Market Review

Malaysia:. The FBM KLCI (-0.6%) endured another weak session after hovering in the negative territory throughout the day with more than half of the key index components in the red. The lower liners were downbeat, while the REITs sector (+0.3%) outperformed the negative broader market.

Global markets:. The US stockmarkets ended mixed as the Dow and S&P 500 fell 0.2 and 0.1% respectively, but the Nasdaq gained 0.1% as investors turned cautious of the threat from the rising inflation. European stockmarkets retreated, while Asia stockmarkets finished mixed.

The Day Ahead

The FBM KLCI failed to extend its gains amid pervasive negative sentiment and weak buying interest, bucking the regional uptrend. With the World Bank cutting Malaysia’s 2021 GDP growth projection amid slower-than-expected economic recovery, the sideways trade is likely to persist without a fresh catalyst under the current economic and public health crisis. Investors may also look at the US's 1Q21 GDP growth rate, while Bank of England’s interest rate decision, which will be releasing tonight. Commodities wise, the oil price has risen above the USD 75 per barrel level.

Sector focus:. Investors might see some trading interest in oil & gas counters alongside the higher oil price above USD75. Besides, optimism in the plastic & packaging sector is expected following Scientex’s strong set of results. With the record high Nasdaq, buying support could spillover to technology stocks on the local front

The FBM KLCI retreated and closed below the immediate support level at 1,565. Technical indicators stayed negative with the MACD Histogram extended another red bar, while the RSI is below 50. With the 1,565 support level broken, the key index may further pullback trend. The next support level is set at 1,555, while the resistance is envisaged around 1,580.

Company Brief

Singapore’s sovereign wealth fund GIC (Ventures) Pte Ltd is investing RM750.0m for a 16.0% stake in Sunway Group Bhd’s healthcare business which will enable the latter to accelerate the expansion of its medical facilities including building new hospitals. The proposed investment entails the issuance by Sunway Healthcare and subscription by Greenwood of 100.0m Sunway Healthcare shares representing 8.2% equity interest in Sunway Healthcare. The investment includes 10.0m irredeemable convertible preference shares (ICPS) which can be converted upon election by Greenwood into 94.2m Sunway Healthcare shares representing 7.8% equity interest in Sunway Healthcare and one cumulative irredeemable dividend convertible preference share (DCPS) which can be converted into one Sunway Healthcare share. (The Star)

Scientex Bhd’s 3QFY21 net profit grew 57.9% YoY to RM109.9m, boosted by higher property sales which saw contribution from its property division almost doubled to RM305.0m, from RM158.0m recorded in the previous corresponding quarter and improved results from its packaging division. Revenue for the quarter gained 26.4% YoY to RM976.0m. An interim dividend of 4.0 sen a share, payable on 23rd July 2021 was declared. (The Star)

Pharmaniaga Bhd has taken up a financing facility from Standard Chartered Malaysia for the import and distribution of Sinovac Covid-19 vaccines to the public and private sectors. Pharmaniaga is the latest recipient of the bank’s not-for-profit US$1.00bn (RM4.17bn) financing commitment to battle the Covid-19 pandemic. The company was completing the contractual supplies of 12.0m doses of Sinovac vaccines four months ahead of its delivery schedule, from November 2021 to July 2021. (The Star)

Serba Dinamik Holdings Bhd’s board of directors was scheduled to meet on Friday to decide on the scope of work to be undertaken by the yet to be appointed independent reviewer. Serba Dinamik has agreed in principle to appoint Ernst & Young (EY) as an independent reviewer to assess the veracity and accuracy of the matters highlighted by its external auditors, KPMG PLT. But an impending legal battle between Serba Dinamik and KPMG may have changed the scope of the proposed independent review. (The Star)

Binasat Communications Bhd is venturing into the solar energy business with the purchase of a 51.0% stake in Borderless Communications Sdn Bhd (BCSB) for RM18.4m. The company will pay RM5.4m cash, while the remaining RM13.0 will be settled via the issuance of 37.1m new shares at 35 sen each to sellers Nik Abdul Hakim Abd Razak and Mohd Solehuddin Yahya. The deal includes an aggregate profit guarantee of RM8.0m for FY22 and FY23. (The Star)

Market talk is rife that Astro Malaysia Holdings Bhd will announce its partnership agreement with Netflix. The actual service will not take place immediately after the signing announcement and will be available on the Astro box in a couple of months. (The Edge)

Shareholders of information technology and trade facilitation services company Dagang NeXchange Bhd (DNeX) has approved the acquisition of a 60.0% equity interest in loss-making wafer foundry SilTerra Malaysia Sdn Bhd from Khazanah Nasional Bhd for a purchase consideration of RM163.8m to be satisfied entirely by cash. (The Edge)

BSL Corporation Bhd (BSLCorp) has received a notice of unconditional mandatory takeover from Sanichi Technology Bhd managing director Datuk Seri Dr Pang Chow Huat and PNE PCB Bhd executive director Ho Jien Shiung. This comes after the duo acquired a total stake of 51.7% in the metal stamping group from Esteem Role Sdn Bhd via direct business transactions for a total cash consideration of RM57.5m or RM1.15 a share. (The Edge)

AEON Co (M) Bhd has allocated RM251.0m as capital expenditure for 2021, with 40.0% of the budgeted amount to be allocated to further strengthen the group’s technology and IT infrastructure. The balance of the capex will be channelled for renovation, maintenance and remodelling of its malls and stores. The group is looking at expanding on 13 new specialist stores and to focus on 11 malls to renovate and rectify this year. (The Edge)

Magni-Tech Industries Bhd's 4QFY21 net profit rose 6.5% YoY to RM30.6m, on the back of higher revenue contributed by its garment and packaging segments. Revenue for the quarter grew 13.0% YoY to RM297.5m. A fourth interim dividend of 2.8 sen per share, payable on 28th July 2021 was declared. (The Edge)

Kejuruteraan Asastera Bhd (KAB) has inked a collaborative agreement to enter the renewable energy market in Vietnam. The group has signed a collaboration agreement with Janakuasa Pte Ltd to explore the renewable energy market in Vietnam. (The Edge)

JHM Consolidation Bhd has entered into a technical collaboration agreement with Jiangsu Dekai Auto Parts Co Ltd to create an efficient and effective supply chain to support automotive lighting to Proton-Geely companies located in Malaysia. The collaboration will propel the group into a Tier 1 player that is able to deal directly with automotive original equipment manufacturers. (The Edge)

Source: Mplus Research - 24 Jun 2021