Market Review

Malaysia: In line with its regional peers, the FBM KLCI (+0.4%) climbed higher following the gains on Wall Street overnight as well as continued optimism after the budget approval, which has lifted the construction sector, outperforming the mixed broader with mega infrastructure projects projected to resume next year.

Global markets: US stockmarkets finished on a mixed tone as optimism on the stimulus deal as well as the Federal Reserve’s policy to boost the economy were offset by the weaker-than-expected retail sales. The Dow (-0.2%) edged lower, but S&P500 (+0.2%) and Nasdaq (+0.5%) were traded higher. Both the European and Asian stockmarkets mostly on the green.

The Day Ahead

With the US stockmarkets inching higher overnight, we believe stocks on the local may proceed higher, but profit taking could emerge on glove manufacturers on the back of Covid-19 cases was observed in several glove companies, which may attract profit taking activities after a two-day rebound. Meanwhile, with the ongoing market talks on the KL-SG HSR, we opine traders will continue to trade within the construction and property sector. Meanwhile, Brent oil price has surged above USD51 on the back of crude oil inventory declined by 3.1m barrels last week.

Sector focus: Market players may focus on construction and building materials as well as property sector amid the news on High Speed Rail. Meanwhile, we expect the recovery-themed sectors such as banking, consumer will be lifted amid the window dressing period.

The FBM KLCI has gapped up and closed lower on the intraday basis, but still on track with the upward move since the recovery started since early November. Based on the MACD Histogram, the key index might be taking a mild pause, while the RSI is still above 50 (albeit hooking down). The key index may consolidate sideways before advancing higher towards 1,720-1,740. Meanwhile, support is located around 1,640, followed by 1,620.

Company Brief

Kossan Rubber Industries Bhd has temporarily suspended operations at one of its plants in Klang after 427 employees were infected with Covid-19. With the temporary closure of the affected plant premise, the capacity loss is estimated to be less than 1% of the total annual output volume. (The Star)

Daibochi Bhd’s 1QFY21 net profit rose 16.5% YoY to RM12.8m, on the back of higher sales in the domestic market. Revenue for the quarter grew 2.7% YoY to RM156.7m. (The Sun Daily)

Komarkcorp Bhd has entered into a distributorship agreement with LKL International Bhd to sell and distribute its disposable medical grade face masks worldwide. The distributorship agreement was signed by the subsidiaries of both companies, namely Komark Mask (M) Sdn Bhd and LKL Advance Metaltech Sdn Bhd. Komarkcorp diversified into mask and personal protection equipment (PPE) manufacturing via the incorporation of Komark Mask in June 2020. The company currently has three operating mask lines and is about to install a further five lines within the next 60 days to cater to growing export demand. (The Edge)

Ocean Vantage Holdings Bhd is collaborating with Toyo Engineering & Construction Sdn Bhd to jointly bid for the tender for engineering, procurement, construction and commissioning (EPCC) works for an oil storage terminal project by Senari Synergy located in Senari Synergy Industrial Complex, in Kuching, Sarawak. Its wholly-owned unit Ocean Vantage Engineering Sdn Bhd signed an unincorporated consortium agreement (UCA) with Toyo, which is valid until 18th March 2021. (The Edge)

Kumpulan Kenderaan Malaysia Bhd (KKM) has ceased to be a substantial shareholder of Konsortium Transnasional Bhd, after selling 20.0m shares, which is equivalent to a 5.0% stake, in the bus operator. Post-divestment, KKM is left with 9.3m shares or 2.3% in Konsortium Transnasional. (The Edge)

G Capital Bhd’s 90%-owned subsidiary Gunung Hydropower Sdn Bhd’s has received the Sustainable Energy Development Authority’s (SEDA) nod for a higher feed-in tariff (FiT) rate for its small 10MW hydropower project in Sungai Perak, Salu. The certificate will increase its FiT rate from 25 sen per kWh to 28.98 sen per kWh. The contract is effective from 14th December 2020 up till December 2025 while the yearly energy yield has been increased to 68 m kWh from 67.77 kWh. (The Edge)

Lion Industries Corp Bhd (LICB) will take over China-based property developer Well Morning Ltd, in an RM210.4m debt settlement by Lion Diversified Holdings Bhd (LDHB), which is currently in liquidation. Of the total RM210.4m outstanding debt, LDHB owes RM26.8m to Antara Steel Mills Sdn Bhd and RM35.2m to Lion Waterway Logistics Sdn Bhd, both being subsidiaries of LICB, as well as RM148.4m to Posim Marketing Sdn Bhd, which is a 74.0% indirect subsidiary of LICB. Well Morning, a wholly-owned subsidiary of LDHB, in turn wholly owns Changshu Lion Enterprise Co Ltd, a property developer based in China. (The Edge)

Mah Sing Group Bhd is considering listing its manufacturing division — which includes its new rubber glove business — in Hong Kong within the next five years. The group’s manufacturing division is currently 100% owned by Mah Sing and would be under separate management under the new tentative listed entity. The group’s manufacturing division also has aims of producing other medical devices, which will be parked under the entity if it ends up being listed. (The Edge)

OKA Corp Bhd has temporarily shut its Senai factory in Johor- one of five factories the group owns after two of its workers tested positive for Covid-19. The closure will be until 21st December 2020. The capacity loss from the temporary closure is estimated to be less than 0.7% of the group’s total annual output. (The Edge)

Source: Mplus Research - 17 Dec 2020