Keeping gains in check

Market Review

Malaysia: The FBM KLCI was traded on a downbeat mode as the key index fell 0.5% yesterday, mainly dragged by selling pressure on Petronas-related and selected telco heavyweights. The lower liners retreated, while the broader market also ended mostly in red with the healthcare sector (-1.6%) lagging behind its peers.

Global markets: US stockmarkets rebounded as the Dow (+0.4%) climbed on a series of strong earnings reports and optimism over fiscal stimulus development ahead end of the week deadline. European and Asia stockmarkets, however, both ended mixed.

The Day Ahead

The FBM KLCI endured a choppy trading session before succumbing to quick profit taking as investors were roiled by the political uncertainty in the local scene, coupled with the selling activities from foreign funds. Meanwhile, the further stringent measures imposed due to the unabated new Covid-19 cases may derail the prospects of economic recovery projection in 2021. Likewise, the lower liners and broader market shares may experience quick profit taking but the rising trading activities will ensure pockets of trading opportunities over the near term.

Sector focus: We see the utilities sector that is touted as defensive in nature will provide an avenue to cushion the renewed volatility. Meanwhile, the technology sector remained in prime position for further upsides as demand remain relatively sturdy.

The absence of follow-through buying interest sent the FBM KLCI lower as the key index formed a bearish candle to close below the daily EMA60 level. With the lack of further buying support, the consolidation may prolong with immediate resistances at 1,530, followed by 1,540. On the flipside, the immediate support is located at 1,490, followed by 1,480. Indicators have turned negative as the MACD Histogram has turned red, while the RSI has slipped below 50.

Company Brief

SMTrack Group Bhd has proposed to issue up to RM120.0m in debt notes and to diversify its business, to include commercial air transport operations. The redeemable convertible notes will mature 60 months from the closing date of the first sub-tranche of the tranche one notes. SMTrack will use RM25.0m as down payment for the lease to purchase one aircraft and RM38.0m within three years to purchase an aircraft, RM45.6m as working capital. (The Star)

KIP Real Estate Investment Trust’s (REIT) 1QFY21 net property income rose 3.7% YoY to RM14.0m, thanks to lower property operating expenses and better cost management. Revenue for the quarter, however, fell 1.4% YoY to RM18.2m. A distribution per unit of 1.55 sen, payable on 23rd November 2020 was declared. (The Edge)

Gets Global Bhd, whose share price surged 35.8% in active trading yesterday is unaware of the reason behind the sudden jump in the price and trading volume of its shares in response to an unusual market activity query from Bursa Malaysia. (The Edge)

ManagePay Systems Bhd’s peer-to-peer (P2P) financing platform is set to provide floor stocking financing for used-car dealers. Wholly-owned P2P financing platform QuicKash Malaysia Sdn Bhd will be providing floor stocking financing to 365 Resources Sdn Bhd’s recruited used-car dealers with vehicles acting as collateral and guarantee. Under the partnership, participating used-car dealers would be able to access financing of up to 70% of the transaction value of the used cars. (The Edge)

Handal Energy Bhd has secured a new contract from Mubadala Petroleum’s entity MDC Oil & Gas Ltd for the provision of offshore pedestal crane maintenance services and spare parts. The four-year contract that does not have a specified value as it is on a ‘call-out’ basis was awarded by the Abu Dhabi-based company to its wholly-owned subsidiary Handal Cranes Sdn Bhd. (The Edge)

Greatech Technology Bhd has proposed a one-for-one bonus issue, to reward its shareholders and provide greater equity participation. The proposed bonus issue will expand the company’s issued share capital to 1.25bn shares, from 626.0m shares currently. (The Edge)

Sime Darby Bhd is weighing a separate listing for its health care unit that could raise at least RM500.0m. The company has held discussions with potential advisers for an initial public offering of Ramsay Sime Darby Health Care Sdn Bhd. A listing on Malaysia’s stock exchange could happen as early as 2021. (The Edge)

Source: Mplus Research - 21 Oct 2020