Dampened by new Covid-19 variant

Market Review

Malaysia:. The FBM KLCI (-0.4 %) extended its declining streak as the key index mirrored the weakness across regional peers on last Friday. The lower liners also slid lower, while the healthcare sector (+4.2%) outperformed the negative broader market amid the emergence of new Covid-19 variant in South Africa.

Global markets:. US stockmarkets endured a Black Friday slump as the Dow (-2.5%) was battered by the resurgence of concern over the new Covid-19 variant in South Africa which may potentially stall the economic recovery. Both the European and Asia stockmarkets also tumbled on the Covid-19 news.

The Day Ahead

The FBM KLCI swung lower for the fourth straight session amid concerns over new Omicron Covid-19 variant; foreign investors stayed as net sellers, pulling out RM42.8m from the local bourse on Friday. The worries on the emergence of new Covid-19 variant may result in a mixed sentiment as the data such as infectivity and mortality rate will only be known by another 1-2 weeks. In the meantime, tracking the mild rebound in overseas futures at the point of writing, there is a slight chance for a technical rebound move today, but upside will be capped as Covid-19 concerns remain valid. Commodities wise, the crude oil price dropped over 11.0% as market worries that the Covid-19 conditions may eventually result in oil supply surplus, while the CPO price fell.

Sector focus:. Selldown in recovery theme sector may continue with more countries imposing travel bans, while we could expect fresh buying interest within the healthcare sector at least for the near term. Nevertheless, bargain hunting will emerge if the selldown is significant on the recovery theme sectors.

FBMKLCI Technical Outlook

The FBM KLCI declined further away from the 1,520 support level following Friday’s selldown. Technical indicators remained negative as the MACD Histogram has extended a negative bar, while the RSI hovered below the 50 level. The next support level is pegged at 1,500, while the resistance is pegged along 1,535-1,560.

Company Brief

Petronas Dagangan Bhd’s (PDB) 3QFY21 net profit fell 43.9% YoY to RM119.3m, as sales continued to experience the impact of the Covid-19 pandemic. Revenue for the quarter, however, rose 7.7% YoY to RM5.20bn. An interim dividend of 20.0 sen per share, payable on 24th December 2021 was declared. (The Star)

Press Metal Aluminium Holdings Bhd’s 3QFY21 net profit jumped 130.4% YoY to RM283.3m, bolstered by higher aluminium prices. Revenue for the quarter rose 55.0% YoY to RM2.89bn. A dividend of 1.0 sen per share, payable on 30th December 2021 was declared. (The Star)

IJM Corporation Bhd’s wholly-owned subsidiary, IJM Construction Sdn Bhd has secured three construction contracts worth RM680.0m. The contracts comprised a RM242.4m serviced apartment project in Segambut, a RM382.8m luxury residential project in Bukit Kiara, both in Kuala Lumpur, and a RM55.0m factory expansion project in Batu Kawan, Penang. (The Star)

Malakoff Corporation Bhd’s 3QFY21 net profit increased 32.2% YoY to RM67.2m, primarily due to higher energy payments recorded from Tanjung Bin Power Sdn Bhd (TBP) and Tanjung Bin Energy Sdn Bhd (TBE) on the back of higher applicable coal price (ACP). Revenue for the quarter rose 6.8% YoY to RM1.58bn. (The Star)

Dagang NeXchange Bhd's 1QFY22 net profit stood at RM293.6m on top of a revenue at RM270.9m. There were no comparative figures for the quarter due to a change in its financial year end to from 31st December to 30th June. (The Edge)

AMMB Holdings Bhd's 2QFY22 net profit rose 35.3% YoY to RM321.0m, due to lower impairment charges. Revenue for the quarter slipped 2.9% YoY to RM1.12bn. (The Edge)

Axiata Group Bhd’s 3QFY21 net profit fell 1.0% YoY to RM349.6m, on higher operational costs. Revenue for the quarter, however, rose 7.1% YoY to RM6.54bn. (The Edge)

Alliance Bank Malaysia Bhd’s 2QFY22 net profit improved 66.2% YoY to RM172.7m, mainly due to higher interest income and lower credit cost. Revenue for the quarter, however, declined 4.5% YoY to RM453.0m. A first interim single-tier dividend of 8.3 sen per share, payable on 30th December 2021 was declared. (The Edge)

