Dour trend still on horizon

Market Review

Malaysia:. The FBM KLCI (-0.6%) recorded its sixth straight losing streak, dragged by weakness in Top Glove which reported weaker-than-expected 4QFY21 earnings; the FBM KLCI fell 1.7% WoW. The lower liners were also downbeat, while the broader market ended mostly red with the plantation sector (-1.5%) taking the biggest hit.

Global markets:. The US stockmarkets extended their losses as the Dow (-0.5%) declined, dragged by the concern over the Delta variant strain and prospects of slowing economic growth. European stockmarkets turned downbeat, while Asia stockmarkets ended mixed.

The Day Ahead

The FBM KLCI finished the week lower last Friday, as foreign funds turned into net seller; the net selling stood at RM72.6m, snapping the 4 days of inflow by the foreign funds. However, the local bourse may see bargain hunting activities emerging on the back of declining daily Covid-19 confirmed cases, while waiting for Malaysia’s inflation rate that will be released this Friday. Meanwhile, both the CPO and crude oil price declined, while Baltic Exchange Dry Index rose to 4,275, its record high since 2009.

Sector focus:. Investors may look out for transportations & logistics stocks on the back of upward trending Baltic Exchange Dry Index. Besides, declining number of daily Covid-19 confirmed cases may bode well for recovery theme sectors such as consumer, tourism and construction as well as selected building material. Meanwhile, technology sector still looking attractive as buying interest is still mounting on this sector despite weaker broader market sentiment.

FBMKLCI Technical Outlook

The FBM KLCI extended its losses, falling below the daily EMA60 level on Friday. Technical indicators remained negative as the MACD Histogram has extended another red bar, while the RSI continued hovering below the 50 level. The next support level is located at 1,535, while the resistance is pegged along 1,580-1,600.

Company Brief

Top Glove Corp Bhd's 4QFY21 net profit fell 48.4% YoY to RM608.0m, on the back of normalising demand, following mass vaccine rollout on a global scale, leading to lower sales volume and average selling prices. Revenue for the quarter dipped 32.0% YoY to RM2.12bn. (The Star)

Gadang Holdings Bhd’s wholly-owned subsidiary, Gadang Engineering (M) Sdn Bhd (GESB), has secured a RM100.3m subcontract works for Central Spine Road Package 2 from Binary Vista Sdn Bhd. GESB would be the subcontractor to undertake demolition, site clearance, earthwork and access bridge to Kuala Berang, Terengganu. (The Star)

Hup Seng Industries Bhd has temporarily suspended the operation of its Johor plant's packaging machine for disinfection purposes to curb the spread of Covid- 19. Its wholly-owned subsidiary Hup Seng Perusahaan Makanan (M) Sdn Bhd located at Tongkang Pecah Industrial Area in Batu Pahat has received a notice from the Ministry of Health to temporarily suspend the operation of one packaging machine from 16th September 2021 to 22nd September 2021. (The Edge)

Malaysia Airports Holdings Bhd (MAHB) has managed to ward off a huge chunk of a claim made by a construction firm involved in the upgrading of the Penang International Airport. Syarikat Pembinaan Anggerik Sdn Bhd (SPASB), which had claimed RM66.8m in a lawsuit against MAHB, was only awarded RM9.9m for balance of work payments plus interest by the High Court. The RM9.93 m was for balance of work payments. (The Edge)

Eco World Development Group Bhd’s 3QFY21 net profit dipped marginally by 1.9% YoY to RM35.2m, on weaker topline contribution. Revenue for the quarter fell 6.1% YoY to RM448.9m. (The Edge)

Eco World International Bhd's (EWI) 3QFY21 net profit sank 93.4% YoY to RM2.5m, mainly due to lesser number of units sold to customers being handed over in the current quarter by its Australian projects, as well as a lower share of profits from its UK joint ventures. Revenue for the quarter slumped 79.3% YoY to RM127.1m. (The Edge)

Handal Energy Bhd has secured a new contract from Tanjung Offshore Services Sdn Bhd for the provision of portable crane equipment and services package. The contract commenced on 2nd July 2021 and the estimated completion date is in December 2021. The contract does not have any specified value, as it is on a call out basis. (The Edge)

Fintech Global Bhd's associate NetX Holdings Bhd has emerged as a substantial shareholder in MLabs Systems Bhd after acquiring a 5.5% stake in the loss-making company. NetX has acquired the stake, comprising 80.0m shares in the open market through its subsidiary First United Technology Ltd on 15th September 2021 for RM3.6m, which averages at 4.5 sen per share. With the acquisition, First United owns 104.5m shares or a 7.3% stake in MLabs. (The Edge)

Southern Cable Group Bhd has received the nod from the Securities Commission Malaysia to transfer its listing status to the Main Market of Bursa Malaysia, 11 months after its ACE Market debut in October 2020. The transfer of the listing status is expected in 4Q21, conditional upon approval from Bursa Securities. (The Edge)

 AirAsia X Bhd (AAX) has made substantial progress in months-long talks with creditors, as it aims to convene meetings with them to vote on a restructuring scheme by the end of October 2021. Negotiations with lessors, planemaker Airbus SE and service providers had progressed. (The Edge)

Bioalpha Holdings Bhd's has signed an agreement with Suzhou Medicalsystem Technology Co Ltd (MEDIC) for the commercialisation of Biolapha’s proprietary herbal formulations and products in China in the near future. The proposed joint venture is to capitalise on the regional expertise of MEDIC in China, as it is well known across many hospitals within the country. (The Edge)

Revenue Group Bhd’s 4QFY21 net profit jumped 181.7% YoY to RM1.3m, on higher returns from rental and maintenance of EDC terminals and the more relaxed MCO. Revenue for the quarter, however, fell 25.2% YoY to RM23.5m. (The Edge)

Perdana Petroleum Bhd's 2QFY21 net loss widened to RM39.1m, from a net loss of RM2.9m recorded in the previous corresponding quarter, dragged by an impairment on property, plant and equipment amounting to RM29.9 m and lower vessel utilisation. Revenue for the quarter dropped 35.7% YoY to RM38.6m. (The Edge)

Source: Mplus Research - 20 Sept 2021