Market Review

Malaysia: The FBMKLCI surged 2.5% as sentiment turned bullish as market players could be pricing win a Biden win which may provide a smoother business environment moving forward given he is perceived as friendlier towards China as well as prior to Malaysia’s Budget 2021. Market breadth was positive with more than 1000 gainers on Bursa Exchange.

Global markets: US stockmarkets extended its gains as the Dow (+2.0%) was fuelled by healthcare and tech stocks following the likelihood of divided government which indicates diminished prospect for higher corporate taxes for the industries. Both the European and Asia stockmarkets in the green.

The Day Ahead

Strong gains on Wall Street overnight spill over to Asia markets, including the FBM KLCI as foreign funds net buying rose to the highest level since mid-August 2020. Moving forward, investors will be anticipating on the announcement of Budget 2021 that points to further measures to be dished out to rejuvenate the economy. Under the prevailing largely positive market sentiment, we expect the market undertone to remain buoyant as investors’ quest to search for higher yields returned.

Sector focus: We continue to favour the construction sector as the impending Budget 2021 announcement may likely to see the flurry of mega-infrastructure projects remain in the pipeline. The technology sector is expected to remain in the front seat, mirroring the strong gains on Nasdaq overnight.

FBMKLCI Technical Outlook

The FBM KLCI gapped up to extend its gains as the key index formed a bullish candle to close above the daily EMA20 level. The recent change in tide that sent the local bourse above 1,500 may propel further gains over the foreseeable future towards the immediate resistance at 1,515-1,520. In contrast, the supports located at 1,470, followed by 1,450. Indicators turned positive as the MACD Histogram has extended another green bar, while the RSI has risen above 50.

Company Brief

Bintai Kinden Corp Bhd's partner Generex Biotechnology Corporation has entered a framework agreement with Chinese agencies to develop and commercialise a coronavirus vaccine in China. Under the terms of the agreement, Generex will receive upfront development fees and back-end licensing payments to conduct the research and development and fully fund the commercial approval of the Ii-KeyCoV-2 vaccine. (The Star)

Tafi Industries Bhd is planning to diversify into property development and construction given the lacklustre prospects of its furniture manufacturing business. TAFI’s subsidiary, Tafi Development Sdn Bhd had entered in to a conditional joint development agreement with E Prompt Sdn Bhd to develop a portion of freehold land in Cameron Highlands measuring about 33.0-ac. The gross development value and gross development cost of the mixed-development project is estimate to be about RM390.0m and RM260.0m respectively. (The Star)

MR DIY Group (M) Bhd’s 3QFY20 net profit rose 54.1% YoY to RM113.4m on higher monthly average sales per store and lower operating expenses. Revenue for the quarter gained 31.7% YoY to RM740.0m. (The Star)

Kumpulan Powernet Bhd (KPower) has clinched its first engineering, procurement, construction and commissioning (EPCC) contracts in Indonesia for hydro power plants worth RM54.6m. PT Pat Petulai Energi awarded a RM29.7m contract to construct a 3.1MW power plant in Sg Simpang while PT Klaai Dendan Lestari gave a RM24.9m contract for a 2.6MW power plant. (The Star)

MY EG Services Bhd (MyEG)’s JV in the Philippines, I-Pay MYEG Phillipines Inc, has teamed up with Family Vaccine Speciality Clinics Inc to develop an application for the booking and payment of Covid-19 tests, along with the issuance of a digital WR code as proof of testing. (The Edge)

Vstecs Bhd’s 3QFY20 net profit rose 22.3% YoY to RM10.1m, following higher demand for work from home products. Revenue for the quarter increased 16.7% YoY to RM536.4m An interim dividend of 2.5 sen per share, payable on 16th December 2020 was announced. (The Edge)

Solution Group Bhd will raise RM18.7m via private placement for the establishment of a vaccine fill and finish facility. Of the proceeds, RM10.2m has been allocated for the set-up of the facility, RM5.0m for purchases of machinery and equipment for the fill and finish process, while RM3.0m will be used for the purchases of quality assurance and control equipment. The private placement exercise will entail the issuance of up to 30.9m placement shares, representing not more than 10.0% of the group's current share base. The group has also proposed to diversify its operations to include pharmaceuticals. (The Edge)

Source: Mplus Research - 6 Nov 2020