Market Review

Malaysia:. The FBM KLCI (-1.1%) pullback alongside regional markets amid the ongoing concern over the interest rate normalisation in US. The lower liners fell, while the telecommunications & media sector (+0.7%) outperformed the broader market as both the DIGI and AXIATA took a step forward firming up the deal.

Global markets:. The US stockmarkets rebounded as the Dow gained 1.8% as investors perceived that the US Federal Reserve will take on a less hawkish stance when inflation rate normalised. European stockmarkets also rebounded, but Asia stockmarkets were mostly downbeat.

The Day Ahead

The FBM KLCI surrendered its gains amid hawkish comments from the Feds, alongside its regional peers. However, with the strong rebound overnight on Wall Street, coupled with the gradual subsiding in Covid-19 daily cases, bargain hunting may lift the sentiment on the local bourse. Also, we believe market participants should focus on recovery theme stocks given the vaccination rate is improving in Malaysia. Meanwhile, the oil price climbed near the USD75 on the back of weaker USD; while the CPO price continued its downtrend move.

Sector focus:. Tracking the upward move on Nasdaq, investors may continue to look out for technology stocks on the local front. Besides, the oil & gas sector may attract some buying interest on the back of firmer oil prices.

The FBM KLCI resumed its downtrend, closing again below the SMA200 level as investors’ sentiment remained tepid. Technical indicators turned negative as the MACD Histogram has turned into a red bar, while the RSI crossed below 50 level. We expect the key index to trade below its resistance level at 1,600 with some bargain hunting activities taking shape, while the support level is located around 1,555-1,565.

Company Brief

Axiata Group Bhd, Telenor Asia Pte Ltd and Digi.com Bhd have signed the transaction agreements for the proposed merger of Celcom Axiata Bhd and Digi. The parties have concluded the due-diligence exercise and confirmed their intent to converge the Malaysian mobile operations to establish a more more-resilient and leading local telco. Upon successful completion of the transaction, the merged entity will have an estimated 19.0m customers with revenue of RM12.40bn, Ebitda of RM5.70bn, profit after tax of RM1.90bn and fresh cash flow of RM4.00bn. The proposed transaction remains subject to shareholder and regulatory approvals and is expected to be completed by 2Q22. (The Star)

Serba Dinamik Holdings Bhd has denied there was any element of related party transaction (RPT) in the undertaking of Block 7 Investments LLC when the Abu Dhabi project win was first announced in April 2021. The company also clarified that Block 7 was incorporated in Abu Dhabi, United Arab Emirates (UAE), and not in the United States as reported in The Edge Weekly on 17th June 2021. Block 7’s ownership is EFIRE Capital Holdings Ltd, which is owned by LIWA Investment Holding and Serba Dinamik International Ltd with 99.0% and 1.0% ownership, respectively. (The Star)

Nestle (M) Bhd has appointed Dr Tunku Alina Raja Muhd Alias as an independent non-executive director. She will also be appointed as a member of the group's governance, nomination and compensation committee. (The Edge)

Cahya Mata Sarawak Bhd (CMS) has reported that Datuk Seri Yam Kong Choy and Ho Heng Chuan have resigned as directors of the group, effective yesterday. Yam, 67, had served as a non-independent and non-executive director, while Ho, 64, was an independent and non-executive director. Both resigned citing to pursue personal commitments. (The Edge)

Comfort Gloves Bhd's 1QFY22 net profit surged 13.4x YoY to RM219.1m, on higher sales volume and average selling prices (ASPs), as well as better economies of scale. Revenue for the quarter rose 254.0% YoY to RM541.2m. The group declared an interim dividend of 4.0 sen, payable on 22nd July 2021. (The Edge)

George Kent (Malaysia) Bhd’s achieved a net profit of RM11.3m for the two months ended 31st March 2021, on revenue of RM34.6m, after changing their financial year end from 31st January 2021. A third dividend of one sen per share, payable on 28th July 2021 was declared. (The Edge)

Rubberex Corp (M) Bhd has proposed a private placement of up to 83.2m shares or 10.0% of its share capital to raise RM78.7m, to acquire 28 double-formers nitrile disposable glove production lines as part of its expansion in Perak, as well as for its working capital. (The Edge)

LTKM Bhd has also proposed to undertake a private placement to raise up to RM11.7m for its working capital. (The Edge)

Focus Dynamics Group Bhd has subscribed to 138.1m rights issue shares of Saudee Group Bhd, equivalent to a 19.4% stake in the latter’s share capital. The share subscription was pursuant to the memorandum of understanding inked by the two companies in relation to the rolling out of a robotics-based manufacturing facility and the development of robotic burger kiosks. (The Edge)

Source: Mplus Research - 22 Jun 2021