Market Review

Malaysia: The FBM KLCI (-1.1%) trended lower for the third straight session as selling activities were prominent in banking heavyweights amid speculation over another round of OPR cut tomorrow. The lower liners, however, remain on course for the upward momentum, while the technology sector (+3.5%) outperformed the mostly negative broader market.

Global markets: Wall Street was closed in conjunction with the Martin Luther King Jr. Day, whilst futures market tipped mildly higher. European stockmarkets ended mostly higher, while China stockmarkets outperformed the mostly negative Asia stockmarkets owing to the strong 4Q2020 GDP data that rose +6.5% YoY vs. consensus estimates expansion of +6.1% YoY.

The Day Ahead

The FBM KLCI extended another red bar as the talks around OPR cut in the midweek continued to weigh on the major constituents of the key index – banking stocks. Meanwhile, the technology sector outperformed the local bourse yesterday as investors continued to like the sector for its higher earning certainty. We reckon the announcement by the Prime Minister of a RM15.00bn Malaysian Economic and Rakyat’s Protection Assistance Package (PERMAI) might lift the market sentiment, albeit investors’ sentiment to stay cautious ahead of the BNM MPC meeting.

Sector focus: We believe the focus today will be on the PERMAI assistance package beneficiaries such as automotive, electronic devices as well as vaccine distribution services. Besides, we still expect trading interest to hover around packaging industry given the elevated online shopping demand under MCO period.

FBMKLCI Technical Outlook

The FBM KLCI broke another support level of 1,620 as market sentiment remains cautious. Technical indicators are slightly negative with the MACD Histogram turning red, while the RSI hooked below the 50 level. Hence, based on the indicators, the FBM KLCI’s upside could be capped around 1,620-1,640. Meanwhile, support will be located around 1,600, followed by 1,580.

Company Brief

Milux Corporation Bhd has proposed a 3-for-1 bonus issue of up to 176.3m new bonus shares to reward its shareholders. Upon completion of the corporate exercise, Milux’s issued share capital would be RM59.1m, comprising 235.1 m shares. (The Star)

Kelington Group Bhd’s orderbook rose to a record RM490.0m with new contracts valued at RM118.0m secured in 4Q2020. At RM490.0m, the orderbook exceeded last year’s record of RM386.0m as the strong orders were due to the recovery in the semiconductor industry. (The Star)

Lii Henn Industries Bhd’s 875 workers employed by its subsidiaries have been placed under quarantine and isolated since 16th January 2021 for suspected Covid-19. The workers will continue to be quarantined until 29th January 2021 and they will be allowed to resume work once clear of Covid-19. Estimated capacity loss arising from the temporary closure is expected to be increased from 3.5% to 4.6% of the total estimated annual output volume for the financial year under review. (The Star)

SCGM Bhd’s subsidiary Lee Soon Seng Plastic Industries Sdn Bhd (LSSPI) is working at a reduced capacity of 50.0% after two production workers were tested positive for Covid-19. The two workers were found to have the virus during a routine test on 16th January 2021. This resulted in mass screening exercise carried out on all LSSPI employees. It also halted operations on its production floor on 16th January 2021 and 17th January 2021. (The Star)

EcoFirst Consolidated Bhd is buying seven parcels of land in Sungai Buloh for a combined RM70.0m. The land parcels are intended to be developed into a mixed development project with an estimated gross development value of more than RM550.0m, which is slated to commence by the end-2021. (The Edge)

UEM Sunrise Bhd has appointed Sufian Abdullah to the post of chief executive officer, which has been left vacant for some four months after the departure of Anwar Syahrin Abdul Ajib. The appointment of Sufian, 46, would take effect on 2nd February 2021. (The Edge)

GHL Systems Bhd has expanded its service offerings to include vehicle insurance and road tax renewal services following a tie-up with Loanstreet. GHL services enable end-to-end road tax and insurance delivery services right to the consumers' doorsteps for a quick and hassle-free process. (The Edge)

Genetec Technology Bhd is not aware of any rumour or report concerning the group's business and affairs that might have accounted for the company's share trade activity, which saw the stock's price hit limit up while volume registered a ninefold spike. There is no corporate development in relation to the group's business and affairs that has not been previously announced including those in the stage of discussion. Genetec's share trade activity which saw its share price rise as much as 60 sen or about 30.0% to RM2.63 yesterday. (The Edge)

Ecobuilt Holdings Bhd has secured a RM166.4m contract to undertake a mixed commercial development project in Kota Kinabalu, Sabah. The group's whollyowned subsidiary E&J Builders Sdn Bhd has been appointed the main contractor for the project by Golden Wave Sdn Bhd. (The Edge)

Parkson Holdings Bhd has reported that Parkson Vietnam Co Ltd (PVC) has received a letter from its landlord in Vietnam alleging, among others, that PVC is required to pay a total amount of VND66.2bn (RM12.0m) to the landlord for unpaid and outstanding rental and late-payment charges. This is for the period of 15th April 2019 to 14th January 2021 and compensation for early termination of the lease. (The Edge)

Top Glove Corp Bhd has refuted claims by the Canadian Broadcasting Corp over alleged unsuitable working conditions at its factories. The allegations raised in the report and the way in which they were presented were misleading and damaging on the basis that they suggested a breach in existing policies that it currently has in place. (The Edge)

SKP Resources Bhd expects 3.0% of its sales revenue for the financial year ending 31st March 2021 to be impacted by the temporary closure of its Johor Bahru operations. The temporary shutdown is expected to lead to some delays in its delivery schedule for two weeks. (The Edge)

Source: Mplus Research - 19 Jan 2021