Gloves up again

Market Review

Malaysia: The FBM KLCI (+0.3%) bucked the negative performance across regional peers as the key index performance was largely uplifted by gains in glove heavyweights yesterday. On the other hand, the lower liners were mixed, while the healthcare (+4.0%), transportation & logistics (+0.2%) and REIT (+0.2%) sectors outperformed the negative broader market.

Global markets: US stockmarkets rebounded from their previous session slump as the Dow rose 0.2% after experiencing a choppy trading session on reports that the House Democrats were putting together another stimulus plan that would come in at US$2.4tn. Both European and Asia stockmarkets, however, were downbeat yesterday.

The Day Ahead

Although most of the key index components trended lower, the FBM KLCI managed to trend higher owing to gains in glove heavyweights as the number of Covid-19 cases across the globe remained elevated. In the meantime, FTSE Russell has retained Malaysia bonds in the watch list will provide some alleviation for the prospects of further foreign capital flight. The lower liners and broader market shares are expected to experience a consolidation phase as investors may turn more defensive ahead of the Sabah state election over the weekend.

Sector focus: We continue to see the healthcare sector thriving in current environment as demand for the products and services expected to remain upbeat. We also think that the REIT sector will remain resilient during the volatile times.

The FBM KLCI staged a mild recovery after hovering mostly in the positive territory but closed below the daily EMA9 level. Despite yesterday’s recovery with the key index re-claiming 1,500, we reckon that the consolidation will continue to take shape with resistances located at 1,515 and 1,555. The support, meanwhile are remained at 1,480, followed by 1,450. Indicators have turned mixed as the MACD Histogram has turned green, but the RSI remains below 50.

Company Brief

Axiata Group Bhd has been granted approval from the Bangladesh Securities and Exchange Commission to list its 68.7% unit Robi Axiata Ltd on the Dhaka and Chittagong stock exchanges. It would be raising RM255.2m from the listing. The IPO will consist of 523.8m new shares, representing 10.0% of Robi’s enlarged share capital post-listing. Axiata will continue to be Robi’s controlling shareholder after the listing. (The Edge)

AirAsia Group Bhd is looking at options to raise capital for its rebadged digital business arm, AirAsia Digital. It could be convertible debt or equity. The amount to be raised under this plan was not disclosed. On its core airline business, it would have to wait for borders to reopen. The airline is planning on launching new routes for the interior areas of Sarawak and Langkawi, and one domestic route in Thailand. (The Edge)

Sapura Energy Bhd has refuted allegations over any form of corruption over its Brazilian business or elsewhere, in response to investigations involving Sapura Energy and Seadrill Ltd in Brazil, where bribery was alleged to have taken place for Petrobas contracts. Brazilian and Dutch police have executed search warrants as part of the corruption probe into Seadrill and Sapura, as the Brazilians are eyeing an increasing number of international firms as part of its “Car Wash” corruption investigation. The operation is an attempt to deepen ongoing probes into three contracts worth RM11.25bn in a JV between Sapura and Seadrill and Petrobas in 2011. (The Edge)

Lotte Chemical Titan Holdings Bhd has received shareholder approval for its dividend reinvestment scheme at its EGM. A total of 99.99% of shareholders agreed to the scheme and the issuance of new shares in relation to the scheme. The measure is appropriate to meet the 25.0% minimum public spread requirement. Its public spread stood at 24.0% as of 30th July 2020. (The Edge)

Poh Kong Holdings Bhd’s 4QFY20 net profit dropped 24.2% YoY to RM8.0m, in line with the lower revenue recorded for the quarter. Revenue for the quarter fell 22.7% YoY to RM179.3m. A first and final dividend of 1.2 sen per share was proposed. (The Edge)

Eco World Development Group Bhd’s 3QFY20 net profit declined 72.7% YoY to RM13.8m due to the decision to write down inventories by RM65.0m. Revenue for the quarter fell 8.3% YoY to RM477.9m. (The Edge)

Mah Sing Group Bhd is issuing up to RM100.0m seven-year redeemable convertible sukuk Murabaha for investments and working capital. It is part of its RM1.00bn Islamic medium term notes programme. The sukuk can be converted into shares at 75.5 per share. Mah Sing is planning to raise RM100.0m, of which RM95.0m will go to future investments and RM5.0m for working capital purposes. (The Edge)

Source: Mplus Research - 25 Sept 2020