Market Review

Malaysia: The FBM KLCI (+0.2%) extended its gains prior to the final results of Budget 2021 vote as Petronas Dagangan Berhad (+12.6%) rose sharply following the Brent crude oil price surpassed US$45 per barrel mark. The lower liners ended mixed, while the energy sector (+5.6%) outperformed the mixed broader market with 5.6% gain.

Global markets: US stockmarkets advanced as the Dow (+1.1%) climbed on AstraZeneca’s promising Covid-19 trial results which elevated investors’ optimism about economic recovery in 2021. European stockmarkets finished mostly lower, but Asia stockmarkets mostly in the green.

The Day Ahead

The FBM KLCI was traded in a lacklustre manner as the key index re-tested the 1,600 psychological level. As there was absence of follow-through buying beyond the aforementioned level, we reckon that the local bourse will be poised for further consolidation. At the same time, the uncertainty surrounding the vote on Budget 2021 are also keeping investors on their toes. The lower liners are looking increasingly toppish which may prompt profit taking activities over the near term.

Sector focus: We continue to favour the energy sector amid higher crude oil prices ahead of the OPEC meeting next week which is pointing for a deeper production cut in 2021. The healthcare sector will continue to find stability after enduring a volatile period, while the plantation sector will be boosted by the soaring CPO prices.

FBMKLCI Technical Outlook

The FBM KLCI hovered mostly in the positive territory before finishing mildly higher yesterday as the key index remain above the daily EMA9 level. The lacklustre movement may bring further consolidation into the picture with the immediate resistances located at 1,610, followed by 1,640. Supports are at 1,570, followed by 1,540. Indicators are mixed as the MACD Line continues to point higher, while the RSI remains overbought.

Company Brief

Sime Darby Plantation Bhd’s (SDP) 3QFY20 net profit stood at RM190.0m vs. a net loss of RM243.0m recorded in the previous corresponding quarter, bolstered by higher crude palm oil (CPO) and palm kernel (PK) prices. Revenue for the quarter rose 12.8% YoY to RM3.18bn. (The Star)

Boustead Plantations Bhd’s 3QFY20 net profit stood at RM18.0m vs. a net loss of RM34.3m recorded in the previous corresponding quarter, underpinned by the rebound in crude palm oil prices. Revenue for the quarter rose 47.7% YoY to RM205.7m. An interim dividend of 0.5 sen, payable on 30th December 2020 was declared. (The Star)

Karex Bhd’s 1QFY21 net profit surged 26.7x YoY RM4.5m, due to favourable sales mix and improved cost control initiatives. Revenue for the quarter rose 6.3% YoY to RM101.7m. (The Edge)

Tiong Nam Logistics Holdings Bhd’s 2QFY21 net profit jumped 181.7% YoY to RM3.7m, boosted by the logistics and warehousing services segment. Revenue for the quarter, however, fell 4.2% YoY to RM149.1m. (The Edge)

Lotus KFM Bhd directors Wong Sak Kuan and Yau Ming Tek’s general offer for MESB Bhd failed to secure any acceptance from MESB shareholders. At the offer’s close, MESB shares held by the two remained at 46.8m or a 44.1% stake. The offer was triggered on 12th October 2020 after they bought 29.5m shares for RM8.9m. (The Edge)

Guan Chong Bhd’s 3QFY20 net profit declined 22.7% YoY to RM46.8m, on lower cocoa sales, narrower margins and higher tax expenses. Revenue for the quarter, however, climbed 13.0% YoY to RM841.6m. A second interim dividend of 1.5 sen per share, payable on 20th January 2021 was declared. (The Edge)

Dayang Enterprise Bhd’s 3QFY20 net profit slipped 66.3% YoY to RM36.1m, due to lower vessel utilisation and extra costs as from Covid-19 standard operating procedures. Revenue for the quarter fell 35.6% YoY to RM230.2m. (The Edge)

Malaysian Resources Corp Bhd’s (MRCB) 3QFY20 net profit slump 63.4% YoY to RM0.9m, on slower construction activities amid Covid-19. Revenue for the quarter decreased 20.2% YoY to RM297.6m. (The Edge)

Hextar Global Bhd’s 3QFY20 net profit gained 42.7% YoY to RM12.5m, boosted by the agriculture segment. Revenue for the quarter rose 14.8% YoY to RM111.6m. A third interim dividend of one sen per share, payable on 28th December 2020 was declared. (The Edge)

Top Glove Corp Bhd will temporarily shut down 28 factories in Klang due to a high number of Covid-19 cases among its workers. The factories would cease operations in stages to allow for factory workers to undergo screening and mandatory quarantine to contain the spread of the virus. The Teratai cluster linked to Top Glove’s workers saw 1,067 new Covid-19 cases yesterday. (The Edge)

Mesiniaga Bhd has signed an agreement with Maxis Bhd to provide the latter with hardware and software services for an information technology and engineering network modernisation project. The contract will last until 31st December 2025. (The Edge)

TA Enterprise Bhd’s substantial shareholder and co-founder Datuk Tony Tiah’s takeover to acquire the remaining 39.8% stake in TA Global Bhd has been deemed as not fair but reasonable. The share exchange options is more favourable as the implied offer price of TA Global of 94.9 sen to 95.2 sen represents a discount of approximately 3.0% to 3.3% to the fair value per TA Global share. (The Edge)

Kanger International Bhd has received support from the Ministry of Science, Technology and Innovation to purchase Covid-19 vaccines for private-sector use in Malaysia. The ministry’s agency National Institutes of Biotechnology Malaysia (NIBM) had no objection for the company to liaise with China National Pharmaceutical Group Corp (Sinopharm) on the purchase of the vaccines. (The Edge)

Samaiden Group Bhd has secured an RM115.6m contract from BTM Resources Bhd to develop a biomass-based power plant in Terengganu. Samaiden has taken on an engineering, procurement, construction and commissioning (EPCC) contract for the development of a 10MW biomass power plant in Teluk Kalong, Terengganu. Work will start on 2nd January 2021 and will be schedule for completion within 23 months. (The Edge)

Eonmetall Group Bhd, which was slapped with an unusual market activity (UMA) query by Bursa Malaysia is in talks to acquire an equity interest of 51.0% in a glove company for the production of medical grade (nitrile) gloves and non-medical grade gloves. The purchase consideration is envisaged to be satisfied via issuance of new shares in Eonmetall Group. (The Edge)

Source: Mplus Research - 24 Nov 2020