Not ripe for further recovery

Market Review

Malaysia: The FBM KLCI (-0.4%) retreated after erasing all its intraday gains owing to the eleventh hour profit taking in selected index heavyweights. Still, the local bourse managed to climb 0.1% WoW as the key index snapped three consecutive weeks of decline. The lower liners finished on a mixed note, while the broader market closed mostly higher.

Global markets: US stockmarkets extended their losses amid the unabated selling in technology shares, coupled with the concerns over the rising geopolitical uncertainty between US and China as the Dow fell 0.9%. European stockmarkets were also downbeat on the rising number of Covid-19 cases, but Asia stockmarkets finished mostly higher on last Friday.

The Day Ahead

The consolidation on the local bourse is expected take shape over the foreseeable future amid the lack of fresh leads. Still, we believe that the movements of glove heavyweights will continue to dictate the direction on the key index. Elsewhere, we see rotational play amongst the lower liners to stand pat amid the positive market breadth, whilst retail players continue to seek for higher yield investments.

Sector focus: We continue to expect the plantation sector taking the spotlight after CPO prices rallied beyond RM3,000/MT with the momentum appears to be sustainable overtime. Meanwhile, the healthcare sector may also garner some trading interests as investors bargain hunt on beaten down stocks.

The FBM KLCI has rebounded to re-test the daily EMA120 level before turning lower as the key index attempts to find stability above the 1,500 psychological level. We think that the sideways movement may take charge with immediate resistance at 1,540, followed by 1,555. Support, meanwhile, is pegged at 1,500, followed by 1,480. Indicators remain mixed as the MACD Histogram extended another green bar, while the RSI remains below 50.

Company Brief

Amanah Harta PNB (AHP) will be taken private by Permodalan Nasional Bhd (PNB) via selective unit redemption (SUR) exercise, where minority unitholders will receive RM1.00 per unit, a 50.3% premium over the 66.5 sen it last traded at. Wholly owned PNB unit Ombak Real Estate Sdn Bhd will be undertaking the SUR exercise, which will cost RM118.6m. PNB and its parties in concert control a 46.1% stake in AHP. (The Edge)

Icon Offshore Bhd’s wholly-owned Bruneian unit Icon Bahtera (B) Sdn Bhd has secured a chartering contract from Zell Transportation Sdn Bhd (ZT) to supply offshore support vessels and chartering services, including the charter of Icon Valiant and Icon Aliza. While no contract value was provided, the contract for each vessel is for six years, with two extension options of one year each. The Icon Aliza will be starting its contract on 1st February 2021, while the Valiant will be for 31st March 2021. ZT holds a contract to provide vessels and chartering services to Brunei Shell Petroleum Sdn Bhd. (The Edge)

Sapura Energy Bhd’s 2QFY21 net profit stood at RM23.7m, vs. a net loss of RM116.3m recorded in the previous corresponding quarter on the back of improved operating metrics from its engineering and construction segment. Revenue for the quarter, however, dropped 36.7% YoY to RM1.22bn. (The Edge)

Ta Win Holdings Bhd is setting up a healthcare arm, Ta Win Copper Biohealth Sdn Bhd (TWCBiohealth), to explore the downstream copper segment. Copper which has medical benefits can be used in antimicrobial copper-alloy in the healthcare sector to prevent frequently contacted surfaces from serving as a medium to transfer microorganisms and minimise hospital-acquired infections. (The Edge)

Scientex Bhd 4QFY20 net profit grew 6.5% YoY to RM142.1m following growth in both its manufacturing and property development segments. Revenue for the quarter edged up 1.7% to RM954.6m. A final dividend of 13.0 sen per share, payable on 13th January 2021 was declared. A bonus share issuance involving two bonus shares for every one Scientex share held (two-for-one), as well as free warrants on the basis of one free warrant for every five shares held (one-for-five) were proposed. (The Edge)

Berjaya Corp Bhd has no interest in Sea Gamer Mall Sdn Bhd (SEAGM), from which two Malaysian executives were arrested by Malaysian authorities and are now pending extradition to the US to face criminal charges by the US Department of Justice. The Group’s founder and executive chairman, Tan Sri Vincent Tan Chee Yioun had been a passive investor in SEAGM for 13 years after being introduced to the company by a business associate. (The Edge)

Source: Mplus Research - 21 Sept 2020