Downward momentum may persist

Market Review

Malaysia:. The FBM KLCI (-0.2%) extended its losses, dragged down by profit taking activities in selected banking, plantation and gloves heavyweights yesterday. The lower liners also skid lower, while broader market ended mostly in the red with the property sector (-0.6%) taking the worst hit.

Global markets:. The US stockmarkets marched lower as the Dow (-0.7%) declined after inflation rate in October 2021 rose 6.2% YoY; beating consensus expectations of 5.9% YoY growth. European stockmarkets rebounded after recovering from their intraday lows, while Asian stockmarkets closed mostly lower.

The Day Ahead

The FBM KLCI ended lower for the second day and may continue to perform on a weaker tone due to rising concerns over inflationary pressure following the release of higher-than-expected producer price index in China. Also, with the negative performance on Wall Street overnight, especially within the technology sector, selling interest may spillover towards local front at least for the rest of the week. Market players will be monitoring and deploying a wait-and-see strategy ahead of Malaysia’s 3Q GDP data. Commodities wise, the CPO price rebounded but still below the important RM5,000 level, while the crude oil price dropped below USD85.

Sector focus:. Although the sentiment might turn weaker on the broader market, we see brighter prospects in mid-to-long term for the aviation and tourism sectors, in view of the gradual border reopening for international tourists. Meanwhile, we do expect the furniture related stocks to gain attention in the upcoming reporting season amid higher demand for furniture during the work-from-home period.

FBMKLCI Technical Outlook

The FBM KLCI sank after hovering mostly in the negative territory, forming another negative candle below the 1,530 level. Technical indicators remained negative as the MACD Histogram is still negative, while the RSI hovered below the 50 level. Based on the technical readings, the downside risk may take KLCI towards 1,500- 1,510 zone. Resistance is located around 1,540-1,550.

Company Brief

Hibiscus Petroleum Bhd 1QFY22 net profit surged 313.9% YoY to RM41.5m, on higher oil prices that overcame the reduced production in Sabah due to the Covid- 19 restrictions. Revenue for the quarter expanded 69.6% YoY to RM246.7m. (The Star)

Serba Dinamik Holdings Bhd is taking Ernst & Young Consulting Sdn Bhd to Court, seeking block its special auditor from revealing any findings from the special independent review. The Originating Summons (OS) against EY Consulting was filed at the High Court of Malaya on 5th November 2021. (The Star)

AwanBiru Technology Bhd has reported that Serba Dinamik Holdings Bhd is unable to complete the purchase of an eight-storey office building in Cyberjaya from the group for RM24.2m. In accordance with the terms of the sale and purchase agreement inked in February 2021, the deposit of RM2.4m paid by Serba Dinamik is forfeited. (The Edge)

Sentral REIT's 3QFY21 net property income rose marginally by 0.2% YoY to RM32.5m on reduction in operational costs. Revenue for the quarter, however, declined 3.7% YoY to RM40.2m. (The Edge)

EP Manufacturing Bhd (EPMB) has entered into a two-year memorandum of understanding (MOU) with the Ministry of International Trade and Industry (MITI) agency Malaysia Automotive Robotics and IoT Institute (MARii) to explore areas of collaboration in the production of two- and four-wheel electric vehicles and establishment of an electronic payment system. (The Edge)

Hup Seng Industries Bhd’s 3QFY21 net profit shrank by 65.9% YoY to RM4.1m, on lower biscuit sales, as well as increase in costs of main raw materials. Revenue for the quarter decreased 25.8% YoY to RM64.8m. (The Edge)

Transocean Holdings Bhd named Billionaire Tan Sri Surin Upatkoon as the second largest shareholder with 18.4% stake in the company on 10th November 2021. The group did not disclose the price at which he has purchased the stake comprising 12.0m Transocean shares. (The Edge)

TAFI Industries Bhd in response to an UMA query from Bursa Malaysia has reported that it was in the midst of deliberating on a corporate transaction to enhance the tradability of its shares. A follow-up query was issued by Bursa Malaysia later in the day, seeking details of the corporate transaction, and the company replied that it involved a potential bonus issue. (The Edge)

Omesti Bhd has increased its investment in the Bemed Group of companies with the acquisition of a 70.0% shareholding in each of nine other Bemed pharmaceutical businesses for a total cash consideration of RM15.8m. The nine companies are engaged in various activities, including trading and retail sale of pharmaceutical products, orthopaedic and medical goods, perfumery products, cosmetics and toiletries. (The Edge)

Iconic Worldwide Bhd is planning to raise RM38.3m from a private placement to fund the working capital of its glove and medical face mask venture. The company on unveiled its newly completed RM200.0m personal protective equipment (PPE) manufacturing facility for gloves and medical face masks in the Batu Kawan Industrial Park, Penang. (The Edge)

AirAsia Group Bhd expects its earnings to return to pre-pandemic levels as early as 6 months, in view of Malaysia’s gradual border reopening. The low-cost carrier also announced that it has appointed former Adidas Asia Pacific MD Colin Currie as its new chief commercial officer, to develop a consumer-centric strategy using data to optimise growth and meet the financial objectives across AirAsia's airlines and digital units. (The Edge)

Celcom Axiata Bhd, Digi.Com Bhd, Maxis Bhd, Telekom Malaysia Bhd, and U Mobile Sdn Bhd were integrated into the national 5G wholesale service operator Digital Nasional Bhd’s (DNB) 5G network on 10th November 2021. However, none of the major mobile carriers have agreed to use the government’s 5G network yet, due to transparency and pricing issues ahead of a planned rollout in December 2021. (The Edge)

Pimpinan Ehsan Bhd will see Thai-listed B.Grimm Power Public Co Ltd emerge as a 40.6% shareholder. B.Grimm via its Malaysian unit inked an agreement to subscribe to new shares in reNIKOLA, amounting to 45.0% of the latter’s enlarged share capital for RM367.0m cash. (The Edge)

Source: Mplus Research - 11 Nov 2021