Market Review

Malaysia: The FBM KLCI (-0.7%) snapped a three-day winning streak as the number of new daily Covid-19 cases across the nation breached the 6,000 mark yesterday. The lower liners retreated, while the Healthcare sector (+2.0%) was the sole winner on the broader market.

Global markets: The US stockmarkets ended lower for the third straight session as the Dow declined 0.5%, on the rising Treasury yields and concern over the tapering of monthly bond purchases amid better economic data. European stockmarkets extended their losses, while Asia stockmarkets closed mostly were lower.

The Day Ahead

The FBM KLCI succumbed to selling pressure as the Covid-19 daily confirmed cases jumped to all-time-high in the country. The ongoing pandemic, however, benefited the healthcare sector. Despite concerns over possible stricter lockdown in Selangor that could dampen the market sentiment, we expect mild bargain hunting activities to emerge following yesterday’s strong selldown. Meanwhile, buoyant crude palm oil prices have benefited companies’ performance in the plantation sector.

Sector focus: Trading interest is likely to emerge within the healthcare related stocks such as gloves, glove-proxies and face masks segments. Also, investors may focus on the plantation sector following the release of quarterly results from several companies yesterday, which saw significant improvement in performance. Meanwhile, technology stocks may be put on traders’ radar ahead of their earnings.

The FBM KLCI failed to clear the 1,600 psychological level as the key index finished lower after hovering in the negative territory for the entire session. Technical indicators turned negative as the MACD Histogram has turned red, while the RSI is still below the 50 level. We expect the key index to trade below 1,600 level over the near term, support is located around 1,555-1,565.

Company Brief

Dialog Group Bhd's 3QFY21 net profit fell 9.9% YoY to RM136.2m, affected by on going expansion of its tank terminals and lower contribution from its downstream business. Revenue for the quarter dropped 19.8% YoY to RM405.2m. (The Star)

Aeon Co (M) Bhd’s 1QFY21 net profit jumped 194.9% YoY to RM22.0m, on improved merchandise gross margin and sustainable cost reduction structures. Revenue for the quarter, however, slipped 15.1% YoY to RM1.01bn. (The Star)

Bumi Armada Bhd has announced that its joint venture company in India has entered into a deal to set up and operate a floating storage and regasification unit (FSRU) in Mumbai harbour. The project is for a period of 30 years. (The Star)

Kuala Lumpur Kepong Bhd's (KLK) 2QFY21 net profit surged 17.6x YoY to RM490.4m, thanks to higher commodity prices, and stronger earnings from its manufacturing and property segments. Revenue for the quarter grew 18.5% YoY to RM4.51bn. An interim dividend of 20 sen per share, payable on 3rd August 2021 was declared. (The Edge)

Batu Kawan Bhd’s 2QFY21 net profit soared 16.3x YoY to RM261.1m, underpinned by higher profits from all segments, coupled with unrealised foreign currency exchange translation gain and an RM154.6m surplus from the sale of plantation land and government acquisition. Revenue for the quarter rose 20.2% YoY to RM4.73bn. (The Edge)

Malaysian Bulk Carriers Bhd (Maybulk) 1QFY21 net profit fell 68.5% YoY to RM15.0m, as it recorded a one-off gain on the liquidation of a subsidiary in the previous corresponding quarter. Revenue for the quarter declined 10.8% YoY to RM46.6m. (The Edge)

Magnum Bhd's 1QFY21 net profit sank 86.5% YoY to RM7.5m, on higher number of cancelled draws due to the Movement Control Order 2.0 (MCO 2.0), which also coincided with its peak period during the Chinese New Year. Revenue for the quarter slipped 37.0% YoY to RM383.9m. (The Edge)

Allianz Malaysia Bhd’s 1QFY21 net profit fell 20.4% YoY to RM63.3m, due mainly to lower profit contribution from the life insurance segment. Revenue for the quarter, however, grew 8.2% YoY to RM1.61bn. (The Edge)

Wah Seong Corp Bhd’s 1QFY21 net profit stood at RM8.6m vs. a net loss of RM44.4m recorded in the previous corresponding quarter, on stronger performance by its business segments. Revenue for the quarter rose 2.1% YoY to RM333.4m. (The Edge)

Hup Seng Industries Bhd’s 1QFY21 net profit rose 1.7% YoY to RM9.9m, on higher sales and lower operating expenses. Revenue for the quarter grew 2.3% YoY to RM82.8m. (The Edge)

TSH Resources Bhd's 1QFY21 net profit surged 9.2x YoY to RM20.8m, thanks to higher crude palm oil and palm kernel prices, partially offset by lower sales contribution from the cocoa segment due to the pandemic as well as the higher export levy and duty. Revenue for the quarter, however, declined 5.0% YoY to RM198.7m. (The Edge)

Sunway Real Estate Investment Trust's (Sunway REIT) 3QFY21 net property income (NPI) fell 35.3% YoY to RM67.0m, as footfall and sales in the retail segment was affected by the imposition of the Movement Control Order (MCO 2.0). Revenue for the quarter decreased 25.9% YoYto RM104.3m. (The Edge)

Tropicana Corp Bhd's 1QFY21 net profit sank 54.7% YoY to RM2.3m, on higher tax expense. Revenue for the quarter, however, expanded 68.5% YoY to RM240.5m. (The Edge)

UCrest Bhd has inked an agreement with two contract manufacturers in China and secured the capacity to produce Sputnik V vaccines. The agreement is a follow-up to a Memorandum of Understanding inked between UCrest and the Russian Direct Investment Fund (RDIF) in April 2021, wherein it was agreed that UCrest will identify and manage contract manufacturers for the production of the Sputnik V vaccine for RDIF. The agreement with the two Chinese contract manufacturers results in UCrest having secured the capacity to produce between 312.0-960m doses in a 24-month period. (The Edge)

The police have dispersed NWP Holdings Bhd's directors at the timber products manufacturer’s extraordinary general meeting broadcast venue, as the EGM was adjourned following the notification of a shareholder’s complaint on the integrity of the proxy form. Board members dispersed by the police were Datuk Chu Boon Tiong, Yew Onn Chong, Datuk Seri Kee Soon Ling, Matthew Chan Cheng Han and Hong Chia Seong. (The Edge)

Source: Mplus Research - 20 May 2021