Trudging near support

Market Review

Malaysia:. The FBM KLCI (-0.1%) trended lower for the third straight session on a lacklustre trading day ahead of the MSCI quarterly indexes review. The lower liners closed mixed, while broader market finished mostly negative with the energy sector (-1.3%) underperformed after crude oil prices slipped overnight.

Global markets:. The US stockmarkets closed mixed as the Dow (-0.4%) recorded its third day losing streak on concern over the possibility of quicker-than-expected monetary tightening, but the S&P 500 and Nasdaq rose 0.1% and 0.5% respectively. European stockmarkets were upbeat, while Asian stockmarkets ended mixed.

The Day Ahead

The FBM KLCI inched lower in a volatile trading session, marking its third straight losing streak as investors eye on Malaysia’s 3Q21 GDP data which will be released today to gauge the country’s economic condition. Whilst market sentiment may remain cautious without a fresh lead, we believe economic recovery is still on track as Malaysia will reopen its borders to international visitors by 1st January 2022 at the latest. Investors may position themselves on fundamentally solid companies amid the on-going earning season. Meanwhile, the CPO price dropped, while the crude oil price rose to stay below the crucial USD85 per barrel level.

Sector focus:. Investors may see the positive momentum in Nasdaq overnight spilling over to local technology stocks. Besides, we remain optimistic on tourism and aviation sector in mid-to-long term as the country seeks to revive its sailing tourism sector. With gold prices advancing for the sixth straight session, gold related stocks may be in focus.

FBMKLCI Technical Outlook

The FBM KLCI broke below the 1,520 support level as the key index skidded after dipping in and out of the positive and negative territories. Technical indicators remained negative as the MACD Histogram has extended a negative bar, while the RSI hovered below the 50 level. The key index may retest the next support level at 1,500, while the resistance is pegged at 1,540-1,550.

Company Brief

Heineken Malaysia Bhd’s 3QFY21 net profit fell 16.7% YoY to RM51.0m, due to the strict Covid-19 measures. Revenue for the quarter declined 17.7% YoY to RM389.8m. (The Star)

Southern Steel Bhd's 1QFY22 net profit stood at RM32.1m vs. a net loss of RM28.1m recorded in the previous corresponding quarter, due to higher selling prices and improved margin. Revenue for the quarter increased 9.6% YoY to RM487.1m. (The Star)

AirAsia Group Bhd has won shareholder approval for a rights issue to raise RM1.00bn (US$240.9m) in nominal value of seven-year redeemable convertible unsecured Islamic debt securities. The airline in July 2021 proposed to raise the funds through a rights issue to weather the financial impact. (The Star)

Hwa Tai Industries Bhd has received a notice from the Ministry of Health to temporarily close its factory in Johor for 10 days from 11th November 2021 to 20th November 2021 to curb the spread of Covid-19 infections. The temporary suspension of operations is expected to result in a reduction of production output. (The Edge)

Berjaya Food Bhd’s 1QFY22 net profit improved 12.1% YoY to RM11.6m, as its business trends towards normalcy amid the gradual easing of restrictions for fully vaccinated people. Revenue for the quarter rose 3.9% YoY to RM187.7m. (The Edge)

UMW Holdings Bhd posted a 63.8% MoM hike in automotive sales to 36,358 units in October 2021, as the group's production and sales recovered following the easing of the Full Movement Control Order (FMCO) restrictions. (The Edge)

Destini Bhd has entered into a Heads of Agreement (HOA) with Indonesia's state owned PT Industri Kereta Api to pursue opportunities in the railway business and related infrastructure projects in Malaysia, Indonesia and across the region. The HOA is effective for 12 months. (The Edge)

Supermax Corporation Bhd’s Canadian unit is undertaking an independent auditing process of the working conditions at its facilities in place. The audit was being conducted by an independent firm specialising in compliance with International Labour Organization (ILO) criteria after the US Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) against the company and its subsidiaries' products on forced labour allegations. (The Edge)

DRB-Hicom Bhd’s 50.1%-owned subsidiary, Proton Holdings’s wholly-owned subsidiary Perusahaan Otomobil Nasional Sdn Bhd's (Proton) special-purpose vehicle PONSB Capital Bhd is undertaking a 30-year RM4.00bn Islamic medium term notes programme and a 7-year RM1.00bn Islamic commercial papers scheme. (The Edge)

Impiana Hotels Bhd has triggered the prescribed criteria of Practice Note 17 (PN17) under the Main Market Listing Requirements but will not be classified as a PN17 company, thanks to Bursa Malaysia's relief measures. Its external auditor has highlighted a material uncertainty related to its going concern, which is that the group’s shareholders’ equity deficit of RM41.6m as at 30th June 2021 is less than 50.0% of its share capital of RM456.2m. (The Edge)

Guocoland (M) Bhd’s 1QFY22 net loss stood at RM8.0m vs. a net profit of RM8.6m recorded in the previous corresponding quarter, affected by the MCO extension towards sales and construction progress of its development projects. Revenue dropped 61.4% YoY to RM35.1m. (The Edge)

Source: Mplus Research - 12 Nov 2021