Computer Forms (Malaysia) Bhd’s 2QFY22 net profit stood at RM62.0m vs. a net loss of RM10,000 recorded in the previous corresponding quarter, primarily due to the gain from disposal of land amounting to RM63.1m. Revenue for the quarter, however, fell 7.2% YoY to RM6.7m. (The Edge)

UOA Development Bhd’s 3QFY21 net profit sank 84.1% YoY to RM33.2m, on lower sales from existing property projects, coupled with a fair value adjustment of RM114.0m on investment properties recorded in the previous corresponding quarter. Revenue for the quarter dropped 59.4% YoY to RM54.6m. (The Edge)

SKP Resources Bhd's 2QFY22 net profit fell 9.0% YoY to RM40.1m, as its operational capacity was affected by lockdown restrictions. Revenue for the quarter dropped 23.8% YoY to RM553.7m. (The Edge)

TIME dotCom Bhd’s 3QFY21 net profit expanded 52.5% YoY to RM100.5m, underpinned by higher recurring data centre revenue and data revenue and a net gain on foreign exchange of RM5.8m. Revenue for the quarter rose 12.0% YoY to RM346.8m. A special dividend of 8.22 sen per share, payable on 22nd December 2021 was declared. (The Edge)

Hengyuan Refining Company Bhd’s 3QFY21 net loss stood at RM54.0m vs. a net profit of RM154.9m registered in the previous corresponding quarter, mainly due to foreign exchange losses caused by the strengthening of the US Dollar and under accrual of tax in the prior year. Revenue for the quarter, however, jumped 104.4% YoY to RM3.25bn. (The Edge)

Brem Holding Bhd's majority shareholders, Brem Properties Sdn Bhd and Tan Sri Khoo Chai Kaa, have proposed to privatise the company via a share capital reduction (SCR) which entails a selective capital reduction and a corresponding capital repayment of RM1.20 per share. This is a 51.9% or 41.0 sen premium over Brem Holding’s last traded price of 79.0 sen on 25th November 2021. They added that they do not intend to maintain the listing status of Brem Holding. (The Edge)

Careplus Group Bhd's 3QFY21 net profit slumped 80.5% YoY to RM8.4m, due to a lower utilisation rate of its production capacity following Movement Control Order restrictions and lower average selling price (ASP) due to increased industry competition from existing glove manufacturers and newcomers. Revenue for the quarter slipped 17.8% YoY to RM100.8m. (The Edge)

KPJ Healthcare Bhd’s 3QFY21 net profit dropped 62.8% YoY to RM12.6m, on higher operational costs. Revenue for the quarter, however, grew 10.3% YoY to RM699.0m. A single-tier interim dividend of 0.3 sen per share, payable on 28th December 2021 was declared. (The Edge)

Rubberex Corp (M) Bhd’s 3QFY21 net profit declined 36.2% YoY to RM25.2m, due to lower average selling price (ASP), lower production efficiencies due to slower order uptakes by customers and labour restrictions due to Covid-19. Revenue for the quarter dipped 12.9% YoY to RM94.9m. (The Edge)

Inari Amertron Bhd no longer names the Employees Provident Fund (EPF) as one of its substantial shareholders. EPF’s stake in the group dropped below 5.0% after it disposed of a total of 1.4m shares on 24th November 2021 and 1.7m shares on 23rd November 2021. (The Edge)

Padini Holdings Bhd’s 1QFY22 net loss stood at RM16.9m vs. a net profit of RM20.7m registered in the previous corresponding quarter, as a majority of its outlets were closed during the Full Movement Control Order (FMCO) between 1st June 2021 and 18th August 2021. Revenue for the quarter sank 73.8% YoY to RM81.4m. A first interim dividend of 2.5 sen per share, payable on 31st December 2021 was declared. (The Edge)

IGB Bhd’s 3QFY21 net loss stood at RM58.7m vs. a net profit of RM17.0m recorded in the previous corresponding quarter, dragged down by a one-off tax expense of RM56.2m in relation to the disposal of investment properties to IGB Commercial REIT. Revenue for the quarter decreased 28.1% YoY to RM201.3m. An interim dividend of 10.0 sen per share, payable on 24th December 2021 as well as dividend-in-specie, to be distributed via 10.36 treasury shares for every 1,000 existing shares held with ex-date on 9th December 2021 was declared. (The Edge)

Sarawak Oil Palms Bhd’s 3QFY21 net profit rose 70.0% YoY to RM125.5m, due to higher average prices of palm oil products. Revenue for the quarter grew 63.5% YoY to RM1.30bn. (The Edge)

Source: Mplus Research - 29 Nov 2021