Market Review

Malaysia: The FBM KLCI (-0.4%) was dragged down by quick profit taking in selected banking and plantation heavyweights yesterday amid some developments in the political scene. The lower liners trended lower, while the energy (+0.9%), property (+0.3%) and healthcare (+0.04%) sectors outperformed the mostly negative broader market.

Global markets: The US stockmarkets retreated as the Dow slipped 0.4% as investors turned cautious ahead of the inflation data to be release today. Both the European and Asia stockmarkets closed mostly downbeat.

The Day Ahead

The FBM KLCI reversed its gains from the previous session as the key index languished in the negative territory on profit taking, mirroring the regional declines. However, we believe investors’ sentiment may turn mildly positive following the government’s announcement to commence the dispensing of vaccines to critical economic sectors under phase four of the National Covid-19 Immunisation Programme, targeting to increase the vaccination rate. Commodities wise, the CPO price extended its losses, while the crude oil price remained flat around USD72.

Sector focus: We expect the transportation and logistics stocks to continue to bode well under ongoing MCO. Besides, the recovery theme stocks may be in focus over the near term given the improved market sentiment following the higher vaccination rate in the country. Also, plantation counters might get a lift from IJM Plantation’s take over deal.

The FBM KLCI failed to extend its rebound as the key index retreated and closed below the EMA20 level. Technical indicators turned negative as the MACD Histogram turned red, while the RSI hovered marginally below the 50 level. We expect the key index to trade sideways in upward bias tone, with resistance located around 1,600-1,620, while the support is set at 1,555-1,565.

Company Brief

Top Glove Corporation Bhd’s 3QFY21 net profit surged 485.3% YoY to RM2.04bn, on higher average selling prices and robust sales. Revenue for the quarter jumped by 146.6% YoY to RM4.16bn. An interim dividend of 18.0 sen per share, payable on 7th July 2021 was declared. (The Star)

Kuala Lumpur Kepong Bhd (KLK) has offered to purchase IJM Corp Bhd's entire 56.2% stake in IJM Plantation Bhd for RM1.53bn cash. This offer, which valued IJM Plantation at RM3.10 a share is valid until 11th June 2021, of which IJM Corp has agreed in principle to accept the offer. (The Star)

Kejuruteraan Asastera Bhd's (KAB) indirect subsidiary Energy Optimization (Thailand) Co Ltd has secured four new projects in Thailand with a combined installed capacity of 3,912kW peak solar photovoltaic systems under the build own-operate-transfer model. The contracts have a combined capex of about RM11.4m and are expected to be completed within a year from the signing of the respective contract's power purchase agreement. (The Star)

Eversendai Corp Bhd’s 1QFY21 net loss narrowed to RM3.8m, from a net loss of RM10.1m recorded in the previous corresponding quarter, due to higher progress billings from the ongoing and new projects in the energy segment followed by India and the Middle East region. Revenue for the quarter rose 36.3% YoY to RM311.4m. (The Star)

Malaysia Smelting Corp Bhd (MSC) has declared force majeure after suspending its tin mining and smelting operations from 4th June 2021 until 14th June 2021 in line with the Malaysian Government’s implementation of the total lockdown across the country to curb the spread of the Covid-19 pandemic. A force majeure declaration aims to free parties in a contract from their obligations due to extraordinary circumstances. (The Edge)

MSM Malaysia Holdings Bhd has temporarily halted the operations of its plant in Seberang Prai, Penang, from 8th June 2021 until 17th June 2021, after eight positive Covid-19 cases were detected among the factory workers. The management foresees that the temporary suspension of operations will delay the shipment of several sales orders to its customers. (The Edge)

Greatech Technology Bhd has reported that its earnings will not be affected by issues faced by its client Lordstown Motors Corp, which reportedly will not be able to commence full commercial production and there are doubts over whether it could continue as a going concern through the end of the year. (The Edge)

Tiong Nam Logistics Holdings Bhd is boosting its logistics warehousing capacity by acquiring the owner of a warehouse within Port of Tanjung Pelepas in Johor for RM30.0m. The group is buying VM Andaman Sdn Bhd from Kwasa Logistics Sdn Bhd and Goodman SEA Investments No 1 Ltd. (The Edge)

Central Global Bhd’s (CGB) construction arm Proventus Bina Sdn Bhd has inked a Memorandum of Understanding with Multi Scopes Engineering Sdn Bhd to set up a joint venture to build an RM250.0m sewage treatment plant in Petaling Jaya, Selangor. The scope of the proposed JV would be the engineering, procurement, construction, commissioning, operation and handover of the plant to Kwasa Land Sdn Bhd, a wholly-owned subsidiary of the Employees Provident Fund. (The Edge)

Yinson Holdings Bhd has been selected by French oil and gas giant Total to perform preliminary front-end engineering design for two floating production storage and offloading projects to be installed in Angola and Suriname. The Angola project would be installed at around 1,400m, located 160km from Luanda, while the Suriname project would be installed at about 2,000m, located 150km from Paramaribo. (The Edge)

MQ Technology Bhd (MQ Tech) has called off its plan to acquire a 70.0% stake in rubber and plastic medical products manufacturer Kibaru Manufacturing Sdn Bhd. The company and Kibaru have mutually agreed to terminate the Memorandum of Agreement (MoA) dated 2nd September 2020, after failing to meet a condition precedent, but did not specify the details. (The Edge)

Handal Energy Bhd’s wholly-owned Handal Cranes Sdn Bhd has won a contract from Kebabangan Petroleum Operating Company Sdn Bhd for the provision of operations and maintenance services for offshore cranes and other hoisting as well as lifting equipment. Meanwhile, its 51.0%-owned unit, Borneo Sea Offshore Engineering Sdn Bhd, has secured a contract from PTTEP HK Offshore Ltd for the provision of 2021 Sarawak turnaround management and coordination services. (The Edge)

Fitters Diversified Bhd has bagged a central purchase contract to supply Hypro Oriented PVC pipes. Its subsidiary Molecor (SEA) Sdn Bhd received a letter of acceptance of the contract from Pengurusan Aset Air Bhd to supply HYPRO® PVC O pipes over a period of 24 months with provisional quantity of approximately 290km. (The Edge)

Source: Mplus Research - 10 Jun 2021