Market Review

Malaysia: The FBM KLCI (-0.7%) extended its losses after hovering largely in the negative territory throughout the day as sentiment was bogged down by the potential implementation of MCO 3.0. The lower liners finished lower, while the broader market was downbeat with the exception of Transportation & Logistics (+1.1%) and Plantation (+0.3%) sectors.

Global markets: The US stockmarkets closed mostly higher as the Dow (+0.7%) and S&P 500 (+0.3%) advanced after the IHS Markit US Manufacturing PMI rose to 60.5 in April of 2021, but the Nasdaq shed 0.5%. European stockmarkets closed higher, while Asia stockmarkets extended their losses.

The Day Ahead

The FBM KLCI stayed on a downbeat note despite solid expansion of Malaysia’s PMI in April as the key index succumbed to selling in most index components, led by PETDAG and glove heavyweights. The key index is likely to trade in consolidation over the near term as investors’ are still cautious switching among recovery and healthcare-related stocks. Commodities wise, the CPO price jumped around 5.0% to close above the RM4,000 level, while tin futures are at another record high position. On a side note, according to Intel’s CEO, the global chip shortages situation may not resolve anytime soon.

Sector focus: With the setup above, we believe plantation and metal-related counters may see decent trading interest. Meanwhile. Investors may focus on the semiconductor sector ahead of the results given the strong demand for chips amid Covid-19 pandemic.

The FBM KLCI slipped below the 1,600 psychological level to close below the EMA 20 level as investors’ sentiment remained cautious. Technical indicators remained negative as the MACD Histogram has extended a red bar, while the RSI was hovering below the 50 level. Should bargain hunting activities emerge, the key index may trend towards the 1,600 level again, with next resistance pegged around 1,615-1,635; support is set at 1,565.

Company Brief

The Malaysia Competition Commission’s (MyCC) decision and its fine imposed on My E.G. Services Bhd (MYEG) and MY E.G. Commerce Sdn Bhd (MYEC) for violating the competition law was upheld by the Court of Appeal. There is no financial or operational impact for the financial year ending 31st December 2021 arising from the above as MYEG and MYEC had paid the fines amounting to RM9.6m and had fully complied with the decisions made earlier by the MyCC. (The Star)

Handal Energy Bhd's 51.0%-owned subsidiary Borneo Seaoffshore Engineering Sdn Bhd has secured a new contract from Malaysia LNG Sdn Bhd (MLNG) for the provision of pipeline isolations services. The contract does not have any specified value as it is on a “call-out” basis is effective for about 14 months from 27th January 2021 until 2nd April 2022, and comes with a one-year extension option. (The Edge)

Duopharma Biotech Bhd’s 1QFY21 net profit increased 29.9% YoY to RM17.6m, on the back of higher sales in the consumer healthcare sector. Revenue for the quarter rose 4.9% YoY to RM166.5m. Meanwhile, Duopharma has proposed a onefor-three bonus issue, involves up to 239.9m new shares which will be issued on a date to be announced later. (The Edge)

Tashin Holdings Bhd's 1QFY21 net profit surged 16.9x YoY to RM12.2m, on higher demand for its steel products as well as selling prices. Revenue for the quarter added 55.2% YoY to RM95.2m. (The Edge)

Sarawak Consolidated Industries Bhd (SCIB) plans to raise up to RM227.8m via its latest private placement. The group will place up to 20.0% of its issued shares to third party investors to be identified later, at a yet to be determined issue price. Some RM133.0m of the placement proceeds will be used for working capital for ongoing projects. Another RM67.0m will be set aside for estimated expenses for upcoming projects, while RM20.0m will be utilised for capital expenditure requirements for current operations. (The Edge)

UEM Edgenta Bhd has been slapped with a RM18.7m penalty by the Inland Revenue Board (IRB) for the years of assessment 2015 to 2018, of which the notices of additional assessment were raised mainly pursuant to dispute on the status of UEM Edgenta as a management services company and shall be taxed as an investment holding company under Section 60FA of the Income Tax Act, 1967. UEM Edgenta shall proceed to file an appeal against the said notices raised by IRB with the Special Commissioner of Income Tax. (The Edge)

Minetech Resources Bhd has won a RM33.7m contract to undertake construction work for the second phase development of the Sarawak Islamic Skills Institute. The project is expected to commence upon receipt of official order from Azan Engineering, and is scheduled to be completed by 18th March 2024. (The Edge)

SHH Resources Holdings Bhd's wholly-owned subsidiaries SHH Furniture Industries Sdn Bhd and Kurnia Sejati Sdn Bhd have shut their manufacturing facilities in Muar until 14th May 2021, after some employees tested positive for Covid-19. The temporary suspension of operations of the subsidiaries is expected to result in delay of shipment of several orders to its customers. (The Edge)

Source: Mplus Research - 4 May 2021