Market Review

Malaysia: The FBM KLCI (+1.3%) rallied to its three-month high after a one-day pullback, buoyed by growing optimism surrounding a Covid-19 vaccine and traders were hunting for recovery themes such as banking and gaming sectors on the FBMKLCI. The lower liners finished up, while the broader market closed higher with the exception of healthcare sector (-0.2%).

Global markets: The US equities tumbled as the Dow (-1.1%) declined on fading vaccine rally due to rising number of Covid-19 cases coupled with fears over possible nationwide lockdown. European stockmarkets closed in red while the Asia stockmarkets also closed mostly lower.

The Day Ahead

It was another exceptional performance on the FBM KLCI that recovered all its year-to-date losses, lifted by the gains across the board. Moving forward, investors will shift their focus on the 3Q2020 GDP data which may see the contraction to be milder against the prior quarter as economic activities resumed gradually. For now, we think that the key index is increasingly toppish and may warrant a pullback over the near term. The lower liners, meanwhile, remain supported by the liquidity driven market as investors capitalise on the positive market sentiment.

Sector focus: We continue to favour the plantation sector, owing to the multi-year high CPO prices that looks to remain elevated over the near term. Against the backdrop of potential renewed volatility, the rebound in gold prices may also imprint fresh trading interest within gold-related stocks.

FBMKLCI Technical Outlook

The FBM KLCI remained upbeat as the key index formed another bullish candle to close at 3 months high. Amid the increasingly toppish momentum, we reckon that a pullback is due with immediate support at 1,540, followed by 1,520. Additional upsides, if any will be capped towards the immediate resistances at 1,600-1,615. Indicators remained positive as the MACD Histogram has extended another green bar, while the RSI is slightly overbought.

Company Brief

Bintai Kinden Corporation Bhd’s subsidiary has picked ASX-listed IEC Properties Pty Ltd as sole distributor for the Ii-Key-SARS-CoV-2 Covid-19 vaccine in Australia and New Zealand. Bintai Healthcare Sdn Bhd had signed an MoU with IEC – a unit of International Equities Corporation Ltd to further negotiate on the terms and conditions to grant IEC the exclusive distribution rights. (The Star)

Star Media Group Bhd (SMG) 3QFY20 net profit surged to RM26.9m, from a net profit of RM0.4m recorded in the previous corresponding quarter, aided by an exceptional item of RM50.5m following the recognition of compensation from a legal case. Revenue for the quarter, however, fell 39.4% YoY to RM48.2m. (The Star)

Duopharma Biotech Bhd’s 3QFY20 net profit fell 4.0% YoY o RM14.2m on lower demand from private healthcare providers. Revenue for the quarter declined 6.7% YoY to RM133.8m. (The Star)

Karex Bhd will acquire the remaining 30.0% stake in US-based Global Protection Corp (GP Corp), which is the owner of ONE brand condoms. Under the deal, Karex will acquire the stake from its founder and president Davin Wedel for RM42.3m via the issuance of 82.9m new Karex shares. (The Star)

Salcon Bhd intends to buy a 51.0% stake in glove manufacturing company JR Engineering and Medical Technologies (M) Sdn Bhd (JR) for RM28.6m. The proposed acquisition comes with a profit guarantee of RM10.0m a year for the coming three financial years (FY21-FY23). In order to cater to the spike in demand in specific export markets, the group targets to ramp up its production capacity by an additional 12 lines to a total of 16 production lines within a year, bringing annual production capacity to 3.0bn pieces at an estimated capital expenditure of RM150.0m, to be funded via internally generated funds and bank borrowings. (The Edge)

Top Glove Corp Bhd has continued buying back more shares on the open market as its share price drifted nearly 20.0% down from a recent peak of RM9.60. It bought back an additional 89.0m shares yesterday, representing a 0.8% stake, for RM69.7m. (The Edge)

IHH Healthcare Bhd is selling its 50.0% stake in an Indian joint venture (JV) to its partner Apollo Hospitals Enterprise Ltd for RM227.1m cash or 4.1bn Indian rupees. Apollo Hospitals runs a 750-bed multi-speciality hospital in Kolkata. (The Edge)

Oversea Enterprise Bhd (OEB) plans to raise up to RM27.7m via a private placement to fund its business expansion and working capital requirements. It will be placing out 48.5 m shares, representing 20.0% of its share capital to selected third-party investors to be identified later. (The Edge)

Carlsberg Brewery Malaysia Bhd’s 3QFY20 net profit fell 41.3% YoY to RM69.2m on weaker sales. Revenue for the quarter declined 19.7% YoY to RM542.2m. (The Edge)

MRCB-Quill REIT (MQREIT) has disposed of its Quill Building 5 in Cyberjaya, which is not tenanted at present for RM45.0m, cash. The expected net gain from the proposed disposal is RM3.7m. (The Edge)

An arbitral tribune has ordered EA Technique (M) Bhd (EATech) to pay Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) a sum of US$29.5m (RM121.9m), after hearing a dispute between the two companies over a contract. EATech has also been ordered to pay MHB costs of RM4.7m and interest at 5.0% per annum from date of award to the date of full payment. MHB, on the other hand, is not liable to pay any sum to EATech. (The Edge)

Berjaya Food Bhd’s 1QFY21 net profit jumped 124.9% YoY to RM10.4m amid improved performance from its Kenny Rogers Roasters (KRR) restaurants after closing certain non-performing stores in the previous financial year, was also bolstered by more effective cost management initiatives implemented to mitigate the impact of the prolonged pandemic. Revenue for the quarter was flat at RM180.4m. A first interim dividend of 0.5 sen per share, payable on 29th December 2020 was declared. (The Edge)

Gas Malaysia Bhd’s 3QFY20 net profit gained 21.2% YoY to RM50.9m due to higher volume sold, higher finance income and share of profits from joint venture companies that offset the lower average natural gas tariff. Revenue for the quarter, however, declined 2.3% YoY to RM1.72bn. (The Edge)

Source: Mplus Research - 13 Nov 2020