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Mplus Market Pulse - 12 Aug 2021

Publish date: Thu, 12 Aug 2021, 09:23 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%) resume trading on an upbeat manner as the key index re-captured the 1,500 psychological level, supported by buying interest in selected healthcare and banking heavyweights. The lower liners, however, ended their winning streak, while the broader market closed mixed.

Global markets:. The US stockmarkets extended their gains as the Dow climbed 0.6% after inflation data in July 2021 rose 5.4% YoY; similar with previous month which provide some relief to the impending scale back of stimulus. European stockmarkets also marched higher, while Asia stockmarkets closed mixed.

The Day Ahead

The FBM KLCI notched gains for a second consecutive session amid buying interest following the announcement of the relaxation of SOPs for fully vaccinated citizens. While the recovery-theme stocks continued to garner investors’ interest, the market sentiment may still be affected by the ongoing Covid-19 cases and political developments in Malaysia. Meanwhile, the Malaysian Rubber Council’s (MRC) projected a double-digit growth in 2021 on rubber gloves demand in volume. Commodities wise, the CPO price jumped above RM4500 after end-July palm oil stocks slumped due to delayed harvesting amid labour shortages. On a side note, foreign investors have turned into net buyers after 12 session of net selling.

Sector focus:. We reckon follow-through buying interest to be seen in the glove manufacturers on the back of current Covid-19 situation in Malaysia, as well as the MRC’s projection on gloves demand growth on the global front. Besides, the plantation sector may be under the limelight as tighter inventories are expected.

The FBM KLCI climbed above the critical 1,500 level after hovering in the positive territory for the session, closing above the daily EMA 9 level. Technical indicators remained mixed as the MACD Histogram has extended a green bar, while the RSI hovered below the 50 level. Should the key index hold above the 1,500 level, the next resistance is envisaged at 1,520, while the support is set around 1,480-1,500.

Company Brief

D&O Green Technologies Bhd is buying a precision electroplating services company in Melaka for RM55.0m. D&O has made the takeover offer to the shareholder of Syntronixs Asia Sdn Bhd which was accepted yesterday. Syntronixs offers precision electroplating services for the semiconductor industries. It provides effective surface cleaning solution and pre-surface-treatment process namely deflashing and descaling on parts prior to the plating process. (The Star)

Serba Dinamik Holdings Bhd, through its Malaysian and Indonesian subsidiaries, has secured 15 operations and maintenance (O&M) and engineering, procurement, construction, and commissioning (EPCC) contracts. Of the 15 contracts, eight were valued at US$67.7 m (RM286.3 m) with the duration of works up to 31st May 2024. (The Star)

Dialog Group Bhd has announced that its wholly owned Dialog Corporate Sdn Bhd inked a memorandum of understanding (MoU) with Diyou Fibre (M) Sdn Bhd (DFMSB) on 10th August 2021, which outlines an understanding between the parties to set up a special purpose vehicle (SPV) that will build, own and operate a food-grade recycled polyethylene terephthalate (recycled PET) pellets production facility. DFMSB is an established recycling and manufacturing company in Malaysia, with over 30 years of experience in the post-consumer plastics recycling industry. The total investment outlay in the venture is estimated to be about US$25.0m (about RM106.0m), which Dialog plans to finance using internal funds and borrowings. (The Edge)

Sunway Bhd has emerged as a substantial shareholder of IJM Corp Bhd as its shareholding has reached 5.0% as a result of the latter's continued share buy-back activities. IJM said Sunway's stake increased by virtue of the equity interest held through Fortuna Gembira Enterpris Sdn Bhd. The group holds a total of 180.3m shares. (The Edge)

A total of 4.2m more warrants in Dagang NeXchange Bhd (DNeX), which expired on 31st July 2021, have been converted into ordinary shares at an exercise price of 50 sen, lifting the total warrants converted to 702.0m. Following the latest warrant conversion, the group’s issued share capital will be increased to 3.09bn shares from 1.76bn shares a year ago. (The Edge)

Yinson Holdings Bhd and its project partner Sumitomo Corp have entered into a US$670.0m syndicated loan facility for the FPSO Anna Nery project, a floating, production, storage and offloading (FPSO) vessel for the Marlim revitalisation project in Brazil. The agreement, which was entered through its wholly-owned Singapore-based subsidiary Yinson Production Offshore Pte Ltd, also included ING, Natixis and Standard Chartered Bank as underwriting banks. (The Edge)

Reservoir Link Energy Bhd has received shareholders’ approval to acquire a 51.0% stake in Founder Energy Sdn Bhd for RM21.2m, enabling the oil and gas well services group to diversify into renewable energy-related businesses. (The Edge)

JF Technology Bhd has been appointed as the agent for the sale and distribution of South Korea's leading global test solution provider ISC Co Ltd's test contacting solution products in China, Malaysia and ASEAN. Its subsidiaries JFH Technology (Kunshan) Co, Ltd and JF Microtechnology Sdn Bhd (JFM) have separately entered into agency agreements with ISC. (The Edge)

AT Systematization Bhd has called off its conditional voluntary takeover offer of loss-making logistics and ICT services outfit, Asdion Bhd. The offer will be withdrawn as Asdion has secured approval from its shareholders at an extraordinary general meeting today for both its proposed debt settlement and placement exercises. Under the first, Asdion proposed to settle its debts owing to certain creditors via the issuance of irredeemable convertible preference shares, while the second involves a placement of up to 20.0% of its issued shares. (The Edge)

Ta Win Holdings Bhd has bagged a contract for the supply of cables and automotive components for local automobile models in Malaysia. Ta Win’s subsidiary Cyprium Wire Technology Sdn Bhd has accepted a contract from NYSElisted technology and mobility company Aptiv PLC. (The Edge)

Greatech Technology Bhd’s 2QFY21 net profit jumped 117.7% YoY to RM38.4m, underpinned by strong revenue for production line systems in the electric vehicle energy storage industry. Revenue for the quarter leapt 142.5% YoY RM136.4m. (The Edge)

Hup Seng Industries Bhd’s 2QFY21 net profit dropped 59.1% YoY to RM3.6m, dragged by low revenue from biscuits and rising costs of the main raw materials. Revenue for the quarter declined 7.0% YoY to RM66.5m. (The Edge)

Luxchem Corp Bhd’s 2QFY21 net profit surged 118.9% YoY to RM16.6m, on strong domestic demand for its products. Revenue for the quarter grew 53.7% YoY to RM215.6m. An interim dividend of 0.8 sen per share, payable on 30th September 2021 was declared. (The Edge)

Source: Mplus Research - 12 Aug 2021

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