Market Review

Malaysia: In line with most regional peers, the FBM KLCI (+0.4%) climbed to close above the 1,600 psychological level as glove counters pared some losses after previous session’s selldown. The lower liners ended mixed, while the energy sector (-2.4%) underperformed the mostly negative broader market.

Global markets: US stockmarkets rebounded after a choppy trading session as the Dow (+0.6%) rose ahead of the Georgia election which will determine the control of the US Senate. European stockmarkets closed mostly lower, but Asian stockmarkets mostly in the green.

The Day Ahead

Bargain hunting activities emerged on the FBM KLCI as the key index returned into the positive territory in the second half of the trading session, lifted by gains in glove heavyweights. We reckon that further recover is in store as investors may start to accumulate on the beaten down gloves stocks. Gains, however, is expected to be limited by the high number of new Covid-19 cases that may continue to pose a hurdle for a smooth economic recovery. Elsewhere, the lower liners may creep higher on the back of the rotational play amid the returning of risk appetite into the equities market.

Sector focus: We see the energy sector to be upbeat following the spike in oil prices after Saudi Arabia surprise move to cut 1.0m bbl/d of the output in next 2 months. Meanwhile, there are signs of recovery in the gloves stocks that may garner some bargain hunting activities over the foreseeable future.

The FBM KLCI has recovered all its intraday losses, forming a hammer candle as the key index closed above the daily EMA60 level. With the selling activities appear to have abated, a recovery may power the local bourse towards the immediate resistances at 1,630-1,660. The immediate support at 1,580, followed by 1,550. Indicators wise, the MACD Histogram has extended another red bar, while the RSI remains below 50.

Company Brief

Eonmetall Group Bhd plans to dispose of a parcel of land measuring 62,887 sqm, located at the Valdor Industrial Area in South Seberang Perai in mainland Penang with a building erected on it for RM58.8m. The group expects to incur a gain of RM4.3m from the sale of the land. Its subsidiary Eonmetall Industries Sdn Bhd entered into the sale and purchase agreement with the buyer, Power Portal Sdn Bhd. It expects the disposal to be completed in 2Q21. (The Edge)

Cymao Holdings Bhd, whose shares jumped 28.0% yesterday, has received an unusual market activity (UMA) query from Bursa Malaysia. Bursa Malaysia asked Cymao to declare if there are any corporate developments that have not been announced that could be the reason for the rise. The company was also asked if there are any rumours surrounding Cymao’s business that may account for the elevated trading activity. (The Edge)

Top Glove Corp Bhd chairman and founder Tan Sri Dr Lim Wee Chai bought 3.6m shares at an average price of RM5.52 per share, or RM20.0m in total, on 4th January 2021 when its share price plummeted as it became the target for regulated short selling. The latest share purchase raised Lim's direct interest to 2.11 bn shares or a 26.3% stake. He also holds an indirect stake of 691.8m shares or 8.6%. Meanwhile, the Employees Provident Fund acquired 3.4m shares on 30th December 2020, bringing its direct shareholding to 5.3% or 426.5m shares in Top Glove. (The Edge)

Kumpulan Powernet Bhd inked an agreement to supply polymerase chain reaction (PCR) tests for Covid-19 in Indonesia for a minimum contract price of US$6.0m (RM24.1m). Its wholly-owned subsidiary KPower Healthcare & Technologies Sdn Bhd was awarded the contract by PT Arna Cahaya Medika. PT Arna will make a purchase order with the KPower subsidiary and the latter will then request the kits from an approved manufacturer and deliver the kits to PT Arna’s warehouse in Jakarta. KPower would also be acquiring a 70.0% stake in Granulab (M) Sdn Bhd for RM1.0m from Sirim Bhd’s wholly-owned subsidiary Sirim Tech Venture Sdn Bhd. Granulab is a medical device manufacturing company for gradual synthetic bones graft “Granumas”. The acquisition is part of its overall strategy to expand its business into healthcare and technology-related activities that can generate long term revenue growth and income sustainability. (The Edge)

Minho (M) Bhd’s paper manufacturing subsidiary temporarily halted operations from 4th January 2021 to 4th January 2021, after 21 workers at its premises tested positive for Covid-19 on 31 December 2020. The infections were detected after the subsidiary, Indah Paper Industries Sdn Bhd, completed a full screening of its 96 workers for the coronavirus. (The Edge)

MCT Bhd is looking to launch seven new developments, worth RM2.20bn, this year. Comprising residential units and commercial projects, the launches include Aetas Damansara in Tropicana Golf & Country Resort, Damansara; Alira in Metropark, Subang; and Sanderling Lakefront Residences in Cyberjaya. Other projects include a boutique commercial centre at Lakefront Cyberjaya; the maiden phase of Cybersouth Town Centre in Dengkil; and new residential developments in USJ Subang and Cybersouth. (The Edge)

Ecobuilt Holdings Bhd has secured a RM72.3m contract to undertake the construction of a retail-commercial offices project in Kota Kinabalu, Sabah. The group's wholly-owned subsidiary E&J Builders Sdn Bhd has been appointed the main contractor for the project by VTS Property Builders Sdn Bhd. The development includes three blocks of commercial suites and a podium car park, plus retail and office space. (The Edge)

ATA IMS Bhd has temporarily shut down operations of all its factories in Johor Bahru, due to a high daily number of Covid-19 infections. The shutdown has been in effect from 31 December 2020 will last until 7th January 2021. The temporary shutdown is not expected to have a significant financial impact, as the group has communicated with its customers and taken necessary actions to reschedule production output, so that production and deliveries will be back on schedule within the next two weeks. (The Edge)

Kimlun Corp Bhd’s unit plans to buy an 11.12-ac freehold commercial land in Bandar Seri Alam, Johor Baru for RM40.5m.The group’s indirect subsidiary Kii Melodia Sdn Bhd had agreed to acquire the land from Seri Alam Properties Sdn Bhd, the developer of the Seri Alam township and a subsidiary of United Malayan Land Bhd. The purchase consideration translates into about RM83.61 per sq ft. (The Edge)

Source: Mplus Research - 6 Jan 2021