Momentum still dour

Market Review

Malaysia:. The FBM KLCI (-0.3%) erased all its intraday gains to finish lower, dragged down by weakness in plantation heavyweights as CPO prices sank. The lower liners extended their decline, while the broader market ended mostly lower with the plantation sector (-1.7%) taking the hardest hit.

Global markets:. The US stockmarkets rebounded as the Dow (+0.6%) advanced ahead of the US FOMC minutes meeting tonight, lifted by gains in financials and energy shares that offset the extended decline in technology shares. Both the European and Asia stockmarkets ended mostly negative.

The Day Ahead

The FBM KLCI closed lower after erasing its earlier gains on the plantation counters, outweighing the rally in banking and healthcare heavyweights. Also, we believe the upside on the technology stocks might be limited, mirroring the overnight losses on Nasdaq. Commodities wise, the crude oil price charged higher and extended its gains above USD80, while the CPO price performed a declining move, falling more than 2% yesterday. Nevertheless, we think the decision by Joe Biden, ordering release of US oil reserves may post some pressure on the crude oil price moving forward.

Sector focus:. Following the expectation on higher supply on crude oil, investors may take a step back from the energy counters. Nevertheless, investors may focus on sectors such as banking and plantation amid the ongoing earnings season. Also, there is decent buying support into healthcare stocks due to a spike in Covid- 19 cases.

FBMKLCI Technical Outlook

The FBM KLCI closed lower but remained supported above the 1,520 support level. Technical indicators remained negative as the MACD Histogram has extended a negative bar, while the RSI hovered below the 50 level. Support is located at 1,520, followed by 1,500, while the next resistance is pegged along 1,540-1,550.

Company Brief

Kuala Lumpur Kepong Bhd's 4QFY21 net profit jumped 199.7% YoY to RM625.8m, as plantations profit surged on higher crude palm oil (CPO) and palm kernel (PK) prices. Revenue for the quarter improved 48.2% YoY to RM5.93bn. (The Star)

AirAsia X Bhd’s 1QFY21 net loss stood at RM149.1m on top of a revenue of RM99.3m. There will be no comparative financial information available for the same quarter last year as they had changed their financial year end from December to June. (The Star)

S P Setia Bhd’s 3QFY21 net profit stood at RM11.0m vs. a net loss of RM267.0m recorded in the previous corresponding quarter, supported by lower operational cost of sales and a narrowing share of losses from its joint venture companies. Revenue for the quarter, however, fell 45.0% YoY to RM594.6m. (The Edge)

Leong Hup International Bhd’s 3QFY21 net loss stood at RM53.4m, from a net profit of RM22.5m recorded in the previous corresponding quarter, as broad-based lockdowns negatively affected all demand channels after economic activities were significantly scaled back. Revenue for the quarter, however, rose 15.0% YoY to RM1.81bn. (The Edge)

TSH Resources Bhd's 3QFY21 net profit added 87.3% YoY to RM45.1m, boosted by higher crude palm oil (CPO) prices. Revenue for the quarter climbed 42.5% YoY to RM309.1m. (The Edge)

Tan Chong Motor Holdings Bhd's 3QFY21 net loss widened to RM44.2m, from a net loss of RM7.3m reported in the previous corresponding quarter, as the group's business in Malaysia and the region was affected by movement restrictions for most of the reporting quarter to curb the spread of Covid-19. Revenue for the quarter declined 54.5% YoY to RM439.3m. (The Edge)

Batu Kawan Bhd’s 4QFY21 net profit surged 261.7% YoY to RM308.0m, helped by higher CPO and palm kernel prices. Revenue for the quarter grew 49.5% YoY to RM6.16bn. (The Edge)

Oriental Holdings Bhd’s 3QFY21 net profit soared 358.0% YoY to RM68.7m, lifted by the higher contribution from the plantation segment that offset the weakness in plastic and automotive segments. Revenue for the quarter, however, declined 25.3% YoY to RM708.1m. A dividend of 10.0 sen per share for the quarter, payable on 20th January 2022 was declared. (The Edge)

Boustead Plantations Bhd's 3QFY21 net profit surged 431.8% YoY to RM95.6m, amid higher CPO prices. Revenue for the quarter expanded by 42.8% YoY to RM293.8m. (The Edge)

Source: Mplus Research - 24 Nov 2021