Imminent rebound

Market Review

Malaysia:. The FBM KLCI (-0.1%) marked its fifth losing streak on a volatile session; losses were however contained by the rally in gloves heavyweights. Albeit recovering from intraday lows, the lower liners retreated. The healthcare (+6.4%) and technology (+0.2%) sectors outperformed the negative broader market.

Global markets:. US stockmarkets rebounded as the Dow (+0.7%) regained some composure from last Friday slump, led by bargain hunting in technology shares as concern over the Omicron Covid-19 variant eased. The European stockmarkets also advanced, but Asia stockmarkets remain mostly downbeat.

The Day Ahead

The FBM KLCI started the week on a negative note, in tandem with the selldown on regional bourses amid the Omicron variant fears. However, we believe the overnight Wall Street positive performance may provide some buying support on the local equities as we think the selling pressure is overdone at least for the near term, contributing to oversold signals and hammer candles on most of the stocks. Also, some economists claimed that the economic impact stemmed from Covid-19 Omicron variant will be less severe than that in 2020. On the commodity markets, a mild rebound was noticed in both CPO and crude oil price.

Sector focus:. We reckon the technology counters should continue to be in a sweet spot for investors considering its high earning visibility going forward, coupled with the overnight rebound on Wall Street. Meanwhile, healthcare stocks may be traded actively, but upside might be capped after a significant rally.

FBMKLCI Technical Outlook

The FBM KLCI sank for the fifth trading session as the key index remained below its 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 support level is located 1,500, while the resistance is pegged along 1,535- 1,560.

Company Brief

Public Bank Bhd’s 3QFY21 net profit slipped 2.3% YoY to RM1.36bn, impacted by reimposition of tighter containment measures. Revenue for the quarter declined 6.3% YoY to RM4.81bn. (The Star)

Hong Leong Bank Bhd’s 1QFY22 net profit rose 17.7% YoY to RM858.3m, underpinned by topline growth, disciplined expense management, lower loan impairment allowances and robust associate contributions. Revenue for the quarter improved 2.2% YoY to RM1.38bn. (The Star)

Hong Leong Financial Group Bhd’s 1QFY22 net profit improved 9.1% YoY to RM640.6m, due to positive contributions from Hong Leong Bank and its insurance division, HLA Holdings Sdn Bhd. Revenue for the quarter grew 4.0% YoY to RM1.56bn. (The Star)

Sime Darby Bhd's 1QFY22 net profit fell 16.0% to RM236.0m, mainly due to lower profit from the diversified group's heavy equipment distribution business and after it registered a year earlier foreign exchange gain in an operating environment marred by Covid-19 pandemic-driven movement restrictions. Revenue for the quarter slipped 1.9% YoY to RM10.67bn. (The Edge)

Bank Islam Malaysia Bhd’s 3QFY21 net profit fell 0.6% YoY to RM101.6m, on lower revenue. Revenue for the quarter declined 14.8% YoY to RM746.2m. An interim single-tier dividend of 10.93 sen under the dividend reinvestment plan that is slated for completion in January 2022 was declared. (The Edge)

Crest Builder Holdings Bhd has bagged a construction contract for a service apartment with car park worth RM107.5m from Sime Darby Property (Ara Damansara) Sdn Bhd via its wholly-owned subsidiary Crest Builder Sdn Bhd. The contract was awarded for the construction of one block service apartment with car park podium at Ara Damansara and will be in effect for a period of 33 months from 22nd October 2021 to 21st July 2024. (The Edge)

IJM Corp Bhd’s 2QFY22 net profit surged 533.4% YoY to RM629.3m, helped by gains arising from the disposal of subsidiaries. Revenue for the quarter, however, fell 28.3% YoY to RM874.3m. An interim dividend of 2.0 sen per share, as well as a special dividend of 15.0 sen per share, payable on 30th December 2021 was declared. (The Edge)

