Re-capturing 1,600

Market Review

Malaysia:. The FBM KLCI (+0.5%) built onto its previous session gains, boosted by gains in selected banking and Genting-related heavyweights ahead of the mid-week break. The lower liners also extended their upbeat tone, while the broader market finished mostly higher with the construction sector (+1.0%) leading the peers.

Global markets:. The US stockmarkets advanced as the Dow rose 0.6%, boosted by the strong corporate earnings from Travelers Cos. and Johnson & Johnson, whilst expecting for the US Federal Reserve to start tapering of bond buying next month. Both the European and Asia stockmarkets closed mostly positive.

The Day Ahead

The FBM KLCI jumped amid continued buying from foreign investors (MTD net inflow:. RM1.46bn) amid steady recovery tone in the country coupled with elevated commodities market environment. Investors’ sentiment remained upbeat particularly in recovery theme stocks, while the transportation and logistics counters staged a pullback in tandem with the declining Baltic Dry Index that has fallen eight straight sessions. Also, investors or traders may position themselves ahead of the Budget 2022 end of this month. Meanwhile, the CPO and crude oil prices both climbed, with the latter hovering above the USD85 per barrel level.

Sector focus:. We opine that the local bourse to point higher, tracking with the overnight gains in Wall Street. The building material segment may gain traction on the back of increasing demand amid economic recovery, in line with other recovery theme stocks such as banking and consumer, while construction and property sectors could be lifted ahead of the Budget 2022. Besides, the oil & gas counters should remain under the limelight.

FBMKLCI Technical Outlook

The FBM KLCI breaches its immediate resistance level at 1,600 after hovering in the positive region for the entire session. Technical indicators remained positive as the MACD Histogram has extended a green bar, while the RSI headed higher for the session. Next resistance is located at 1,620, while the support is at 1,580.

Company Brief

Inari Amertron Bhd has entered into a preliminary deal with a private equity fund China Fortune-Tech Capital Co Ltd (CFTC) to set up a joint venture in China. The JV company was intended to carry out Outsourced Semiconductor Assembly and Test (OSAT) manufacturing and related businesses. Inari will own a 55.0% stake in the JV company with CFTC holdings the remaining 45.0% equity interest. (The Star)

MyEG Services Bhd (MyEG) has proposed placement of up to 4.2% of its total number of issued shares to third party investors that would be identified later at an issue price to be determined later. As of the latest practicable date, the total issued share of MyEG is valued at RM664.2m comprising 7.38bn shares, including 182.0m treasury shares. Proceeds would be used for the development of healthcare related services and technology and the development of automated driving tests and training systems and the purchase of hardware. (The Star)

ES Ceramic Technology Bhd’s 1QFY22 net profit soared 194.9% YoY to RM9.4m, boosted by higher average selling prices. Revenue for the quarter jumped 113.3% YoY to RM25.5m. (The Star)

AirAsia X Bhd (AAX) is proposing to pay just 0.5% of debt owed to each creditors and to terminate all existing contracts so that it can restructure RM33.65bn (US$8.1bn) of liabilities. The low-cost long-haul airline had set 12th November 2021 for creditor meetings to vote on the restructuring proposal. (The Edge)

IOI Corp Bhd’s subsidiary IOI Investment (L) Bhd has invited holders of its outstanding US$600.0m 4.4% notes due 2022 to either submit tenders to purchase their notes for cash on the terms and in the tender offer to be despatched to them. The offer in conjunction with the issuance of the new notes, is part of the group’s proactive management of its funding and capital structure. (The Edge)

Moody's Investors Service has assigned a provisional (P)B1 corporate family rating (CFR) to Hibiscus Petroleum Bhd. Moody's also assigned a provisional (P)B1 rating to the proposed US dollar-denominated senior secured bonds to be issued by Hibiscus Capital Ltd. (The Edge)

Gamuda Bhd’s wholly-owned sub-subsidiary in Vietnam, Gamuda Land HCMC Joint Stock Company, has acquired 5.6-ha of land in Binh Duong New City, Vietnam for US$53.9m. The piece of land was acquired from Binh Duong Trade and Development Joint Stock Company, which is a state-owned company established in 2015 and listed on Ho Chi Minh City Stock Exchange. The purchase consideration will be funded through internally generated funds. (The Edge)

ACO Group Bhd is teaming up with EV Connection Sdn Bhd to install a direct current fast-charging station at ACO Group’s new headquarters in Johor Bahru, as part of its initiatives to tap into the green technology sector. To capitalise on rising growth prospects of the EV space, ACO Group has proposed to acquire a 10.0% stake in EV Connection for RM1.0m cash. (The Edge)

Straits Energy Resources Bhd plans to acquire a vessel for US$3.5m (RM14.6m) to expand the business of its 67.0%-owned unit Straits Marine Fuels and Energy Sdn Bhd, especially in the supply of low sulphur fuel oil. Straits Energy is acquiring Empower, which has a gross tonnage of 4,991 tonnes and death weight tonnage of 7,820 tonnes, from Adamas Marine Sdn Bhd. (The Edge)

Southern Cable Group Bhd has secured an RM18.5m contract from Tenaga Nasional Bhd (TNB) for the supply of underground cables and conductors. Southern Cable Sdn Bhd would supply and deliver the underground cables and conductors for the distribution network division of TNB. The tenure of the contract is for a period of six months from October 2021. (The Edge)

Haily Group Bhd has bagged a contract worth RM24.5m from Meridin East Sdn Bhd for the construction and completion of a terraced residential project in Plentong, Johor Bahru. The project comprises 155 double-storey terrace houses, one single-chamber TNB sub-station, two double-chamber TNB sub-stations and one main switch station. (The Edge)

Omesti Bhd via wholly-owned unit Omesti Holdings Bhd (OHB) has acquired 13.2m shares in Microlink Solutions Bhd from the open market for RM10.5m, or an average of 79.2 sen per share. Following the acquisition, Omesti via OHB holds 532.4m shares or 54.9% equity interest in Microlink. (The Edge)

Asia Poly Holdings Bhd has ceased to be a substantial shareholder of Karyon Industries Bhd. Between 25th May 2021 and 15th October 2021, Asia Poly disposed of 28.4m shares or a 6.0% stake in Karyon in the open market for RM8.2m. Following the disposal, Asia Poly is left with 5.5m shares or a 1.2% stake in Karyon. (The Edge)

Source: Mplus Research - 20 Oct 2021