Market Review

Malaysia: The FBM KLCI (-0.9%) endured another rout alongside with the weakness across regional peers with more than two-third of the key index components finished lower prior to the extended weekend break. The lower liners also staged a pullback, while the broader market closed mostly downbeat with the exception of the healthcare (+2.0%) and REIT (+0.3%) sectors.

Global markets: US stockmarkets marched higher as the Dow gained 0.8% after the focus has shifted to the upcoming barrage of corporate earnings from corporate giants such as Amazon and Alphabet. Both the European and Asia stockmarkets closed on a positive note yesterday.

The Day Ahead

Tracking the regional and Wall Street gains overnight, market players could be factoring in a Conditional MCO instead of a strict MCO (albeit in a rising Covid-19 cases environment) moving forward to avoid further breakdowns in the economy. Thus, we may anticipate a mild rebound moving forward. However, the rebound may attract profit taking activities as Malaysia’s Covid-19 status has not flattened out at this current juncture. We might observe some trading interest within healthcare and vaccine related sectors in the near term.

Sector focus: On the back of rising Covid-19 cases along with the upcoming reporting season, glove-related counters may continue to be on investors’ radar. Meanwhile, the arrival of vaccine in Malaysia should trigger some trading interest within vaccine and transport and logistics companies. Besides, the plantation counters may see some rebound following the increase in crude palm oil price.

As the FBM KLCI has formed a bearish candle last Friday, indicators remained mixed as the MACD Histogram has turned into a red bar, while the RSI crossed into oversold territory. We believe the FBM KLCI may remain rangebound over the near term with the support pegged along 1,550-1,560, and resistance is envisaged around 1,600-1,610.

Company Brief

Supermax Corp Bhd’s 2QFY21 net profit ballooned 3341.5% YoY to RM1.06bn, mainly fuelled by higher average selling prices (ASPs) as demand for gloves continued to soar worldwide against the backdrop of the Covid-19 pandemic. Revenue for the quarter surged 418.5% YoY to RM2.00bn. An interim single tier dividend of 3.8 sen, payable on 26th February 2021 was declared. (The Edge)

Top Glove Corp Bhd has pledged to vaccinate its entire staff including foreign workers, once the Covid-19 vaccine is made available. The glove maker has over 21,000 employees at 47 factories and 750 production lines as at December 2020. (The Edge)

Iris Corp Bhd has secured an immigration system contract from the government worth RM1.16bn. Its wholly-owned subsidiary Iris Information Technology Systems Sdn Bhd received a letter of award from the Ministry of Home Affairs to develop and deliver the immigration system. The contract will be for a period of 54 months until 31st August 2025. (The Edge)

Homeritz Corp Bhd's 1QFY21 net profit fell 9.6% YoY to RM7.3m, weighed down by the weakening USD, as well as rising raw materials and labour costs. Revenue for the quarter, however, increased 26.7% YoY to RM52.5m. (The Edge)

Uchi Technologies Bhd has reported that 15 employees of its subsidiary Uchi Optoelectronic (M) Sdn Bhd (UOM) have tested positive for Covid-19. UOM started a mass screening process for its employees, after the acknowledgement of a confirmed Covid-19 case from a contractor on 25th January 2021. (The Edge)

KTG Bhd (formerly known as DWL Resources Bhd) has proposed a private placement of up to 20.0% of its shares to raise as much as RM29.5m to finance the moneylending and glove manufacturing businesses that it recently ventured into. Up to 134.1m shares will be placed out to investors to be identified later at an issue price to be fixed later. (The Edge)

Jerasia Capital Bhd plans to undertake a corporate exercise involving a rights issue with free warrants on the basis of seven rights shares together with four warrants for every one existing Jerasia share to raise a minimum of RM228.0m to help fund its venture into the manufacturing and trading of gloves. As part of the corporate exercise, Jerasia will also undertake a private placement of up to 24.6m new shares, representing not more than 30.0% of its issued shares to independent third party investor or investors. Based on an indicative issue price of 40 sen per placement share, it hopes to raise RM9.8m which will be used to pare down its borrowings and finance the glove business. (The Star)

Source: Mplus Research - 2 Feb 2021