Swaying lower

Market Review

Malaysia:. The FBM KLCI (-0.1%) registered its fifth straight session of decline after erasing all its intraday gains, dragged by weakness in selected gloves heavyweights. The lower liners also turned lower, while the broader market ended mostly negative with the energy sector (-1.1%) underperformed.

Global markets:. The US stockmarkets retreated from their all-time high levels as the Dow slipped 0.7% on concern over economic growth following the rising raw material prices, wage cost and supply constraints. European stockmarkets also turned downbeat, while Asia stockmarkets closed mostly lower.

The Day Ahead

The FBM KLCI moved a tad lower in tandem with the regional peers as investors jittered over the concerns over China’s property market, resurfacing US-China tensions, as well as inflationary concerns going forward. However, we believe trading interest on the local front will be focusing on the Budget 2022 themes and the buying support from the foreign investors. We expect REDTONE’s news on the telco may spurs buying support into telco related stocks, while construction and property sectors may be rebounding higher prior to the Budget 2022. Commodities wise, both the CPO and crude oil prices declined, while the gold price bounded.

Sector focus:. Following the economic reopening activities few weeks back, recovery theme sectors such as property, consumer, banking and aviation are likely to gain traction. Meanwhile, we think metal related counters may be undergoing a pullback formation due to lower steel prices.

FBMKLCI Technical Outlook

The FBM KLCI failed to hold above its daily EMA 9 level as the key index slipped into the negative territory in the afternoon trading session. Technical indicators remained mixed as the MACD Histogram gravitated further below the zero line, while the RSI is still hovering above the 50 level. The support level is located at 1,570-1,580, while the resistance level is set around 1,600-1,620.

Company Brief

Trading in shares of Serba Dinamik Holdings Bhd remained suspended after it failed to announce the findings from the Factual Findings Update on the Special Independent Review (SIR) by 26th October 2021. As the trading in Serba Dinamik’s securities has been suspended since 2.30pm on 22nd October 2021, the suspension of trading will continue until further notice. (The Star)

Seni Jaya Corp Bhd has proposed a private placement exercise involving the issuance of up to 14.6m new ordinary shares, subject to the issuance of the placement shares not exceeding 20.0% of the group’s total number of issued shares. It intends to utilise RM24.0m of the total proceeds from the proposed private placement for the advertising projects/concessions which expect to further enhance its existing advertising services and approximately RM7.2m of the proceeds to expand to a new business category which is to deploy the LED advertising media. Separately, Seni Jaya has also proposed to undertake a bonus issue of up to 262.1m new ordinary shares on the basis of 3 bonus shares for every 1 share held. The proposals are expected to be completed by 1Q22. (The Star)

Samchem Holdings Bhd’s 3QFY21 net profit climbed 32.6% YoY to RM12.6m, on improved margins and favourable exchange rates which offsets the lower sales due to strict pandemic measures in Malaysia and Vietnam. Revenue for the quarter, however, declined 5.5% YoY to RM272.8m. (The Star)

REDtone Digital Bhd has been appointed as a universal service provider for the Jendela Phase 1 (Part 2) project. REDtone’s wholly-owned subsidiary REDtone Engineering & Network Services Sdn Bhd (RENS) has received the notice of approval from the Malaysian Communications and Multimedia Commission (MCMC). The job scope includes the design, supply, installation and operations of network service equipment. (The Edge)

Malayan Banking Bhd (Maybank) has extended RM20.00bn worth of repayment assistance as of 30th September 2021 to over 26,000 small-and-medium enterprise (SME) loan/financing accounts impacted by the pandemic. The bank has also continued to avail financing to the companies, approving and disbursing more than RM15.00bn in loans and financing to SMEs since 2019. (The Edge)

The Terengganu State Heritage Trust Board (LTAWNT), one of the largest shareholders of TDM Bhd, received RM1.9m as its share of profit from the plantation and healthcare group. The payment was for last year's profit from the development of LTAWNT’s 1,336-ha oil palm plantation by TDM at its Air Putih Estate in Kemaman. (The Edge)

Glomac Bhd expects the performance of the property industry to improve in the near term with the easing of economic restrictions that allows construction to recommence and sales galleries to re-open. However, the rise in costs of labour and construction materials, which are currently in short supply due to pent-up demand over the last 18 months bears some risk. (The Edge)

Kanger International Bhd has entered into a Heads of Agreement (HoA) with a Dubai-based pharmaceutical company to purchase Covid-19 rapid testing kits for distribution within Malaysia. The HoA with Sparmak Medical Equipment Trading LLC will take effect once the medical device authorisation is granted to the product by the Malaysian health authorities. (The Edge)

Salcon Bhd has secured a RM20.9m sewerage system contract from Gamuda Bhd’s subsidiary Gamuda Land (Botanic) Sdn Bhd. The work involves rehabilitation of vacuum sewerage system at Bandar Botanik and Ambang Botanik in Klang. The project is a construction contract and has no option for renewal. (The Edge)

Gadang Holdings Bhd’s 1QFY22 net profit stood at RM3.7m vs. a net loss of RM0.5m recorded in the previous corresponding quarter, helped by higher contributions from its construction, property and utility businesses. Revenue for the quarter rose 16.7% YoY to RM134.6m. (The Edge)

K-One Technology Bhd has received conditional approval from the Health Ministry’s Medical Device Authority for the import and distribution of a China-made Covid-19 antigen self-test kit. The saliva-based test kit is manufactured by Labnovation Technologies Inc, which is based in Shenzhen, Guangdong. (The Edge)

Tasco Bhd's 2QFY21 net profit rose 46.6% YoY to RM15.7m, on stronger contribution mainly from its international business solutions segment. Revenue for the quarter increased 37.5% YoY to RM315.5m. An interim dividend of 1.0 sen per share, payable on 30th November 2021 was declared. (The Edge)

IOI Corp Bhd’s subsidiary IOI Investment (L) Bhd's new offer of US$300.0m 10-year unsecured notes has attracted institutional investors. The new offer of US$300.0m 10-year senior unsecured notes is a drawdown from the issuer's US$1.50bn Euro Medium-term Note Programme. (The Edge)

Sime Darby Property Bhd has proposed to acquire 760.0-ac of land with development potential in Labu, Negeri Sembilan, from sister company Sime Darby Bhd for RM280.0m. The land is located within the regional development of Malaysia Vision Valley 2.0 and adjacent to Bandar Enstek. (The Edge)

Source: Mplus Research - 28 Oct 2021