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Market Review

Malaysia:. The FBM KLCI (+0.2%) managed to extend its lead with half of the key index components closed in the green yesterday. The lower liners, however, extended their losses, while the plantation (+0.4%), financial services (+0.3%) and construction (+0.2%) sectors outperformed the negative broader market.

Global markets:. The US stockmarkets endured a rough session as the Dow (-0.6%) declined amid concerns over the inflationary pressure may not be transitionary and the interest rate hike may come sooner-than-expected. European stockmarkets ended mixed, while Asia stockmarkets closed mostly lower.

The Day Ahead

The FBM KLCI finished at intraday high, snapping a two-day decline amid buying interest in the final trading hour. However, we believe investors may remain cautious over the near term while awaiting more corporate earnings reports as well as further guidance from the Feds in the US on the monetary policies going forward; market players might be speculating for an earlier interest rate hike. Meanwhile, selling pressure in oil and gas counters mounted following OPEC chief’s comment over possible oil surplus over the near term, which contributed to the decline in oil prices overnight, but still hovering above USD80 per barrel mark. Meanwhile, the CPO price is retesting the RM4,900 level.

Sector focus:. The spike in Covid-19 cases may prompt traders to look at glove companies at least over the near term. For the O&G sector, selling pressure may emerge on the back of declining oil prices. Besides, we expect traders to accumulate on consumer and banking stocks ahead of the earnings season.

FBMKLCI Technical Outlook

The FBM KLCI inched up yesterday and supported above the 1,520 level. Technical indicators remained negative as the MACD Histogram has extended a negative bar, while the RSI hovered below the 50 level. The resistance is pegged along 1,540- 1,550, while the support is located around 1,500-1,520.

Company Brief

Supermax Corp Bhd’s 1QFY22 net profit dropped 19.1% YoY to RM638.5m, due to the fall in average selling prices (ASPs) as competition has intensified significantly following a period of substantial capacity expansion across the industry as both existing and new players ramped up their production capacities. Revenue for the quarter, however, rose 7.6% YoY to RM1.46bn. (The Star)

Kimlun Corp Bhd's wholly owned subsidiary Kimlun Sdn Bhd has been awarded the main works for the construction and maintenance of the Sarawak-Sabah Link Road Construction project (Lawas-Long Lopeng junction) for a contract sum of RM780.0m. The construction job is expected to be completed in 2Q25. (The Star)

T7 Global Bhd has secured two contracts with a combined value of about RM150.0m under its energy division for integrated well services and operations and maintenance businesses. The contracts were from Petronas Carigali for the provision of plug and abandonment integrated services for the M3 oilfield and PTTEP Group for the provision of Gastec nitrogen generator maintenance services and spare parts. The contract durations were for the periods of 14th October 2021 to 31st December 2022 and 2nd July 2021 to 1st July 2023 respectively. (The Star)

Amway (Malaysia) Holdings Bhd's 3QFY21 net profit fell 49.0% YoY to RM8.0m, due to a new sales incentive plan and increased sales incentives provision in view of a higher number of qualifiers. Revenue for the quarter, however, grew 19.3% YoY to RM383.9m. A third single-tier interim dividend of 5.0 sen per share, payable on 17th December 2021. (The Edge)

Gagasan Nadi Cergas Bhd (GNCB) has secured a RM33.9m contract to build a mosque at the Merdeka 118 project in Kuala Lumpur via its wholly-owned Nadi Cergas Sdn Bhd from PNB Merdeka Ventures Sdn Bhd. The contract will be for 18 months from 1st December 2021 until 31st May 2023. (The Edge)

Apex Healthcare Bhd’s 3QFY21 net profit fell 1.5% YoY to RM14.0m, dragged by a weaker performance by its associate, coupled with higher sales, marketing and tax expenses. Revenue for the quarter, however, improved 24.8% YoY to RM211.1m. (The Edge)

CTOS Digital Bhd has access by its subsidiary CTOS Data Systems Sdn Bhd to Bank Negara Malaysia's Central Credit Reference Information System restored effective 17th November 2021. (The Edge)

Mesiniaga Bhd has secured a contract from the Social Security Organisation (SOCSO) worth RM31.2m for works in relation to SOCSO's Data Centre and Data Recovery Centre. The contract duration will be from 29th November 2021 to 28th June 2027. (The Edge)

Malayan Flour Mills Bhd's (MFM) 3QFY21 net profit fell 58.4% YoY to RM3.9m, as its flour and grains trading segment was impacted by higher wheat costs and operating expenses. Revenue for the quarter, however, rose 22.8% YoY to RM620.5m. (The Edge)

Tomei Consolidated Bhd's 3QFY21 net profit sank 92.6% YoY to RM1.0m, amid a lower revenue as intermittent lockdowns affected its operations. Revenue for the quarter declined 38.0% YoY to RM112.1m. (The Edge)

Talam Transform Bhd is selling its entire 85.0% stake in Jilin Province Maxcourt Hotel Ltd together with an assignment amount of creditors rights to Jilin Provincial Expressway Group Co Ltd for a combined cash sum of 72.7m Yuan (RM46.7m). This is the second time that Talam has attempted to sell its stake after the first proposal was called off in 2018 due to the failure of the purchaser to obtain approval from Jilin's Trade and Industry Bureau for the proposed deal. (The Edge)

WZ Satu Bhd is exploring the potential of taking over a 100.0% stake in Citaglobal Engineering Services Sdn Bhd valued at RM140.0m from Citaglobal Sdn Bhd, the private vehicle of WZ Satu's chairman and largest shareholder Tan Sri Mohamad Norza Zakaria. The transaction will be settled by issuing new WZ Satu shares and new redeemable convertible preference shares. The acquisition comes with a profit guarantee of RM60.0m in three financial years from FY22 to FY24. (The Edge)

Source: Mplus Research - 18 Nov 2021