Market Review

Malaysia:. The FBM KLCI (+0.7%) continues to build onto its previous string of positive performance to close above 1,600 level as the key index recorded 7.1% MoM gains in August 2021; the biggest monthly gains since July 2009. The lower liners rebounded, while the broader market closed mostly upbeat.

The Day Ahead

Global markets:. The US stockmarkets retreated as the Dow fell 0.1% on concerns over the current lofty valuations with the conclusion of 2Q21 earnings. European stockmarkets were downbeat as policy makers discussed on potential tapering in stimulus measures, while Asia stockmarkets finished mostly higher. The Day Ahead The FBM KLCI jumped to close above the key 1,600 level amid persistent buying interest from foreign funds into heavyweights, in response to the positive cues from regional markets and Wall Street overnight as well as the decent progress heading towards of achieving 80% vaccination rate in Malaysia. However, with the key index notching 7th-straight winning sessions, upside may be capped as the market may digest the recent gains before more sectors showing significant recovery considering the recent overbought signals. Nevertheless, we believe resumption of business activities should bode well for the economy as more states are moving into Phase 3-4 of the NRP going forward. Commodities wise, both CPO and crude oil prices retreated.

Sector focus:. We expect the increasing vaccination rates should bode well for the recovery theme sectors, targeting sectors such as banking, consumer related and building materials. Besides, gold counters may gain traction as the gold price continues its uptrend move above USD1800 at this moment.

The FBM KLCI closed above the critical 1,600 psychological level as well as the upward sloping daily EMA 9 and EMA 20 level. Despite the MACD Histogram extended a green bar, the RSI is overbought above 70. Hence, the resistance could be envisaged around 1,620, while the support is pegged along 1,580.

Company Brief

CIMB Group Holdings Bhd’s 2QFY21 net profit jumped 289.9% YoY to RM1.08bn, thanks to higher operating income, tight cost control and lower provisions. Revenue for the quarter rose 21.0% YoY to RM4.67bn. A dividend payout of 10.44 sen per share under the dividend reinvestment plan was proposed. (The Star)

Malaysian Pacific Industries Bhd’s (MPI) 4QFY21 net profit climbed 53.1% YoY to RM75.1m, amid strong global demand for chips. Revenue for the quarter expanded 32.5% YoY to RM537.3m. (The Star)

Vizione Holdings Bhd’s wholly-owned unit Vizione Builder Sdn Bhd (VBSB) has bagged an RM116.1m contract from Inspirasi Langkawi Sdn Bhd (ILSB) for the main building works of a four-star hotel in Langkawi. The completion period shall be 24 months, inclusive of all necessary testing and commissioning of mechanical and engineering (M&E) services. (The Star)

Mah Sing Group Bhd's 2QFY21 net profit swelled 215.1% YoY to RM40.4m, on stronger property sales in line with the extension of the Home Ownership Campaign until 31st December 2021. Revenue for the quarter gained 46.9% YoY to RM438.7m. (The Star)

Hong Leong Bank Bhd's 4QFY21 net profit rose 21.1% YoY to RM689.5m, mainly due to higher share of profit from associate companies and net income. Revenue for the quarter grew 11.0% YoY to RM1.33bn. A final dividend of 35.22 sen per share was declared. (The Edge)

Sime Darby Bhd is collaborating with Porshe AG to assemble the latter's sports car for the Malaysian market only. The car will be assembled at Sime Darby's motor vehicle and production and facility which will be the first assembly plant of the German sports car manufacturer outside of Europe with production slated to start in 2022. (The Edge)

AMMB Holdings Bhd’s (AmBank) 1QFY22 net profit grew 5.9% YoY to RM386.6m, mainly driven by higher net income and smaller other operating expenses. Revenue for the quarter, however, slipped 5.3% YoY to RM2.10bn. (The Edge)

