Market Review

Malaysia: The FBM KLCI (+0.1%) managed to hold onto its gains after enduring some volatility in the eleventh trading hour as gains were largely supported by banking heavyweights yesterday. The lower liners, however, closed mixed, while the broader market ended mostly lower with the energy sector (-1.6%) underperformed after crude oil prices took a dive in the previous session.

Global markets: US stockmarkets rebounded overnight as the Dow advanced 1.2%, boosted by the stronger-than-expected jobs creation data in September 2020. European stockmarkets extended their losses, while Asia stockmarkets ended mostly lower.

The Day Ahead

Gains on the local bourse were largely tepid as investors were quick to book profits amid the on-going volatility. Therefore, we reckon that any gains will be tempered by opportunity to sell into strength, particularly from foreign funds (YTD net outflow at RM22.3bn). Elsewhere, the lower liners are will continue to endure a rough ride amid the fading trading interest ahead of the end of the blanket loan moratorium that saw trading value slumping to the lowest level since June 2020.

Sector focus: We continue to like the technology sector on the back of their favourable outlook. Trading interests are also starting to pick up within the construction sector ahead of the tabling of Budget 2021 which may provide further clarity on the status of mega-infrastructure projects.

The FBM KLCI formed a doji candle as the key index barely hangs onto its gains before re-testing the daily EMA9 level. Amid the absence of fresh catalyst, the consolidation will likely to remain in shape 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

Inta Bina Group Bhd has bagged two main building works contracts worth RM496.6m from Eco World Development Group Bhd. The first is a design and build contract worth RM184.2m at Eco Santuary project in Kuala Langat, Selangor. The second contract worth RM312.3m was awarded by Eco Ardance Sdn Bhd to undertake civil and structural at its project in Shah Alam, Selangor. (The Star)

AirAsia Group Bhd’s associate AirAsia Japan Co Ltd is reported to have told relevant authorities that it plans to end its operations. The low cost carrier, whose major investors include AirAsia and Rakuten, resumed flight operations in August, but demand remained weak on the back of the coronavirus pandemic. (The Star)

Sunway Construction Group Bhd (SunCon) has won two projects totalling RM1.98bn from Sunway Velocity Two Sdn Bhd and Sunway Medical centre Sdn Bhd. In the first award, SunCon will undertake the main building and associated external works for the proposed commercial development of Sunway Velocity Two - Plot B project in Kuala Lumpur for a contract sum of RM253.6m. The project is expected to be completed in September 2023. SunCon will also undertake the main building works for the proposed development of Sunway Medical Centre - Phase 4 project in Bandar Sunway for a contract sum of RM612.3m. The project is expected to be completed in August 2022. (The Star)

Dagang NeXchange Bhd (DNeX) has clinched a RM47.2m contract for the MyGovCloud @ PDSA government data centre project in Putrajaya. The contract will last 37 months, until 23rd October 2023. The contract involves providing expertise in IT project management and consultancy, the supply of ICT hardware equipment, maintenance and asset management. (The Edge)

Cypark Resources Bhd's 3QFY20 net profit fell 19.5% YoY to RM16.2m as Covid- 19-induced movement restrictions interrupted and delayed worksite activities. Revenue for the quarter fell 36.1% YoY to RM55.7m. (The Edge)

Prestariang Bhd's indirect subsidiary Prestariang Skin Sdn Bhd (PSkin) will commence meetings with creditors to restructure debts. As of 30th June 2020, total borrowings for the group stood at RM65.5m (of which RM26.9m was a revolving credit). The High Court granted leave for PSkin on the grounds that PSkin could preserve its going concern while it carries on with negotiations and legal action to seek compensation from the federal government for the termination of the RM3.50bn Sistem Kawalan Imigresen Nasional (SKIN) contract. PSkin had sought RM732.9m in damages after the government terminated the SKIN project awarded to it in 2017. (The Edge)

Malaysia Airports Holdings Bhd (MAHB) has appointed Datuk Azmi Murad as its new chief operating officer effective 30th September 2020. Azmi will take over the position which had been left vacant since January 2020 when Datuk Mohd Shukrie Mohd Salleh assumed the mantle of the group's acting chief executive officer (CEO), and subsequently the group CEO. (The Edge)

LPI Capital Bhd's wholly-owned Lonpac Insurance Bhd has been fined by the Malaysia Competition Commission (MyCC) for infringing the Competition Act 2010. Lonpac, along with 21 other members of the General Insurance Association of Malaysia (PIAM), was hit with a fine following MyCC's investigation into the market of spare motor parts and labour charges for the PIAM Approved Repairers Scheme. (The Edge)

FGV Holdings Bhd will see its palm oil banned by the US Customs and Border Protection (CBP) over the alleged use of forced labour in the planter's production process. The CBP will issue a "withhold release order" which will allow it to detain shipments based on suspicion of forced labour involvement under long-standing US laws aimed at combating human trafficking, child labour, and other human rights abuses. (The Edge)

Source: Mplus Research - 1 Oct 2020