Brushing off Omicron concerns

Market Review

Malaysia:. The FBM KLCI (+1.1%) extended rallies in tandem with regional peers, driven by PMETAL (+39.0 sen), followed by plantation heavyweights. The lower liners was mixed, while broader market was positive with the utilities sector (-0.3%) being the sole losing sector. Plantation sector gained traction on the back of higher CPO price.

Global markets:. The US stockmarkets stayed on an upbeat note and the Dow (+0.6%) climbed after investors shrugging off concerns over Omicron variant following data that suggest the variant was less likely to lead to hospitalisations. Both the European and Asia stock markets also ended higher.

The Day Ahead

Malaysia’s stock market has traded higher led by the industrial product and plantation sectors following the positive performance on Wall Street overnight as Omicron-led sell off and concerns have faded. Also, with the 3-day rebound on US stock markets, the buying interest should pick up on the local equities ahead of the Christmas season. Traders may shift the attention to recovery theme stocks as data shows that Omicron has lower hospitalisation rate and suffer milder symptoms. We also believe that window dressing activities will continue and support the FBMKLCI at least for the near term. Meanwhile, the Brent crude oil and CPO price continues to stay firm above the USD75 and RM4,500 respectively.

Sector focus:. We believe investors may pick up on recovery theme stocks such as the aviation, gaming and tourism related sectors. Meanwhile, banking sector may be focused on the back of window dressing activities. Besides, the O&G and technology should trade higher following the positive sentiment from Wall Street.

FBMKLCI Technical Outlook

The FBM KLCI extended gains for the second session as the key index rallied above the daily EMA20 level. Technical indicators are slightly more positive as the MACD Histogram has extended a positive bar, while the RSI is heading towards 50. The support level is located at 1,500, while the resistance is set along 1,530-1,540.

Company Brief

AEON Credit Services Bhd’s 3Q22 net profit jumped 145.5% YoY to RM103.5m on higher other income due to improved bad debt recoveries, insurance commission and interest or profit income from deposits with licensed financial institutions, lower impairment losses on financing receivables and lower funding cost. Revenue for the quarter, however, fell 6.2% YoY to RM376.5m. (The Star)

AWC Bhd’s subsidiary had secured a letter of award from the Ministry of Health for a five-year contract to provide hospital support services valued at RM106.0m. The award follows a tender by Ambang Wira Sdn Bhd (AWSB), a wholly-owned unit of AWC, that has been accepted by the MoH for AWSB to provide the services for the National Institute of Health. (The Star)

Marine & General Bhd’s 2Q22 net loss stood at RM10.0m, vs. a net profit of RM56.1m in the previous corresponding quarter as its business operations were significantly affected by the outlook of the oil and gas industry due to the continuing Covid-19 pandemic. Revenue for the quarter, however, rose 13.8% to RM54.1m. (The Edge)

Mah Sing Group Bhd’s healthcare business unit Mah Sing Healthcare Sdn Bhd has obtained the Certificate of European Union Medical Device Regulation notification from its authorised representative Obelis European Authorized Representative Centre that its nitrile examination gloves have fulfilled the relevant requirements of Regulation (EU) 2017/745. The products — nitrile examination powder-free gloves (non-sterile) — may bear the CE marking and can be marketed in the European Union and European Economic Area territories. (The Edge)

Hong Seng Consolidated Bhd has proposed a bonus issue of 3.52bn new shares on the basis of one bonus share for every existing one share held. This comes after Hong Seng's diversification into the healthcare, glove and nitrile butadiene latex manufacturing over the past year which the company said has proven to be timely for it to capture the rise in demand for healthcare products and services. (The Edge)

Spritzer Bhd announced that a factory of one of its subsidiaries, Chuan Sin Sdn Bhd (CS), in Shah Alam was affected by flooding over the weekend. The operations of the plant have been disrupted for a few days in order to carry out maintenance repairs on machinery and clear up some stocks which were damaged. Damages arising from the flood incident are not expected to have any material effect on the earnings and net assets per share of Spritzer for FY21. (The Edge)

Rohas Tecnic Bhd has secured an RM85.2m contract from the Selangor government. The job involves the construction of pumping stations at two existing retention ponds and lay water pipelines, to convey the water to the Semenyih Water Treatment Plant intake. (The Edge)

Puncak Niaga Holdings Bhd is launching an RM300.0m sukuk murabahah programme with a perpetual tenure. Danum Sinar Sdn Bhd (DSSB), owned 90% by Murni Estate Sdn Bhd which in turn is wholly owned by Puncak Niaga, made a lodgement for the programme with the Securities Commission Malaysia on 23rd December 2021. The proceeds from the issuance will be allocated to pay all fees and expenses of the programme, as well as to finance DSSB's new plantation development expenditure, construction of plantation mill and working capital requirements. (The Edge)

Advancecon Holdings Bhd has secured another contract worth about RM33.2m to provide quarry operations and ancillary works at a site in Kinta, Perak. The contract was awarded to its 51.0%-owned subsidiary Spring Energy Sdn Bhd by quarry owner Omya Malaysia Sdn Bhd to operate the site for four years until December 2025. (The Edge)

Dataprep Holdings Bhd’s subsidiary has been appointed as the project delivery partner for the outsourcing of integrated solutions for Covid-19 rapid molecular testing. Its subsidiary Dataprep Asia Sdn Bhd had received the letter of consent from the Ministry of Health to commence the trial run of Covid-19 screening RT PCR testing under the MiCo BioMed brand. (The Edge)

Source: Mplus Research - 24 Dec 2021