Market Review

Malaysia: The FBM KLCI (-1.9%) tumbled to close at its lowest since 27th May 2020 due to profit taking activities as investors remained cautious ahead Budget 2021, Bank Negara Malaysia’s Monetary Policy meeting and US presidential election. The broader market was also painted in red with decliners led advancers by a ratio of 5-to-1.

Global markets: US stockmarkets closed lower for the week as the Dow (-0.6%) registered its biggest weekly decline since March 2020, against a backdrop of surging Covid-19 cases and uncertainties ahead of US presidential elections on 3rd November. European stocks ended mixed, while Asia stocks finished in red.

The Day Ahead

The sluggish global equities performance permeates to stocks across Bursa Malaysia and we see the volatility to remain unabated owing to several factors; rising political tension domestically, impending US election and rising number of Covid-19 cases globally. We reckon that the extended volatility may take place this week as investors’ sentiment remains cautious. The lower liners are expected to remain on a choppy mode as investors prefer to adopt the wait and see approach before taking further risks.

Sector focus: Gold-related companies that is touted to be a hedging methodology may come into focus as gold prices rebounded on last Friday. Meanwhile, the transportation & logistics sector is expected to outperform on the back rising e commerce sales.

FBMKLCI Technical Outlook

The FBM KLCI endured another rout as the key index formed a bearish candle to sink below the 1,475 support level. With the aforementioned level giving way, the downward pressure may see the local bourse heading towards the next support located at 1,450, followed by 1,430. The immediate resistances are now located at 1,500-1,515. Indicators remained negative as the MACD Histogram has extended another red bar, while the RSI remains below 50

Company Brief

DRB-Hicom Bhd is buying 116.0-ha. of land in Alor Gajah, Melaka for RM240.0m cash from Tradewinds Plantation Bhd, a company controlled by its major shareholder Tan Sri Syed Mokhtar Albukhary. Tradewinds original cost of investment for the land was RM6.8m in 2009. Subject to the prevailing future property market conditions, the land was intended to commence for property development in 2022. (The Star)

Lagenda Properties Bhd has entered into a Memorandum of Understanding with BDB Land Sdn Bhd, a unit of Bina Darulaman Bhd, to build affordable homes, with the possibility of a recurring partnership between the two parties. Both parties will negotiate and endeavour to enter into a joint venture to develop affordable homes over 230.0-ac. of land in Kuala Muda, Kedah Darul Aman. (The Edge)

The Federal Land Development Authority (Felda) intends to buy over FGV Holdings Bhd’s palm oil mills, following the termination of the land lease agreement (LLA) between the two parties. However Felda did not disclose the value for the mills nor the amount of compensation to be paid to FGV for the early termination of the 99- year LLA which took effect on 1st November 2011. (The Edge)

Golden Screen Cinemas Sdn Bhd (GSC), Malaysia's largest cinema operator and a wholly-owned subsidiary of PPB Group Bhd will be closing its cinemas nationwide for the whole of November 2020. This follows the announcement by the Malaysian Association of Film Exhibitors to collectively suspend all cinema operations in the country temporarily. (The Edge)

CME Group Bhd’s external auditors have included an emphasis of matter, drawing attention to a material uncertainty related to going concern in the group’s financial statements for the year ending 30th June 2020 (FY20). Messrs Kreston John & Gan pointed out that CME had, in a note in its financial statements, said the group and the company had incurred accumulated losses of RM69.4m and RM69.6m respectively during FY20, and that their current liabilities had exceeded current assets by RM31.3m and RM52.2m respectively. (The Edge)

Focus Dynamics Group Bhd has made a foray into the robotics food and beverage operations by teaming up with Saudee Group Bhd to roll out Malaysia's first robot operated burger kiosks. The group will lend its technological management expertise to develop a seamless, automated robotics operation with minimal human interaction. Saudee will provide research and development processes to produce appropriately packaged and custom processed food to cater for the robotics aspect. (The Edge)

AE Multi Holdings Bhd has signed a collaboration agreement with Ripcol Engineering Sdn Bhd to be a consultation service provider for companies that are entering the rubber glove-manufacturing industry. AE Multi will be responsible to procure customers in Malaysia and Thailand and to advise the requirements in the setting up of glove manufacturing plants in Thailand as well as regulatory approvals for the glove business. (The Edge)

Axiata Group Bhd has appointed former chairman of the Malaysian Communications and Multimedia Commission Tan Sri Dr Halim Shafie as its independent non-executive director. Axiata has also appointed Syed Ali Syed Salem Alsagoff as the Permodalan Nasional Bhd’s nominee to Axiata’s board. (The Edge)

Notion VTec Bhd will be investing some RM90.0m to set up nine nitrile glove production lines. The first phase comprises an estimated capital expenditure (capex) of RM30.0m for three lines with an output of 60.0m pieces of gloves per month. Meanwhile, the group has set a capex of RM60.0m for the remaining six production lines, which are expected to commence operations before November 2021. (The Edge)

Tek Seng Holdings Bhd’s 3QFY20 net profit surged 42.4x YoY to RM8.1m on higher PVC sales and improved margins. Revenue for the quarter rose 23.4% YoY to RM49.3m. (The Edge)

Following the investigation by the Malaysian Anti-Corruption Commission into its RM300.0m loan from Sabah Development Bank Bhd (SDB), AirAsia Group Bhd has come out to clarify that the transaction was completed in accordance with all relevant laws, policies and procedures. The loan from SDB is to be utilised for AirAsia's expansion plans to transform Kota Kinabalu into an international hub for its passenger and logistics operations. (The Edge)

Source: Mplus Research - 2 Nov 2020