Weakness prevails

Market Review

Malaysia: The FBM KLCI erased its intraday losses and finished almost flat after the final trading hour spike led by Kuala Lumpur Kepong Bhd and Hartalega Holdings Bhd, coupled with net foreign institutional buying. The lower liners, however, continued to decline, while plantation (+1.5%) and technology (+0.1%) sectors outperformed the mostly negative broader market.

Global markets: US stocks were slammed as the Dow (-2.3%) fell on fading stimulus hopes amid rising Covid-19 cases, while the industrial stocks were dragged by China’s sanction against US defense firms over weapon sales to Taiwan. European stockmarkets retreated to close lower, while Asia stockmarkets also ended mostly in red.

The Day Ahead

Bargain hunting activities have lifted the local bourse to recover most of its intraday losses yesterday as investors breathed signs of relief over the political status quo. We think that the local bourse performance will continue to be dictated by the political developments over the foreseeable future, whilst the renewed volatility on Wall Street overnight may pile pressure on Bursa Malaysia stocks. Although the lower liners are demonstrating mild signs of recovery, it is still too early to tell for a meaningful rebound over the near term.

Sector focus: We continue to like the technology sector amid the solid outlook, coupled with the prospect of improved earnings following the deliveries of backlog orders. CPO prices that rose beyond RM3,000/MT amid the strong exports data may also trigger fresh trading interests within the plantation stocks

The FBM KLCI has formed a hammer candle after recovering most of its intraday losses, but remains below the daily EMA9 level. We continue to view that any gains are likely to be choppy with near term immediate resistances located at 1,520- 1,530. The immediate support is at 1,470-1,480. Indicators remained negative as the MACD Histogram has extended another red bar, while the RSI is below 50.

Company Brief

IGB Real Estate Investment Trust’s (IGB REIT) 3QFY20 net property income fell 2.8% YoY to RM97.8m on lower rental income and weaker contribution from its car park business. Revenue for the quarter declined 4.1% YoY to RM130.7m. (The Star)

JF Technology Bhd's wholly owned unit JF International Sdn Bhd will enter a partnership with the venture capital arm of Huawei Investment & Holding Co Ltd via the latter's subscription to shares in JFH Technology Sdn Bhd. Hubble Technology Investment Co Ltd (HTI) will inject a total of US$1.5m in JFH Technology, which will fortify the group's relationship with the Chinese firm as a key customer and strategic partner, as well as gain market access into China. JF International will have a 55% stake by virtue of its own US$500,000 capital contribution to JFH while HTI will own the remaining 45%. (The Star)

GDB Holdings Bhd has executed a letter of intent concerning the receipt of a RM1.25bn contract for the 8 Conlay luxury integrated development at the heart of Kuala Lumpur. GDB’s subsidiary Grand Dynamic Builders Sdn Bhd (GDBSB) executed the letter of intent with KSK Land’s unit Damai City Sdn Bhd, with the mutual intention of entering into a definitive letter of award to appoint GDBSB as the main contractor to complete the main building works of the development. (The Edge)

Paragon Union Bhd, which received an unusual market activity (UMA) query from Bursa Malaysia after its share price jumped over 60% to an intraday high of 61 sen yesterday has reported that the group has been approached by certain interested parties who had expressed interest in acquiring its shares. The approach and discussion at this point is preliminary, and no agreement and conclusions have been made, reached or firmed up in respect of the discussion so far. (The Edge)

Glomac Bhd is confident of ensuring steady earnings visibility growth in FY21 on the back of higher sales, spurred by increasing demand in the landed property market. As at the end of 1QFY21, sales for the property development company doubled to RM50.0m from RM25.0m in the same period a year ago, driven by sustained demand for residential phases at its Saujana Perdana in Sungai Buloh and 121 Residences in PJ-Damansara. Unbilled sales stood at RM660.0m as at 31st July 2020, contributed by positive sales momentum from both Glomac’s Plaza @ Kelana Jaya and 121 Residences, as well as Glomac’s landed residential townships. (The Edge)

Cabnet Holdings Bhd’s unit Cabnet Systems (M) Sdn Bhd has been appointed as a subcontractor by Kinetics Systems Malaysia Sdn Bhd for a job valued at RM17.2m. The subcontract was in relation to the provision of supply, delivery, installation, testing and commissioning of electrical package for a factory located at Kulim, Kedah. (The Edge)

AirAsia Group Bhd has lowered its projected recovery rate in Malaysia to 60.0% of its pre-Covid-19 capacity by year-end. The airline in August 2020 had expected a 70.0%-75.0% recovery in Malaysia by the last quarter. Stricter curbs on movement in October 2020 due to rising Covid-19 cases had reined in growth. (The Edge)

Pharmaniaga Bhd is partnering with Serum Institute of India Pte Ltd, the world's largest vaccine manufacturer by number of doses produced, to further strengthen its vaccine business. The group wholly-owned subsidiary Pharmaniaga Lifescience Sdn Bhd (PLS) has signed a memorandum of understanding (MoU) with Serum to enable PLS to purchase the pneumococcal vaccine from Serum and subsequently manufacture products using the technology and know-how licensed by Serum for filling and finishing. (The Edge)

Kanger International Bhd has roped in Zuellig Pharma Sdn Bhd and K-Star Sport Ltd to collaborate on the distribution of Covid-19 vaccines in Malaysia. Kanger has entered into a memorandum of understanding (MoU) with Zuellig Pharma, the largest vaccine distributor in Malaysia and in Asia, to facilitate the import, warehousing and distribution of Covid-19 vaccines in Malaysia. Separately, Kanger announced that it has also entered into an MoU with K-Star to appoint the latter as the sales agent of Covid-19 vaccines for private clinics in Malaysia. (The Edge)

AMMB Holdings Bhd's banking arm AmBank has entered into a strategic partnership with Visa to elevate its credit card propositions and offerings to the market, the first for AmBank among local banks in the industry. The first initiative to complement its partnership with Visa is the launch of the new cash rebate credit card. (The Edge)

Source: Mplus Research - 27 Oct 2020