Market Review

Malaysia:. The FBM KLCI (+0.6%) started off the week on a firm footing with more than half of the key index components finished higher, boosted by banking and oil & gas heavyweights. The lower liners closed mixed, while the broader market closed mostly higher, anchored by the construction sector (+2.1%).

Global markets:. The US stockmarkets ended mixed as the Dow (-0.1%) extended its losses, but the S&P 500 and Nasdaq gained 0.02% and 0.3% each ahead of the inflation data to be release tomorrow. European stockmarkets ended mostly lower, while Asia stockmarkets closed mixed.

The Day Ahead

Gains on the FBM KLCI was encouraged by the reducing Covid-19 transmission, coupled with the strong performance delivered by the Employees’ Provident Fund that saw gross investment income grew 58.6% YoY to RM19.29bn in 1Q21. We reckon that further upsides are in the cards, premised to the progressive step up in vaccination efforts, while investors may keep an eye on the unemployment rate data that demonstrate sequential improvements since January 2021. Meanwhile, the crude oil prices advanced, but the crude palm oil prices retreated.

Sector focus:. We see the recovery theme stocks, particularly tourism-related to remain upbeat in anticipation of re-opening of economic activities alongside with the higher number of vaccinated populations. The technology sector is expected to mirror the gains on Nasdaq overnight, while the energy sector may take cue from the higher crude oil prices. Packaging and transportation sector are also thriving under the current circumstances.

The FBM KLCI rebounded to recover most of its previous session losses as the key index closed above the EMA20 level. Technical indicators turned positive as the MACD Histogram turned green, while the RSI climbed marginally above the 50 level. We expect a slight upward bias on the key index over the near term, with resistance located around 1,600-1,620, while the support is set at 1,555-1,565.

Company Brief

Hartalega Holdings Bhd has completed the remediation of RM41.0m in recruitments fees to workers who had made payments to employment agents during their recruitment process. While the reimbursement was made to current workers who had joined the group prior to the implementation of the zero recruitment cost policy on 1st April 2019, the group will also reimburse current workers who joined after the policy was implemented. In addition, the group has extended the programme to former workers who left the company on or after the zero recruitment cost policy was implemented. (The Star)

See Hup Consolidated Bhd's 51.0% owned unit, SH Moment Builder Sdn Bhd (SHM) has won a RM91.3m contract from China Communications Construction (ECRL) Sdn Bhd. The contract entails the construction and completion of part of the subgrade works of Package 2, Section 4 for the East Coast Rail Link project. The 26-month project will commence on 13th June 2021, and will be funded via internally generated funds and/or external borrowings. (The Star)

Microlink Solutions Bhd (Microlink) has formed a strategic joint venture (JV) with Danapuri Sdn Bhd, a member of the Dipon Group of Bangladesh, to pursue digital transformation projects in selected target territories. The JV would leverage the extensive expertise of Danapuri and the wider Dipon Group in information and communications technology (ICT) project investment and management, eGovernment, eCommerce, ePayment and eFinancial services implementation. Microlink will hold a 51.0% stake in the JV entity, Microlink Technologies Sdn Bhd, while Danapuri will own the remaining 49.0%. (The Star)

Berjaya Corp Bhd (BCorp) has disposed its entire 51.0% stake in Peugeot distributor Berjaya Auto Alliance Sdn Bhd (BAASB) for RM6.7m cash to other minority shareholders including Bermaz Auto Bhd. The deal will increase Bermaz's stake in BAASB to from 20.0% to 55.0%. Bermaz has acquired the additional 35.0% stake in BAASB from BCorp for RM4.6m. (The Star)

Can-One Bhd’s 1QFY21 net profit stood at RM34.8m vs. a net loss of RM15.4m recorded in the previous corresponding quarter, on higher contribution from its general packaging business, as well as lower interest cost and operation expenses. Revenue for the quarter grew 1.1% YoY to RM652.1m. (The Star)

