Finding stability

Market Review

Malaysia:. The FBM KLCI (+0.1%) was boosted by the eleventh-hour buying support in selected banking and telco heavyweights as the key index recouped all its intraday losses to close marginally higher. The lower liners ended mixed, while the broader market also finished mixed with the energy sector (+1.7%) taking the lead.

Global markets:. The US stockmarkets closed mixed as the Dow rose 0.2%, but the S&P 500 and Nasdaq shed 0.3% and 0.5% respectively on concern over the lofty valuations, particularly within the technology sector. European stockmarkets ended mostly higher, while Asia stockmarkets finished mixed.

The Day Ahead

The FBM KLCI rebounded from the earlier session and edged higher as investors picked up shares in midday after digesting the 12th Malaysia Plan (12MP) that highlighted economy may improve to around 4.5-5.5% and a development expenditure allocation of around RM400.0bn for 2021-2025. Several highlights under the 12MP include nationwide 5G roll-out, infrastructure project resumptions, and a greater focus on renewable energy. On a side note, the crude oil price advanced to close above the USD79 per barrel level.

Sector focus:. We expect recovery theme sectors should continue to stay under the limelight, with aviation, tourism, and consumer counters under investors’ focus. Meanwhile, the 12MP may bode well for telecommunication infrastructure companies, construction as well as technology sectors. Besides, trading interest will be seen in oil & gas counters amid firmer crude oil price.

FBMKLCI Technical Outlook

The FBM KLCI continued to trade sideways; the key index rebounded to post marginal gains albeit still hovering below the daily EMA9 level. Technical indicators remained negative as the MACD Histogram has extended a red bar, while the RSI continued hovering below the 50 level. Resistance is located at 1,550-1,560, while the support is pegged along 1,515.

Company Brief

AirAsia X Bhd posted a massive RM24.63bn net loss in the three-month ended 30th June 2021, on the back of a revenue of RM72.3m. AAX has made a provision of RM23.80bn in the current quarter, though it should be highlighted that the contractual liabilities for which the provision is made will be waived upon a successful completion of the proposed debt restructuring exercise. No comparison figures were made as AAX has changed its financial year end from 31st December to 30th June. (The Star)

Straits Energy Resources Bhd has entered into a heads of agreement with Seashore Technologies Pte Ltd to collaborate on 4G and 5G related projects in the oil and gas industry. In addition to participating in the 4G and 5G rollout, the company is also targeting digital transformation of the oil and gas industry, especially in the areas of automation, surveillance, remote operations and big data analytics. (The Star)

Protasco Bhd’s 2QFY21 net profit stood at RM6.4m vs. a net loss of RM1.7m recorded in the previous corresponding quarter, boosted by stronger contribution by its road maintenance division. Revenue for the quarter improved 10.2% YoY to RM189.5m. (The Star)

Dolomite Corporation Bhd has been classified as an affected listed issuer under Practice Note 17 after it was unable to pay its debts as its liabilities have far exceeded its assets. As of 31st December 2020, Dolomite has net liabilities of RM59.6m. (The Star)

Axiata Group Bhd's indirect wholly-owned subsidiary Axiata Investments (Indonesia) Sdn Bhd (AIISB) is selling a 5.0% stake in Indonesia-listed arm PT XL Axiata Tbk to Ferrymount Investments Ltd (FIL) for 1.44tn Rupiah (RM423.5m) or 2,700 Rupiah (RM0.79) per share. AIISB currently holds a 66.5% stake in XL. (The Edge)

Aemulus Holdings Bhd’s wholly-owned subsidiary Aemulus Corp Sdn Bhd (ACSB) has clinched new orders worth RM4.5m. The new orders were given by a customer in Malaysia for the delivery of test systems for the enterprise storage market but the name of the customer was not specified. (The Edge)

Handal Energy Bhd has bagged a five-year contract from ExxonMobil Exploration and Production Malaysia Inc to provide crane overhaul, repair and refurbishment services. This is the second contract it has bagged from ExxonMobil in three months. (The Edge)

AWC Bhd’s 4QFY21 net profit stood at RM2.7m vs. a net loss of RM29.9m recorded in the previous corresponding quarter, on higher operating income and lower other operating expenses. Revenue for the quarter rose 29.6% YoY to RM97.0m. (The Edge)

Malaysian Resources Corp Bhd (MRCB) has on 24th September 2021 received the final award on costs from the Asian International Arbitration Centre (AIAC), which mediated in the MRCB-George Kent (M) Bhd (MRCBGK) dispute involving both companies' shareholders’ agreement dated 8th June 2015. In the final award on costs, the arbitrator has ruled that George Kent (Malaysia) Bhd will pay MRCB RM2.1m, plus S$70,458.50 (about RM0.2m). (The Edge)

Seni Jaya Corp Bhd’s shareholders have approved the issuance of 24.3m bonus warrants on the basis of one bonus warrant for every two existing Seni Jaya shares at its extraordinary general meeting. The exercise price of the warrants will be determined later. (The Edge)

MyNews Holdings Bhd’s 3FY21 net loss widened to RM14.9m, from a net loss of RM6.1m recorded in the previous corresponding quarter, dragged down by weaker retail performance, which saw its food processing division sinking into the red. Revenue for the quarter declined 14.7% YoY to RM93.9m. (The Edge)

Hextar Global Bhd has executed an RM50.0m financing facility from HSBC Amanah Malaysia Bhd to finance its purchase of Nobel Synthetic Polymer Sdn Bhd and Nobel Scientific Sdn Bhd, collectively known as the Nobel Group. The facility is expected to increase its consolidated gearing from 0.5x to 1.2x. The facility will be secured by way of corporate guarantee by its wholly-owned Hextar Chemicals Sdn Bhd. (The Edge)

Source: Mplus Research - 28 Sept 2021