Market Review

Malaysia: The FBM KLCI (+0.1%) resumed trading after a long break to record measurable gains amid the rising Covid-19 cases, coupled with the slow rollout in vaccination programme. The lower liners, however, trended lower, while the Financial Services sector (+0.9%) was the sole outperformer on the broader market.

Global markets: The US stockmarkets retreated as the Dow slipped 0.2%, dragged down by the lingering concern over the inflationary pressure which may lead to the scale back of the massive monthly bond purchases. European stockmarkets ended lower, while Asia stockmarkets closed mostly higher.

The Day Ahead

The FBM KLCI started the week on a flattish tone after the festive holiday and market sentiment remained cautious as significant selldown was noticed on the broader market. While investors may be on bargain hunting following yesterday’s selldown, market’s concern over the possibility of a full lockdown in Selangor to curb further Covid-19 infections may weigh on the local bourse. Meanwhile, we expect commodities prices such as iron ore, CPO and oil prices to stay on upbeat note over the near term.

Sector focus: Given the rise in the Covid-19 cases in several countries, we expect traders to expose themselves with healthcare related counters. Meanwhile, the energy stocks may be on traders’ radar on the back of firmer Brent oil price, rising above USD69 at this moment. Also, we expect overall broader market will be on a bargain hunting tone after the bashed down market yesterday.

The FBM KLCI closed flat with volume resuming to four-week high, but the EMA20 continues to point downwards. Technical indicators remained mixed as the MACD Histogram has extended a green bar, while the RSI continued hovering below the 50 level. Support set around 1,555-1,565, while the resistance is envisaged along 1,600-1,620.

Company Brief

Pestech International Bhd has announced that its unit Pestech Technology Sdn Bhd has secured a contract from RTS Operations Pte Ltd for traction power supply of Rapid Transit System (RTS) Link Asset for the RTS link between Malaysia and Singapore worth RM65.0m. The contract is for the design, manufacture, supply, delivery, installation, testing and commissioning, interfacing, warranty and other related works. It will start immediately and it is expected to be completed by 30th September 2026. (The Star)

Pesona Metro Holdings Bhd has bagged a mixed development project worth RM319.0m for the construction and mechanical and engineering works for a 44- storey office tower for Tenaga Nasional Bhd in Kuala Lumpur. The 27-month project will commence on 17th May 2021. (The Edge)

Evergreen Fibreboard Bhd’s 1QFY21 net profit stood at RM9.6m vs. a net loss of RM12.2m recorded in the previous corresponding quarter, lifted higher revenues from downstream products, higher average selling prices for panel boards, and lower operational costs as a result of higher production efficiency and foreign exchange gains. Revenue for the quarter grew 2.6% YoY to RM233.2m. (The Edge)

Practice Note 17 (PN17) company China Automobile Parts Holdings Ltd has scrapped plans to inject property development business as part of a plan to regularise its PN17 condition and maintain its listing status on the Main Market of Bursa Malaysia. This comes after the company received a termination letter from Gan Kah Siong, whom is the controlling shareholder of Idaman Sejiwa Development Sdn Bhd (ISD) after there were no progress after the execution of the memorandum of understanding (MoU). (The Edge)

Hartalega Holdings Bhd has stepped forward to donate 2.0m pieces of gloves after an appeal by the Ministry of Health (MoH). MoH secretary-general Datuk Mohd Shafiq Abdullah, while taking delivery of 33 ventilators bought by The Edge Covid 19 Equipment Fund for Hospital Sungai Buloh last Saturday has reported that hospitals were in need of more medical gloves. (The Edge)

Ta Ann Holdings Bhd has reported that the tight supply of natural logs is likely to uphold export log prices, while Japan's plan to improve infrastructure will help sustain the group's plywood exports. The outlook for the palm oil for FY21 looks favourable compared with the average prices of FY19 and FY20, supported by growing demand from India and China in view of a gradual economic recovery and rise in edible oil consumption. (The Edge)

Source: Mplus Research - 18 May 2021