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Mplus Market Pulse - 13 Jul 2021

Publish date: Tue, 13 Jul 2021, 10:39 AM
An official blog in I3investor to publish research reports provided by Malacca Securities research team.

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Market Review

Malaysia:. The FBM KLCI (-0.5%) was marred by the recent political developments, coupled with the impending downgrade of 2021 GDP outlook next month. The lower liners were battered, while all 13 major sectors on the broader market finished in the red.

Global markets:. The US stockmarkets extended their gains as the Dow added 0.4% on optimism that re-opening of economic activities in 2Q21 may spur corporate earnings. European stockmarkets also extended their advances, while Asia stockmarkets closed mostly higher.

The Day Ahead

Consumer, banking and glove stocks pulled the FBM KLCI down amid regional uptrend, reflecting negative sentiment in the market affected by political developments and potential downward revision of country’s economic growth projection. However, we still expect mild bargain hunting activities to emerge amid the improvement in vaccination rate across the country. Commodities wise, oil price fell marginally (but still hovering above USD75) over concerns about global economic recovery on the back of spreading Covid-19 variants.

Sector focus:. Given the improvement in vaccination rate and a slight decline in Covid-19 daily infections, market may see buying interest in certain recovery theme stocks such as essential consumer, property and banking. Besides, the technology stocks should continue to bode well amid positive performance in Nasdaq. Meanwhile, we believe plastic packaging manufacturers will continue to grow under Covid-19 environment.

The FBM KLCI retreated after the rally in the previous session, but the key index was supported above the 1,500 level. Technical indicators remained mixed as the MACD Histogram has extended a green bar, while the RSI is hovering below the 30 level. Resistance is set at 1,525-1,548, while the support level is pegged around 1,500.

Company Brief

AirAsia Group Bhd is making a cash call to its shareholders to raise up to RM1.02bn to recapitalise the low-cost carrier that is hard hit by the Covid-19 pandemic, like its peers in the aviation industry. The airline has proposed to undertake a renounceable two-for-six rights issue of redeemable convertible unsecured Islamic debt securities (RCUIDS), on the basis of two RCUIDS with one free detachable warrant for every six AirAsia shares held. Each RCUIDS will be priced at a nominal value of 75 sen. The RCUIDS come with a seven-year tenure and a profit rate of 8.0% per year. (The Edge)

Bursa Malaysia Securities has queried UMS Holdings Bhd after its share price hit limit-up yesterday in the absence of any fresh news. Its share price rose 69 sen or 29.6% to a recent record high of RM3.02 with 2.5m shares done at prices ranging from RM2.47 to RM3.02. (The Star)

Kumpulan H&L High-Tech Bhd is in the final stage of negotiating for an investment property purchase, and is exploring options to develop its landbank, in response to Bursa Malaysia's unusual market activity query. The investment property purchase is estimated at RM13.9m. (The Edge)

Tan Sri Mohd Bakke Salleh has resigned as chairman of Telekom Malaysia Bhd (TM) and will step down from the role effective 31st July 2021. The group has appointed Khazanah Nasional Bhd’s board member Datuk Mohammed Azlan Hashim as its new chairman, effective 1st August 2021. (The Edge)

Straits Inter Logistics Bhd’s indirect subsidiary, Victoria STS (Labuan) Sdn Bhd has received a letter of approval from the Marine Department Malaysia for the development of a ship-to-ship energy transshipment hub to provide and carry out liquid cargo transfer activities in Labuan. (The Edge)

Hextar Global Bhd has acquired chemical derivatives, coating and related products manufacturer and supplier Nobel Group for RM105.0m. The acquisition comes with a profit guarantee of an aggregate of RM42.0m over three years which translates into an after-tax profit of RM14.0m per year. (The Edge)

Teladan Setia Group Bhd has proposed a bonus issue on the basis of three warrants for every 10 shares held to reward its shareholders. The exercise entails the issuance of 241.6m warrants, with the exercise price of the warrants to be determined late. (The Edge)

Pasukhas Group Bhd and Vsolar Group Bhd have inked a collaborative agreement to provide engineering, procurement, construction, and commissioning (EPCC) services to the solar farm industry. The partnership is to cater to the swathe of solar projects they expect will come onstream over the next 24 months. (The Edge)

Johan Holdings Bhd gained RM210.9m from the disposal of its entire equity interest in Diners Club (Singapore) Pte Ltd and subsidiary DinersPay Pte Ltd, resulting in estimated net assets per share of 32.3sen. Johan Holdings disposed Ezy Net Pte Ltd for RM314.0m. (The Edge)

Parkson Holdings Bhd’s 55.0%-owned Hong Kong-listed subsidiary Parkson Retail Group Ltd (PRGL) has inked a 20Y tenancy agreement for a commercial space measuring 39,966 sqm in the city of Yichun, China. The agreement with landlord Yichun Hong Lin Hotel Co Ltd is in respect of the tenancy of the first to fourth floors of Hong Lin World City. (The Edge)

Muda Holdings Bhd’s indirect 70.0%-owned subsidiary Intrapac (Singapore) Pte Ltd has disposed of its 16.9% stake in KL Resources Pte Ltd for S$4.0m (RM12.3m) cash to generate funds for working capital. Upon completion of the disposal, Intrapac Singapore will have a balance of 84,413 ordinary shares representing 16.9% of the issued share capital of KL Resources. (The Edge)

Source: Mplus Research - 13 Jul 2021

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