Market Review 

Malaysia: The FBM KLCI (+0.7%) ended the volatile session higher after the key index was powered up by the passing of Budget 2021 final vote in the final trading hour. The lower liners finished in the green, while the broader market also closed mostly higher, led by the technology sector (+1.5%).

Global markets: US stockmarkets rallied overnight as the Dow (+1.1%) climbed on the pledge from Senate Majority Leader Mitch McConnell to pass a stimulus deal, coupled with vaccine rollout this week. European stockmarkets closed mostly higher, but most of the Asian stock indexes fell.

The Day Ahead

Tracking the positive sentiment on Wall Street, coupled with the approval of third budget reading yesterday, we expect the buying interest could spillover towards stocks on the local front. Also, with the ongoing window dressing activities, the FBM KLCI could be lifted higher as funds maybe rotating back towards value and recovery themed stocks over the next two weeks. On commodities side, crude oil and crude palm oil has been traded on a firmer tone, while lumber price has shot up strongly since October.

Sector focus: With the approval on Budget 2021, traders could focus on recovery sectors and we should expect a broad based buying mode at least for the near term with the ongoing window dressing activities. Construction, property, consumer, gaming and tourism should be under the limelight, while lumber related stocks may trend higher on the back of firmer lumber price.

FBMKLCI Technical Outlook

The FBM KLCI has rebounded yesterday after traders took profits prior to the third budget reading. We expect the uptrend mode will still continue at least for the near term amid the window dressing period. The MACD Histogram is positive, while the RSI is above 50; suggesting that the positive momentum is intact. The FBM KLCI’s resistance is located around 1,700-1,720. For the FBM KLCI’s support, it is set around 1,640, followed by 1,620.

Company Brief

Fraser & Neave Holdings Bhd (F&N) is buying three food and beverage (F&B) companies — Sri Nona Food Industries Sdn Bhd, Sri Nona Industries Sdn Bhd and Lee Shun Hing Sauce Industries Sdn Bhd — for RM60.0m, from Siew Yun Sing and Tong Saw Man. The principal activities of the Sri Nona Companies are manufacture, distribution and sale of rice cakes (ketupat), condiments (oyster sauce and paste), beverages (ginger tea powder), desserts (pudding and jelly powder), jams and spreads under the “NONA” and “Lee Shun Hing” brands owned by the relevant Sri Nona Companies. (The Star)

TA Enterprise Bhd (TAE) has received a notice of an unconditional mandatory takeover offer from Datuk Tony Tiah Thee Kian to acquire all remaining ordinary shares in TAE not already owned by him at a cash offer price of 65.5 sen each, after Tiah and persons acting in concert with him triggered the creeping threshold, whereby their collective shareholdings in TAE will be increased from 42.4% to 59.8%. Separately, it has received valid acceptances of 5.02bn offer shares or 94.4% of the total number of issued shares in TA Global Bhd (TAG) on its conditional voluntary offer for shares of the property developer. (The Edge)

Widad Group Bhd has inked a memorandum of collaboration with Rinani Dynamic Sdn Bhd in the distribution, marketing and selling of the Covid-19 vaccine known as Vxa-Cov2-1 and other products developed by US-based Vaxart Inc in Malaysia. Rinani on 29th November 2020 was appointed by Hong Kong-based Majoritas Global Ltd as its exclusive partner in Malaysia, to negotiate with relevant authorities and parties on the terms and conditions for testing, evaluating, placing on the market, contracting, financing and purchasing of the vaccine and other products in Malaysia. (The Edge)

Top Glove Corp Bhd's executive chairman Tan Sri Dr Lim Wee Chai bought a total of 3.1m shares in his own capacity on the open market, which cost him RM20.0m. In less than a week, Lim has spent RM49.8m on buying Top Glove shares. Lim's direct interest is at 26.2% and indirect stake is at 8.6%. Besides, Tropicana has spent an additional RM20.1m to buy 3.1m Top Glove shares via its wholly-owned subsidiary Desiran Reality Sdn Bhd, while Top Glove also bought back some 576,900 shares worth RM3.6m. The group has spent RM123.5m on share buy-back so far this month. In contrast, the Employees Provident Fund (EPF) disposed of a total of 846,400 shares last Thursday, after selling 3.4m shares on 9th December 2020 and another 12.0m shares on 8th December 2020. (The Edge)

In response to an unusual market activity (UMA) query posed by Bursa Malaysia, Guocoland (Malaysia) Bhd is not aware of any corporate development, rumour or report concerning its business, affairs and possible explanation that would have caused a spike in its share prices. (The Edge)

George Kent (Malaysia) Bhd’s 3QFY21 net profit climbed 4.0% YoY to RM10.7m, underpinned by strong water meter sales. Revenue for the quarter rose 8.2% YoY to RM78.9m. (The Edge)

United Malacca Bhd’s 2QFY21 net profit dropped 79.9% YoY to RM7.4m, as the previous year registered a gain of RM49.3m from the disposal of non-current assets held for sale. Revenue for the quarter rose 27.0% to RM98.0m. A first interim dividend of 3.0 per share, payable on 4th February 2021 was declared. (The Edge)

Deleum Bhd has confirmed that two senior executives working for the company's subsidiary, Deleum Primera Sdn Bhd (DPSB), were interviewed by the Malaysian Anti-Corruption Commission (MACC). The relevant senior executives are currently assisting MACC with its investigation into an alleged illegal scheme. Its internal investigations discovered that the scheme had caused loss to DPSB, as set out in its Statement of Claim filed on 5th November 2020. (The Edge)

Uzma Bhd, via its subsidiary Setegap Ventures Petroleum Sdn Bhd (SVP), has secured a two-year contract extension worth RM200.0m from Petronas Carigali Sdn Bhd for the provision of coiled tubing and services (CTU). The contract was originally awarded to the company in 2015. The extension period is from 1st December 2020 until 30th November 2022. (The Edge)

Apollo Food Holdings Bhd hopes to resume operations on 18th December 2020 or earlier, once it has completed the disinfection of its factories to curb the spread of Covid-19, following the closure of two premises of its wholly-owned subsidiary Apollo Food Industries (M) Sdn Bhd, which is based in Larkin. It said it had taken stringent precautionary measures including the temporary ceasing of operations from 9th December 2020 to test employees at its premises, as well as for disinfection purposes. (The Edge)

Source: Mplus Research - 16 Dec 2020