FGV Holdings Bhd’s 2QFY21 net profit soared 16.5x YoY to RM338.8m, mainly attributed to increased palm products' margin, improved gross profit margin for its sugar business, as well as higher throughput and cargo volume handled by its logistics business. Revenue for the quarter rose 42.1% YoY to RM4.68bn. (The Edge)

MCE Holdings Bhd via its wholly-owned subsidiary Multi-Code Electronics Industries (M) Bhd has secured contracts to supply various mechanical parts for new Perodua car models. The projects are expected to generate total revenue of approximately RM17.6m for MCE, while the estimated total investment cost is RM1.8m. (The Edge)

BIMB Holdings Bhd's 2QFY21 net profit rose 21.0% YoY to RM184.6m, thanks to the absence of modification loss in the quarter compared with the previous corresponding quarter. Revenue for the quarter grew 9.6% YoY to RM1.25bn. (The Edge)

Scientex Bhd is expanding its Klang Valley footprint via the proposed acquisition of over 250.0-ac of agriculture land near Klang and Banting for RM207.6m. It is buying the freehold land in Jenjarom from Seriemas Development Sdn Bhd, a wholly owned subsidiary of Permodalan Nasional Bhd. The group said it plans to launch a mixed development project on the land with gross development value yet to be determined. (The Edge)

Pestech International Bhd has proposed to undertake a bonus issue of 191.1m new shares on the basis of 2 bonus shares for every 8 existing shares held on an entitlement date to be determined later. (The Edge)

Malaysian Resources Corp Bhd's (MRCB) 2QFY21 net loss narrowed to RM32.4m vs. a net loss of RM220.9m recorded in the previous corresponding quarter last year, due to absence of RM197.4m provision made for the impairment recorded a year ago. Revenue for the quarter grew 35.0% YoY to RM225.8m. (The Edge)

Iqzan Holdings Bhd has reported that its external auditor Messrs Nexia SSY PLT has issued a disclaimer of opinion on the packaging material company's audited financial statements for the financial year ended 31st March 2021. Its auditor has not been able to obtain sufficient audit evidence to provide a basis for an audit opinion on the group's financial statements. (The Edge)

Cahya Mata Sarawak Bhd's 2QFY21 net profit jumped 183.6% YoY to RM47.4m, on better contributions from all its core businesses (cement, trading and property development), except the road maintenance division. Revenue for the quarter increased 32.3% YoY to RM185.0m. (The Edge)

Lay Hong Bhd’s 1QFY22 net loss widen to RM14.4m, from a net loss of RM7.5m recorded in the previous corresponding quarter due to weaker topline contribution. Revenue for the quarter declined 3.2% YoY to RM229.4m. (The Edge)

M3 Technologies (Asia) Bhd's external auditor Ecovis Malaysia PLT has expressed a qualified opinion on the company's audited financial statements for the financial period ended 31st March 2021. The basis for its qualified opinion was due to the appointment of an independent investigative auditor to review specific transactions and related accounting entries in FY17 and FY18 to ascertain whether there were any fraudulent transactions related to M3 Technologies' business operations involving a former director and the potential financial impact. (The Edge)

Ranhill Utilities Bhd’s 2QFY21 net profit fell 31.8% YoY to RM9.0m on higher operating expenses. Revenue for the quarter declined marginally by 0.9% YoY to RM365.6m. (The Edge)

Ireka Corp Bhd's external auditor Crowe Malaysia PLT has expressed a qualified opinion with indication on material uncertainty on its ability to continue as a going concern in view of its audited financial statements for FY21. Crowe Malaysia was unable to obtain sufficient appropriate audit evidence on the carrying amount of the group's investment in Aseana Properties Ltd and its subsidiaries (ASPL Group) as at 31st March 2021 and the group's share of ASPL Group's profit after taxation for the FY21 because it was unable to obtain access to the financial information, management, and the auditors of ASPL Group within the audit period. (The Edge)

Source: Mplus Research - 1 Sept 2021