Market Review

Malaysia:. The FBM KLCI (-0.5%) started off the week on a weaker tone on quick profit taking activities. The lower liners extended their lead, while the broader market finished higher with the technology sector (+2.6%) outperformed on the robust world semiconductor sales that rose 29.0% YoY to USD45.4bn in July 2021.

Global markets:. The US stockmarkets were closed the Labour Day public holiday with futures market trending higher as investors cheered on the expectation over the delay in tapering of stimulus. European stockmarkets rebounded, while Asia stockmarkets closed mostly positive.

The Day Ahead

Bucking regional uptrend move, the FBM KLCI dipped into the negative territory in mid-morning as selected plantation, banking and Petronas-linked stocks went through some profit-taking activities. We believe the ongoing discussion on SOP relaxation in preparation for the Covid-19 endemic phase, coupled with the declining Covid-19 daily infections may continue to drive the recovery theme play across the board. Commodities wise, CPO price climbed, while aluminium price also increased on the back of concerns over raw material supply amid a coup in Guinea, the major supplier of bauxite.

Sector focus:. With the Covid-19 daily infections dropped to its lowest in 28 days, we believe focus would remain in the recovery theme stocks such as banking, consumers, construction and property. Besides, building materials counters may gain traction following higher aluminium price. Meanwhile, plantation counters may be attractive amid higher CPO price.

FBMKLCI Technical Outlook

The FBM KLCI reversed, erasing yesterday’s gains to close below the SMA200 level. Technical indicators remained mildly negative as the MACD Histogram has extended a red bar, while the RSI stayed below the 70 level. Resistance is located at 1,600, while the support is envisaged along 1,580.

Company Brief

Foundpac Group Bhd is buying a 70.0% stake in SDKM Technologies Sdn Bhd, a manufacturer of accessory cables and connectors for RM8.4m. The purchase would give Foundpac a foothold in the wire and cable market, as well as the opportunity to cross sell its products. (The Star)

Hubline Bhd’s 51.0%-owned subsidiary, Layang Layang Aerospace Sdn Bhd (LLA) has secured a RM25.7m contract to provide helicopter and fixed wing rental services. The helicopter and fixed wing rental services was for use at the General Election (GE) of the 12th Sarawak State Assembly (DUN) by the Malaysian Election Commission. Due to the uncertainties of when the next GE can take place due to the current pandemic, this contract spans 24 months, from 26th August 2021 to 25th August 2023. (The Star)

Sedania Innovator Bhd’s subsidiary has inked a six-year contract with Pos Malaysia Bhd to reduce energy consumption on a shared saving concept. Sedania Technologies Sdn Bhd will provide its technology through its energy performance contract (EPC) framework which allows organisations to pursue their ESG objectives and significantly reduce its energy consumptions on a zero-capex basis. (The Star)

BSL Corp Bhd has entered into a memorandum of understanding to acquire SD Unify Pte Ltd to expand its market reach in the semiconductor sector. SD Unify is a Singapore-based company that operates an international procurement office centre connecting the overseas supply chain for semiconductor original equipment manufacturers' (OEM) approved vendor list components. (The Star)

Hup Seng Industries Bhd’s biscuit manufacturing unit has temporarily stopped certain operations at its factory in Batu Pahat, Johor, to carry out Covid-19 disinfection. The company wholly-owned subsidiary Hup Seng Perusahaan Makanan (M) Sdn Bhd had received a notice from the Ministry of Health (MoH) to halt part of its operations from 4.15 pm on 5th September 2021 to 11th September 2021, for the disinfection of the affected area. (The Star)

Comintel Corp Bhd unit has secured a subcontract for earthwork and rock hacking works in Damansara Perdana worth RM7.2m. Binastra Construction (M) Sdn Bhd gave the subcontract to Comintel's wholly-owned subsidiary Total Package Work Sdn Bhd for the development of a plot upon which two 36-storey blocks comprising 1,066 units of serviced apartment. The subcontract started yesterday and should be completed in two months. (The Edge)

YB Ventures Bhd rights issue of irredeemable convertible unsecured loan stocks at 4.0 sen per rights share has been oversubscribed by 46.6%. It saw valid acceptances and valid excess applications totalling 1.77bn rights shares, compared with the 1.21bn made available for subscription. (The Edge)

Teladan Setia Group Bhd is acquiring five parcels of leasehold land in Jasin, Melaka measuring a combined 136.9-ha for RM117.9m, cash. The company plans to use the lands for mixed development, although planning is still at the preliminary stage. (The Edge)

UCrest Bhd has entered into a one-year master service agreement with Russian Direct Investment Fund (RDIF) for the production of Sputnik V Covid-19 vaccine, five months after its first announcement on the planned collaboration. (The Edge)

Paramount Corp Bhd intends to hold up to a 30.0% stake in the consortium that is bidding for one of five digital banking licences which Bank Negara Malaysia will be granting next year. Each member of the consortium had their roles to play with Star Media Group Bhd's capabilities as a media house for advertising and branding, RCE Capital Bhd's financial stability and track record, and Prosper Palm Oil Mill Sdn Bhd’s involvement in the agriculture and food sector. (The Edge)

Kuala Lumpur Kepong Bhd (KLK) has completed the acquisition of a 56.2% stake in IJM Plantations Bhd from IJM Corp Bhd. The group is now obliged to extend a mandatory general offer to acquire the remaining stake in IJM Plantations at RM3.10 per share. With the acquisition, KLK's total oil palm planted area has risen by 28.7% to 274,688-ha. (The Edge)

UMS Holdings Bhd’s 3QFY21 net loss stood at RM0.7m vs. a net profit of RM0.6m recorded in the previous corresponding quarter as MCO 3.0 in June 2021 hit sales. Revenue for the quarter fell 6.3% YoY to RM13.9m. (The Edge)

MGB Bhd has received a contract for a housing development in Dengkil worth RM112.5m from a unit of its major shareholder LBS Bina Group Bhd. The job entails the development of 605 units of single storey terrace strata, 41 units of double storey terrace strata and related structure. With the latest contract, MGB outstanding order book now stands at RM1.87bn. (The Edge)

Lambo Group Bhd has received valid acceptances for only 222.2m shares or 22.3% of the 997.6m shares available for subscription under its 5-for-1 rights issue. Lambo has also received excess applications for 775.3m shares or 77.7% of the rights shares available. In total, it has received applications for 997.5m or 99.9% of the rights shares available. (The Edge)

Source: Mplus Research - 7 Sept 2021