Market Review

Malaysia: The FBM KLCI (+3.3%) recorded its fifth straight winning streak, rallying to its over two-month high fuelled by strong buying interest in the leisure and banking heavyweights amid positive market sentiment over development of Covid19 vaccine. The lower liners ended mixed, while healthcare (-2.8%) and technology (-2.1%) sectors underperformed the mostly positive broader market.

Global markets: The US equities finished mixed as the Dow (+0.9%) climbed on extended positive momentum in the market on economic recovery in 2021 following positive vaccine updates, but S&P 500 (-0.1%) and Nasdaq (-1.4%) sank. European stockmarkets ended positive, while Asia stockmarkets also closed mostly higher.

The Day Ahead

It was another exceptional performance on the FBM KLCI, spurred by the positive developments on the potential Covid-19 vaccine, coupled with the higher crude oil prices. We reckon that further upsides are still in the cards, although the move may also attract profit taking activities in the interim. Investors may start to lock in their gains to digest the recent run-up before returning with fresh legs for further upside. Although the lower liners are also looking toppish, any weakness will be cushioned by the improvement in trading liquidity in recent days.

Sector focus: We continue to favour the energy sector following the rising crude oil prices. Likewise, the plantation sector may also perform on a positive note with CPO prices remained above RM3,200/MT.

FBMKLCI Technical Outlook

The FBM KLCI was powered sharply higher as the key index formed a bullish candle to close at its highest level since end-August 2020. After rallying some 7.4% since the start of the month, we think that a pullback will be healthy for gains to be digested with the immediate support at 1,540, followed by 1,520. The immediate resistances are at 1,600-1,615. Indicators remained positive as the MACD Line has risen above the zero level, while the RSI remains above 50.

Company Brief

Tropicana Corporation Bhd has proposed to acquire two parcels of land in Bentong, Pahang through its two indirect subsidiaries for RM402.5m. Both lands measuring 124.6-ha in total, will be acquired through Elkwood Realty Sdn Bhd and Snowflakes Realty Sdn Bhd. The proposed acquisitions along with the company’s existing land adjacent for future development; hereby provide an opportunity for the company and the group to build upon its land bank and also to enhance its property development profile in Genting Highlands. (Bernama)

Nestle (M) Bhd’s 3QFY20 net profit dropped 13.8% YoY to RM128.4m due to the impact of the pandemic on hotels and restaurants and higher operational expenses. Revenue for the quarter inched lower by 0.7% YoY to RM1.39bn. The group declared a dividend of 70.0 sen per share, payable on 16th December 2020. (The Star)

Minetech Resources Bhd associate company Konsep Khas Sdn Bhd has secured a sub-contract work worth RM15.0m to supply and install traffic signs and overhead signboards in Sarawak. The project started on 2nd November 2020 and will be completed by 1st November 2021. (The Star)

Top Glove Corp Bhd bought back 8.9m or 0.7% of its shares for RM69.9m in the open market amid a significant drop in the share price, following Pfizer Inc's announcement of a viable Covid-19 vaccine candidate. The shares were bought at between RM7.68 and RM7.93 per share. (The Edge)

Tenaga Nasional Bhd (TNB) is considering listing its power generation business on the local stock exchange in 2021, following a corporate reorganisation. The power company is working with an adviser on its planned restructuring, and aims to finish the process as soon as the 1H2021. Upon completion, the plan is for a listing by introduction of the generation business, where investors would be given shares in the unit in proportion to their existing holdings in Tenaga. (The Edge)

Sime Darby Plantation Bhd (SDP) has appointed PricewaterhouseCoopers (PwC) and an independent international NGO specialising in migrant worker rights to further strengthen its human rights commitments and compliance. This was followed by the Liberty Shared (LS) submitting a petition to the US Customs and Border Protection, with an allegation that SDP uses forced and child labour to produce palm oil and related products on April 2020. (The Edge)

KLCCP Stapled Group’s 3QFY20 net profit rose 11.5% YoY to RM156.7m as it saw a gradual recovery in the retail and hotel segments. Revenue for the quarter gained 17.0% YoY to RM312.6m. A distribution of 7.5 sen per stapled security was declared. (The Edge)

GD Express Carrier Bhd (GDex) has reported that its unit GD Express Sdn Bhd (GDSB) has received an approval letter from the Malaysian Investment Development Authority (MIDA) for a second round of integrated logistics services (ILS) tax incentive, via pioneer status, of up to 70.0% on statutory income for each year of assessment for a period of five years. (The Edge)

Careplus Group Bhd has suspended factory operations for two days as employees tested positive for Covid-19. The workers involved are working under its factory at the Senawang Industrial Estate in Negeri Sembilan and they are now under the care of a government hospital. (The Edge)

Focus Dynamics Group Bhd has acquired a 16.7% equity stake in Hong Kong-listed food and beverage (F&B) group Top Standard Corp for RM7.9m, as this is in line with its expansion plans with Oversea Enterprise Bhd to bring the Oversea brand onto the international stage. Top Standard is a restaurant group that offers Sichuan cuisine under the "San Xi Lou" brand and has been listed on Hong Kong's Growth Enterprise Market since 2018. (The Edge)