Recovery still premature

Market Review

Malaysia:. The FBM KLCI (+0.2%) snapped a seven-day losing streak after enduring a choppy trading session, boosted by gains across selected banking and telco heavyweights. The lower liners extended their losses albeit coming off from their intraday lows, while the broader market closed mostly upbeat.

Global markets:. The US stockmarkets erased all their intraday gains to close mostly lower as the Dow and S&P 500 shed 0.2% each on the back of the lingering concern over China’s real-estate crackdown, while the Nasdaq rose 0.2%. European stockmarkets rebounded, while Asia stockmarkets ended mostly higher.

The Day Ahead

The FBM KLCI bucked the overnight weakness on Wall Street, staging a rebound after seven straight declining sessions as investors indulged in bargain hunting activities, especially in the technology sector. Mild extension of the rebound might take place in selected sectors as government proposed three more destinations to be opened via domestic tourism bubble on the back of reducing active Covid-19 cases. Meanwhile, both CPO and crude oil prices increased, while the Baltic Exchange Dry Index continued to charge higher to 4,410 after reaching its all-time high since November 2009.

Sector focus:. The proposal of three more destinations for domestic tourism bubble which signals a further reopening of economy may bode well for the recovery theme sectors such as aviation, tourism and consumers. In view of the positive momentum on technology sector, we expect buying interest to extend at least for the near term.

FBMKLCI Technical Outlook

The FBM KLCI rebounded, snapping the seven straight sessions of losses. Technical indicators, however, remained negative as the MACD Histogram has extended a red bar, while the RSI continued hovering below the 50 level. Resistance is pegged along 1,580-1,600, while the support is located around 1,515.

Company Brief

Comfort Gloves Bhd’s 2QFY22 net profit expanded 247.7% YoY to RM148.8m, mainly due to higher sales revenue and better economies of scale that had improved the margin and partially offset by the increase in latex price. Revenue for the quarter jumped 154.7% YoY to RM504.2m. An interim dividend of 2.0 sen a share, payable on 22nd October 2021 was declared. (The Star)

Tanco Holdings Bhd's unit, Tanco Builders Sdn Bhd (TBSB) has received an award from Onine Alliance (M) Sdn Bhd (OAMSB) for the engineering, procurement, construction and completion of a proposed land reclamation project, measuring approximately 48.6-ha in Melaka. Combining the contract sum and the advance payment, the total consideration under the letter of award (LOA) would amount to RM172.7m. (The Star)

Sapura Energy Bhd has reported that group chief financial officer (CFO) Reza Abdul Rahim is leaving the company on 1st October 2021 to pursue other opportunities. Reza joined Sapura Energy as Senior Vice President of the Offshore Construction and Subsea Services Division in 2012 and was appointed Group CFO in June 2016. Reza, 45, will be replaced by Chew Seng Heng, a senior finance professional with 30-year experience with energy giant Royal Dutch Shell Group. (The Star)

Southern Acids (M) Bhd’s 1QFY22 net profit grew 36.8% YoY to RM23.5m, underpinned by strong commodity prices. Revenue for the quarter added 62.9% YoY to RM258.0m. (The Star)

Southern Steel Bhd’s 4QFY21 net profit stood at RM24.5m vs. a net loss of RM48.9m recorded in the previous corresponding quarter, largely thanks to higher selling prices and cost improvement. Revenue for the quarter rose 79.7% YoY to RM358.1m. (The Star)

MR DIY Group (M) Bhd has embarked on its Poket Selamat 7 campaign to ensure members of the public have affordable and accessible personal protective gear to stay safe as offices and businesses around the country reopen and as students prepare for a return to school in October 2021. Effective from 15th September 2021, three-ply face masks are priced at RM5/box (down from RM5.90/box previously), while face shields are priced at RM5.90/piece (down from RM7.90/piece). (The Edge)

Perak Transit Bhd has issued a second tranche of RM100.0m Islamic medium term notes to finance its working capital requirement and capital expenditure for the development of its new transportation terminal in Bidor. The unrated Islamic securities, in which United Overseas Bank (Malaysia) Bhd and AmBank Group are subscribers, comprise the second tranche under its maiden RM500.0m 15-year sukuk murabahah programme launched in 2019. (The Edge)

Astro Malaysia Holdings Bhd's 2QFY22 net profit fell 34.8% YoY to RM87.1m, on subdued commercial subscription and merchandise sales. Revenue for the quarter declined 2.8% YoY to RM2.06bn. A second interim dividend of 1.5 sen per share, payable on 20th October 2021 was declared. (The Edge)

BLD Plantation Bhd's 1QFY22 net profit soared 266.7% YoY to RM16.2m, on higher CPO prices. Revenue for the quarter increased 36.3% YoY to RM540.5m. (The Edge) 

Perusahaan Sadur Timah Malaysia Bhd's (Perstima) 1QFY22 net profit slumped 48.3% YoY to RM5.4m, on lower profit margin from higher operational costs. Revenue for the quarter, however, climbed 25.5% YoY to RM251.8m. (The Edge)

Mah Sing Group Bhd plans to unveil 10 property launches in 2021 as buyers' confidence returns amid the opening of more economic sectors and relaxation of more activities, driven by the positive progress in the National Recovery Plan and strong vaccination rate. These launches have a key focus on affordable products. (The Edge)

Bina Darulaman Bhd joint venture with Menteri Besar Kedah Inc has entered into a concession agreement for a mixed development in Bandar Padang Mat Sirat, Langkawi. The project comprises premium and duty-free outlets, tourism and culture village, retail and F&B outlets, as well as boutique hotels, all under an eco friendly concept. (The Edge)

The Employees Provident Fund (EPF) has emerged as a substantial shareholder of VS Industry Bhd for the first time after raising its direct stake to 5.1% comprising 192.5m shares. This came after the EPF acquired 5.4m shares. (The Edge)

Berjaya Assets Bhd's 4QFY21 net loss narrowed to RM83.7m, from net loss of RM115.8m, as the property investment and hotel and recreation business segments incurred lower operating costs amid further cost reductions. Revenue for the quarter inched up 1.7% YoY to RM36.7m. (The Edge)

KESM Industries Bhd’s 4QFY21 net loss narrowed to RM0.7m, from a net loss of RM3.3m recorded in the previous corresponding quarter, on improved volume for its burn-in, testing, and electronic manufacturing services. Revenue for the quarter added 25.5% YoY to RM58.0m. (The Edge)

Advancecon Holdings Bhd’s 2QFY21 net loss narrowed to RM2.5m, from a net loss of RM6.9m registered in the previous corresponding quarter, on higher progress billings from ongoing construction projects and support services. Revenue for the quarter rose 57.7% YoY to RM60.1m. (The Edge)

Source: Mplus Research - 22 Sept 2021