Market Review

Malaysia: The FBM KLCI (-0.5%) erased most of its previous session gains, dragged down by quick profit taking, coupled with the selloff in gloves heavyweights. The lower liners were mostly upbeat, while the broader market closed mixed with the healthcare sector (-1.7%) underperformed.

Global markets: The US stockmarkets retreated as the Dow (-0.1%) snapped a five day winning streak whereby the strong jobs data suggest that the Fed may begin to taper its asset re-purchase program that offset US President Joe Biden suggestion to lower corporate tax rate below 28.0%. Both the European and Asia stockmarkets closed mixed.

The Day Ahead

The FBM KLCI snapped a two-day gain over the rising Covid-19 cases. Meanwhile, selldown was noticed in gloves and vaccine-related stocks, pulling the health care index down. Tracking the negative tone from the US stock markets, we expect the local exchange to trade sideways with the lack of fresh catalyst in the market. On a side note, MRDIY will be replacing SUPERMX in FBM KLCI following the FTSE semiannual review. Commodities wise, we expect mild pullback on crude palm oil (tracking the soy bean futures movement), while crude oil has firmly stood above USD70 for now.

Sector focus:. We reckon traders could focus on the O&G sector amid firmer crude oil price. The announcement of the inclusion of MRDIY as FBM KLCI constituent may shine a light on consumer related stocks. Also, we expect technology stocks that are laggard as well as IT software related segment to trade actively.

The FBM KLCI failed to maintain its upward momentum, retreating near the 1,600 level. Technical indicators are suggesting a mixed sentiment on the key index; the MACD Histogram turned red bar, while the RSI is above the 50 level. We expect the key index to trade sideways, with resistance located around 1,600-1,620, while the support is set at 1,555-1,565.

Company Brief

Home improvement retailer MR DIY Group (M) Bhd has been included as one of the 30 constituents of the FTSE Bursa Malaysia KLCI to replace rubber glove maker Supermax Corporation Bhd. The change was made following the semi-annual review of the FTSE Bursa Malaysia Index Series, which was done in accordance with the index ground rules. The FTSE Bursa Malaysia KLCI reserve list, comprising the five highest-ranking non-constituents of the index by market capitalisation, will be Westports Holdings, QL Resources, Supermax, Kossan Rubber and Inari Amertron. (The Star)

Tan Sri Syed Mokhtar Albukhary has made an offer to take MMC Corp Bhd private via a selective capital reduction and repayment (SCR) exercise. Minority shareholders in MMC Corp will receive RM2.94bn cash, or RM2.00 per share. The proposed SCR is subject to shareholders' approval at an EGM to be called later. (The Star)

Serba Dinamik Holdings Bhd's independent non-executive directors had expressed their concern over the situation relating to the issues raised by the company's auditor. Management, together with the board, were taking steps to resolve matters and were working on appointing an independent firm to assess the audit issues independently and objectively. (The Star)

Pintaras Jaya Bhd's (PJB) indirect wholly-owned subsidiary, Pintary Foundations Pte Ltd has secured four new pilling contracts worth about RM108.0m (SG$34.5m). These projects have commencement dates from May to July 2021, with contract periods varying from three to seven months. (The Star)

Mah Sing Group Bhd’s wholly-owned subsidiary Mah Sing Healthcare Sdn Bhd has received approval from European Conformity (CE) for its powder-free nitrile examination gloves and powder-free latex examination gloves, which would facilitate the company to tap into the export market to the European region. (The Edge)

Yong Tai Bhd’s healthcare unit is set to undertake the Covid-19 vaccine phase three clinical trial in Malaysia after the National Pharmaceutical Regulatory Agency (NPRA) granted its approval for the clinical trial import licence. (The Edge)

Johore Tin Bhd is buying a piece of freehold land measuring 297.5-ac for RM169.8m cash in Banting, Selangor to expand its manufacturing operations as well as to undertake property development activities. (The Edge)

SKP Resources Bhd’s 4QFY21 net profit surged 580.5% YoY to RM30.7m, driven by strong demand from key customers, as well as improvement in operational efficiencies and effective cost control measures. Revenue for the quarter climbed 4.4% YoY to RM444.9m. (The Edge)

Integrated bus operator Perak Transit Bhd is planning a bonus issue of free warrants on the basis of one warrant for every four existing ordinary shares held, to reward its shareholders. The entitlement date will be announced later. (The Edge)

Pimpinan Ehsan Bhd’s auditor, Messrs BDO PLT has voluntarily resigned and the group has recommended the appointment of Messrs Crowe Malaysia PLT as its new auditor. The auditor’s recommendation will be tabled during the forthcoming AGM on 24th June 2021. (The Edge)

Sedania Innovator Bhd’s subsidiary Sedania Technologies Sdn Bhd has secured awards from Telekom Malaysia Bhd (TM) to expand its GreenTech solutions to 34 sites from the present 10 sites. The 24 new sites will expand its current energy performance contract, which aims to improve energy efficiency for its client’s facilities to reduce energy cost. (The Edge)

Cahya Mata Sarawak Bhd (CMS) has appointed KPMG Management & Risk Consulting Sdn Bhd (KPMG MRC) as the independent consultant to review the financial management of certain investments and contracts. CMS board has resolved to extend group chief financial officer Syed Hizam's suspension by 60 days to accommodate the duration required for KPMG MRC to carry out its work and report its findings to the board. (The Edge)

Progressive Impact Corp Bhd has bagged a contract worth 25.3m riyal (RM27.9m) from the Makkah Municipality in Saudi Arabia for the provision of pest control monitoring services in Makkah. PICORP’s wholly-owned subsidiary Saudi ASMA Environmental Solutions LLC had accepted a letter of award on 1st June 2021 for the said contract. (The Edge)

Source: Mplus Research - 4 Jun 2021