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, remained on course within the uptrend move, while the technology sector (+3.5%) outperformed the mostly negative broader market.

Global markets: US stockmarkets resumed trading on a firm note as the Dow (+0.4%) climbed after Treasury Secretary nominee Janet Yellen endorsed the US$1.9tn stimulus package to combat the economic slowdown. European stockmarkets were downbeat but Asia stockmarkets ended mostly higher.

The Day Ahead

We expect the negative sentiment could persist over the near term as investors will be waiting for the Bank Negara Malaysia’s (BNM) decision on the overnight policy rate (OPR) later in the afternoon; any further cut in the OPR may cause downward pressure on banking stocks. Also, there have been some negative selling activities amongst the glove heavyweights and we believe it may continue for another session today. Meanwhile, consolidation might be seen for selected lower liners following the recent gains.

Sector focus: Since that most of the states are under MCO, there might be slowdown in construction sector, while the building material stocks may take a pause for now. Meanwhile, we like packaging sector on the back of rising demand for online shopping amid the MCO period.

FBMKLCI Technical Outlook

Closing just above its support level, the FBM KLCI may be trading sideways over the near term. However, any further OPR cut today might drag the key index further to below its psychological level at 1,600. Based on the technical indicators, the FBM KLCI’s momentum could be weakening as RSI and MACD have been turning weaker over the past few days. Hence, next support zone will be pegged around 1,560-1,580. Meanwhile, resistance will be set around ,1620-1,640.

Company Brief

The Federal Land Development Authority (Felda) bought 41.0m FGV Holdings Bhd shares from the open market on on 18th January 2021. Felda bought the shares of the plantation company for RM53.3m or at the takeover offer price of RM1.30. (The Star)

Sentral REIT Bhd, formerly MRCB-Quill Reit 4QFY20 net profit stood at RM12.2m against a net loss of RM24.4m recorded in the previous corresponding quarter on lower operating expenses. Revenue for the quarter, however, slipped 2.9% YoY to RM39.5m. An income distribution of 3.65 sen per unit, payable on 26th February 2021 was declared. (The Star)

KIP REIT’s 2QFY21 net property income (NPI) dropped 5.7% YoY to RM13.9m, as the trust continues to be affected by the movement control order (MCO). Revenue for the quarter fell 5.7% YoY to RM18.6m. It has declared a second interim distribution per unit (DPU) of 1.59 sen, payable on 19th February 2021. (The Edge)

Hai-O Enterprise Bhd has proposed a share exchange with BesHom Holdings Bhd, which will also take over the group's listing status. The exercise will see its entire 300.3 m shares exchanged with BesHom shares on a one-for-one basis. Upon completion of the share exchange, BesHom will become the new holding company of the group and will assume the listing status of Hai-O on the Main Market of Bursa Securities. (The Edge)

T7 Global Bhd has won a contract extension from Petronas Carigali Sdn Bhd to provide underwater inspection services using a mini remotely-operated vehicle. The contract was first awarded in August 2019, for one year duration until 2nd September 2020. It has now been extended to 31st May 2021. (The Edge)

Bioalpha Holdings Bhd has proposed to undertake a rights issue of up to 83.3m new shares on the basis of one rights share for every 15 existing shares held and up to 208.3m new irredeemable convertible preference shares (ICPS) on the basis of one rights ICPS for every six existing Bioalpha shares held to raise funds primarily for the group's working capital requirements. The company's fundraising plans include a private placement of 290.0m new ICPS in the group, where Khazanah Nasional Bhd’s wholly-owned unit Malaysian Technology Development Corp (MTDC) is a major shareholder. (The Edge)

Two of Menang Corp (M) Bhd's shareholders holding a collective 13.3% stake have requisitioned an EGM to be convened to remove four existing directors and appoint two new ones. Datuk Lee Chin Hwa and Nicholas Pun Chee Cheang, who hold 8.3% and 5.0% of the group's shares respectively, are seeking to appoint Yee Chun Lin and Chee Wai Hong to the board. (The Edge)

Asia Media Group Bhd expects its newly-appointed legal advisers and other professionals to take three to four months to complete investigations linked to losses in the group. The inspection is essentially linked to the write-downs and depreciation of the group’s assets and its whereabouts that directly or indirectly led to the current impairment and write-downs. (The Edge)

Four employees at Karyon Industries Bhd's wholly-owned plastic additives and industrial chemicals unit have tested positive for Covid-19. The workers are currently receiving medical treatment at designated government facilities, as directed by the Ministry of Health. (The Edge)

Boustead Holdings Bhd will not be able to comment at this juncture on a media report by The Edge recently, on the intention of Lembaga Tabung Angkatan Tentera (LTAT) to privatise the group via selective capital reduction and repayment. (The Edge)

i-Stone Group Bhd’s subsidiaries PA Metal Technics Sdn Bhd (PAMT) and i-Stone Engineering Sdn Bhd (IEN) have been given the green light by the Ministry of Health to resume operations, after the balance of its employees tested negative for Covid19. The rest of its employees working at IEN and PAMT in Johor Bahru were screened for the virus. (The Edge)

Fraser & Neave Holdings Bhd (F&N) is set to establish halal food as the cornerstone of its growth, following its acquisition of Sri Nona companies for RM60.0m, which was announced in December 2020. Sri Nona is best known for its flagship product, the NONA Ketupat (rice cakes) range, which is the number one ketupat brand in Malaysia, and its range of oyster sauce, which is among the top three in its category. (The Edge)

Jade Marvel Group Bhd and JSC Land Sdn Bhd have mutually agreed to terminate their joint venture agreement (JVA) to develop a project in mainland Penang. Jade Marvel will instead complete the development on its own. Jade Marvel had on 21st September 2020 announced its JVA with JSC to develop a housing project with a gross development value of RM25.0m on a 3.2-ac. freehold land at Simpang Ampat, Seberang Perai Selatan. (The Edge)

Source: Mplus Research - 20 Jan 2021