Market Review

Malaysia: The FBM KLCI (+0.6%) snapped a three-day pullback as the key index hovered largely in the positive territory, boosted by gains in selected banking and telco heavyweights; the latter took a boost from the launch of MyDigital blueprint. The lower liners advanced, while the broader market was mostly higher with the telecommunications & media sector (+4.3%) taking the lead.

Global markets: US stockmarkets ended mixed as the Dow closed flat after squaring off almost all its intraday gains, while the S&P 500 (-0.2%) retreated on weakness in communication services sector (-1.0%). European stockmarkets rebounded on expectation to cut the time to develop new vaccines by two-thirds to 100 days, while Asia stockmarkets closed mixed.

The Day Ahead

Bucking the regional trend, the FBM KLCI snapped three-day losing streak to close higher on bargain hunting. Sectors such as telecommunication and technology were headed higher following the launch of MyDigital initiative and the Malaysia Digital Economy Blueprint. Whereas the key index is subject to further consolidation, we believe the earlier-than-scheduled national vaccine rollout on coming Wednesday and the declining number of Covid-19 cases should lift the market sentiment and traders may focus on recovery theme again.

Sector focus: We opine that the launch of MyDigital initiative and the Malaysia Digital Economy Blueprint would continue boosting the technology sector as well as the telecommunication counters. Meanwhile, sectors with high earning certainties such as furniture and plantation will be under the limelight.

The FBM KLCI closed above the EMA120 level after three consecutive losing sessions. Meanwhile, technical indicators turned are mixed as the MACD Histogram extended another red bar, but the RSI climbed above 50. Hence, despite the rebound move last week, we expect the FBM KLCI should consolidate along 1,560-1,620 over the near term.

Company Brief

Muda Holdings Bhd is buying a corrugated cartons and boards factory near Ipoh, Perak from Yee Lee Corp Bhd for RM22.0m cash. The purchase of South East Asia Paper Products Sdn Bhd is to further expand its corrugated carton business. (The Star)

The High Court has granted leave for budget airline AirAsia X Bhd (AAX) to hold meetings with its creditors. The court has also separated the 14 creditors into three different classifications — the first being Malaysia Airports Holdings Bhd (MAHB), the second consists of the other creditors, and the third being aircraft maker Airbus. The court also noted that AAX has failed to demonstrate that they are capable of reviving its financial health. (The Edge)

Careplus Group Bhd’s 4QFY20 net profit skyrocketed 53.9x YoY to RM42.2m, boosted by higher selling prices and strong demand. Revenue for the quarter grew 18.9% YoY to RM129.3m. A special dividend of two sen per share, payable on 24th March 2021 was declared. (The Edge)

Petronas Dagangan Bhd's (PetDag) 4QFY20 net profit dropped 29.5% YoY to RM89.2m, due to decrease in sales volume and lower average prices during the quarter following the sharp decline in Means of Platts Singapore (MOPS) prices. Revenue for the quarter fell 43.6% YoY to RM4.40bn. An interim dividend of 17 sen per share, payable on 19th March 2021 was declared. (The Edge)

Malakoff Corp Bhd’s 4QFY20 net profit dropped 60.9% YoY to RM41.6m, primarily due to the absence of one-off gain from the disposal of the group’s investment in Malakoff Australia Pty Ltd (MAPL) in December 2019. Revenue for the quarter declined 13.2% YoY to RM1.51bn. (The Edge)

Malaysia Smelting Corp Bhd’s 4QFY20 net profit stood at RM15.9m vs. a net loss of RM16.0m recorded in the previous corresponding quarter, on higher tin prices and the reversal of written down inventories worth RM21.1m. Revenue for the quarter grew 27.3% YoY to RM232.6m A dividend of one sen per share was announced. (The Edge)

Luxchem Corp Bhd’s 4QFY20 net profit rose 68.5% YoY to RM16.1m, on the back of an improved manufacturing segment. Revenue for the quarter grew 17.7% YoY to RM220.2m. A single tier interim dividend of two sen per share, payable on 12th May 2021 was declared. (The Edge)

Genetec Technology Bhd has announced that it had secured RM56.0m of new orders, of which RM53.7m came from customers in the electric vehicle and battery industry while the remaining RM2.3m orders were from the automotive, electronics, semiconductors and hard disk drive industries. (The Edge)

Prestariang Systems Sdn Bhd, a unit of Main Market-listed AwanBiru Technology Bhd has been appointed as a managed service provider (MSP) to manage cloud services for the government. During the unveiling of the MyDigital blueprint earlier today, Prime Minister Tan Sri Muhyiddin Yassin has announced that the government had appointed Prestariang Systems, Enfrasys Solutions Sdn Bhd and Cloud Connect Sdn Bhd, which will manage services provided by cloud service providers (CSPs). The CSPs comprise Microsoft, Google, Amazon and Telekom Malaysia Bhd (TM), which have received conditional approvals from the government. (The Edge)

SMTrack Bhd has purchased an aircraft worth US$6.7m (RM27.0m) from a management consultancy firm Cakerawala Solution International Sdn Bhd as the former ventures into cargo carriage services. The acquisition was funded using proceeds raised from the issuance of redeemable convertible notes that was approved by the shareholders at the company’s extraordinary general meeting (EGM) held on 28th December 2020. (The Edge)

The new controlling shareholders of Pimpinan Ehsan Bhd (PEB), formerly known as Triplc Bhd, are planning to turn the cash-rich company into a renewable energy player. PEB has entered into Heads of Agreements (HOAs) with reNIKOLA Sdn Bhd and its owners (vendors) namely Boumhidi Abdelali and Tengku Zaiton Sultan Abu Bakar to acquire reNIKOLA via the issuance of new shares at a price to be revealed later. (The Edge)

MYEG Services Bhd (MyEG) has launched an online portal, SafeQ which offers an array of hotel accommodation and amenity options available to low-risk Covid-19 patients who wish to undergo mandatory quarantine requirements in more comfortable settings. The portal provides a selection of hotel accommodation of varying categories, ranging from three- star to five-star facilities to cater to all budgets. (The Edge)

Source: Mplus Research - 22 Feb 2021