involves a drilling project. (The Edge)

Advancecon Holdings Bhd’s wholly-owned unit Advancecon Infra Sdn Bhd has been appointed to undertake the construction and completion of subgrade and related works for the East Coast Rail Link project for RM29.8m. The latter, which is primarily involved in the provision of earthworks and civil engineering services, had today accepted the letter of acceptance for the sub-contract from the project’s main contractor, China Communications Construction (ECRL) Sdn Bhd. (The Edge)

ACO Group Bhd plans to buy a 49.0% stake in Focus Electrical Malaysia Sdn Bhd (FEMSB) for RM7.4m. The proposed acquisition will help the ACE Market-listed company expand its market reach into more States across Peninsular Malaysia. (The Edge)

Sino Hua-An International Bhd’s (Hua-An) unit Touchpoint International Sdn Bhd had on 15th September 2020 entered into a software licence and service agreement with Technische Investment (PTY) Ltd for the use and commercialisation of a mobile application called SnappiStore App (SSA). Technische is a South Africa-based firm providing online ordering services, payment processing services and delivery services. (The Edge)

Source: Mplus Research - 18 Sept 2020