All eyes on Budget 2022

Market Review

Malaysia:. The FBM KLCI (-1.0%) was marred by the weakness on Wall Street overnight, coupled with the slump in commodity prices. The lower liners extended their losses, while the Property (+2.4%), Technology (+0.3%) and Construction (+0.03%) sectors outperformed the negative broader market.

Global markets:. The US stockmarkets staged a strong recovery as the Dow climbed 0.7%, supported by the strong labour data which saw weekly unemployment claims fell to 281,000 last week; the lowest in 19 months. European stockmarkets closed mixed, while Asia stockmarkets were painted in red.

The Day Ahead

The FBM KLCI experienced another round of profit taking activities and the key index declined below the SMA200 zone. However, we believe the sentiment may turn positive, tracking the positive rebound on Wall Street. Also, market focus today will be on the Budget 2022, which will determine the directions on the economic growth going forward moving away from the Covid-19 pandemic. Commodities wise, both the CPO and crude oil still in the pullback formation, while the gold price hovering around the USD1800 level.

Sector focus:. Investors will be looking out for the recovery theme stocks after the reopening of economic activities over the past few weeks. Also, market focus will be on the upcoming Budget 2022, which we think policies that may be crafted will provide decent catalysts for traders to position within construction, property, tourism, renewable energy going forward.

FBMKLCI Technical Outlook

The FBM KLCI declined below the SMA200 level and performed an extended consolidation phase. For now, the technical indicators are still negative with the MACD Histogram staying below zero, while the RSI crossed below the 50 level. Expect the resistance to be at 1,580, while the support to be located around 1,540- 1,550.

Company Brief

Top Glove Corporation Bhd has slashed the amount it aims to raise from its planned Hong Kong listing for a second time to HKD3.68bn (US$473.0m), less than a quarter of its initial target, it said in a resubmitted listing application. The company could raise about HKD4.24bn if the over-allotment option is fully exercised. Top Glove plans to allocate HKD2.48bn of its listing proceeds to the expansion of production capacity via six new factories in Malaysia and developing a data-driven manufacturing system. (The Star)

EP Manufacturing Bhd (EPMB) has appointed two new directors to its board as it seeks to undertake a new business agenda to turnaround the prospects of the company. The two new directors are independent non-executive director Derek Cheng Sheng and executive director Mac Ho Kok Wei. Separately, EPMB has set up a satellite office in China to help source and identify opportunities for collaboration with Tier 1 suppliers in China. (The Star)

Icon Offshore Bhd’s 3QFY21 net profit surged 33.7x YoY to RM14.4m, boosted by its drilling business that started in April. Revenue for the quarter grew 66.0% YoY to RM87.3m. (The Star)

Yinson Holdings Bhd is back in the race for Petrobras’ floating production, storage and offloading (FPSO) vessel contract in the Parque das Baleias field offshore Brazil. Petrobras has reversed its decision in August 2021 to rule out Yinson, the only bidder for the project, and the two parties are close to signing an agreement for the charter. (The Edge)

Supermax Corp Bhd has declared a final dividend via a share distribution on the basis of one treasury share for every 30 existing shares held, in respect of the financial year ended 30th June 2021. The ex-dividend date is on 17th December 2021, while the entitlement date for the payout is 20th December 2021. (The Edge)

Sapura Energy Bhd’s former CEO Tan Sri Shahril Shamsuddin has raised his shareholding in the company with the purchase of 19.1m shares or a 0.1% stake. The shares were acquired in the open market at an undisclosed price via Sharil’s investment vehicle Jurudata Sdn Bhd on 22nd October 2021. (The Edge)

Dominant Enterprise Bhd has acquired a piece of freehold land in Johor from Senai Airport City Sdn Bhd for a purchase consideration of RM21.2m. The land, measuring 10.2-ac is to expand the group’s business in the construction of warehousing facilities for lease to cater to Senai Airport City’s multinational companies' operation in the Free Industrial Zone. (The Edge)

AirAsia Group Bhd has partnered with more than 20 airlines as it builds up its Super App into an online travel agency that also sells flights by competitors. The app has more than 700 airline partners and can reach over 3,000 destinations. (The Edge)

Southern Cable Group Bhd is targeting to ride on higher demand for cables and wires, as the nation embarks on its infrastructure growth and 5G network expansion plans. The company has secured a rectifier system supply contract worth RM30.4m from Telekom Malaysia Bhd (TM). Southern Cable will supply, deliver, initial, test, and commission rectifier systems, including associated engineering services and accessories for TM's regional hubs in Peninsular and East Malaysia over 30 months from September 2021. (The Edge)

IOI Corp Bhd unit IOI Investment (L) Bhd has set the final acceptance amount at US$295.2m (about RM1.23bn) for the oil palm plantation group's US$600.0m bond cash tender offer which expired at 4.00pm (London time) on 27th October 2021. The expected settlement date for the offer is 9th November 2021. (The Edge)

Maxim Global Bhd is buying a piece of leasehold land measuring 9,775 sqm in Setapak for RM25.7m. The purchase will enable the group to further supplement its existing land bank at strategic locations with potential growth. (The Edge)

British American Tobacco (Malaysia) Bhd’s 3QFY21 net profit rose 23.4% YoY to RM78.7m, boosted by an increase in market share. Revenue for the quarter, however, slipped 2.3% YoY to RM613.0m. A third interim dividend of 26.0 sen per share, payable on 25th November 2021 was declared. (The Edge)

Ancom Bhd’s 1QFY22 net profit jumped 195.4% YoY to RM9.0m, on strong revenue contribution from both its agricultural and industrial chemicals segments. Revenue for the quarter gained 16.9% YoY to RM404.7m. (The Edge)

Pavilion Real Estate Investment Trust's (REIT) 3QFY21 net property income (NPI) fell 22.0% YoY to RM47.5m, on higher operating expenses and lower revenue. Revenue for the quarter declined 2.5% YoY to RM113.3m. (The Edge)

Chin Teck Plantations Bhd’s 4QFY21 net profit grew 20.6% YoY to RM16.5m, due to significant increases in the average selling prices of fresh fruit bunches, crude palm oil and palm kennel which offset the decrease in sales volume Revenue for the quarter increased 32.2% YoY to RM51.8m. (The Edge)

Yong Tai Bhd has proposed to undertake the issuance of up to 180.0m new redeemable convertible preference shares (RCPS) at an issue price of RM1.00 per RCPS. The company has entered into a conditional subscription agreement with RHB Trustees Bhd as trustee for Areca Strategic Income Fund 7.0 in relation to the proposed issuance of RCPS. (The Edge)

Source: Mplus Research - 29 Oct 2021