On extended consolidation

Market Review

Malaysia:. The FBM KLCI (+0.1%) extended its gains to close marginally higher, largely thanks to gains in selected plantation and banking heavyweights. The lower liners, however, retreated, while the broader market closed mixed with the energy sector (-2.3%) underperformed.

Global markets:. The US stockmarkets managed to hold onto their intraday gains as the Dow (+0.1%) rose, but the Nasdaq sank 1.3% following the selloff in technology shares in the final trading hour. Both the European and Asia stockmarkets finished mixed.

The Day Ahead

The FBM KLCI ended marginally higher after the Melaka state election, but the upside was limited given the concerns over the resurgence in Covid-19 cases globally. Tracking the overnight negative performance on Wall Street, we could expect the selling pressure to spillover on the local front, specifically hitting the technology stocks. Meanwhile, we noticed that the foreign funds have been selling local equities over the past two trading days and may dampen the sentiment further. Hence, given this setup market players will be focusing on the ongoing earnings season, while the key index may extend its consolidation mode without any fresh catalyst. The CPO price remained on a high note above RM4,900, while the crude oil price hovered above the USD78 per barrel mark.

Sector focus:. The plantation stocks could be riding on the elevated CPO price amid the earnings season following the solid results from TAANN. Besides, investors could be looking into payment and e-commerce related counters amid reopening of business activities, where it might benefit the banking stocks eventually.

FBMKLCI Technical Outlook

The FBM KLCI rebounded marginally but still rangebound below the daily EMA9 level. Technical indicators remained negative as the MACD Histogram has extended a negative bar, while the RSI hovered below the 50 level. The FBM KLCI’s support is at 1,520, while the resistance is pegged along 1,540-1,550.

Company Brief

AirAsia Group Bhd’s 3QFY21 net loss widened to RM887.0m vs. a net loss of RM851.8m recorded in the previous corresponding quarter, as a result of higher investment in technology, talent and network. Revenue for the quarter slipped 36.9% YoY to RM295.9m. (The Star)

Ta Ann Holdings Bhd’s 3QFY21 net profit surged 141.5% YoY to RM103.3m, due to overall higher average selling price (ASP) of crude palm oil (CPO), fresh fruit bunches (FFB), plywood product and export logs. Revenue for the quarter rose 37.8% YoY to RM486.9m. A second interim single-tier ordinary dividend of 20.0 sen per ordinary share, payable on 24th January 2022 was declared. (The Star)

Pestech International Bhd’s wholly-owned subsidiary PESTECH Sdn Bhd has bagged a contract from the National Grid Corporation of the Philippines (NGCP) for the South Luzon Substations Upgrading Project 2. The total contract value was US$23.5m (US$1= RM4.19) for the offshore portion and 710.8m Philippine pesos for the onshore portion (1 Philippine peso = RM0.083). The commencement date of the project will be determined by NGCP later. (The Star)

Petronas Gas Bhd's (PetGas) 3QFY21 net profit slipped 1.7% YoY to RM580.8m, due to unfavourable foreign exchange movements. Revenue for the quarter, however, rose 1.5% YoY to RM1.43b. A third interim dividend of 18.0 sen per share, payable on 20th December 2021 was declared. (The Edge)

Petronas Chemicals Group Bhd's (PetChem) 3QFY21 net profit surged 316.3% YoY to RM1.96bn, driven by higher petrochemical product prices. Revenue for the quarter rose 66.8% YoY to RM5.77bn. A special dividend of 10.0 sen per share, payable on 30th December 2021 was declared. (The Edge)

Hextar Global Bhd's 3QFY21 net profit fell 42.2% YoY to RM7.2m, mainly due to the global supply chain disruptions that had caused raw material shortages and price escalations across industries. Revenue for the quarter, however, grew marginally by 0.9% YoY to RM112.6m. (The Edge)

Lay Hong Bhd’s 2QFY22 net loss stood at RM8.7m vs. a net profit of RM1.2m registered in the corresponding quarter, on lower contributions from its food manufacturing and retail business segments. Revenue for the quarter, however, rose 5.9% YoY to RM242.1m. (The Edge)

KNM Group Bhd has proposed a private placement of 10.0% of its share capital to raise up to RM53.5m to pare its debt (RM30.0m) and working capital (RM22.2m), after its private placement of 30.0% share capital was rejected by shareholders in June 2021. The company has proposed to place 334.1m new shares at an indicative price of 16.0 sen apiece. (The Edge)

Guan Chong Bhd's 3QFY21 net profit fell 26.4% YoY to RM34.5m, on higher freight costs and competitive margins. Revenue for the quarter, however, grew 18.6% YoY to RM988.1m. A second interim dividend of 1.0 sen per share, payable on 20th January 2021 was declared. (The Edge)

Hong Leong Industries Bhd’s 1QFY22 net profit plunged 98.7% YoY to RM0.7m, due to the curtailment of the group's production for two months that led to lower sales across product segments. Revenue for the quarter dropped 57.6% YoY to RM277.0m. (The Edge)

Malaysian Bulk Carriers Bhd’s (Maybulk) 3QFY21 net profit stood at RM113.6m vs. a net loss of RM6.0m recorded in the previous corresponding quarter, on higher charter rates, and lower operating expenses from a smaller fleet size and gain of RM91.5m from the disposal of M.V. Alam Molek and M.V. Alam Madu. Revenue for the quarter grew 37.6% YoY to RM58.7m. (The Edge)

Advancecon Holdings Bhd has secured a construction project worth RM23.5m in Klang from Sime Darby Property (Bukit Raja) Sdn Bhd via its wholly-owned subsidiary Advancecon Infra Sdn Bhd (AISB). The work entails the construction and completion of earthworks and other related works for Development of Phase 1 at Bandar Bukit Raja 2, Kapar district. The contract period is from 6th December 2021 to 5th August 2023. (The Edge)

BP Plastics Holding Bhd’s 3QFY21 net profit rose 30.5% YoY to RM10.1m, thanks to strong revenue growth and a better product mix. Revenue for the quarter improved 53.5% YoY to RM113.3m. A third interim dividend of 2.0 sen per share and a special dividend of 1.0 sen per share, payable on 6th January 2022 was declared. (The Edge)

Revenue Group Bhd’s 1QFY22 net profit increased 64.1% YoY to RM3.5m, on higher revenue from the rental and maintenance of its electronic draft capture terminals, and income from electronic transaction processing. Revenue for the quarter, however, fell 3.7% YoY to RM18.8m. (The Edge)

Source: Mplus Research - 23 Nov 2021