Market Review

Malaysia: The FBM KLCI (-1.1%) ended 2020 lower as 29 counters were red among the 30 index constituents on profit taking prior to the long New Year weekend. The lower liners finished mixed, while the broader market was splashed in red, with the exception of the technology sector (+0.3%).

Global markets: US stockmarkets rallied overnight as the Dow rose 0.7% to wrap up the volatile 2020 after picking up steam in the final two trading hours, spurred by better-than-expected weekly jobless claims. European stockmarkets was painted in red, but the Asian stockmarkets closed mostly higher.

The Day Ahead

After recording 2.4% YoY gain in 2020, we reckon that the FBM KLCI is poised for further upsides moving into 2021. The extended gains will largely be dictated by the pace of economic recovery, coupled with the roll-out of Covid-19 vaccine progress in Malaysia. Coming closer, bargain hunting activities may emerge from the previous session selldown, but gains are likely to be tepid owing to the surge in number of new Covid-19 cases reported. We also expect the lower liners to march higher, driven by the resumption of improve trading liquidity.

Sector focus: We continue to favour the technology sector which has yet to demonstrate signs of reversal as momentum remains relatively solid. Meanwhile, the energy sector is poised for further upside with Brent oil prices continue to defend US$50 level

The FBM KLCI has formed a bearish candle to retreat below the daily EMA20 level, suggesting that the pullback is still in place. Still, we think that bargain hunting activities may emerge as investors nibble on beaten down stocks. For now, the 1,660-1,680 will serve as the immediate resistances. Support is located at around 1,620, followed by 1,600. The MACD Histogram has turned red, while the RSI has slipped below 50.

Company Brief

Bursa Malaysia Securities has maintained the upper limit for the securities of Toyo Ventures Bhd and its warrants after they hit limit-up over the past two days. The upper limit price for the shares would be maintained at RM1.69 and for the warrants 2020/2023, at 79.5 sen. The shares attracted strong interest over the past two days after it finally executed the build, operate and transfer (BOT) contract valued at US$3.2bn with Vietnam’s Ministry of Industry and Trade. (The Star)

The Roundtable on Sustainable Palm Oil (RSPO) said today it has launched an immediate investigation into new violations by Sime Darby Plantation Bhd as alleged by the US Customs and Border Protection (CBP) following the issuance of a withhold release order against the company's palm oil at all US ports of entry. The RSPO has reported that it can confirm that an initial review of audit findings earlier this year did not generate any red flags against Sime Darby Plantation. (The Edge)

Malakoff Corp Bhd's wholly owned subsidiary Tanjung Bin Energy Sdn Bhd (TBE) has proposed to issue RM4.5bn worth of Islamic bonds or sukuk, the proceeds of which will be used to repay money owed by TBE to its 100.0%-owned turnkey contractor. RAM Ratings has assigned a preliminary "AA3/Stable" rating to TBE's proposed RM4.5 bn Islamic medium term notes programme. (The Edge)

Top Builders Capital Bhd (formerly known as Ikhmas Jaya Group Bhd) has obtained court orders to restrain its creditors from taking action against the group and its assets, as well as to summon them to attend meetings for the purpose of discussing restructuring arrangements. The High Court had granted the orders to the piling and engineering group, its wholly owned subsidiary Ikhmas Jaya Sdn Bhd, and indirect wholly owned unit Ikhmas Equipment Sdn Bhd. (The Edge)

Mudajaya Group Bhd‘s 76.0%-owned indirect subsidiary Bera Hydropower Sdn Bhd has been selected as one of the successful bidders in a competitive Feed-in Tariff e-bidding small hydro tender exercise by the government. Bera Hydropower will enter into a renewable energy power purchase agreement with Tenaga Nasional Bhd for the project located in Pahang at the installed capacity and tariff rate of 30MW and 29 sen per kWh respectively for a period of 21 years. (The Edge)

Hong Seng Consolidated Bhd is acquiring a 60.0% stake in Neogenix Laboratoire Sdn Bhd for RM6.5m from Neogenix's shareholder Neoh Cheu An. Neogenix is a medical diagnostic and research laboratory and provides more than 76 tests ranging from infectious diseases, oncology, precision medicine, generic tests and etc.

Separately, the group is acquiring a 32.0% stake in eMedAsia Sdn Bhd from Open Dynamics Sdn Bhd for RM3.0m, via the issuance of 3.0m new Hong Seng shares. eMedAsia currently runs a medical digital platform under the domain name of www.emedasia.com, which provides online clinic appointments and an ecommerce marketplace for clinics to purchase pharmaceutical, medical and healthcare supplies. (The Edge)

Source: Mplus Research - 4 Jan 2021