Market Review

Malaysia:. The FBM KLCI (+0.7%) rebounded alongside with gains across regional markets, driven by optimism on economic recovery prospects that outweigh concerns over rising Covid-19 cases. The lower liners also rebounded, while the healthcare sector (-0.1%) was the sole underperformer on the broader market.

Global markets:. The US stockmarkets marched higher for the third straight session as the Dow added 0.1% on the back of gains in technology stocks, while earnings reporting continue to roll in. European stockmarkets finished mostly higher, while Asia stockmarkets ended on a positive note.

The Day Ahead

The FBM KLCI is expected to build onto its previous session gains with the focus now shifting back towards the economic recovery progress. Still, we remain cautious as there were few domestic leads over the near-term outlook and this will further curtail any extended potential upsides. Nevertheless, the general market undertone is improving and this will allow the lower liners to develop decent recovery after a difficult two-month period that has seen many stocks veering into the oversold region.

Sector focus:. The technology sector is expected to chart higher, mirroring the positive performance on Nasdaq overnight. The consumer products and transport & logistics sectors may be in focus in anticipation of improve consumer spending in coming months alongside with the gradual re-opening of economic activities. Also, the firmer crude oil prices owing to the tight supplies and improving demand may provide a boost in the energy sector.

The FBM KLCI rebounded as the key index claw its way to close above the daily EMA9 level yesterday. Technical indicators, however, are still mixed as the MACD Histogram has extended a green bar, but the RSI remains below the 50 level. The key index may continue to consolidate, with resistance set at 1,530-1,550, while the support level is located at 1,500.

Company Brief

Vitrox Corp Bhd’s 2QFY21 net profit soared 121.0% YoY to RM50.6m, driven by strong demand for electronics inspection systems. Revenue for the quarter jumped 103.3% YoY to RM196.2m. (The Star)

United Plantations Bhd's (UP) 2QFY21 net profit grew 9.9% YoY to RM135.8m, improvement in plantation and refinery segments. Revenue for the quarter improved 63.7% YoY to RM481.9m. (The Star)

Ireka Corp Bhd has proposed to undertake a private placement, involving 18.7m shares which will be issued to third-party investors to be identified later. Based on an illustrative issue price of 62 sen per placement share, the exercise is expected to raise RM11.6m of which RM11.4m will be used as working capital, such as staff costs and other operating costs. (The Edge)

Hong Seng Consolidated Bhd’s 51.0%-indirect unit, Pantasniaga Sdn Bhd has secured an RM112.3m contract from the Ministry of Health to supply polymerase chain reaction (PCR) Covid-19 test kits to the Ministry. The PCR test kits will be supplied to the Institute for Medical Research and Public Health Laboratory Kota Kinabalu. (The Edge)

Tiong Nam Logistics Holdings Bhd will be issuing 5.2m new shares in its lossmaking unit Terminal Perintis Sdn Bhd (TPSB) to Create Fortune Enterprise Sdn Bhd (CFE) for RM36.7m. Tiong Nam’s equity interest in TPSB will dilute from 100.0% to 49.0%. The proceeds to be received from the subscription of shares will be utilised by TPSB for working capital and other financial obligations. (The Edge)

CapitaLand Malaysia Mall Trust's (CMMT) 2QFY21 net property income (NPI) rose 36.5% YoY to RM26.4m, on higher gross revenue and lower rental relief for eligible tenants. Revenue for the quarter gained 5.7% YoY to RM52.7m. A distribution of 0.9 sen per unit for the quarter was declared. (The Edge)

Magni-Tech Industries Bhd has reported that a few of the group's garment production facilities in Vietnam have temporarily suspended operations from 19th July 2021, following a renewed lockdown in the country amid rising Covid-19 cases there. Operationally, Magni-Tech is expecting delays in its shipments of orders to a customer overseas due to the closures. (The Edge)

Source: Mplus Research - 23 Jul 2021