Market Review

Malaysia: Yesterday, the FBM KLCI (-1.3%) snapped its five-day winning streak as the key index retreated with investors taking profits on selected banking and glove heavyweights. The lower liners were splashed in red, while the broader market also ended mostly lower, with the healthcare sector (-5.2%) taking the biggest blow.

Global markets: US stockmarkets finished in a mixed tone as the Dow (-0.6%) S&P500 (-0.4%) edged lower, but Nasdaq (+0.5%) climbed amid mixed market sentiment as investors weighed vaccine distribution and potential further lockdown measures due to the resurgence in Covid-19 cases. Meanwhile, both the European and Asian stockmarkets closed mostly higher.

The Day Ahead

Wall Street started the week on a mixed note amid the additional Covid-19 restrictions and it may spillover towards stocks on the local front. Also, with the recent political developments ahead of the third budget reading in the parliamentary session today, that may limit the upside potential on the FBM KLCI as well as the broader market at least for the near term. Once there is more clarity on the third budget vote, we might experience rekindling of buying interest moving forward. On a side note, the Brent oil price is hovering near the USD50 despite the new Covid-19 measures in the US.

Sector focus: Traders could focus on sectors such as consumer, property, building materials, tourism, plastic and paper packaging. We expect the firmer commodities prices on Brent oil, crude palm oil, iron ore, copper, tin prices should support their respective industry over the near term, should there be any significant selldown.

The FBM KLCI has taken a pause after a 5-day winning streak. The MACD Histogram has turned weaker yesterday, while the RSI is overbought. Hence, the FBM KLCI could extend its consolidation move today with the potential support located around 1,640, followed by 1,620. Meanwhile, resistance will be envisaged around 1,700, followed by 1,740.

Company Brief

AirAsia X Bhd (AAX) is targeting to raise RM500.0m to finance its working capital for the next 24 months, including RM300.0m from the rights issue exercise to existing shareholders, and another RM200.0m from a proposed share sale exercise. Under the plan, a special purpose vehicle company incorporated by its deputy chairman Datuk Lim Kian Onn (SPV) will commit a minimum subscription of RM50.0m. (The Star)

Aabar Investments PJS is offering 169.5m shares in RHB Bank Bhd, representing about 4.2% in RHB Bank, which is the entire stake held by Aabar currently. The shares are being offered at between RM5.45 and RM5.62. (The Edge)

Two senior executives of Deleum Bhd were called up by the Malaysian AntiCorruption Commission (MACC) last week over an alleged illegal scheme involving the group’s 60.0%-owned subsidiary Deleum Primera Sdn Bhd (DPSB), and Petronas Carigali Sdn Bhd. The alleged scheme was purportedly initiated to defraud Petronas Carigali in relation to multiple maintenance and services contracts between the Petronas unit and DPSB. (The Edge)

Hartalega Holdings Bhd has completed the mandatory precautionary Covid-19 tests for all of its foreign workers and has further expanded the tests to its local employees as well. 35 workers tested positive for the virus, representing 0.4% of its total 8,772 employees including local employees, as well as outsourced vendors such as security personnel and canteen operators. With some production lines temporarily shut down, the capacity loss is estimated to be less than 0.5% of annual output. (The Edge)

Top Glove Corp Bhd has resumed its share buyback — spending RM3.6m. The group’s executive director Lim Cheong Guan sold a total of 670,000 shares worth RM4.7m between 9th December 2020 and 11th December 2020 and is now left with some 257,800 shares or a 0.003% stake in the company as at 14th December 2020. Also, EPF Employees Provident Fund (EPF) continued to trim its stake in Top Glove, disposing of 3.4m more shares on 9 December 2020 after selling 12.0m shares on 8th December 2020, which its shareholding in Top Glove now dropped to 430.2m shares or a 5.4% stake. (The Edge)

Luxchem Corp Bhd is planning to buy 55.0% stakes in three firms — Lexis Chemical Sdn Bhd, Lexis Specialties Sdn Bhd and Lexis Corp Sdn Bhd — for a total of RM121.0m, which would be partly in cash and partly via the issuance of new Luxchem shares at the issue price of 83.0 sen per share to the vendors, Chuah Kim Piew and Lee Juinn Yong. Luxchem also announced a private placement to raise up to RM97.3m, of which RM70.3m will be used to finance any suitable business or investment. (The Edge)

Ta Win Holdings Bhd will be acquiring a 32.5% stake in pharmaceutical company Royce Pharma Manufacturing Sdn Bhd for RM20.9m. This deal represents an opportunity for the group to undertake its first investment in the pharmaceutical industry. (The Edge)

Bina Darulaman Bhd, which is controlled by the Kedah state government, is jointly developing an integrated project called Langkawi Premium Outlet in Kedah with the Menteri Besar Kedah Incorporated (MBI Kedah). The project in Langkawi will have a premium outlet, an International Cultural and Tourism Village, a hotel, and food and beverage outlets. (The Edge)

Ivory Properties Group Bhd has acquired Copthorne Orchid Hotel & Resort in Penang for RM75.0m cash. The hotel sits on a parcel of freehold land measuring at 2.5-ac and has ceased operations. Ivory Properties plans to develop a hotel and serviced apartments on the land with a gross development value of RM410.0m, which is expected to commence in 2022 and be developed over a span of three to four years. (The Edge)

Source: Mplus Research - 15 Dec 2020