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Mplus Market Pulse - 28 Jul 2021

Publish date: Wed, 28 Jul 2021, 06:11 PM
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 (+0.1%) staged a mild recovery from the two-day pullback, supported by gains in selected banking and plantation heavyweights. The lower liners, however, extended their losses, while all 13 major sectors on the broader market closed mixed.

Global markets:. The US stockmarkets retreated from their all-time high levels as the Dow fell 0.2%, dragged down by weakness in technology shares, coupled with concern over the potential tightening of monetary policy. European stockmarkets also ended lower, while Asia stockmarkets ended mostly negative.

The Day Ahead

Bucking the regional downtrend move, the FBM KLCI rebounded and posted modest gains on the back of bargain hunting activities as well as expectation on the economy reopening by October. Although investors will be shifting their focus from daily Covid-19 infections to the positive vaccination rate locally, the local sentiment may still remain cautious following the negative performances in China and Hong Kong after Beijing announced additional measures for the technology, education and real estate’s sectors. On a side note, foreign investors are net seller for the third session.

Sector focus:. We believe electric vehicle related sectors are gaining momentum with the expectation that the EVs demand will grow in the near future. Besides, investors may see buying interest in Kossan following its strong set of results, eventually spilling to other glove stocks, although the sector has been losing ground amid ongoing vaccination programme as well as fading glove ASPs.

The FBM KLCI finished mildly higher with improvement in volume but the key index still closed below the daily EMA9 level. Technical indicators remained negative as the MACD Histogram has extended a red bar, while the RSI hovered below the 50 level. The resistance is envisaged around 1,530-1,550, while the support level is located around 1,500 amid cautiously optimistic sentiment.

Company Brief

Kossan Rubber Industries Bhd’s 2QFY21 net profit surged 708.8% YoY to RM1.06bn, attributed to higher average selling price (ASP) and demand for its glove products, but signalled that falling glove prices would curb growth in the coming quarters. Revenue for the quarter soared 219.2% YoY to RM2.20bn. A second interim dividend of 12 sen a share, payable on 26th August 2021 was declared. (The Star)

Globetronics Technology Bhd’s 2QFY21 net profit rose 24.5% YoY to RM6.2m, on better product mix. Revenue for the quarter improved 3.3% YoY to RM46.4m. (The Star)

AirAsia Group Bhd has announced that all four of its key operating entities posted YoY improvements for 2Q21, on the back of a low base in the corresponding quarter last year, when its fleet was hibernated amid the pandemic. AirAsia Malaysia's operations, however, remained constrained due to the lockdown and restrictions on interstate travel imposed in January 2021. (The Edge)

Nexgram Holdings Bhd's 51.0%-owned subsidiary, Tri-G Technologies Sdn Bhd, has received an operation notification letter from the government for the implementation of the Covid-19 quarantine process using the TracAPM digital system. The registration system, better known as SafeTravelPass Malaysia, is the country's official portal for Covid-19 entry registry and the booking of quarantine hotels. (The Edge)

Omesti Bhd has launched a programme to provide Covid-19 vaccination services to local companies as part of a nationwide drive to combat the virus. Dubbed OMESTI Healthcare Vaccin8 Programme, it is offered by Omesti's healthcare division and is authorised by the Jawatankuasa Khas Jaminan Akses Bekalan Vaksin Covid-19 and the Ministry of Health. Omesti has invested in Bemed Tempua Sdn Bhd, a pharmaceutical company which has been granted approval to acquire an initial allocation of 1.0m doses of Sinovac vaccine from Pharmaniaga LifeScience Sdn Bhd. (The Edge)

TH Heavy Engineering Bhd (THHE) has received an arbitration notice from Coral Intoil Sdn Bhd (CISB) over alleged failure to provide funding to a firm established by the two companies to bid for hook-up and commissioning (HUC) jobs. CISB is claiming on Permas HUC project amounting to RM12.6m and is also seeking liquidated damages on the Permas project commencing from 1st February 2015 to 16th April 2021, amounting to RM7.7m. (The Edge)

Brahim's Holdings Bhd has engaged MHC Trading (M) Sdn Bhd to manage and operate its wholly-owned subsidiary Tamadam Industries Sdn Bhd's business in warehouse rental, bonded warehousing, freight forwarding and transportation services for a period of up to three years. This follows a proposal received from MHC, which is involved in retail sale of food products, to help turn around and grow the business of Tamadam. (The Edge)

Dagang NeXchange Bhd (DNeX), which has launched its digital trade and logistics platform known as SealNet to provide users one-stop cloud-based logistics and cross-border services, expects SealNet's revenue to grow about 300% from a low base. SealNet is intelligently built to connect and digitalise components across global supply chains and logistics to enhance efficiency of transport and tradefacilitation mechanisms. (The Edge)

KNM Group Bhd has obtained a loan facility worth up to RM128.8m from ExportImport Bank of Malaysia Bhd. The fund aims to facilitate the issuance of bank guarantees for overseas projects undertaken by the company and its subsidiaries. (The Edge)

Source: Mplus Research - 28 Jul 2021

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