Malaysia Building Society Bhd’s 3QFY21 net loss stood at RM104.6m vs. a net profit of RM258.2m recorded in the previous corresponding quarter, due to a higher modification loss and impairment allowance. Revenue for the quarter fell 11.0% YoY to RM681.1m. (The Edge)

MY EG Services Bhd’s 3QFY21 net profit grew 10.9% YoY to RM78.5m, thanks to its new concession services, new commercial services and an overall increase in transaction volumes for its existing services. Revenue for the quarter added 15.2% YoY to RM156.8m. (The Edge)

Velesto Energy Bhd’s 3QFY21 net loss stood at RM52.0m vs. a net profit of RM0.5m recorded in the previous corresponding quarter, on low rig utilisation rates and reactivation costs for its oilfield services. Revenue for the quarter fell 29.9% YoY to RM91.5m. (The Edge)

UMW Holdings Bhd’s 3QFY22 net loss stood at RM47.9m vs. a net profit of RM83.9m recorded in the previous corresponding quarter, dragged down by the implementation of the Full Movement Control Order (FMCO). Revenue for the quarter fell 24.3% YoY to RM2.02bn. (The Edge)

IHH Healthcare Bhd’s 3QFY21 net profit rose 77.4% YoY to RM550.0m, on the back of a rebound in performance driven by factors that include patients returning to its hospital services network and contributions from Covid-19 services rendered, as well as maintaining cost discipline. Revenue for the quarter expanded 26.1% YoY to RM4.44bn. (The Edge)

QL Resources Bhd’s 2QFY22 net profit fell 34.5% YoY to RM45.9m, amid higher depreciation and amortisation, and lower share of profit from associates. Revenue for the quarter, however, rose 15.8% YoY to RM1.25bn. (The Edge)

Mulpha International Bhd’s 3QFY21 net profit stood at RM419.8m vs. a net loss of RM25.4m recorded in the previous corresponding quarter, mainly attributed to a one-off gain on disposal of the group’s associate in New Zealand which is involved in online education sector amounting to RM420.9m. Revenue for the quarter increased 1.0% YoY to RM141.2m. (The Edge)

Ann Joo Resources Bhd's 3QFY21 net profit stood at RM69.1m vs. a net loss of RM18.9m, driven by a robust recovery in China demand. Revenue for the quarter, however, declined 27.6% YoY to RM405.7m. (The Edge)

Malaysia Airports Holdings Bhd’s 3QFY21 net loss narrowed to RM182.3m, from a net loss of RM319.7m registered in the previous corresponding quarter, on the back of higher revenue posted coupled with lower operational expenses. Revenue for the quarter grew 16.3% YoY to RM461.3m. (The Edge)

Tiong Nam Logistics Holdings Bhd’s 2QFY22 net profit plunged 93.1% YoY to RM0.3m, mainly due to higher depreciation from increased capital expenditure, as well as higher staff costs in line with business expansions. Revenue for the quarter, however, increased 10.9% YoY to RM165.4m. (The Edge)

KPower Bhd’s 1QFY22 net profit fell by 61.4% YoY to RM3.2m, as the pandemic movement restrictions disrupted the progress of the group’s projects in Malaysia and Indonesia. Revenue for the quarter declined 23.3% YoY to RM43.8m. (The Edge)

Glomac Bhd’s 2QFY22 net profit increased 37.1% YoY to RM11.5m, on reduction in operational cost. Revenue for the quarter, however, declined 27.9% YoY to RM75.4m. (The Edge)

ATA IMS Bhd is expecting another 40.0% YoY drop in turnover for FY23, following the termination of its contracts from its largest customer; Dyson which contributes to about 80.0% of its revenue. Cost-cutting measures will be undertaken in response to the termination of contracts and that the company is working towards maintaining profitability by lowering costs to ensure sustainability. For FY22, it is expecting revenue to reduce by 30.0% YoY due to the impact of the MCO and the shortage of workers. (The Edge)

Source: Mplus Research - 30 Nov 2021