Recovery still premature

Market Review

Malaysia:. The FBM KLCI (+0.1%) extended its lead with miniscule gains, anchored by better performances in selected banking heavyweights yesterday. The lower liners also marched higher, while the broader market ended mixed with the energy indices (+1.7%) leading the other sub-indices.

Global markets:. Wall Street turned wobbly again as the Dow (-0.1%) erased all its intraday gains to close mildly lower, dragged down by selloff in technology shares. European stock markets advanced after Bank of England unexpectedly raised the Bank Rate by 15 basis points, while Asia stock markets finished mostly higher.

The Day Ahead

Lifted mainly by the banking heavyweights, the FBM KLCI edged marginally higher in tandem with the positive regional markets as well as the positive performance on Wall Street. However, as the market participants reacted to the Bank of England rate hike decision, the US stock markets fell significantly and investors turned cautious and continue to digest the faster tapering of bond buying by the Feds as it has turned more hawkish in the recent FOMC meeting. With that, we opined that market volatility remained in place on the local bourse on a downward bias tone. Meanwhile, both the CPO and crude oil prices advanced.

Sector focus:. Tracking the overnight losses on Wall Street, traders may trade in a cautious tone, especially on the technology stocks. Meanwhile, traders are likely to put Sarawak counters on the radar ahead of Sarawak state election. Also, investors may look out for plantation and energy stocks on the back of firmer commodities prices.

FBMKLCI Technical Outlook

The FBM KLCI swung higher but failed to close above the daily EMA9 level. Technical indicators remained mixed as the MACD Histogram has extended a positive bar, while the RSI hovered below the 50 level. The support level is located at 1,450, while the resistance is pegged along 1,485-1,500.

Company Brief

VS Industry Bhd’s 1QFY22 net profit shrank 40.9% YoY to RM39.4m, due to lower printed circuit board assembly orders received by its Malaysian operations as well as component supply disruption. Revenue for the quarter slipped 2.0% YoY to RM968.0m. A first interim dividend of 0.4 sen per share, payable on 4th March 2021 was declared. (The Star)

Lotte Chemical Titan Holding Bhd (LCT) has obtained its shareholders’ approval to award engineering, procurement and construction (EPC) works worth US$1.65bn (RM6.80bn) to sister company Lotte Engineering and Construction Co Ltd (LEC). The project financing would be a 60:40 debt-equity structure arrangement and the company planned to utilise its internal funds for the equity financing on its 51.0% stake in the venture. (The Star)

Inta Bina Group Bhd has secured a RM67.7m construction contract from Gamuda Land (T12) Sdn Bhd, a wholly-owned subsidiary of Gamuda Bhd. The contract is for the construction of 203 units of terrace houses for Phase 1C-1 of Gamuda Cove Development. The construction will take 18 months to complete, beginning 15th December 2021. (The Star)

Samaiden Group Bhd has bagged an engineering, procurement, construction and commissioning (EPCC) job in relation to the development of a 39.0-MWp rooftop solar photovoltaic system worth RM98.2m. The project, which covers the design, supply, delivery, installation, testing and commissioning, is expected to be completed in 3Q22. (The Star)

Telekom Malaysia Bhd (TM) has signed a 10-year fibre leasing service agreement with Digital Nasional Bhd worth RM2.00bn to speed up the deployment of the government-owned 5G network nationwide. Under the agreement, TM will provide the services to enable DNB’s 5G infrastructure needs in supporting the government’s aspiration to speed up 5G rollout in Malaysia. (The Edge)

Eco World Development Bhd’s 4QFY21 net profit dropped 42.7% YoY to RM42.8m, on lower contribution from its Malaysian joint ventures and its international arm due to the lockdown. Revenue for the quarter, however, rose 4.8% YoY to RM666.1m. (The Edge)

Eco World International Bhd’s (EWI) 4QFY21 net loss stood at RM56.3m vs. a net profit of RM17.4m recorded in the previous corresponding quarter, mainly due to share of losses in joint ventures and higher finance cost. Revenue for the quarter dropped 39.5% YoY to RM34.8m. (The Edge)

AirAsia X Bhd (AAX)’s plan to restructure its debts totalling RM33.65bn is set to be implemented after receiving court sanction. The sanction was granted by Judicial Commissioner Ong Chee Kwan in the High Court after hearing submissions on the matter. The proposed debt restructuring will take effect upon lodgement of the sanction order with the Registrar of Companies of Malaysia. (The Edge)

KNM Group Bhd has announced that the Asian Development Bank’s trust fund, Credit Guarantee and Investment Facility (CGIF), has made repayment on behalf of the group to its bondholders in Thailand. KNM has received a reimbursement demand notice from CGIF via email on 15th December 2021, after the latter made the repayment to the bondholders. (The Edge)

Taliworks Corp Bhd has won a contract from Pengurusan Air Selangor Sdn Bhd to develop a package under Phase 1 of the Sungai Rasau water treatment plant for RM602.4m. The contract is to design and build a water pumping station, and water pumping mains to the existing Bukit Lipat Kajang reservoirs, distribution and associated works (Package 2). (The Edge)

Country Heights Holdings Bhd has acquired an auctioned property, which is a 10- storey tower together with five levels of elevated car park podium in Seri Kembangan, Selangor for RM60.0m. It entered into a memorandum of the contract with the licensed auctioneer pursuant to the successful bid to acquire the property from Mines Resort Sdn Bhd. (The Edge)

Source: Mplus Research - 17 Dec 2021