Market Review

Malaysia: The FBM KLCI (-0.1%) ended mildly lower, mainly dragged down by Top Glove (-5.3%) after the Customs and Border Protection (CBP) agency concluded the firm used forced labour for certain disposable gloves imported gloves to US. The lower liners extended their losses, while the broader market was mostly downbeat, with the healthcare sector (-1.1%) taking the worst hit.

Global markets: The US stockmarkets trended lower as the Dow fell 0.3% after the US 10Y Treasury yield jumped to 14-months high. European stockmarkets closed higher on the strong Eurozone’s Economic Sentiment data that rose to 101 in March 2021, while Asia stockmarkets ended on a mixed note.

The Day Ahead

The FBM KLCI closed with modest losses as the key index succumbed to the selldown in index-linked glove counters. Tracking the negative performance on the Wall Street overnight, we expect the FBM KLCI and the broader to trend sideways at least for the near term. Meanwhile, oil prices declined as investors looked beyond the Suez Canal incident and traded cautiously prior to the upcoming OPEC+ meeting. However, we noticed that the media is reporting on the chip crunch situation amid the US-China tensions, this might see some trading interest within the technology stocks going forward.

Sector focus: We believe investors may focus on counters with more stability such as consumer, utilities and REITs. Also, with the subsiding Covid-19 cases daily, we may anticipate the recovery-theme to bode well under this scenario. Meanwhile, we do expect some technology stocks to rebound in the near term as they have well consolidated over the past few weeks.

The FBM KLCI staged a mild pullback after two sessions of gains. Technical indicators turned positive as the MACD Histogram has extended another green bar, while the RSI is slightly above 50. However, under the cautious market environment, we expect the key index to trade sideways with resistance set along 1,625-1,645; while support is pegged at 1,580-1,600.

Company Brief

Gamuda Bhd’s 2QFY21 net profit shrank 30.0% YoY to RM123.1m, weighed down also by the Covid-19 pandemic. Revenue for the quarter declined 17.9% YoY to RM895.4m. (The Star)

UEM Edgenta Bhd and PLUS Malaysia Bhd have formed a collaboration that will see the expansion of digital solutions in highway maintenance operations. The company has developed the Road Asset Management System that enables it to plan short and long-term road maintenance activities, prioritising its responsibilities of managing over 1,000km of highway assets for PLUS. (The Star)

Ta Win Holdings Bhd is embarking into the global electric vehicle (EV) market following the appointment of its subsidiary as a vendor in the global automotive supply chain by a New York Stock Exchange-listed company. Ta Win’s unit Cyprium Wire Technology Sdn Bhd (CWT) received a global vendor agreement from international technology and mobility company, Aptiv PLC. The agreement would see CWT utilising its innovative electron beam irradiation technology to manufacture cables and automotive components for Aptiv. (The Star)

Top Glove Corporation Bhd has reported that it is unable to ascertain the quantum of the financial and operational impacts arising from the US Customs and Border Protection's (CBP) directive to its personnel at all US ports of entry to begin seizing disposable gloves produced in Malaysia by Top Glove over forced labour allegations. The rubber glove manufacturer wishes to announce that its US counsels are in the midst of liaising with representatives of the CBP to obtain more clarity and information on the latest order issued. (The Edge)

Sime Darby Bhd is considering several options for the proceeds from the sale of its remaining 10.9% stake in Eastern & Oriental Bhd, including a special dividend to its shareholders. (The Edge)

Sapura Energy Bhd's wholly-owned unit Sapura TMC Sdn Bhd has executed multi currency financing facilities to raise over RM10.3bn. The facilities comprise two term loan facilities of approximately US$602.0m (RM2.50bn) and RM906.0m respectively, and unrated sukuk murabah amounting to US$125.0m (RM518.5m) and RM6.38bn. (The Edge)

Kumpulan Perangsang Selangor Bhd has approved a dividend policy under which the company intends to pay at least 30.0% of its normalised profit after taxation and minority interest annually. The policy which takes immediate effect, will serve as a guideline to ensure that future dividends are declared in reflection of the group's financial position, operating performance, future investment needs, and other factors deemed relevant to the group. (The Edge)

LB Aluminium Bhd's 3QFY21 net profit surged 248.5% YoY to RM14.9m, mainly to the increase in sales volume and better margins from the aluminium segment, coupled with higher share of profit contribution from the associate. Revenue for the quarter grew 15.1% YoY to RM125.4m. (The Edge)

TH Plantations Bhd is facing a lawsuit over its decision not to cancel its proposed disposal of two plantation units to Sabah-based private firm Tamaco Plantation Sdn Bhd for RM170.0m. The highly publicised proposal failed to materialise after the Economic Planning Unit withdrew its approval for the transaction on 4th December 2020, 10 days after the initial approval was given. (The Edge)

Source: Mplus Research - 31 Mar 2021