Market Review 

Malaysia: The eleventh-hour buying support in selected index heavyweights lifted the FBM KLCI (+1.4%) to close marginally above the 1,600 psychological level after the key index hovered in the positive region throughout the day. The lower liners also rebounded, while the Energy sector (-0.5%) was the sole underperformer on the broader market.

Global markets: The US stockmarkets closed mostly higher as the Dow (+0.1%) staged a modest recovery after the US Federal Reserve signals no changes to the current bond buying programme. Meanwhile, both the European and Asia stockmarkets finished mixed.

The Day Ahead

The FBM KLCI snapped the two-day losing streak and buying interest pushed the key index to close above the 1,600 psychological level. We believe the foreign buying support yesterday may continue to lift the FBM KLCI members in the near term. Given the higher oil prices resulting from the recovery of global economy, coupled with the smooth on-going Covid-19 vaccination, it should bring some optimism to the market. Meanwhile, the crude palm oil price has rebounded again above the RM3,800 level.

Sector focus: Still, we think traders should look out on the recovery-theme sector (i.e consumer, aviation, tourism, construction and property) on the back of the ongoing vaccination plan on the local front. Meanwhile, with the commodities such as crude palm oil, crude oil and metal-related (i.e. iron, copper and aluminium) on the rise, market participants may focus on commodity-related counters for the day.

The FBM KLCI (+1.4%) climbed back above the 1,600 psychological level with improved volume. Technical indicators, however are still mixed as the MACD Histogram has turned into a green bar, while the RSI continued to hover below the 50 level. Nevertheless, we believe the key index may have positive bias move over the near term with the resistance envisaged along 1,615-1,635, while the support level is set at 1,565-1,575.

Company Brief

Nestle Malaysia Bhd has opened its first plant-based meal solutions manufacturing facility in ASEAN to cater to the rising demand for the food segment. Nestle has invested RM150.0m for a 6,000-sqm food factory, one of only two in Asia after China that would have an annual production capacity of 8,000 tonnes in the Shah Alam Industrial Complex facility. (The Star)

Malaysian Genomics Resource Centre Bhd has entered into a private label, right of use agreement with Eostre Bhd for the latter's procurement of its know-how in genetic screening tests and other products under private label for sale to customers. The total contract sum amounts to RM7.0m with the agreement remaining in force for one year with automatic renewal for another year. (The Star)

AirAsia Group Bhd, Southeast Asia's largest low-cost airline, has established a new entity within the group to provide consulting services on setting up a low-cost carrier (LCC), according to sources. AirAsia Consulting Sdn Bhd, the new entity will provide consulting services to interested parties who wish to set up a new LCC under a new brand, which will be franchised out by AirAsia. (The Edge)

Velesto Energy Bhd’s unit Velesto Drilling Sdn Bhd (VED) has bagged a contract worth US$17.7m for the provision of jack-up drilling rig services. VED has received a letter of award from Sarawak Shell Bhd (SSB) and Sabah Shell Petroleum Company Limited (SSPC). The contract is for VEB’s jack-up rig, namely NAGA 4 — a premium independent-leg cantilever jack-up drilling rig that has a drilling depth capability of 30,000 ft and has a rated operating water depth of 400 ft. (The Edge)

EcoFirst Consolidated Bhd is acquiring a 51.0% stake in BCM Holdings Sdn Bhd, the owner of 4.2-ac of freehold land in Sungai Besi, for RM81.6m. The purchase consideration comprises RM1.6m cash and the issuance of 228.5m new EcoFirst shares at 35 sen apiece or RM80.0m. (The Edge)

Paragon Globe Bhd has proposed a rights issue to raise up to RM56.0m to help pay for a property acquisition in Johor and fund the construction of a medical centre in Selangor. The rights issue of up to 746.6m shares will be issued on the basis of four rights shares for every one existing share held on an entitlement date to be announced later. (The Edge)

Samaiden Group Bhd has proposed a bonus issue of up to 105.0m warrants on the basis of one warrant for every two existing shares. The exercise price of the warrants of RM1.20 represents a discount of 24.6% to the five-day volume weighted average market price of Samaiden shares of RM1.59. (The Edge)

A forensic audit by Ferrier Hodgson MH Sdn Bhd revealed that the RM23.7m construction cost incurred by former Ageson Bhd unit Prinsiptek (M) Sdn Bhd (PMSB) for a construction project in Sentul here did not commensurate with the progress billing issued by the project’s quantity surveyor. The surveyor certified that only RM2.8m worth of preliminary works and RM8.6m of piling works had been done as at 22nd November 2017. (The Edge)

The Federal Land Development Authority’s (Felda) efforts to take over FGV Holdings Bhd and realise its recovery plan are in progress. FELDA might negotiate with two other FGV shareholders, namely the Pahang and Sabah State governments which own 5.0% and 4.0% of FGV shares respectively. Felda and KPF together currently own 81.0% of FGV. (The Edge)

Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) unit Malaysia Marine and Heavy Engineering Sdn Bhd (MHB) has received an arbitration notice from Boskalis Malaysia Sdn Bhd over the delay in the load out exercise. Boskalis, among others, was required to make available a vessel for the load out of the topside based on an agreed schedule, but had served the notice to MHB claiming that there was a delay in the load out exercise onto the vessel and that it had allegedly incurred demurrage and standby costs. (The Edge)

Tan Sri Krishnan Tan has resigned as a non-executive director of IJM Plantations Bhd due to heavy commitments and involvement in other boards. Krishnan, 68, who had served as non-executive director since December 1993, will be replaced by his brother Velayuthan Tan effective yesterday. (The Edge)

Source: Mplus Research - 8 Apr 2021