Market Review

Malaysia: The FBM KLCI closed flat after lingering mostly in the negative territory as losses were recouped by the emergence of bargain hunting activities following the strong China’s Markit Manufacturing Purchasing Managers’ Index (PMI) that rose to 53.6 in October 2020; the highest since January 2011. The lower liners and the broader market both ended mixed.

Global markets: Following the sharp fall last week, US stockmarkets started the week on an upward tone, the Dow (+1.6%) climbed ahead of the US Presidential election amid solid ISM manufacturing PMI that rose to 59.3 in October 2020. Both European and Asia stockmarkets also finished in the green.

The Day Ahead

The FBM KLCI took a dive before recovering most of its intraday losses on the back of strong Chinese economic data. We reckon that bargain hunting activities may take precedence over the near term, although sentiment remains largely indifferent at current juncture. At the same time, investors will be focusing on Bank Negara’s monetary policy decision today that may provide further clarity on the economic recovery progress. The lower liners are also attempting to find stability, following the recent rout.

Sector focus: We continue to favour the transportation & logistics sector as a proxy to the rising e-commerce sales. Meanwhile, the technology sector is also a sweet spot for trading following the recent pullback.

FBMKLCI Technical Outlook

The FBM KLCI staged a strong recovery from its intraday low before forming a hammer candle yesterday. The aforementioned move suggests a potential rebound may take precedence which we see gains are limited towards the immediate resistance at 1,500-1,515. In contrast, the supports located at 1,450, followed by 1,430. Indicators remained negative as the MACD Histogram has extended another red bar, while the RSI remains below 50

Company Brief

FGV Holdings Bhd has yet to receive a written notice from Federal Land Development Authority (Felda) regarding the termination of the land lease agreement and its intention to take over FGV's palm oil mills nationwide. The plan was announced by Felda's special task force chairman Tan Sri Abdul Wahid Omar on 30th October 2020. (The Star)

Pintaras Jaya Bhd’s unit in Singapore has secured five pilling contracts worth a combined RM163.0m. The projects have commencement dates from October 2020 to February 2021 with contract periods varying from 2 to 12 months. (The Star)

DRB-Hicom Bhd’s 50.1% unit Proton Holdings Bhd saw its October 2020 sales rise by 19.9% YoY to 11,392 units. Year to date, sales were up by 6.2% YoY at 84,999 units. As of end-October 2020, Proton saw 27,400 bookings for its X50 SUV, with 447 units already delivered to customers. (The Edge)

Tomei Consolidated Bhd’s 3QFY20 net profit surged 553.8% YoY to RM13.6m on better profit margins from higher selling prices in its retail, manufacturing and wholesale operating segments. Revenue for the quarter rose 52.1% YoY to RM180.6m. (The Edge)

Cycle and Carriage Bintang Bhd’s 3QFY20 net profit stood at RM7.2m, from a net loss of RM12.2m recorded in the previous corresponding quarter, following better car sales as a result of the sales tax exemption under the Penjana stimulus package and cost-saving. Revenue for the quarter gained 58.0% YoY to RM409.1m. (The Edge)

Kerjaya Prospek Property Bhd bought a piece of freehold land near its Bloomsvale mixed development project in Old Klang Road for RM15.1m. The land will be used to complement the Bloomsvale project. The acquisition is expected to be completed by January 2021 and will be funded via internally-generated funds and bank borrowings. (The Edge)

Dufu Technology Corp Bhd’s 3QFY20 net profit contracted 13.0% YoY to RM12.9m due to forex losses of RM1.9m. Revenue for the quarter, however, increased 12.3% YoY from RM67.6m. (The Edge)

Kronologi Asia Bhd won an exabyte-size cloud hyper-scale supply and managed services contract in China. The contract was awarded by a market-leading web search, online community and artificial intelligence services provider. It, however, did not disclose the identity of the Chinese entity. (The Edge)

Hibiscus Petroleum Bhd’s unit SEA Hibiscus Sdn Bhd has completed the St Joseph Minor Sands Infill and Major Sands Redevelopment Infill Drilling Campaign in September under the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract (North Sabah PSC). This now added 2,200 barrels per day of crude oil production, as well as some 4.0m stock tank barrels of incremental life of field gross reserves. (The Edge)

Tadmax Resources Bhd’s 55.0%-owned unit Builtamont Development Sdn Bhd is acquiring a 2.6-ac. piece of land in Cheras for RM37.4m, in order to replenish its land bank for development activities. The purchase will be funded through a combination of bank borrowings and internally-generated funds and is expected to be completed within six months. (The Edge)

Source: Mplus Research - 3 Nov 2020