Market Review

Malaysia: The FBM KLCI (+1.9%) rallied to close above the 1,600 psychological level on gains from the glove heavyweights on the back of growing fears of a new lockdown amid spike in Covid-19 cases. The lower liners ended lower, while the healthcare sector (+3.9%) outperformed the mostly red broader market.

Global markets: US stockmarkets finished the first week of 2021 to record high as all Dow (+0.2%) climbed higher amid investors’ hope for more political stability and trillions of USD stimulus packages demanded by the President-elect Joe Biden. European stockmarkets were in the green, while the Asian stockmarkets also closed mostly higher.

The Day Ahead

Sharp gains in gloves heavyweights came as investors feared for another round of nationwide or certain states lockdown being imposed as buying activities have now catered towards the healthcare sector. As it is, all heads will turn to the Covid19 public health measures that are expected to be more stringent today. With the prospects of economy recovery remain clouded by the rising number of Covid-19 cases, we think that the lower liners may continue to remain under pressured over the near term on mounting concerns over the disruption of supply chain with numerous factories and retail outlets were temporary closed.

Sector focus: We remain upbeat on the healthcare sector as resumption of buying activities may prolong on the rising concern over the surging Covid-19 cases nationwide. At the same time, the surging crude oil prices will provide further uplift into the energy sector

FBMKLCI Technical Outlook

The FBM KLCI has formed a bullish candle to extend its gains as the key index remained firm above the 1,600 level. With signs of recovery stance remain in place; the immediate resistance is located at 1,650-1,680. Downside risks are at 1,600 and 1,580. Indicators remained mixed as the MACD Histogram extended another green bar, while the RSI remains below 50, suggesting the technical rebound remain on course.

Company Brief

The Employees Provident Fund (EPF) has ceased to be a substantial shareholder of Top Glove Corp Bhd, after disposing of 40.0m shares on 5th January 2021. The disposal of the shares reduced its shareholding to below 5.0%. Separately, Top Glove defended its board after BlackRock Inc issued a scathing statement earlier, attacking the firm's handling of a coronavirus outbreak and saying it had voted against the re-election of six directors to Top Glove's board. The six independent directors were re-elected at the company's annual general meeting, gaining between 86.5% and 72.3% of shareholder votes. The company claimed that the directors have served an average of six years, and that the board meets regularly to discuss the pandemic and other governance matters. (The Star)

AT Systemization Bhd has mutually agreed to terminate two memorandum of understanding (MOU) with Shanghai Jienaxin Mech & Elec Equipment Co Ltd to produce tooling parts for mask-making machines and disinfection chambers due to the absence of any further progress on the MOUs. (The Sun Daily)

APFT Bhd will be delisted from Bursa Malaysia on 13th January 2021, after the bourse dismissed the company’s appeal for an extension of time to submit its regularisation plan for approval. Bursa Malaysia said that upon APFT’s delisting, the Practice Note 17 company will continue to exist, but as an unlisted entity. (The Edge)

SKP Resources Bhd announced five employees of its wholly-owned subsidiary, Syarikat Sin Kwang Plastic Industries Bhd, have tested positive for Covid-19. The group will continue to adhere to the standard operating procedures as directed by the MoH. (The Edge)

VS Industry Bhd has set aside RM200.0m in capital expenditure (capex) for FY21 to expand and enhance its capacity and capabilities. Despite 2020 being an arduous year for the company in the face of unprecedented market challenges stemming from the Covid-19 pandemic and ongoing macroeconomic issues, it managed to secure two new customers from the United States. (The Edge)

A subsidiary of Bintai Kinden Corp Bhd has been appointed by South Korea’s SLAB Asia Co Ltd, as the exclusive distributor for the Greenie Medi Cold Chain Box designed for the storage and distribution of Covid-19 vaccines in Malaysia. The subsidiary, Bintai Healthcare Sdn Bhd, has also been appointed an authorised distributor for the product in Southeast Asian countries. The Greenie Medi Cold Chain Box was designed for the exclusive use in transporting and storing medical products at very low temperatures, as it keeps the inbox temperature at -70℃ for up to 120 hours. (The Edge)

Sentoria Group Bhd is selling two parcels of land measuring 747,069 sq m collectively in Kedah for RM27.9m, to repay bank borrowings. Its 75.0%-owned Sentoria Utara Sdn Bhd had inked a sale and purchase agreement (SPA) with Redvalley Development Sdn Bhd for the sale of the freehold parcels in Amanjaya, Kuala Muda. Sentoria will be using RM26.7m of the sale proceeds to repay bank borrowings, which it noted will save it RM1.6m worth of interest per year, based on the average interest rate of its borrowings of about 6.0% per annum. The balance RM1.2m will be used for working capital. (The Edge)

Source: Mplus Research - 11 Jan 2021