Market Review

Malaysia: The FBM KLCI (-1.2%) endured another rout to trend lower for the third straight session as selling pressure in selected banking and telco heavyweights escalated in the second half of the trading session. The lower liners ended mixed, while the broader market was mostly negative with the exception of the energy (+3.4%) and plantation (+0.9%) sectors.

Global markets: US stockmarkets retreated overnight as the Dow fell 0.4%, bogged down by concerns over the rising cost of debt, coupled with the higher than expected unemployment claims. European stockmarkets remained downbeat for the third day, while Asia stockmarkets were mostly battered down.

The Day Ahead

In line with most regional peers, the FBMKLCI skidded on profit taking activities for the third straight session and market sentiment may remain cautious ahead of the weekend. Despite ongoing profit taking, we opine the downside risk could be limited as some bargain hunting may start to take place ahead of the full blown reporting season next week. Meanwhile, the Brent crude oil price has loses its grip, pulling back from level above the USD65.

Sector focus: Given the pullback in crude oil price, traders may take profit on O&G counters after a decent rally. We think that the market participants may venture into consumer, plantation and furniture stocks ahead of their respective earnings next week. Besides, transportation and logistics counters could be favoured by traders after MISC’s result yesterday.

The FBM KLCI slid to close below its immediate support level at 1,580. We expect the current consolidation move shall continue given both the MACD Histogram and RSI suggesting that the momentum is weak at this current juncture. We expect FBM KLCI may revisit support at 1,560, while its resistance is pegging around 1,600-1,620.

Company Brief

Coastal Contracts Bhd and its Mexican joint venture partner, Grupo Empresarial Alfair SAPI de CV has secured a project to build a RM258.7m gas processing plant in Mexico. The plant will have a processing capacity of up to 180 mmscf of wet sour gas a day. The firm period for this contract shall be 32 months and with chances of further extension by Pemex. (The Star)

Carlsberg Brewery Malaysia Bhd’s 4QFY20 net profit fell 45.0% YoY to RM37.9m, as Covid-19 restrictions in Malaysia and Singapore to curb the pandemic impacted its business. Revenue for the quarter declined 17.7% YoY to RM472.5m. The group has proposed a total payout of 40 sen a share FY20. (The Star)

Heineken Malaysia Bhd’s 4QFY20 net profit decreased 40.6% YoY to RM54.2m, due to lower sales as its business was impacted by the government's implementation of wider restrictions and stricter standard operating procedures to curb the spread of Covid-19. Revenue for the quarter dropped 23.7% YoY to RM519.0m. A first and final single tier dividend of 51 sen per share, payable on 28th July 2021 was declared. (The Edge)

KPJ Healthcare Bhd’s 4QFY20 net profit sank 69.9% YoY to RM25.3m, due to lower patient numbers. Revenue for the quarter dropped 13.9% YoY to RM586.8m. (The Edge)

Greatech Technology Bhd’s 4QFY20 net profit rose 76.8% YoY to RM31.8m, boosted by higher sales. Revenue for the quarter added 30.5% YoY to RM76.4m. (The Edge)

Sime Darby Plantation Bhd’s 4QFY20 swung back into the black, posting a net profit of RM149.0m, from a net loss of RM58.0m recorded in the corresponding quarter rose 7.8% YoY to RM3.64bn. (The Edge)

Source: Mplus Research - 19 Feb 2021