Market Review 

Malaysia: Last Friday, the FBM KLCI (-0.1%) reversed its first session’s losses and finished the week on a flat note as investors cheered the smaller-than-expected 3Q2020 GDP contraction. Both the lower liners and the broader market ended mixed.

Global markets: The US stocks climbed as the Dow (+1.4%) ended the volatile week higher, driven by the optimism over Covid-19 vaccine as well as investors’ hopes on another round of fiscal stimulus. The European stockmarkets ended mostly higher, but the Asia equities closed mostly lower.

The Day Ahead

The stronger-than-expected 3Q2020 GDP (-2.7% YoY) vs. consensus forecast of - 4.0% YoY contraction boosted the FBM KLCI to recover most of its intraday losses last Friday. The three consecutive days of foreign fund inflow will continue to lend support for any weakness over the near term. Meanwhile, we view the conclusion of Regional Comprehensive Economic Partnership (RCEP) bodes well for Malaysia alongside with 14 nations that will strengthen the trade partnership between these countries. Moving forward, investors will be focusing on the barrage of corporate earnings releases, which expects to record sharp QoQ recovery.

Sector focus: We believe that the technology sector is well remain on course for further upward trajectory. The plantation sector will remain buoyed by the multiyear high CPO prices, hovering around RM3,400/MT.

FBMKLCI Technical Outlook

The FBM KLCI finished mildly lower after recovering most of its intraday losses as the key index formed a hammer candle to remain above the daily EMA9 level. With buying momentum appears to have yet to taper, further upsides remain to be seen at the next resistances at 1,600-1,615. Immediate support is pegged at 1,540, followed by 1,520. Indicators remained positive as the MACD Histogram has extended another green bar, while the RSI is slightly overbought.

Company Brief

Kumpulan Powernet Bhd has proposed to increase the number of its shares by dividing one current stock into four new shares that will be issued with free warrants. The warrants will be distributed to eligible shareholders on the basis of one warrant for every three shares held after the stock split exercise. The warrants can be converted into new KPower shares based on the exercise price of RM2.50 per warrant. The proposals are expected to be completed by 1Q2021. (The Star)

Top Glove Corp Bhd has bought back an additional 9.0m shares worth RM69.9m in the open market, marking the fourth consecutive day the rubber glove maker has bought back its own shares. It spent RM279.4m last week to buy 35.8m of its own shares, which represents a 3.5% stake in the company. (The Edge)

The Inland Revenue Board has withdrawn its appeal against a High Court's decision to allow a judicial review sought by Tune Protect Group Bhd’s subsidiary Tune Insurance Malaysia Bhd (TIMB), relating to a tax dispute concerning RM10.7m. The matter involves the deductibility of the provision of risk margin for adverse deviation (PRAD) expenses borne by TIMB that amounted to RM7.3m. (The Edge)

Gets Global Bhd, whose share price rocketed to RM3.17 from barely nine sen at end-July 2020 has reported that its subsidiaries have been served with a summons and claims of RM0.4m from Sinotek Autoparts Sdn Bhd (SASB). The claims are in respect of alleged outstanding payments for the supply of bus spare tyres by SASB to Gets Global’s wholly-owned Super Coach Assembly Plant Sdn Bhd (SCAP) and its 80.0%-owned Pengangkutan Awam Putrajaya Travel & Tours Sdn Bhd (PAPTT). (The Edge)

S P Setia Bhd’s 3QFY20 net loss stood at RM263.4m vs. a net profit of RM84.6m recorded in the previous corresponding quarter, due to its share of impairment of RM336.3m from the group's 40.0%-owned joint venture company, Battersea Project Holding Company Ltd (BPHC), in the UK. Revenue for the quarter, however, rose 15.8% YoY to RM1.08bn. (The Edge)

Kumpulan Fima Bhd’s 2QFY21 net profit gained 81.1% YoY to RM18.3m, underpinned by higher profits from its plantation and bulking segments. Revenue for the quarter grew 1.5% YoY to RM130.6m. (The Edge)

Chemical Company of Malaysia Bhd (CCM) will be financing its combined heat and power (cogen) plant project in Pasir Gudang, Johor, via an Islamic financing facility amounting to RM28.0m from OCBC Al-Amin Bank. On 29th November 2019, CCM announced it had awarded Sime Darby Bhd a RM27.9m contract to construct the cogen plant. (The Edge)

Source: Mplus Research - 16 Nov 2020