Emergence of profit taking

Market Review

Malaysia:. The FBM KLCI (-0.9%) endured a volatile session on the back of profit taking activities with more than two third of the key index components finished lower. The lower liners and broader market were beaten down and ended mostly in the red with the telecommunications & media sector (-2.1%) underperformed.

Global markets:. The US stockmarkets ended on a mixed note as the Dow fell 0.02% after recovering from its intraday lows, but both the S&P 500 and Nasdaq added 0.3% and 0.6% respectively, boosted by the extended rally in technology shares. Both the European and Asia stockmarkets closed mostly lower.

The Day Ahead

The FBM KLCI languished in the negative territory for almost the entire trading session and closed lower, snapping its 3-day winning streak as profit taking activities emerged. Given the mixed Wall Street performances, coupled with Evergrande’s issues, we believe market sentiment to remain negative today. However, we expect traders or investors may focus on sectors that are related to the upcoming Budget 2022, which may provide clarity for the economic recovery going forward. Commodities wise, both the CPO and crude oil prices declined after a significant extended rally in both commodities over the past weeks.

Sector focus:. Investors may continue collecting laggard counters in the recovery theme sectors such as consumer and banking, as well as construction and property stocks. Meanwhile, the technology counter may track Nasdaq’s gains overnight.

FBMKLCI Technical Outlook

The FBM KLCI pulled back below the psychological 1,600 level as the key index took a breather after 3 winning sessions. Technical indicators remained positive as the MACD Histogram has extended a green bar, while the RSI has hooked lower below the 70 level. Resistance is pegged along 1,600-1,620, while support is located at 1,580.

Company Brief

Digi.com Bhd’s 3QFY21 net profit dipped 2.5% YoY to RM312.8m, on higher depreciation and amortisation, net loss on foreign exchange and fair value movement of foreign currency forward contracts. Revenue for the quarter, however, rose 0.3% YoY to RM1.58bn. A third interim tax exempt (single-tier) dividend of 4 sen per share, payable on 17th December 2021 was declared. (The Star)

Supermax Corporation Bhd’s representatives in the United States are currently in touch in the US Customs and Border Protection (CBP) to obtain more clarity and information on the Withhold Release Order (WRO) issued and the required measures going forward. The company had embarked on its undertaking to meet the International Labour Organisation (ILO) standards on migrant workers since 2019. Currently, about 20 per cent of the Supermax Group’s sales go to the US market. (The Star)

Vitrox Corp Bhd’s 3QFY21 net profit rose 42.1% YoY to RM42.2m, attributable to strong demand for both its machine vision system (MVS) and automated board inspection (ABI) product. Revenue for the quarter increased 36.0% YoY to RM168.3m. (The Star)

Kumpulan Peransang Selangor Bhd’s (KPS) subsidiary Aqua-Flo Sdn Bhd has secured a supply contract worth RM91.6m from Pengurusan Air Selangor Sdn Bhd (Air Selangor) for supply, transport, and deliver water chemicals to water treatment locations. The contract will run for 14 months from 1st November 2021 to 31st December 2022 with option for extension upon request by Air Selangor. (The Star)

Kossan Rubber Industries Bhd's 3QFY21 net profit rose 51.5% YoY to RM528.2m, mainly due to the higher average selling price (ASP) from the gloves division. Revenue for the quarter improved 26.1% YoY to RM1.30bn. A third interim dividend of 12 sen per share, payable on 19th November 2021 was declared. (The Edge)

CIMB Group Holdings Bhd is considering renegotiating terms of its bancassurance partnerships in Indonesia amid increasing interest from insurers seeking to expand in Southeast Asia. CIMB, which owns a majority stake in Indonesia’s PT Bank CIMB Niaga, is holding talks with existing insurance partners Hong Kong-based AIA Group Ltd and Canada’s Sun Life Financial Inc about a revised deal. A potential pact could be valued at between USD300.0-400.0m. (The Edge)

Sime Darby Plantation Bhd’s (SDP) subsidiary SDP Renewable Energy Sdn Bhd (SDPRE) plans to develop 2 new biogas power plants with the largest grid connected palm oil mill effluent (POME) biogas developer in Malaysia, Cenergi SEA Bhd's wholly-owned subsidiary Cenergi RE Sdn Bhd (Cenergi). To date, Cenergi has developed 3 biogas power plants for SDP's palm oil mills which are currently operational, while two others are under construction with targeted completion in November 2021 and mid-2022. (The Edge)

Lotte Chemical Titan Holding Bhd (LCT) has decided to proceed with the construction of an RM18.00bn integrated petrochemical project in Indonesia. The construction of the Lotte Chemical Indonesia New Ethylene (LINE) project is expected to commence in 2022 and be completed by 2025. The project will double its existing production capacity, as well as propel LCT into the top three companies in Southeast Asia, alongside Thailand-based Siam Cement Group Plc and PTT Global Chemical Plc. (The Edge)

Pantech Group Holdings Bhd’s 2QFY21 net profit rose 42.8% YoY to RM15.3m, mainly due to optimised trading and manufacturing operations, robust export demand and higher product prices. Revenue for the quarter grew marginally by 0.1% YoY to RM136.5m. A second interim dividend of 1 sen per share for the quarter, payable on 23rd December 2021 was declared. (The Edge)

Ageson Bhd is selling a piece of industrial land measuring approximately 168.0-ac in Batang Padang, Perak for a purchase consideration of RM278.8m. Ageson’s indirect 75.0%-owned subsidiary Ageson Holdings Sdn Bhd has entered into a sale and development agreement with China’s Zhejiang Guorong Digital Economy Group Ltd. (The Edge)

Jaycorp Bhd has proposed to undertake a bonus issue of 137.3m new shares on the basis of 1 bonus share for every 1 share held. The entitlement dates will be determined later. (The Edge)

IGB Bhd's indirect wholly-owned subsidiary Verokey Sdn Bhd (VSB) has sold the latter’s 50.0% stake in property investment firm Black Pearl Ltd (BPL) to HNG Blackfriars 1 Ltd for £104.4m (RM598.9m) to realise VSB’s investment in BPL. (The Edge)

Willowglen MSC Bhd's wholly-owned subsidiary Willowglen Services Pte Ltd has been awarded an RM5.8m contract for works relating to the installation of a public address emergency system and other security and communication systems for a fire station in Singapore Changi Airport. (The Edge)

Serba Dinamik Holdings Bhd group managing director and chief executive officer Datuk Mohd Abdul Karim Abdullah has disposed of his entire holding of 55.9m of the group’s warrants this week. He sold 21.6m warrants on 18th October 2021, another 34.2m warrants on 20th October 2021, and a further 123,600 warrants on 21st October 2021. Together, the warrants disposed of represent about 6.3% of the group’s total warrants. (The Edge)

CapitaLand Malaysia Trust (CLMT) 3QFY21 net property income (NPI) contracted 54.4% YoY to RM18.6m, dragged down by re-implementation of a nation-wide movement control order (Full MCO) in June 2021, followed by a National Recovery Plan Phases 1 and 2 where most restrictions were still in place. Revenue for the quarter fell 30.5% YoY to RM48.7m. A distributable income of 0.86 sen per share, payable on 22nd September 2021 was declared. (The Edge)

Source: Mplus Research - 22 Oct 2021