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Market Review

Malaysia:. The FBM KLCI (-0.1%) drifted lower despite positive performances across regional markets due to concerns over supply chain issue caused by stricter lockdown in Europe due to Omicron variant, as well as the disruption on business activities caused by flood. The lower liners ended softer, while the healthcare sector (-2.0%) succumbed to profit taking activities on the broader market.

Global markets:. The US stockmarkets rebounded and the Dow (+1.6%) rallied as investors brushed off the concerns over the impact of the Omicron variant. Both the European and Asia stock markets advanced.

The Day Ahead

The FBM KLCI traded marginally lower as healthcare stocks succumbed to profit taking activities, bucking the regional peers. However, Wall Street cheered positively, brushing off the concerns over Covid-19 Omicron variant as the President Joe Biden commented that people with booster shots are “highly protected”; this buying support is likely to spillover on local front equities and could lift the bashed down technology stocks as well as the recovery theme sectors. Also, we expect the window dressing may emerge in the near term; lifting the FBM KLCI at least above the key 1,500 level. On the commodity markets, the crude oil price rebounded and trading around USD71, while the CPO is near RM4,400.

Sector focus:. We expect traders to move away from the healthcare sector for the near term and focus on recovery theme stocks within the gaming, hospitality and aviation sectors. Meanwhile, investors may pick up in selected heavyweights on the back of the ongoing window dressing activities.

FBMKLCI Technical Outlook

The FBM KLCI extended losses and the key index fell below the key 1,500 level to close below the daily EMA9 level. Technical indicators remained mixed as the MACD Histogram has extended a positive bar, while the RSI is hovering below the 50 level. The support is located at 1,475, while the resistance is pegged along 1,505-1,535.

Company Brief

Gamuda Bhd’s 1Q21 net profit rose 38.1% YoY to RM152.4m due to stronger earnings from all divisions as works on all fronts continued to pick up pace on the back of the company’s rigorous Covid-19 control measures. Revenue for the quarter, however, slipped 2.2% YoY to RM747.1m. An interim dividend of 6.0 sen per share was declared. (The Star)

Censof Holdings Bhd is acquiring a 51.0% equity interest in Cognitive Consulting Sdn Bhd (CCSB) for RM3.7m with a profit guarantee scheme. The strategic investment aligns with its strategies to grow and focus on its digital technology segment. The acquisition is expected to allow its solutions to reach a much wider market segment, diversify its revenue stream and contribute positively to its earnings from next year onwards. (The Star)

Serba Dinamik Holdings Bhd has sought to expunge a document by Ernst & Young Consulting Sdn Bhd called “Factual Findings Update”, that had been included in Bursa Malaysia Securities Bhd's affidavit in support of its lawsuit to compel the company to make public the independent review done. In Serba Dinamik's application, its managing director and CEO Datuk Dr Mohd Abdul Karim Abdullah also affirmed an affidavit in support claiming the Factual Finding Update is “documentary hearsay evidence”. (The Edge)

Malakoff Corp Bhd has appointed former UEM Group chairman Tan Sri Dr Ahmad Tajuddin Ali, 73, as its new chairman, effective 1st January 2022. He replaces Datuk Hasni Harun, who is resigning after over four years since his appointment in June 2017, due to personal commitments. (The Edge)

CTOS Digital Bhd has obtained an extension for the fee waiver for Central Credit Reference Information System (CCRIS) report extractions from Bank Negara Malaysia (BNM). The waiver granted to its subsidiary CTOS Data Systems Sdn Bhd will be extended by another year to 31st December 2022. (The Edge)

Tan Chong Motor Holdings Bhd has established an Islamic medium term notes programme worth RM1.50bn under Sukuk Murabahah programme which will be utilised for its capital expenditure, working capital requirements, general corporate purposes as well as refinancing and/or repaying financing facilities including its existing borrowings. (The Edge)

KNM Group Bhd will enter into bilateral discussions with Credit Guarantee and Investment Facility (CGIF) instead of its Thai bondholders to resolve its default in payment of the principal and interest on the bonds. CGIF made payment of the principal of 2.78bn baht (RM347.4m), interest of 42.0m baht (RM5.3m) and accrued interest from 18th November 2021 to 17th December 2021 6.6m baht (RM828,030), on behalf of KNM to Bank of Ayudhya, the Thai bondholders' representative, on 15th December 2021. CGIF also issued a demand notice for immediate payment from KNM on the same day. (The Edge)

The major shareholders of PCCS Group Bhd are buying out wholly-owned Mega Label (Malaysia) Sdn Bhd and 51%-owned indirect subsidiary Mega Label (Penang) Sdn Bhd, for RM8.5m. The two units are part of the label and packaging division of PCCS, which is involved in the printing of labels and stickers for garments and other products. The units made losses of RM5.3m and RM9.7m for FY21 and FY20 respectively, and continue to require heavy capital expenditure for the next few years. (The Edge)

Source: Mplus Research - 22 Dec 2021