Market Review

Malaysia: The FBM KLCI (-1.2%) retreated on the back of the uncertainty over the voting for Budget 2021, coupled with the selling pressure on Top Glove after more than 2,000 workers were tested positive for Covid-19. The lower liners also finished lower as profit taking activities set in.

Global markets: US stockmarkets extended their gains as the Dow (+1.5%) jumped to close above the 30,000 psychological level after Trump administration approved the start of the presidential transition. European stockmarkets also edged higher, but Asia stockmarkets ended mixed.

The Day Ahead

Selling pressure across the board escalated as the FBM KLCI underperformed its regional peers to finish sharply lower yesterday. Market sentiment has turned dour as the recent spikes in Covid-19 cases are dampening the prospects of economic recovery. Meanwhile, the uncertainty over voting of Budget 2021 deters investors to take further positions. We leave our views unchanged that the lower liners are toppish, hovering largely in the overbought territory that may see further pullback over the near term.

Sector focus: Amidst the renewed volatility, the financial services sector appears to be more defensive as investors continue to bargain hunt. Meanwhile, packagingrelated stocks are on the move, owing to the rising demand.

FBMKLCI Technical Outlook

The FBM KLCI endured a volatile trading session before erasing all its intraday gains to close below the daily EMA9 level yesterday. Yesterday’s pullback may signal for further retracement, which we view the 1,570 to play the immediate support, followed by 1,540. On the flipside, the immediate resistances are at 1,600, followed by 1,610. Indicators are mixed as the MACD Histogram has extended another red bar, while the RSI remains overbought.

Company Brief

Top Glove Corp Bhd has reported that some deliveries from facilities in Klang, Selangor affected by the temporary closure would be delayed by two to four weeks and forecast a 3.0% hit of its current year annual sales. The company's 28 facilities in Meru, representing 50.0% of the total production capacity, are affected by the two weeks enhance movement control order (EMCO) that started on 17th November 2020. 16 facilities have stopped work since 17th November 2020, while the remaining 12 facilities are operating at 20.0% capacity. The group does not anticipate penalty from this delay in delivery. (The Star)

AirAsia Group Bhd’s 3QFY20 net loss widened to RM851.8m, from a net loss of RM51.4m recorded in the previous corresponding quarter, as airlines have been badly hit by the coronavirus crisis, which brought air travel to a near standstill at its height earlier this year, forcing many to seek financial help. Revenue for the quarter sank 85.6% YoY to RM442.9m. (The Star)

My EG Services Bhd’s 3QFY20 net profit stood at RM70.7m on the back of RM136.1m. No comparative numbers were provided due to a change in the group’s financial year-end from 30th September 2020 to 31st December 2020. (The Star)

Inari Amertron Bhd’s 1QFY21 net profit jumped 46.8% YoY to RM70.1m, boosted by higher revenue generated by its radio frequency (RF) business and the reversal in deferred tax provision. Revenue for the quarter rose 9.8% YoY RM347.6m. A first interim dividend of 2 sen per share, payable on 8th January 2021 was declared. (The Star)

Berjaya Land Bhd’s 1QFY21 net loss widened to RM41.9m, from a net loss of RM6.0m recorded in the previous corresponding quarter, on lower revenue. Revenue for the quarter declined 7.7% YoY to RM1.46bn. (The Edge)

Hong Leong Industries Bhd’s 1QFY21 net profit fell 19.9% YoY to RM50.7m, on weaker topline contribution. Revenue for the quarter declined 9.2% YoY to RM652.7m. An interim single-tier dividend of 17.0 sen per share, payable on 23rd December 2020 was declared. (The Edge)

ARB Bhd’s 3QFY20 net profit inched up 1.3% YoY to RM8.4m, with growth mitigated by higher cost of sales. Revenue for the quarter increased 71.8% YoY to RM58.3m from RM33.94 m a year ago. (The Edge)

Malakoff Corp Bhd’s 3QFY20 net profit dropped 38.4% YoY to RM50.8m, on lower revenue and absence of now disposed subsidiary Malakoff Australia Pty Ltd. Revenue for the quarter fell 18.7% YoY to RM1.48bn. (The Edge)

UEM Sunrise Bhd’s 3QFY20 net loss stood at RM28.9m vs. a net profit of RM27.1m recorded in the previous corresponding quarter, impacted by the weaker sales. Revenue for the quarter fell 33.6% YoY to RM217.4m. (The Edge)

Syarikat Takaful Malaysia Keluarga Bhd’s (STMKB) 3QFY20 net profit fell 26.7% YoY to RM82.6m, on lower family takaful product sales Revenue for the quarter, however, was flat at RM753.47m. (The Edge)

Omesti Bhd’s 51.0% owned indirect subsidiary bagged a two-year contract to provide network equipment maintenance services for the Federal Court’s eCourts Phase 2 project. The contract is worth RM19.9m. (The Edge)

Tan Chong Motor Holdings Bhd’s 3QFY20 net loss narrow to RM7.3m, from net loss of RM78.4m recorded in the previous corresponding quarter, following a rebound in vehicle sales and sales tax exemptions for locally manufactured vehicles. Revenue for the quarter expanded 88.1% YoY to RM964.5m. (The Edge)

Wah Seong Corp Bhd’s 3QFY20 net loss stood at RM255.8m vs. a net profit of RM15.3m recorded in the previous corresponding quarter, dragged down by impairments and provisions. Revenue for the quarter fell 29.7% YoY to RM453.3m. (The Edge)

Source: Mplus Research - 25 Nov 2020