Outlook still choppy

Market Review

Malaysia:. The FBM KLCI (+0.9%) marched higher after recovering from its intraday losses, lifted by gains in selected gloves and oil & gas heavyweights yesterday. The lower liners, however, ended mixed, while the energy sector (+4.3%) outperformed the mostly negative broader market, following the higher crude oil prices.

Global markets:. The US stockmarkets endured another volatile session as the Dow sank 1.6% after the Republicans blocked the Democrats proposal to raise debt ceiling which triggers concern over rising federal debt default risk. European stockmarkets were downbeat, while Asia stockmarkets closed mostly weaker.

The Day Ahead

The FBM KLCI finished higher on the back of positive sentiment as investors digested the positive economic outlook in the 12th Malaysia Plan as well as powered by a rally in the energy sector after the crude oil price climbed above USD80 per barrel mark on the intraday due to improved demand amid reopening of economic activities. However, investors may remain cautious while waiting for the economic activities to return to normalcy, considering the significant pullback on Wall Street overnight. Meanwhile, the CPO price advanced near the RM4450 level.

Sector focus:. The advance in CPO price may bode well for the plantation counters. However, the pullback below the USD80 mark on the crude oil price may anticipate some profit taking activities to emerge. Nevertheless, we still expect defensive sectors such as consumer and healthcare to return under the limelight.

FBMKLCI Technical Outlook

The FBM KLCI extended its gains as the key index advanced, closing above the daily EMA9 level. 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 at 1,550-1,560, while the support is set along 1,515.

Company Brief

Malaysian Resources Corp Bhd (MRCB) has reported that George Kent (M) Bhd has accepted its RM53.0m cash offer to buy-out the company's stake in their joint venture. MRCB-George Kent Sdn Bhd (MRCB-GK) is a single purpose company appointed the Prasarana Malaysia Bhd as the main contractor for the Light Rail Transit Line 3 (LRT 3) project which has completed more than 50.0% of the LRT 3 project. (The Star)

Boustead Plantations Bhd is selling 664.0-ha of land in Kulai, Johor to SIPP Power Sdn Bhd for RM428.8m cash. SIPP Power in a wholly owned subsidiary of YTL SIPP Power Holdings Sdn Bhd, which in turn is a subsidiary of YTL Power International Bhd. Boustead is expected to realise an estimated net gain on disposal of approximately RM323.0m. The company said it has set aside RM361.0m for repayment of bank borrowings, while RM26.9m was allocated for working capital purposes, while the remaining RM40.0m for tax and other expenses. (The Star)

AEON Credit Service (M) Bhd's 2QFY21 net profit rose 45.7% YoY to RM75.5m, partly due to lower impairment losses on financing receivables. Revenue for the quarter increased 2.9% YoY to RM374.5m. (The Star)

Pecca Group Bhd’s board had resolved to declare an interim dividend via a share dividend distribution of treasury shares on the basis of one treasury share for every 41 existing shares held in respect of FY22. The entitlement and share deposit dates of the dividend will be announced at a later date. (The Edge)

Reservoir Link Energy Bhd’s wholly-owned subsidiary Reservoir Link Sdn Bhd has secured a contract from Sarawak Shell Bhd/Sabah Shell Petroleum Company Ltd for the provision of slickline equipment and services. Reservoir Link will be the primary contractor providing slickline equipment and services for well completion activities which are rig assisted, and as a backup contractor for well interventions activities which are non-rig assisted. (The Edge)

Daibochi Bhd’s 4QFY21 net profit fell 20.8% YoY to RM8.9m, on lower revenue and higher operating costs. Revenue for the quarter decreased 14.2% YoY to RM133.7m. (The Edge)

Hong Leong Bank Bhd (HLB) expects Malaysia’s economy to register a modest recovery in 2021, as spikes in Covid-19 infections and the reintroduction of movement restrictions moderate. There is growing optimism that an acceleration in the vaccination roll-out and a more favourable external environment will help underpin a more sustained recovery in 2022. (The Edge)

PCCS Group Bhd is kicking off its hire purchase business this month with a RM5.0m loan book and expecting this division to start contributing to the group's revenue in FY22. PCCS' hire purchase business is based in Melaka and Johor. (The Edge)

Kumpulan Wang Persaraan (Diperbadankan) (KWAP) has raised its direct stake in Tenaga Nasional Bhd (TNB) to 6.7%, comprising 384.2m shares after the pension fund bought shares of the national utility in several tranches of 1.0m shares each, following foreigners' emergence as net buyers of TNB shares for the first time in 21 months. KWAP also owned as of 24th September 2021, an indirect stake of 0.7%, comprising 38.3m shares in TNB. (The Edge)

NPC Resources Bhd is withdrawing its offer to sell its Sabah oil palm plantation land to IOI Corporation Bhd, as the company is unable to accept IOI Corp’s revised purchase price for the assets. In July 2021, IOI Corporation had offered to buy several parcels of oil palm plantation land located in Sabah's Labuk, Sugut, Kinabatangan and Beluran districts from NPC, and the deal was slated for completion by 1Q22, although the combined offer price of RM281.2m for the assets had yet to be finalised. (The Edge)

KNM Group Bhd has secured a contract worth RM13.4m to build a pre-fabrication tank for a combined cycle power generating facility of up to 1,200MW at Pulau Indah, Selangor. The contract was awarded by PEC Powercon Sdn Bhd to its wholly-owned unit KNM Process Systems Sdn Bhd, which is expected to deliver the tank in 11 months. (The Edge)

MY EG Services Bhd (MYEG) 40.0%-Philippines joint venture (JY) I-Pay MYEG Philippines Inc (MYEG Philippines) is rolling out two e-government services in the Philippines for the online payment of income tax to their Bureau of Internal Revenue, and the payment of fees to the Philippine Economic Zone Authority (PEZA). The online income tax payment will be made available on MYEG Philippines' online portal from October 2021. (The Edge)

Icon Offshore Bhd subsidiary, Perisai Offshore Sdn Bhd has secured a contract extension for the provision of its jack-up drilling rig involving works for four wells. This is an extension of the earlier contract for eight wells from Petrofac Ltd. (The Edge)

Tropicana Corp Bhd’s 2QFY21 net loss stood at RM25.0m vs. a net profit of RM24.3m recorded in the previous corresponding quarter, on lower revenue due to the impact of the lockdown. Revenue for the quarter declined 41.9% YoY to RM195.0m. (The Edge)

Source: Mplus Research - 29 Sept 2021