Market Review

Malaysia: Bargain hunting activities in gloves heavyweights lifted the FBM KLCI (+0.1%) mildly higher as the key index mirrored the mostly positive performance across regional peers. The lower liners extended their gains, spurred by the improved trading liquidity. Meanwhile, the Plantation sector (-1.3%) was the worst performer on the mostly negative broader market.

Global markets: The US stockmarkets extended their gains as the Dow (+0.1%) advanced after US Federal Reserve Chairman Jerome Powell re-assured that the central bank has enough tools to cope with the inflationary pressure. European strockmarkets ended higher, while and Asia stockmarkets were mostly upbeat.

The Day Ahead

The FBM KLCI posted mild gains yesterday as investors piled into glove heavyweights with the narrative of potential surge in demand for gloves amid the recent waves of Covid-19 outbreak in Europe and parts of Asia. Tracking the overnight gains on Wall Street, Nasdaq especially, we expect the positive sentiment to spill over to technology stocks on the local front. Commodities wise, the CPO prices saw a modest decline while the Brent oil price edged higher.

Sector focus: Following the overnight rally in Nasdaq, we expect buying interest to emerge in the technology sector, especially those that is in the oversold region. Besides, we reckon the market participants may look into consumer, aviation, property and construction for recovery-theme exposure.

The FBM KLCI (+0.1%) stayed firmer above the 1,600 psychological level with doubled trading volume. Technical indicators remain mixed as the MACD Histogram has extended a green bar, while the RSI continued to hover below the 50 level. With that, we believe the market may trade with resistance pegged at 1,615- 1,635, while the support level is set at 1,565-1,575.

Company Brief

Advanced discussions are underway to merge Celcom Axiata Bhd, a unit of Axiata Group Bhd, with Digi.com Bhd under a new joint entity named Celcom Digi Bhd. Axiata has plans with Digi's parent, Telenor Asia, to merge the operations of the two telco firms and are aiming to finalise agreements over the proposed transaction within 2Q21 following due diligence. In the event of a successful merger, the parties will each have equal ownership of about 33.1% stake. Among the terms of the transaction, Axiata will receive newly issued shares in Digi representing 33.1% post-transaction shareholding and cash equalisation of about RM2.00bn, of which RM1.70bn will come from Digi as new debt and the balance of RM300.0m from Telenor. (The Star)

MSM Malaysia Holdings Bhd has announced a temporary production shutdown of its refinery at MSM Sugar Refinery (Johor) Sdn Bhd (MSM Johor) for two months, effective 31st March 2021. The move is to enable the rectification of MSM Johor’s boiler following a breakdown. Upon completion, the plant is expected to be able to achieve its targeted utilisation factor by 3Q21. During the temporary production shutdown, the company shall utilise its available refined sugar stocks in MSM Johor, supported by the production from MSM Prai Bhd’s refinery for supply to the domestic and export markets. (The Star)

Top Glove Corporation Bhd has announced that its glove production has been affected because of a US ban on its products over allegations they are made with forced labour. A "certain percentage" of Malaysian production has been affected because of the ban, but the impact will be temporary, with no further details on the extent of the impact. (The Star)

KUB Malaysia Bhd is selling an oil palm estate in Kinabatangan, Sabah to Tradewinds Plantation Bhd. Under the deal, Tradewinds will pay RM10.0m cash to KUB and settle KUB Malua Plantation Sdn Bhd outstanding loans of RM70.4m with Bank Islam. The proposed disposal will also enable the Group to strengthen its financial position by reducing its overall debt level and interest expenses significantly following the de-consolidation of KUB Malua’s bank borrowings. (The Star)

LBS Bina Group Bhd's unit has signed an agreement with the Melaka government to reclaim and develop land spanning 1,200-ac in Tanjung Bruas. The group indirect subsidiary Leaptec Engineering Sdn Bhd has signed a reclamation and development agreement (RDA) with the Melaka government to reclaim and develop the land into an industrial hub with port facilities. (The Edge)

MMC Corp Bhd has benefited from higher demand for cargo storage space at its Port of Tanjung Pelepas in Johor, which is operated by its unit Pelabuhan Tanjung Pelepas Sdn Bhd, due to the recent blockage at the Suez Canal caused by a trapped container ship. (The Edge)

Aeon Credit Service (M) Bhd’s 4QFY21 net profit rose 28.7% YoY to RM113.7m, as it recorded lower operating expenses. Revenue for the quarter, however, slipped 1.7% YoY to RM406.4m. A final dividend of 20 sen, payable on 15th July 2021 was proposed. (The Edge)

Source: Mplus Research - 9 Apr 2021