Turning lacklustre

Market Review

Malaysia:. The FBM KLCI (-0.2%) remained downbeat, dragged by the weakness in selected oil & gas, plantation and gloves heavyweights yesterday. Despite the lower liners inched marginally higher, the broader market was mostly downbeat with the healthcare sector (-1.6%) underperformed.

Global markets:. The US stockmarkets extended their lead as the Dow rose marginally by 0.04%, boosted by the strong batch of corporate earnings from United Parcel Service and General Electric. European stockmarkets also closed higher, while Asia stockmarkets ended mostly positive.

The Day Ahead

The FBM KLCI witnessed another round of profit taking activities yesterday as the key index ahead of Friday’s Budget 2022. Whilst investors took a further step back from glove counters, we believe market focus will be on potential beneficiaries of the Budget 2022. We believe the buying interest has been noticed in building material segment could continue as it is the proxy to construction sector. The CPO price has surpassed the RM5,000 mark again, while the crude oil prices climbed above USD86 per barrel mark on the back of supply-induced uncertainties.

Sector focus:. Investors may trade on plantation and oil & gas counters as the commodities prices remained strong. Besides, the construction and telecommunication stocks may trend higher ahead of the tabling of Budget 2022, while building material stocks may be focused as well. Meanwhile, the recovery theme may bode well for transportation and logistics as well as consumer sector.

FBMKLCI Technical Outlook

The FBM KLCI continued drifting lower after breaching its daily EMA 9 level yesterday. Technical indicators were mixed as the MACD Histogram has dipped below zero, but RSI is above the 50 level. Investors could keep their eye on the immediate support level at 1,580, while the resistance is located at 1,600-1,620.

Company Brief

Sarawak Consolidated Industries Bhd won't be able to meet the month-end deadline to submit its audited financial statement and annual report for year ended 30th June 2021. The company had on 8th October 2021 applied to Bursa Securities for an extension of time until the end of the year. The application was rejected by the stock exchange operator on 25th October 2021. As the result, shares in SCIB are at risk of being suspended from trading five days after the deadline has passed. (The Star)

Favelle Favco Bhd (FFB) has announced that four of its subsidiaries have secured purchase orders with a combined value of about RM37.1m. All the purchase orders are expected to see delivery in 2022. (The Star)

Sime Darby Bhd is investing more than RM120.0m for the new Auto Bavaria Balakong 4S Centre. The conglomerate automotive division Sime Darby Motors, via its subsidiary Sime Darby Auto Bavaria Sdn Bhd (Auto Bavaria), broke ground on its new BMW 4S Dealership in Balakong. (The Edge)

CTOS Digital Bhd, which is among the credit reporting agencies suspended from accessing the Central Credit Reference Information System (CCRIS) amid potential cyber threats has reported that its assessment indicated no breach of its data assets. CTOS has completed and submitted a compromise assessment to Bank Negara Malaysia on 18th October 2021. (The Edge)

Unisem (M) Bhd's 3QFY21 net profit fell 20.6% YoY to RM40.3m, mainly impacted by the closure of the plant and headcount limitation imposed during the quarter under review. Revenue for the quarter, however, increased 2.4% YoY to RM366.4m. A dividend of 2.0 sen per share, payable on 26th November 2021 was declared. (The Edge)

Advancecon Holdings Bhd has received its shareholders’ nod to acquire a 51.0% controlling stake in quarry operator Spring Energy Resources Bhd for RM30.4m. The acquisition of the stake in Spring Energy would be satisfied via RM15.2m in cash and RM15.2m via the issuance of 33.0m new Advancecon shares to vendor Fook Hua Holdings Sdn Bhd at an issue price of 46.0 sen per share. (The Edge)

Yinson Holdings Bhd has signed a term sheet with GreenTech Malaysia Alliances Sdn Bhd, a wholly-owned subsidiary under the Malaysian Green Technology and Climate Change Corporation, to accelerate the development of electric vehicle (EV) charging infrastructure in Malaysia. Yinson will hold a majority stake in the joint venture, which will provide EV charging stations in Malaysia. (The Edge)

Berjaya Food Bhd's wholly-owned subsidiary Berjaya Starbucks Coffee Co Sdn Bhd (BStarbucks) which operates Starbucks coffee outlets in Malaysia, is expected to have a near-complete presence across the country with a proposed new store in Perlis by end-2021. BStarbucks had 327 stores across Malaysia, except in the state of Perlis in the latest annual filing dated 30th June 2021. (The Edge)

OM Holdings Ltd's ferroalloy smelter complex in Sarawak registered higher production volumes in 3Q21, compared with in 2Q21. Its plant at Samalaju Industrial Park in Bintulu produced 33,453 tonnes of ferrosilicon, 59,307 tonnes of manganese alloys, and 34,542 tonnes of manganese sinter ore for the quarter under review. (The Edge)

Padini Holdings Bhd chairman Chia Swee Yuen is cautiously optimistic of successfully navigating through the current Covid-19-driven crisis and delivering long-term value to shareholders. The clothes retailer’s domestic operations continue to be the main driver of revenue and profits. (The Edge)

MHC Plantations Bhd’s 3QFY21 net profit jumped 118.9% YoY to RM11.5m, on the back of improved profitability at both its plantation and oil mill segments. Revenue for the quarter increased 75.7% YoY to RM168.0m. (The Edge)

Deleum Bhd has bagged two contract extensions from Petronas Carigali Sdn Bhd (PCSB) for the provision of slickline equipment and services and provision of gas lift valves (GLV) & insert strings equipment, accessories and services. The value of the contracts will depend on the agreed rates and the work order issued by PCSB. (The Edge)

Shareholders of Ancom Bhd gave the green light for the company to take over all assets and liabilities of Nylex (Malaysia) Bhd for RM179.3m (RM1.00 per Nylex share) at the group’s extraordinary general meeting. The acquisition of the remaining shares it does not own will be satisfied via cash payment of RM50.0m and the issuance of 31.1m new Ancom shares valued at RM46.7m (fixed at RM1.50 per Ancom share). (The Edge)

Globetronics Technology Bhd's 3QFY21 net profit slipped 9.8% YoY to RM16.3m, due to lower volume loadings from certain customers and a drop in economies of scale. Revenue for the quarter fell 15.1% YoY to RM55.7m. (The Edge)

Bursa Malaysia Bhd has disposed of its remaining 75,250 shares of CME Group Inc (previously known as Chicago Mercantile Exchange Holdings Inc) Class A common stock, for US$16.4m (RM67.9m). (The Edge)

Ajiya Bhd's 3QFY21 net profit dropped 32.4% YoY to RM1.5m, as sales were hit by the Full Movement Control Order restrictions implemented on 1st June 2021. Revenue for the quarter contracted 65.6% YoY to RM24.0m. (The Edge)

Mestron Holdings Bhd targets to win 30.0% of orders for the total of 1,661 telecommunication towers to be constructed under Phase One of the National Digital Network (JENDELA) initiative. Sarawak alone would require the construction of 600 towers under the plan and Mestron was expected to benefit from its strong track record in the state. (The Edge)

Source: Mplus Research - 27 Oct 2021