Market Review

Malaysia: The FBM KLCI (-0.3%) slid on profit taking activities following four straight sessions of gains as investors digested gains following the Budget 2021 vote coupled with still rising Covid-19 cases going into winter in several countries globally, which may impact the economic growth outlook moving forward.

Global markets: US stocks registered gains as the Dow (+0.1%) edged higher on decreasing political uncertainty and market enthusiasm about the coming vaccines amid low trading volume due to early market close on Black Friday. The European stockmarkets closed higher, while Asia stockmarkets also ended mostly in the green.

The Day Ahead

After delivering a two consecutive days of solid performance, mild profit activities set onto course as the FBM KLCI staged a mild pullback on last Friday. Still, we maintain our positive tone on the local bourse as investors will continue to pin their expectations over the economic recovery following the recent batch of corporate earnings that appears to have bottomed-out. The lower liners may continue to edge higher, largely supported by the liquidity-driven momentum as investors continue their quest for higher yields.

Sector focus: We reckon that the plantation sector may march higher, premised on firmer crude palm oil prices as demand remain relatively strong. With the Covid-19 vaccine development and distribution edging closer, the vaccine-related stocks may continue to garner increase trading interest.

FBMKLCI Technical Outlook

Despite the positive performance as the start of the trading bell, quick profit taking activities sent the FBM KLCI mildly lower. With the 1,600 level remain supported; we think that further upsides are still in the cards with the immediate resistance at 1,640, followed by 1,670. Meanwhile, the supports are at 1,600, followed by 1,570. Indicators have turned mixed as the MACD Histogram has turned red, while the RSI remains above 50.

Company Brief

Public Bank Bhd’s 3QFY20 net profit increased 2.2% YoY to RM1.39bn, underpinned by higher income from investments, stock broking, fund management and Islamic banking. Revenue for the quarter, however, fell 8.5% Yoy to RM5.13bn. (The Star)

Alliance Bank Malaysia Bhd’s 2QFY21 net profit fell 10.0% YoY to RM104.0m, mainly due to prudent higher reserves as the bank set aside allowance for expected credit losses on loans, advances and financing and other financial assets of RM150.5m,. Revenue for the quarter, however, increased 8.7% YoY to RM464.4m. (The Star)

Kenanga Investment Bank Bhd’s 3QFY20 soared 11.5x YoY to RM49.3m, driven by record trading volume on the stock exchange. Revenue for the quarter jumped 100.6% YoY to RM319.0m. (The Star)

Datasonic Group Bhd’s 2QFY21 net profit slipped 45.9% YoY to RM7.5m, as the Covid-19 pandemic and the international travel curb have impacted its business. Revenue for the quarter declined 31.2% YoY to RM43.7m. (The Star)

Hong Leong Bank Bhd’s 1QFY21 net profit rose 5.9% YoY to RM728.9m, due to higher net income, prudent cost control and robust contributions from associates. Revenue for the quarter added 11.0% YoY to RM1.35bn. (The Edge)

Hong Leong Financial Group Bhd’s (HLFG) 1QFY21 net profit rose 19.8% YoY to RM587.0m, lifted by stronger contributions from all of its operating businesses. Revenue for the quarter climbed 13.0% YoY to RM1.50bn (The Edge)

Hibiscus Petroleum Bhd’s 1QFY21 net profit stood at RM10.0m vs. a net loss of RM145.2m recorded in the preceding quarter, owing to the higher oil prices and greater output from its North Sabah, Anasuria Hibiscus and 3D Oil, VIC/L31 and VIC/P57 assets. Revenue for the quarter jumped 268.4% YoY to RM145.5m. (The Edge)

Ekovest Bhd’s 1QFY21 net profit stood at RM10.9m vs. a net loss of RM53.8m recorded in the previous corresponding quarter, due to more construction work done being recognised, an increase in traffic volume for its toll operations, and an increase in rental income from the EkoCheras Shopping Mall. Revenue for the quarter increased 63.2% YoY to RM313.8m. (The Edge)

Padini Holdings Bhd’s 1QFY21 net profit rose 5.7% YoY to RM20.7m, thanks to cost control in staff cost and rental rebate received during the quarter. Revenue for the quarter, however, fell 8.1% YoY to RM310.7m. (The Edge)

Axiata Group Bhd’s 3QFY20 net profit jumped 96.9% YoY to RM353.0m, thanks to lower depreciation and amortisation, plus narrower forex loss and tax. Revenue for the quarter, however, slipped 1.6% YoY to RM6.11bn. (The Edge)

Malayan Banking Bhd’s (Maybank) 3QFY20 net profit fell 2.3% YoY to RM1.95bn, amid lower net operating income due to the Covid-19 pandemic. Revenue for the quarter contracted 0.6% YoY to RM13.76bn. An interim dividend of 13.5 sen per share, which will be made under its dividend reinvestment plan was declared. (The Edge)

QL Resources Bhd’s 2QFY21 net profit grew 0.6% YoY to RM70.1m, underpinned by improved margins from its marine product manufacturing division. Revenue for the quarter inched up by 0.5% YoY to RM1.08bn. (The Edge)

KNM Group Bhd has secured a US$23.0m (RM93.6m) contract for the supply of equipment, piping systems and process control, and the integration of an energy storage vessel, from Germany-based power company Vattenfall Wärme Berlin AG. The contract involves the supply of overall engineering equipment (static and rotary), piping systems, process control and integration of the energy/heat storage vessel for the Vattenfall Energy Storage “Reuter-West”, Berlin Project. (The Edge)

Affin Bank Bhd’s 3QFY20 net profit fell 27.7% YoY to RM48.7m, mainly due to the recognition of modification losses on the loan moratorium and higher overhead expenses. Revenue in the quarter, however, gained 35.3% YoY to RM694.2m. (The Edge)

CIMB Group Holdings Bhd’s 3QFY20 net profit sank 80.8% YoY to RM194.4m, amid lower net interest margin (NIM) and higher provisions across several business segments, with the commercial banking segment posting a loss. Revenue for the quarter slipped 3.7% YoY to RM4.46bn. (The Edge)

Sunway Bhd’s 3QFY20 net profit fell 27.6% YoY to RM132.8m net profit, dragged by lower contributions across all its business segments, save for quarry services. Revenue for the quarter dropped 16.2% YoY to1.03bn. (The Edge)

Paramount Corp Bhd’s 3QFY20 net profit fell 34.6% YoY to RM19.8m, after the tertiary education and pre-tertiary education businesses are no longer consolidated following the divestment of its controlling stakes. Revenue for the quarter, however, rose 39.3% YoY to RM218.9m. (The Edge)

Boustead Heavy Industries Corp Bhd (BHIC) has lodged a report with the Malaysian Anti-Corruption Commission (MACC) on possible irregularities in the RM9.00bn littoral combat ship project, which its associate Boustead Naval Shipyard Sdn Bhd (BNS) is undertaking. Findings of the forensic audit, which was commissioned in February 2020, were handed over to the MACC in September 2020. (The Edge)

TDM Bhd CEO Zainal Abidin Shariff, 53, has resigned from the position with immediate effect over disagreements with its chairman. Zainal Abidin and group chairman Raja Datuk Idris Kamarudin disagreed over trade contract issues, practices and queries involving its subsidiary’s palm oil trading activities. (The Edge)

Source: Mplus Research - 30 Nov 2020