Market Review

Malaysia: The FBM KLCI (-0.4%) marked its sixth straight session of decline and the key index slipped below the 1,600 psychological level after erasing the first hour gains on the back of weakness in gloves heavyweights yesterday. The lower liners also turned lower, while the broader market was mostly downbeat.

Global markets: Tech giants led the US stock markets higher for the session following Joe Biden’s transition into the White House, despite the rising Covid-19 cases in the US. Meanwhile, European stockmarkets ended lower, while Asia stockmarkets closed mostly higher.

The Day Ahead

With Wall Street charging towards its all-time-high region after Joe Biden’s transition into the White House, we expect mild bargain hunting activities to emerge on our local front. However, following the extension of the Movement Control Order for the six states to 4th February, we reckon the upside could be capped today as Covid-19 infections are still rising. Hence, it could be translating to another consolidation day. Nevertheless, we believe market players to rotate into several laggard plays in the stock market.

Sector focus: We believe traders may lookout for plantation stock after a firmer CPO session yesterday. Meanwhile, we expect investors to look for opportunities within the laggard sectors such as property and construction as well as furniture and steel-related stocks ahead of the February reporting season.

FBMKLCI Technical Outlook

The FBM KLCI has declined for the sixth trading day and falling below the 1,600 psychological level and currently hovering below the EMA20 level. Technical indicators still having negative bias for the time being, with the MACD Histogram extended another red bar, while the RSI is below 50. We expect the upside to be limited around 1,600-1,620, while the support is pegged at 1,590, followed by 1,570.

Company Brief

AirAsia Group Bhd is planning to raise as much as RM454.5m by selling 668.4m new shares, as budget airline seeks urgently needed funds to strengthen its financial position. The fund raising plan would not be sufficient to meet its longterm cash flow requirements, but as an interim measure to address its immediate cash flow requirements. The new stocks to be issued will be issued in several tranches over the next six months. The indicative issue price of the placement shares was assumed at 68 sen each, or 9.0% to the five-day volume weighted average market price of AirAsia shares AAGB up to and of 74.79 sen. (The Star)

Pantech Group Holdings Bhd’s 3QFY21 net profit fell 15.3% YoY to RM8.7m, on lower contribution from its trading division. Revenue for the quarter dropped 19..9% YoY to RM133.0m. (The Star)

A tech fund promoted by Green Packet Bhd is funding the majority shareholders of Nuglobal Ventures Sdn Bhd which is keen on taking over Khazanah Nasional Bhd's semiconductor fabricating company SilTerra Malaysia Sdn Bhd. The bid is subject to strict confidentiality with Khazanah and no detail of the bid can be publicly disclosed now. (The Edge)

Dagang NeXchange Bhd (DNeX) has clarified that it has not entered into any definitive agreement to acquire Khazanah Nasional Bhd's semiconductor fabricating company SilTerra Malaysia Sdn Bhd. The company nevertheless is constantly evaluating various proposals to grow its business organically or through acquisitions including that of SilTerra. (The Edge)

Genting Malaysia Bhd's (GenM) Resorts World Genting, Resorts World Away, Resorts World Kijal and Resorts World Langkawi will be temporarily closed following the implementation of the Movement Control Order in six more states. The Resorts World Birmingham, alongside all land-based casinos in the UK, will be temporarily closed until further notice, in compliance with the British government's directives to curb the spread of Covid-19. Its online business GentingBet.com is still operational. (The Edge)

UOA Real Estate Investment Trust's (REIT) 4QFY20 net rental income fell 10.8% YoY to RM13.0m, due to rental rebates given to eligible tenants. Revenue for the quarter declined 8.4% YoY to RM18.1m. A distribution per unit of 4.46 sen was announced. (The Edge)

Independent adviser BDO Capital Consultants Sdn Bhd has advised Versatile Creative Bhd's minority shareholders to accept its largest shareholder NSK Trading Sdn Bhd's takeover offer as the deal is "fair and reasonable". The offer price of 70 sen is fair because it represents a premium of 44 sen or 169.2% to the estimated fair value per Versatile Creative share of 26 sen. The offer price also represents a discount of 7.3% per share to the closing price at the latest practicable date (LPD) of 75.5 sen and 2.5% to the five-day volume-weighted average market price up to the LPD. (The Edge)

Top Glove Corp Bhd annual rubber glove production capacity has reached 91.0bn pieces as at January 2021 as demand for gloves continues to be strong despite the availability of vaccines to curb the Covid-19 pandemic. The world's largest rubber glove manufacturer expects to have an annual output capacity of 110.0bn gloves by December 2021 as the company adds new capacity of 19.0bn pieces of gloves for the year. (The Edge)

Pertama Digital Bhd is urging banks to lift limits on FPX transactions as it predicts that digital bail collections will rise further this year after the Covid-19 pandemic forced courts to move their operations to digital platforms. This would enable the full adoption of its digital bail payment solution eJamin. (The Edge)

Source: Mplus Research - 22 Jan 2021