Not ripe for further upside

Market Review

Malaysia: The FBM KLCI (-0.5%) endured a choppy trading session before edging lower as the key index snapped a three-day winning streak, dragged down by the move from World Bank to lower Malaysia’s GDP outlook from -3.1% to -4.9% in 2020. The lower liners also retreated, while the broader market ended mixed with the construction sector (+1.1%) leading.

Global markets: US stockmarkets retreated overnight as Dow (-1.5%) prior to the presidential debate, whilst the prospects of additional stimulus appears to be dimming. Earlier, European stockmarkets also fell as rising Covid-19 cases are forcing certain cities returning to lockdown, while Asia stockmarkets ended mostly lower.

The Day Ahead

The FBM KLCI succumbed to another round of selling pressure as investors were quick to lock in their gains on the dour economic outlook presented by World Bank. We continue to think that significant upsides will be difficult to come by as the tepid economy recovery remains beset by the unabated new cases of Covid-19. In the meantime, the lower liners are also in a choppy mode as valuations have turned less unappealing at current juncture.

Sector focus: With the technology sector remains on the move; we continue to think that buying support remains prevalent amid the solid demand over time. Meanwhile, the REIT sector may return to favour on the back of the unabated volatility.

The FBM KLCI formed a bearish candle to erase all its previous session gains as the key index slipped to close below the daily EMA9 level. With the lack of follow through buying interest, the consolidation will linger with the immediate resistances located at 1,515, followed by 1,555. The support, meanwhile are remained at 1,480, followed by 1,450. Indicators remained mixed as the MACD Histogram has extended another green bar, but the RSI remains below 50.

Company Brief

Hai-O Enterprise Bhd’s 1QFY21 net profit rose 32.0% YoY to RM10.3m on higher sales recorded by its multi-level marketing division and improved operating margin. Revenue for the quarter climbed 8.0% YoY to RM71.2m. (The Star)

Ekovest Bhd has signed agreements with three related parties to acquire 89.1m shares and 78.3m warrants in PLS Plantations Bhd for RM85.8m (making it an Ekovest subsidiary). As a result of the acquisition, Ekovest would hold a 57.4% equity stake in PLS and 29.5% of its outstanding warrants, compared to a 32.8% equity stake and 25.1% of warrants currently. Ekovest will have to extend an unconditional mandatory general offer to acquire all remaining PLS shares and warrants it does not own. The group intends to maintain PLS’ listing status. (The Edge)

Aeon Credit Service (M) Bhd’s 2QFY21 grew 5.4% YoY to RM51.8m, amid lower operating expenses. Revenue for the quarter, however, shrunk by 10.0% YoY to RM364.0m. An interim dividend of 9.2 sen, payable on 5th November 2020 was declared. (The Edge)

OSK Holdings Bhd has announced the launch of RM2.00bn worth of Islamic Medium Term Notes (IMTN or Sukuk Murabahah) and Multi-Currency Medium Term Notes (MCMTN). The group would be using proceeds from the issuances for the refinancing of borrowings, capital expenditure, working capital, general corporate fees, as well as to defray costs associated with their issuances. (The Edge)

Ireka Corp Bhd is aiming for its demerger from London-Stock-Exchange- listed Aseana Properties Ltd to be completed by the end 2020. The exercise is awaiting approval from both Bursa Malaysia and the SC, before the group is allowed to hold an EGM to seek shareholder approval. The exercise involves separating the interests of Ireka group from 23.0%-owned Aseana. It also includes Aseana buying back Ireka’s shares in Aseana, in exchange for certain assets owned by Aseana, namely The RuMa Hotel and Residences in Kuala Lumpur and a parcel of land in Kota Kinabalu. (The Edge)

Supermax Corp Bhd has bought 5.1m shares worth RM43.1m in a share buyback exercise, bringing the total amount it has spent on buybacks this month to RM110.4m. The group’s former managing director Datuk Seri Stanley Thai Kim Sim, meanwhile, saw his conviction for insider trading in relation to shares in APL Industries Bhd reversed by the High Court yesterday. He had been sentenced to five years' jail and fined RM5.0m by the Sessions Court in November 2017, after being found guilty. (The Edge)

MyNews Holdings Bhd’s 3QFY20 net loss stood at RM6.1m, vs. a net profit of RM7.4m recorded in the previous corresponding quarter due to the impact of Covid-19, particularly the MCO. Revenue for the quarter declined 16.4% YoY to RM110.1m. (The Edge)

Inix Technologies Holdings Bhd’s 2QFY21 net profit stood at RM216,000, vs. a net loss of 4.0m recorded in the previous corresponding quarter. Revenue for the quarter, however, fell 54.7% YoY to RM629,000. The group is entering the durian business by partnering with a durian product manufacturer, Dura Manufacturing Sdn Bhd (Duria). Inix will be appointed to secure the supply chain for Duria for 5,000 tonnes of nitrogen frozen Musang King durians, 2,000 tonnes of Durian paste and 1,000 tonnes of Musang King pulp over the next five years. (The Edge)

Source: Mplus Research - 30 Sept 2020