Market Review

Malaysia: The parliament’s approval for Budget 2021, coupled with the positive vaccine news earlier during the month has pushed the FBM KLCI to close 0.9% higher. The lower liners ended in green, while the broader market also closed mostly higher.

Global markets: US stockmarkets were closed for Thanksgiving public holiday. Meanwhile, European stocks closed flat on Thursday as investors were digesting recent gains after a few rounds of rally recently. However, most of the Asia stockmarkets were up.

The Day Ahead

The positive progress of Budget 2021 has instilled further confidence into the Malaysian market as the FBM KLCI soared beyond the 1,600 psychological level yesterday. With the uncertainty from the aforementioned event being eliminated, the focus has now reverted back to the economic recovery progress. Hence, we reckon that the positive momentum may resume over the near term. The lower liners are also on a positive note with investors nibbling on beaten down stocks, capitalising on the positive market sentiment.

Sector focus: We continue to favour the construction sector as a proxy to the Budget 2021 amid the higher development expenditure. The healthcare will continue to fare better, while the technology sector is expected to remain upbeat as the recent batch of corporate earnings remained solid.

FBMKLCI Technical Outlook

The FBM KLCI has extended its gains, forming another bullish candle as the key index remains supported above the daily EMA9 level. Under the prevailing positive momentum, further upsides are likely to come by toward the immediate resistance at 1,640, followed by 1,670. Meanwhile, the supports are at 1,600, followed by 1,570. Indicators have turned positive as the MACD Histogram has turned green, while the RSI remains above 50.

Company Brief

Tenaga Nasional Bhd's (TNB) 3QFY20 net profit dropped 16.1% YoY to RM1.01bn, due to higher finance cost, which was cushioned by forex gain and a non-cash fair value gain. Revenue for the quarter fell 12.1% YoY to RM11.11bn. (The Star)

IHH Healthcare Bhd’s 3QFY20 net profit rose 31.1% YoY to RM310.0m, on efforts to capture new opportunities while keeping a tight control on costs. Revenue for the quarter, however, fell 7.1% YoY to to RM3.52bn. (The Star)

Heitech Padu Bhd has entered a memorandum of understanding with Regal Orion Sdn Bhd to explore business synergies and to enhance data-centre-related business activities in Malaysia. The parties shall enter into a definitive agreement to define their relationship in more detail within 90 days of the MoU. (The Star)

Press Metal Aluminium Holdings Bhd’s 3QFY20 net profit rose marginally by 0.4% YoY to RM122.0m, mainly to the favourable pricing of the group’s commodity hedges, lower alumina and carbon anode prices, as well as lower finance costs. Revenue for the quarter, however, declined 12.3% YoY to RM1.86bn. (Bernama)

Sime Darby Bhd’s 1QFY21 net profit rose 14.2% YoY to RM281.0m, on strong growth of the group’s motors division, particularly in China. Revenue for the quarter climbed 14.8% YoY to RM10.88bn. (The Edge)

PPB Group Bhd’s 3QFY20 net profit rose 4.4% YoY to RM411.6m, thanks to higher profit contribution from associate Wilmar International Ltd. Revenue for the quarter, however, fell 13.2% YoY to RM1.04bn. (The Edge)

Dutch Lady Milk Industries Bhd’s 3QFY20 net profit fell 56.5% YoY to RM9.3m, following a one-off valuation impact on raw material or milk investors. Revenue for the quarter, however, added 4.9% YoY to RM286.8m. A second interim dividend of 40 sen per share, payable on 24th December 2020 was declared. (The Edge)

Hengyuan Refining Company Bhd’s 3QFY20 net profit stood at RM154.9m vs a net loss of RM11.4m recorded in the previous corresponding quarter, on higher average prices of oil products. Revenue for the quarter, however, fell 50.8% YoY to RM1.59bn, from RM1.21bn. (The Edge)

Velesto Energy Bhd’s 3QFY20 net profit sank 98.6% YoY to RM0.5m, as all the hydraulic workover units of the group are currently idle as demand for workover and plug and abandonment activities is soft due to the weak market environment. Revenue for the quarter declined 37.3% YoY to RM130.7m. (The Edge)

DRB-Hicom Bhd’s 3QFY20 net profit stood at RM47.5m on the back of revenue of RM3.56bn. There were no comparative figures owing to its change of financial year-end from 31st March to 31st December. (The Edge)

Heineken Malaysia Bhd’s 3QFY20 net profit declined 40.7% YoY to RM61.3m, mainly due to a decline of beer volume in the mid-teens as its business was still in the recovery stage amid subdued market conditions. Revenue for the quarter shrank 21.4% YoY to RM602.5m. (The Edge)

Genting Bhd’s 3QFY20 net losses stood at RM130.8m vs. a net profit of RM305.7m as business resumed operations with a reduced capacity. Revenue for the quarter declined 37.7% YoY to RM3.30bn. (The Edge)

Westports Holdings Bhd’s 3QFY20 net profit improved 28.0% YoY to RM203.9m, due to higher container revenue and lower operational cost. Revenue for the quarter rose 14.8% YoY to RM528.4m. (The Edge)

Genting Malaysia Bhd (GenM)’s 3QFY20 net loss stood at RM704.6m vs. a net profit of RM410.8m recorded in the previous corresponding quarter, due to due to the unprecedented disruptions to the group’s leisure and hospitality operations worldwide amid the outbreak of the Covid-19 pandemic. Revenue for the quarter fell 46.0 YoY to RM1.42bn. (The Edge)

Magnum Bhd’s 3QFY20 net profit fell 37.0% YoY to RM30.3m, as sales has yet to return to pre-Covid-19 level. Revenue for the quarter declined 25.5% YoY to RM485.6m. A third interim dividend of two sen per share, payable on 24th December 2020 was declared. (The Edge)

Hock Seng Lee Bhd (HSL)’s 3QFY20 net profit fell 25.4% YoY to RM10.9m, on increase in operating costs and fixed overheads incurred during the Movement Control Order (MCO) and Conditional Movement Control Order (CMCO). Revenue for the quarter slipped 7.3% YoY to RM161.2m. (The Edge)

Kerjaya Prospek Group Bhd’s 3QFY20 net profit fell 8.0% YoY to RM30.4m, due to due to higher costs incurred for complying with the standard operating procedures set by the government to curb the spread of Covid-19. Revenue for the quarter declined 15.6% YoY to RM222.2m. An interim dividend of 1.5 sen per share, payable on 6th January 2021 was proposed. (The Edge)

Source: Mplus Research - 27 Nov 2020