Market Review

Malaysia:. The FBM KLCI advanced to close near the 1,600 psychological level with only 3 index heavyweights closed in the red yesterday. The lower liners extended their gains amid the positive market sentiment, while all 13 major sectors on the broader market finished higher, anchored by the REITs sector (+1.6%).

Global markets:. The US stockmarkets edged mildly higher as the Dow added 0.1% overnight, as traders anticipate on the upcoming jobs data, while technology and energy stocks advanced. European stockmarkets extended their gains, while Asia stockmarkets ended mixed.

The Day Ahead

The FBM KLCI climbed for the second session as market sentiment was aided by the higher CPO and Brent oil prices on the back of OPEC+ decision to gradually restore supply to the market amid stronger demand in view of the Covid-19 recovery. The CPO price surged more than 5.0%, while the Brent oil price stayed firmer above USD70 per barrel. Despite the rising Covid-19 cases, we expect the expedition of vaccination rollouts and FMCO should eventually translate to market players focusing in recovery theme at least for the near term.

Sector focus:. We reckon the stronger CPO and oil prices which may bode well for the plantation and oil & gas counters on the local front. On the recovery theme, traders may focus on essential consumer stocks and transportation & logistics. Meanwhile, we expect some buying interest to be seen after a decent consolidation in technology stocks over the past month. 

The FBM KLCI extended its gains, crossing above the 1,595 level. Technical indicators turned positive as the MACD Histogram has extended a green bar, while the RSI was hovering above the 50 level. Should the rebound sustain above 1,595, the next resistance will be located around 1,600-1,620, while the support is set at 1,555-1,565. Otherwise, the key index may trade range bound within 1,600 level.

Company Brief

Datasonic Group Bhd has won a RM39.8m job to provide comprehensive maintenance services of card personalisation centres at the National Registration Department (NRD). The 24-month contract, effective 1st June 2021, was awarded by the Home Ministry. Under the contract, Datasonic is also required to implement the Professional Training & Education for Growing Entrepreneurs (PROTÉGÉ) programme based on the contract sum with the minimum number of participants of 15 persons, at no cost to the Government. (The Star)

Wah Seong Corp Bhd has won a contract to supply of oil and gas processing and compression modules for a project in Gabon, Africa. The US$39.4m (RM162.4m)
job was awarded by BW Energy Gabon SA to its indirect wholly owned unit Wasco Engineering International Ltd. The work was estimated to be completed within 13 months. (The Star)

Axiata Group Bhd's subsidiary, Boost Holdings Sdn Bhd, and RHB Bank Bhd’s RHB Banking Group have signed a Heads of Agreement to form a consortium to apply for a digital banking licence from Bank Negara Malaysia. Boost would own a majority stake of 60.0% in the digital bank joint venture while RHB would hold the remaining 40.0%, with a minimum issued share capital of RM100.0m. (The Edge)

Serba Dinamik Holdings Bhd has accepted a request from its second largest shareholder Datuk Abdul Kadier Sahib to withdraw the proposal to remove the company’s external auditor KPMG. Meanwhile, Kumpulan Wang Persaraan (Diperbadankan) (KWAP) has ceased to be a substantial shareholder of the group after the pension fund sold 26.0m shares on the open market. (The Edge)

Spanish oil and gas company Repsol has agreed to sell its exploration and production assets in Malaysia and in Block 46 CN in Vietnam to a wholly-owned subsidiary of Hibiscus Petroleum Bhd. Hibiscus indirect unit, Peninsula Hibiscus Sdn Bhd has signed an agreement with Repsol to acquire the entire equity interest in Fortuna International Petroleum Corp for US$212.5m cash. (The Edge)

Techfast Holdings Bhd has secured an RM1.46bn contract to supply a range of marine fuel oils over a three-year period to a Singapore-based integrated marine fuel oil logistics provider. Its wholly-owned subsidiary Fast Energy Sdn Bhd will supply Wise Marine Pte Ltd up to 20,000 tonnes of low sulphur fuel oil, low sulphur marine gas oil and high sulphur fuel oil every month. (The Edge)

The High Court has granted Sime Darby Plantation Bhd (SDP) leave to challenge the "unlawful" acquisition of 380.0-ac of land of its Byram Estate in Seberang Perai Selatan by the Penang government and the state-owned Penang Development Corporation (PDC). SDP deems the compulsory acquisition as unlawful and an abuse of the Land Acquisition Act on the grounds that the company was allegedly required to give up the land at a very low value. (The Edge)

The High Court also granted Boustead Holdings Bhd’s subsidiary Boustead Naval Shipyard Sdn Bhd (BNS) a three-month restraining order and leave to proceed with its scheme of arrangement with its creditors. BNS had in 2011 received a letter of award of RM9.00bn from the Defence Ministry to design, construct, equip, install, commission, integrate, test and conduct trials and deliver six Second Generation Patrol Vessels or Littoral Combat Ships (Frigate Class) (LCS). Those vessels are supposed to be completed by 2019, but have not been completed until today despite large amounts of funds are said to be drawn down (The Edge) Computer Forms (Malaysia) Bhd has proposed a bonus issue of up to 164.0m new shares on the basis of four bonus shares for every one existing share. The bonus issue is expected to be completed by 3Q21. (The Edge)

IRIS Corporation Bhd has announced that its wholly-owned subsidiary IRIS Information Technology Systems (IITS) Sdn Bhd has accepted a supplement letter of award from the Home Ministry for a reduction of sales and service tax in the National Integrated Immigration System (NIISe) project. The government has agreed to reduce the applicable sales and service tax for NIISe from RM65.6m to RM33.1m. Hence the total contract value including sales and service tax for the NIISe project to date has been reduced to RM1.13bn from RM1.16bn previously. (The Edge)

Source: Mplus Research - 3 Jun 2021