Rebounding from support

Market Review

Malaysia:. The FBM KLCI (+0.8%) delivered a solid performance, snapping a 3-day losing streak, mainly lifted by gains in selected banking and gloves heavyweights. The lower liners staged a mild rebound, while broader market turned mostly upbeat, anchored by the healthcare sector (+2.3%).

Global markets:. The US stockmarkets rebounded as the Dow (+0.5%) advanced, lifted by gains in technology and communication services stocks that offset the consumer sentiment data in November 2021 at 66.8; the weakest reading since November 2011. Both the European and Asia stockmarkets closed mostly higher.

The Day Ahead

The FBM KLCI recovered from the 3-day decline on Friday as the banking and glove heavyweights led gains, shrugging off concerns over Malaysia’s 3Q21 GDP, which has contracted 4.5% YoY due to the lockdown measures. With the foreigners staying positive buying mode into our local equities, we expect the broader market sentiment may stay positive and the FBM KLCI may extend its rebound formation. Meanwhile, positive performance on the Wall Street overnight especially on Nasdaq may spillover to technology stocks on our local front. Commodities wise, the CPO price rebounded above RM4,900, crude oil price dropped, while the gold prices gained, anticipating a stronger breakout.

Sector focus:. We expect technology counters on the local front may build on Nasdaq’s rally overnight. Besides, investors may focus on sectors such as banking, consumer-related and property amid earning season, while gold-proxy may anticipate an extension of rally amid firmer gold price.

FBMKLCI Technical Outlook

The FBM KLCI rebounded from the 1,520 support level but hovered below the daily EMA9 level. Technical indicators were mixed as the MACD Histogram extended a negative bar, while the RSI hooked higher on Friday after nearing the 30 level. The next resistance is pegged along 1,540-1,550, while the support is located at 1,500- 1,520.

Company Brief

AirAsia X Bhd (AAX) creditors have agreed to a restructuring that will pay just 0.5% of debt owed and end its existing contracts. The first of three groups of creditors had voted 100.0% in favour of the plan to restructure RM33.65bn (USD 8.10bn) of liabilities and the second (engine suppliers, lessors, trade creditors, travel agents and passengers) had voted 97.6% in favour. The final group, which includes planemaker Airbus, has also voted 100.0% in favour of the plan. The results will be presented for court approval in the coming weeks after which it will start a recapitalisation, expected to be completed in 1Q22. (The Star)

D&O Green Technologies Bhd has proposed a placement of up to 3.2% or 38.5m new ordinary shares to raise about RM205.2m for its capital expenditure. The funds would be used to part-finance the construction of an eight-storey manufacturing plant with overall floor space of about 60,000 sqm, situated between the group’s two existing manufacturing plants in Batu Berendam Free Trade Zone, Melaka. (The Star)

Top Glove Corp Bhd has reported that the maximum amount of funds to be allocated by the rubber glove manufacturer for its proposed renewal of share buy back authority will be made wholly out of the company’s retained profit which stood at RM2.49bn as of 31st August 2021. The renewal of share buy-back authority will be funded by Top Glove’s internally-generated funds and external borrowings. (The Edge)

Widad Group Bhd’s unit Widad Builders Sdn Bhd (WBSB) has accepted a contract from the Public Works Department with a higher revised value of RM194.3m for road upgrading works. The contract, previously valued at RM151.8m, was to upgrade the Northport roadworks from Klang Container Terminal to Northport in Port Klang for 24 months from 10th October 2021. (The Edge)

Ipmuda Bhd has received its shareholders’ approval for all five proposed corporate exercises including a special cash dividend of 30.0 sen and the acquisition of the 100.0% equity in healthcare service provider Ultimate Forte Sdn Bhd. All five proposed corporate exercises were tabled and approved in a virtual extraordinary general meeting held on the same day. (The Edge)

Radiant Globaltech Bhd (RGTech) saw the emergence of new substantial shareholder, which is 99 Speedmart retail chain founder Lee Thiam Wah. He is now the third biggest shareholder in the company with a 15.8% stake, which was acquired in off market deals via his company Global Success Network Sdn Bhd from RGTech’s executive director for operations Yap Sin Sang (37.0m shares), and managing director Yap Ban Foo (36.8m shares), via their companies Practical Resources Sdn Bhd and Global Merits Sdn Bhd. (The Edge)

Inari Amertron Bhd’s 1QFY22 net profit rose 52.6% YoY to RM106.9m, on higher revenue growth across all segments, led by the radio frequency business. Revenue for the quarter increased 24.0% YoY to RM431.1m. An interim dividend of 2.8 sen per share, payable on 7th January 2022 was proposed. (The Edge)

Malaysia Smelting Corp Bhd’s (MSC) 3QFY21 net profit jumped 130.8% YoY to RM28.9m, mainly benefitting from the higher average tin price during the quarter, which soared 92.5% YoY to RM141,915 per tonne. Revenue for the quarter, however, dipped 5.4% YoY to RM218.5m. (The Edge)

Samaiden Group Bhd has secured a RM60.1m contract from Bakateam Services Sdn Bhd to undertake engineering, procurement, construction and commissioning (EPCC) works for a 15MW large scale solar photovoltaic power plant in Simpang Ampat, Seberang Perai, Penang. The project is scheduled for completion on 1st December 2022. (The Edge)

ATA IMS Bhd’s 2QFY21 net loss stood at RM11.2m vs. a net profit of RM52.3m recorded in the previous corresponding quarter, as it has not been able to operate at optimal levels due to a manpower shortage. Revenue for the quarters slipped 55.6% YoY to RM594.5m. (The Edge)

Haily Group Bhd has accepted a letter of award from JYP Architects Sdn Bhd for the construction of community housing in Kulai, Johor, worth RM14.6m. The project comprises 216 units of strata townhouses, one unit of management office and one unit of TNB substation. The contract period will be for duration of 16 months from the date of commencement of the project. (The Edge)

Carlsberg Brewery Malaysia Bhd’s 3QFY21 net profit fell 56.4% YoY to RM26.0m, in line with lower sales and compounded by unabsorbed fixed costs from the shutdown of its brewery. Revenue for the quarter slipped 24.6% YoY to RM349.3m. (The Edge)

Source: Mplus Research - 15 Nov 2021