Market Review

Malaysia: The FBM KLCI (+0.3%) rebounded ahead of the extended weekend festive break, boosted by bargain hunting activities in selected banking and gloves heavyweights. The lower liners also rebounded, while the broader market finished mostly higher as the Technology sector (+0.6%) snapped a 10-day losing streak.

Global markets: The US stockmarkets recovered most of their previous session slump as the Dow gained 1.1%on the back of easing inflationary concern, coupled with weaker Treasury yields. European stockmarkets were also upbeat, while Asia stockmarkets closed mostly higher.

The Day Ahead

Last week, the FBM KLCI finished with modest gains ahead of the festive holiday with buying interest being noticed in the healthcare sector amid rising Covid-19 infections globally. Despite the positive performance on Wall Street overnight, we expect the sentiment may remain weak given the MCO3.0 environment, as well as the geopolitical tension in the middle east; which has brought the Brent oil price slightly higher last Friday. Meanwhile, the CPO futures climbed above RM4,500 per ton last week.

Sector focus: Investors are likely to focus on healthcare stocks on the back of rising cases in several countries such as Taiwan and Singapore. Also, traders may lookout for sectors high earning certainties ahead of the May reporting season, including packaging and plastic-related companies on the back of higher demand amid MCO. Besides, the commodities rally may shine a light on sectors such as plantation, energy and metal-related stocks.

The FBM KLCI ended mildly higher on the back of bargain hunting in selected heavyweights. Technical indicators turned mixed; the MACD Histogram has turned green, while the RSI is hovering below the 50 level. We expect trading volume to resume as the market reopens from a long weekend, with support set around 1,555-1,565, while the resistance is envisaged along 1,600-1,620.

Company Brief

YTL Cement Bhd, a subsidiary of YTL Corp Bhd will dispose of its entire cement and ready-mixed concrete operations in Malaysia to its subsidiary Malayan Cement Bhd for a total consideration of RM5.16bn under an asset rationalisation and optimisation plan. Under the agreement, Malayan Cement will acquire 12 companies involved in cement and ready-mixed concrete businesses, as well as YTL Cement’s marketing and plant management activities.

The deal, which is subject to adjustments at point of completion, will be settled via RM2.00bn in cash, RM1.41bn through the issuance of 375.5 m new ordinary shares in Malayan Cement and RM1.75bn through the issue of 466.7 m new irredeemable convertible preference shares (ICPS) in Malayan Cement. The issue price for the new Malayan Cement shares and ICPS to be issued has been fixed at RM3.75 apiece. (The Star)

Berjaya Land Bhd (BLand) has sold an aggregate of 15.0m shares or a 4.2% stake in Berjaya Food Bhd (BFood) over the past two days via direct business transactions for RM27.6m at an average of RM1.84 per share. BLand and its subsidiaries now hold 11.6m of BFood shares, representing a 3.3% stake. The disposals enabled it to cash out part of its investment in BFood will be used for working capital. (The Edge)

Property developer Eastern & Oriental Bhd (E&O) does not plan to merge with any entities in the near term, including construction player Kerjaya Prospek Group Bhd, according to the majority shareholder of both companies, Datuk Tee Eng Ho. This is because there is no synergy to be derived from by merging the two companies at this juncture. Separately, Kerjaya Prospek announced that Datuk Tee Eng Hoo has been redesignated as non-executive chairman from executive chairman previously, while his brother Tee Eng Tiong has been made chief executive officer. (The Edge)

AirAsia Group Bhd has announced that its wholly-owned Asia Digital Engineering Sdn Bhd (ADE) has obtained the Civil Aviation Authority of Malaysia's base maintenance approval, which allows ADE to offer aircraft maintenance, repair and overhaul (MRO) services. (The Edge)

Cabnet Holdings Bhd is acquiring engineering services firm CEE M&E Engineering Sdn Bhd for RM16.3m in cash, to extend its business activities to include electrical engineering services from medium and low voltage to extra-low voltage as well as mechanical engineering services. The deal comes with a two-year profit guarantee of RM4.0m for the financial years ending FY21 and FY22. (The Edge)

Source: Mplus Research - 17 May 2021