Market Review

Malaysia: The FBM KLCI (-0.5%) extended its losses after being traded mostly in the negative territory, dragged by profit taking activities in selected banking heavyweights. The lower liners, however, extended their gains on rotational play, while the broader market ended mixed.

Global markets: US stockmarkets extended their losses as the Dow slipped 0.6% in wake of the weaker-than-expected earnings from Wells Fargo, lower crude oil prices and sluggish retail sales data that declined -0.7% MoM in December 2020. European stockmarkets retreated, while Asia stockmarkets were mostly downbeat.

The Day Ahead

With the retreat of crude palm oil prices, coupled with the speculation of another round of Overnight Policy Rate (OPR) cut, investors could further reduce their position in plantation and banking heavyweights; that may translate to potential negative trading tone amongst banking stocks and dragging down the FBM KLCI this week. Also, market sentiment may remain weak amid the ongoing rising Covid19 cases despite the re-imposition of MCO. On the flipside, we expect some rotational play towards building materials segment amid the firmer commodity prices such as tin, iron, aluminium and etc.

Sector focus: Based on the above setup, traders may stay away from banking and plantation sector. Meanwhile, furniture and technology sectors may be on traders’ radar given the WFH mode could boost demand for furniture and technology stocks – the latter being higher demand for technology gadgets and 5G products. Also, the industrial products counters could trade higher for the session.

FBMKLCI Technical Outlook

The FBM KLCI broke the support of 1,630 last Friday, closing lower at EMA20 level. We expect the key index to consolidate before trending higher as both the MACD and RSI indicators are hovering sideways for now; the MACD Line is slightly above zero, while the RSI is hovering near 50. The FBM KLCI’s resistance will be pegged around 1,650-1,660. Support will be set around 1,620, followed by 1,590.

Company Brief

Samaiden Group Bhd has won a contract to build a 2.0-MWac biomass power plant in Hulu Terengganu from Gimzan Plywood Sdn Bhd. Construction for the contract valued at RM25.8m expected to start on 2nd February 2021 and will be completed within 23 months. (The Star)

KNM Group Bhd has proposed to raise up to RM54.9m by placing out 296.9m new shares at an assumed price of 18.5 sen each to investors. Proceeds from the exercise, which will expand its share capital base by up to 20.0%, will be utilised to buy raw materials and as payment to contractors (RM33.6m) and repay bank borrowings (RM20.0m). (The Star)

Notion VTEC Bhd's recent tests for Covid-19 among its employees found there were 87 positive and suspected cases. As precautionary and preventive measures, it had conducted tests on workers who had close contact with the infected workers. It had also carried out thorough disinfection work and the affected operational units are expected to resume their operations within three days once the disinfection and sanitisation are completed. (The Star)

Kanger International Bhd’s wholly-owned subsidiary, Kanger Ventures Sdn Bhd, has entered into collaboration agreements with multiple main contractors to carry out the remaining construction works across six sites in Kuala Lumpur and Pahang totalling RM495.9m. Under the terms of the agreements, Kanger will be responsible for the project management role and coordinate the remaining construction work of the six projects. (Bernama)

SKP Resources Bhd is temporarily closing its Johor Bahru operations from 16th January 2021 till 29th January 2021 to facilitate Covid-19 screening of its employees, after five of them tested positive last week. This temporary closure is expected to result in a capacity loss of 3.0% of its annual output. (The Edge)

Batu Kawan Bhd has updated that it now controls 92.1% of Chemical Company of Malaysia Bhd (CCM), after receiving more acceptances for its RM3.10 takeover offer. With its shareholding rising above 90%, Batu Kawan will not be maintaining CCM’s listing on the Main Market of Bursa Malaysia. The group said the offer will remain open for acceptance until 2nd February 2021. (The Edge)

Daya Materials Bhd, a Practice Note 17 (PN17) company has secured an RM23.9m construction sub-contract in Banting, Selangor. The sub-contract awarded to its 51.0%-owned subsidiary Daya CMT Sdn Bhd involves the construction of a recycle pulp and packaging paper plant in Mahkota Industrial Park. It was awarded by Sing Foong Niap Engineering Sdn Bhd and is targeted to be completed by 30th June 2021. (The Edge)

MESB Bhd plans to venture into the waste recycling business, as it sees its lossmaking trading and retailing of apparel and leather products business to continue to face challenges amid the Covid-19 pandemic. The waste recycling business has a favourable outlook to enhance its prospects and financial performance, as well as reduce its sole dependency on the existing business. (The Edge)

Seacera Group Bhd is selling a 72,770-sqm land in Taiping, Perak to AT Systematization Bhd’s glove unit for RM10.5m. The land being sold to AT Glove Engineering Sdn Bhd was valued at RM11.7m by an independent valuer in June 2015. (The Edge)

Tenaga Nasional Bhd (TNB) will implement the government-approved enhanced terms for the electricity connection charge and connected load charge, effective 15th January 2021. A connection charge is the upfront payment made by consumers who require new electricity supply infrastructure or an upgrade of existing infrastructure to cater for additional power supply. (The Edge)

Genting Malaysia Bhd's (GenM) wholly-owned subsidiary Genting UK PLC permanently closed its Genting Casino Southport, in the north-west of England, with 38 staff members facing redundancy. The gaming group has already closed casinos in Margate, Torquay and Bristol and has reduced its workforce in London, Glasgow, Edinburgh, Blackpool and Birmingham. (The Edge)

Federal Land Development Authority (Felda) has acquired 5.1m FGV Holdings Bhd shares for a total of RM6.6m on 14th January 2021, following an earlier purchase of 22.0m shares, as part of its efforts to take the group private. The smaller tranche of shares was also bought at RM1.29 apiece, one sen below its cash offer of RM1.30 for FGV shares. (The Edge)

Source: Mplus Research - 18 Jan 2021