Market Review

Malaysia:. The FBM KLCI (-0.1%) finished marginally lower after hovering mostly in the negative territory, dragged by weakness in the gloves heavyweights. Both the lower liners and the broader market closed mixed with the healthcare sector (- 1.0%) underperformed in the latter.

Global markets:. The US stockmarkets extended their gains as the Dow climbed 0.4%, following the stronger-than-expected jobs data that added 850,000 jobs last month vs. consensus expectations of 700,000. Both the European and Asia stockmarkets closed mixed.

The Day Ahead

The FBM KLCI edged lower in a volatile week following the implementation of EMCO over in parts of Selangor and Kuala Lumpur. Having said that, market sentiment may improve as five states in the country are moving into Phase-2 of the National Recovery Plan (NRP). Nevertheless, upside could be capped on the FBM KLCI as investors could stay cautious as Covid-19 daily cases remained above 6,000. Meanwhile, investors may monitor BNM’s interest rate decision this week to position themselves in the stock markets. Commodities wise, the CPO price rose for the fourth consecutive day, while Brent oil is trading near USD76.

Sector focus:. The oil & gas sector may be focused as Brent oil price is trending around USD76. Besides, we opine that the technology sector should stay in line with Nasdaq upward movement. Given that we are still in the lockdown mode with 5 states moving into Phase-2 of the NRP, we may lookout for plastic packaging stocks amid stronger demand on plastic usage.

The FBM KLCI posted modest losses after erasing most of its intraday losses in the second trading session. Technical indicators turned mixed as the MACD Histogram turned green, while the RSI hovered below 50. The key index may trade in a tight range with bargain hunting activities in sight. Resistance is envisaged around 1,560-1,580, while the support is set around 1,520.

Company Brief

IOI Corporation Bhd will undergo an audit to assess the compliance of its labour policies and working conditions at its plantations, following a report by a human rights group alleging violations. Helsinki-based Finnwatch on Wednesday published a report alleging that Indian migrant workers at an IOI estate face poor living conditions, paid high recruitment fees, and were paid below the minimum wage. The audit will seek to ascertain any non-compliance with its labour policies or unsatisfactory working conditions faced by its 16,000 workers in Malaysia. (The Star)

UEM Sunrise Bhd is selling about 431.0-ac of freehold agricultural land in Mersing, Johor to Lagenda Properties Bhd for RM45.1m. In August 2020, UEM Sunrise sold 623.0-ac of land in Tapah, Perak to Lagenda for RM29.9m. (The Star)

Serba Dinamik Holdings Bhd has formally appointed Ernst & Young Consulting Sdn Bhd (EY) as the special independent reviewer to assist the board in undertaking the special independent review on the issues raised by its former external auditor KPMG PLT. The appointment of EY is also made under the directive from Bursa Malaysia pursuant to paragraphs 2.23 and 2.24 of the Main Market Listing Requirements of Bursa Malaysia. (The Edge)

Boustead Holdings Bhd has entered into a consortium with Angkatan Koperasi Kebangsaan Malaysia Bhd (Angkasa) and an independent insurance brokerage company to jointly submit an application for the Islamic Digital Banking Licence. The three parties will collaborate under MyAngkasa Digital Services (MDS) to apply for the Islamic digital banking licence from Bank Negara Malaysia. (The Edge)

Media Prima Bhd is paying RM156.4m to buy back Balai Berita Bangsar, one of two properties it sold to Permodalan Nasional Bhd (PNB) for RM280.0m in 2018. Media Prima has received a letter of offer from PNB’s wholly-owned subsidiary PNB Development Sdn Bhd to acquire the building as well as the two parcels of freehold land which measure approximately 151,814 sqf it currently occupies. The deal will be satisfied entirely by cash. (The Edge)

GUH Holdings Bhd and fellow shareholders of Straits International Education Group Sdn Bhd (SIEG) are disposing of their stakes in the education group to Tenby Educare Sdn Bhd for RM52.5m. SIEG owns and operates international schools in Rawang and Penang. The disposal will enable the GUH to dispose of a non-core business entity and focus its resources into other core businesses. (The Edge)

Shareholders of MAG Holdings Bhd have approved the acquisition of a 100.0% equity interest in North Cube Sdn Bhd for RM200.0m, a deal that is more than the company's market capitalisation at the extraordinary general meeting. The proposed acquisition to be satisfied via a cash consideration of RM60.0m, issuance of 300.0m shares at 20 sen per share and 400.0m new redeemable preference shares (RPS). The proposed acquisition also comes with a profit guarantee of not less than RM18.0m in aggregate on a consolidated basis for the 18-month financial period ending 30th June 2022. (The Edge)

China Automobile Parts Holdings Bhd is making another attempt at regularising its Practice Note 17 condition by inking a Memorandum of Understanding (MOU) with several vendors for the acquisition of Singapore-based Tenda Construction Equipment Pte Ltd and Tenda Equipment & Services Pte Ltd. The target companies are involved in the provision of repair and maintenance of construction and civil engineering machinery and equipment, as well as the provision, renting and sale of the machinery and equipment. (The Edge)

Source: Mplus Research - 5 Jul 2021