Market Review

Malaysia: The FBM KLCI (-0.1%) extended its losses alongside with the mostly negative performance across its regional peers after erasing all its intraday gains amid the escalating net foreign fund selling pressure at -RM298.7m. The lower liners rebounded, while the broader market ended mixed with the technology sector (+2.7%) taking the lead.

Global markets: US stockmarkets edged mildly lower as the Dow (-0.1%) registered its fourth losing session on lingering concern over the Covid-19 variants. European stockmarkets rebounded, while Asia stockmarkets closed mostly lower after China’s central bank cautioned of an asset bubble in the financial markets.

The Day Ahead

In tandem with the regional peers, the FBM KLCI inched lower due to heavy selling in glove heavyweights and Petronas-related counters. With growing concerns over the still-rising Covid-19 cases, that may contribute to the potential extension of MCO (albeit with some relaxation in SOP). Hence, it may limit the upside potential on the key index over the near term until the vaccine rollout. Nevertheless, we expect some bargain hunting activities to emerge in the near term on high certainty sectors ahead of the February reporting season.

Sector focus: Based on the some corporate results announced yesterday, we expect plantation and consumer electronics stocks to perform well in the near term. Also, market players will be watching out the technology sector as they have performed a swift recovery after the selldown. Meanwhile, traders will lookout on solar related counters following SOLARVEST’s move yesterday.

FBMKLCI Technical Outlook

The FBM KLCI extended its losing streak for another session, contributing to an 8- day losing streak. Indicators remained negative as the MACD Histogram has extended another red, while the RSI remains below 50. The FBM KLCI’s support will be set around 1,550-1,560, while resistance will be pegged along 1,600-1,610.

Company Brief

Pharmaniaga Bhd has entered into a term sheet agreement with the Government to supply 12.0m doses of Covid-19 vaccine developed by China's Sinovac Life Sciences Co Ltd. The vaccine fill-finish processing by Pharmaniaga into vials is expected to start in February 2021. (The Star)

Duopharma Biotech Bhd has signed a deal with the Malaysian government to supply 6.4m doses of the Russian-developed "Sputnik V" Covid-19 vaccine. The group will procure and supply to the Ministry of Health (MoH) the vaccine developed by the Gamaleya National Research Institute of Epidemiology and Microbiology. (The Edge)

Gabungan AQRS Bhd’s wholly-owned subsidiary, Gabungan Strategik Sdn Bhd (GSSB) has accepted a letter of award (LOA) to undertake construction works worth RM45.7m from Teringin Sentral Sdn Bhd. The company had also won a similar contract from Solitaire Suites Sdn Bhd worth RM37.9m. The construction works under the contract with Teringin Sentral will be executed over a period of 30 months from the date of commencement, while works under the contract with Solitaire Suites will commence on 1st May 2021, and is expected to be completed by 31st October 2023. (The Star)

Atrium REIT’s 4QFY20 net property income (NPI) rose 20.6% YoY to RM9.3m, thanks to rental income contribution from its Atrium Bayan Lepas (ABLI) property in Penang. Revenue for the quarter increased 16.1% YoY to RM8.9m. A distribution per unit of three sen, payable on 26th February 2021 was declared. (The Edge)

PNE PCB Bhd is proposing a private placement to raise RM21.1m in order to reduce its borrowings and upgrade its existing printed circuit board production. It would be issuing up to 71.2m new shares (20.0% of its total share capital) to third party investors at an indicative price of 29.7 sen apiece. The company will allocate RM10.8 m of the proceeds to pay off borrowings, while RM5.0m will be used to fund the upgrading of its printed circuit board production line. (The Edge)

Poh Huat Resources Holdings Bhd's main operating subsidiary, Poh Huat Furniture Industries (M) Sdn Bhd (PHFI) in Malaysia has discovered 543 positive Covid-19 cases among its employees. The screening exercise covered 1,400 employees at all of PHFI’s plant premises and corporate offices in Bukit Pasir, Muar and 543 employees tested positive for Covid-19. (The Edge)

Hwa Tai Industries Bhd has been slapped with an unusual market activity (UMA) query by the stock exchange, after its share price surged as much as 33.3% or 15.5 sen to a three-year high of 62 sen yesterday. Its share price has been on a steep climb since last Monday (18th January 2021), from 36 sen. (The Edge)

Chin Teck Plantations Bhd’s 1QFY21 net profit jumped 101.9% YoY to RM15.8m, thanks to higher prices for fresh fruit bunches (FFB), crude palm oil (CPO) and palm kernel (PK). Revenue for the quarter gained 36.6% YoY to RM45.4m. (The Edge)

Advancecon Holdings Bhd has bagged a RM60.6m subcontract for the proposed construction and completion of subgrade works of Package 3, Section 4 for the East Coast Rail Link (ECRL) project. The contract period spans from 1st March 2021 to 15th April 2023. (The Edge)

Dagang NeXchange Bhd (DNeX) has clarified that other than a consortium agreement signed by its unit yesterday, it has not received a letter of award, nor has it entered into an agreement with the Indonesian government for a cable laying, maintenance and repair job there. DNeX was responding to an article published in The Edge Malaysia dated 25th January 2021, entitled "DNeX close to bagging cable laying, maintenance and repair job in Indonesia”. (The Edge)

Tasco Bhd has proposed a share split of every share to four shares. Tasco currently has an issued share capital of RM100.8 m, comprising 200.0m shares. The proposed share split is to reward its existing shareholders, improve liquidity of the company's shares and broaden its shareholder base. (The Edge)

Source: Mplus Research - 27 Jan 2021