Green shoots of recovery

Market Review

Malaysia:. The FBM KLCI (+0.1%) managed to recover all its intraday losses to close slightly higher, supported by selected banking and gloves heavyweights yesterday. The lower liners also edged mildly higher, while the broader market finished mostly positive with the healthcare sector (+0.8%) outperformed.

Global markets:. Wall Street rebounded as the Dow (+1.1%) recovered after the US Federal Reserve outlined three rate hikes in 2022 to contain inflationary pressure, while aims to keep economic growth on track. European stock markets ended mixed, while Asia stock markets closed mostly lower.

The Day Ahead

The FBM KLCI ended marginally higher after erasing all its intraday losses as banking and healthcare heavyweights led the rebound prior to the outcome of the FOMC meeting. Despite the Fed signalling a quicker pace of taper and 3 rate hikes in 2022 to fight inflation, Wall Street rebounded and cheered positively on the move. We believe the buying interest may spillover towards the local front, especially on the technology stocks, mirroring the movement on Nasdaq. The crude oil price rebounded marginally to stay above USD73 per barrel mark, while the CPO price extended losses.

Sector focus:. Traders may focus on the technology sector on the back of the Nasdaq rebound overnight. Besides, market participants may put 5G related counters on the radar following the kick-off of 5G services in Malaysia. Meanwhile, we believe Sarawak related stocks may be boosted ahead of the state election.

FBMKLCI Technical Outlook

The FBM KLCI saw slight rebound but the key index remained below its previous support level at 1,485. Technical indicators remained mixed as the Histogram has extended a positive bar, while the RSI hovered below the 50 level. Support is pegged at 1,450, while the resistance is envisaged along 1,485-1,500.

Company Brief

Nestle (Malaysia) Bhd has inked a plan to plant over 1.0m trees in Sime Darby Plantation Bhd's estates under its Project RELeaf initiative. Nestle has entered into a memorandum of agreement with Sime Darby Plantation to produce and supply over one m seedlings for planting activities across 1,200l.0-ha. of riparian zones and steep slope areas within the plantation group's oil palm operation areas. (The Star)

Straits Energy Resources Bhd's unit Victoria STS (Labuan) Sdn Bhd has signed a heads of agreement with Fendercare Marine (Asia Pacific) Pte Ltd to collaborate on providing ship-to-ship (STS) services at the port limit of Victoria Bay in Labuan. The STS hub will be Straits’ sustainable energy flagship project in Victoria Bay deep water area spanning 3,309.0-ha. supporting an initial six STS berths with safe water depths of up to 30m. The hub is scheduled to begin operations by early 1Q2022. (The Star)

Serba Dinamik Holdings Bhd has triggered PN17 criteria but will not be classified as such following the Covid-19 relief measures. SD International Sukuk Ltd (SDISL) has defaulted in its payment of interest due on 9th December 2021 pursuant to the US$300.0m trust certificates due on 9th May 2022 amounting to US$6.5m (USD Sukuk). (The Star)

ATA IMS Bhd has announced that the four summonses the group received in October 2021 from the Johor Bahru Labour Department were not related to allegations of forced labour that the company faced amid the impending termination of its contract by major client Dyson. The four summonses were issued to its wholly-owned ATA Industrial (M) Sdn Bhd for having temporarily accommodated nine workers in houses of a residential area that did not have the Certificate of Accommodation. (The Edge)

Dialog Group Bhd has bagged an RM360.0m contract from Petronas Gas Bhd for the Southern Transmission Improvement and Readiness (STAR) project in Johor. The scope of work of the project involves the engineering, procurement, construction and commissioning of a new booster compressor station with associated equipment and facilities at Mengkibol, Kluang. (The Edge)

Malaysia Airports Holdings Bhd’s (MAHB) network of airports in Malaysia recorded a total of 2.3m passenger movements in November 2021, surpassing the 2.0m mark for the first time since the onset of the Covid-19 in April 2020. The improvement was mainly contributed by domestic passenger movements, which continued to improve since the easing of interstate travel restrictions. (The Edge)

Allianz Malaysia Bhd has appointed Sean Wang Wee Keong as its new CEO and executive director with effect from 1st January 2022. Wang will be replacing current CEO Zakri Mohd Khir, who will be retiring on 31st December 2021. Zakri will however continue to serve the group as a non-independent and non-executive director. (The Edge)

JHM Consolidation Bhd plans to raise RM92.0m via a private placement for the construction of its new manufacturing facility at the Batu Kawan Industrial Park in mainland Penang. Under the exercise, up to 55.8m new shares, representing 10.0% of JHM’s 557.6m issued shares, will be issued to independent third party investors to be identified later. (The Edge)

Censof Holdings Bhd has secured an iPayment contract worth RM13.5m from the Accountant General's Department. The 3 year contract commences on 15th December 2021. (The Edge)

TH Plantations Bhd has reported that Tamaco Plantation Sdn Bhd has withdrawn its lawsuit against the group over its decision not to proceed with the proposed disposal of two plantation units for RM170.0m. (The Edge)

Bursa Malaysia Securities has commenced de-listing procedures against China Automobile Parts Holdings Ltd (CAP) after the company failed to issue annual reports from FY17 until FY20. Meanwhile, CAP will be submitting an appeal to Bursa Securities in due course. (The Edge)

Ipmuda Bhd, which will soon change its name to Jentayu Sustainables Bhd, has received the Sabah government’s approval for its proposal to develop two hydro plants in Sipitang with total capacity of 160.0MW. The State government gave the greenlight to the group for exclusive water and land rights to develop run-of-river hydroelectric cascading schemes in Sungai Maligan and Ulu Padas, Sipitang, with installed capacity of 31.0-MW and 129.0-MW respectively. (The Edge)

Advance Information Marketing Bhd (AIM) has announced that employee fraud and control deficiencies have been found at its wholly-owned Indonesian unit, PT CLS System, based in Jakarta. Subsequent findings of an internal audit further confirmed the employee fraud, and that PT CLS has lodged a police report over the issue. AIM has also appointed BDO Consulting Sdn Bhd as forensic auditor to carry out an independent forensics audit. (The Edge)

Kamdar Bhd is disposing of a property in Bayan Lepas, Penang for RM12.3m to repay its bank borrowings. The group is selling the land with a four-storey detached factory on it to GSH Precision Technology Sdn Bhd. (The Edge)

Source: Mplus Research - 16 Dec 2021