FGV Holdings Bhd’s unit FGV Integrated Farming Holdings Sdn Bhd (FGVIF) had signed an agreement to buy the entire 100.0% equity interest in MSM Perlis Sdn Bhd, a wholly-owned subsidiary of MSM Malaysia Holdings Bhd (MSM) which owns about 4,500-ha in Chuping, Perlis, for RM175.0m. MSM will be conducting an extraordinary general meeting (EGM) to obtain approval from its shareholders which is scheduled by 3Q21 as the transaction is targeted to complete before the end-2021. MSM is expected to realise an extraordinary income from the proposed disposal with an estimated gain of RM91.6m. (The Star)

Yinson Holdings Bhd has entered into a deal with Singapore's SMRT Corp Ltd's corporate venture arm to co-invest an undisclosed amount in an autonomous vehicle start-up named MooVita Pte Ltd. The co-investment aims to accelerate the development, commercialisation and international expansion of MooVita's driverless solutions, beginning with the deployment of safe and comfortable driverless solutions for public transportation and the urban environment. (The Edge)

IJM Corp Bhd, IJM Plantations Bhd and Kuala Lumpur Kepong Bhd (KLK) requested to suspend the trading of their shares effective 2.30pm yesterday, pending an announcement. It is learnt that KLK is making an offer to take over IJM Plantations. Shareholders of IJM Plantations will be given the option of either a cash offer or share swap. The takeover deal is valuing IJM Plantations in the range of RM2.50 to RM2.70 per share. (The Edge)

Lay Hong Bhd has proposed to acquire the remaining 50.0% stake in Sri Tawau Farming Sdn Bhd (STF) it does not already own for RM28.0m in a related party deal. The acquisition is undertaken to enable STF to become a wholly-owned subsidiary of the company. (The Edge)

Majuperak Holdings Bhd has called off a plan to develop large-scale solar photovoltaic (LSS) projects in Perak jointly with Cahya Suria Energy Sdn Bhd. Majuperak Energy Resources Sdn Bhd and Cahya Suria have mutually agreed to terminate the framework agreement they entered into a year ago after failing to meet a condition precedent. (The Edge)

Latitude Tree Holdings Bhd has suspended the operations of two factories in Kapar, Selangor after 13 positive Covid-19 cases were detected among the factory workers. The group's two wholly-owned subsidiaries, namely Latitude Tree Furniture Sdn Bhd and Rhong Khen Industries Sdn Bhd, suspended their operations from yesterday until 18th June 2021. (The Edge)

Apollo Food Holdings Bhd's wholly-owned subsidiary in Johor Bahru has temporarily stopped operations for disinfection purposes to help curb the spread of Covid-19. Apollo Food Industries (M) Sdn Bhd received a notice from the Ministry of Health (MoH) asking the firm to close until 13th June 2021 and disinfect its premises. (The Edge)

Carlsberg Brewery Malaysia Bhd also announced that it has temporarily suspended the operations of its brewery in Shah Alam from 2nd June 2021 due to the enforcement of the Movement Control Order to curb the spread of Covid-19 infections. (The Edge)

K-One Technology Bhd unit has received approval from the Medical Device Authority, an agency under the MoH, to sell low dead-volume disposable syringes with needles in Malaysia. Its wholly-owned subsidiary K-One MediTech Sdn Bhd received the approval on 4th June 2021. (The Edge)

Boustead Heavy Industries Corp Bhd (BHIC) has inked a memorandum of understanding (MoU) with Airbus Defence and Space as the latter seeks to explore the joint development of military aircraft maintenance, repair and overhaul (MRO) capabilities in Malaysia. (The Edge)

Pecca Group Bhd plans to invest a further RM5.0m to expand its mask-making capacity due to increasing market demand. The expansion will be managed by its wholly-owned subsidiary Pecca Leather Sdn Bhd and involve the purchasing of five new mask production lines amounting to RM3.0m. The remaining RM2.0m will be used for building renovations. (The Edge)

Source: Mplus Research - 9 Jun 2021