Fading Omicron fears

Market Review

Malaysia:. The FBM KLCI (+0.0%) ended the week flat amid softer trading activities, in line with the mixed performances across regional markets. The lower liners and broader market however, trended higher led by the energy sector (+1.3%) on the back of firmer crude oil prices.

Global markets:. The US stockmarkets closed on Friday ahead of the Christmas holiday which falls on Saturday. Meanwhile, both the European and Asia stock markets ended mixed as investors kept a watchful eye on the developments around the Covid-19 Omicron variant.

The Day Ahead

Wall Street’s sentiment has turned positive last week despite the spike in Covid-19 cases following the emergence of Omicron variant. Meanwhile, the broader stock market on the local front was fairly positive led by energy sector, but FBM KLCI was flat on Friday. We expect the buying interest to continue at least for the week given the Omicron fear has faded. We think traders should focus on recovery theme stocks as well as companies with solid earning visibility such as the technology sector. Also, thematic theme may surround the furniture and timber related stocks on the back of the recent flood situations. On commodity markets, the Brent crude oil is hovering above USD75, while the CPO price has surged above RM4,600.

Sector focus:. With the positive sentiment gaining momentum despite the spike in Omicron cases, we expect investors to pick up recovery theme counters within the aviation, gaming and tourism industries. Also, furniture and timber related stocks might have some upside reward on the back of the flood conditions recently.

FBMKLCI Technical Outlook

The FBM KLCI ended flat on Friday amid lacklustre trading activities prior to the Christmas weekend. Technical indicators are positive as the MACD Histogram has extended a positive bar, while the RSI is hovering above the 50 level. The support level is at 1,500, while the resistance is pegged along 1,530-1,540.

Company Brief

Solarvest Holdings Bhd’s wholly-owned subsidiary, Atlantic Blue Sdn Bhd has secured an engineering, procurement, construction and commissioning (EPCC) contract for a 20.76MW large-scale solar photovoltaic (PV) plant in Kulim, Kedah from Energy ES Sdn Bhd. The contract value is RM87.5m. (The Star)

BCM Alliance Bhd has entered into a manufacturing agreement to produce medical products with rLoop Ltd and Euro-China Technology Achievement Transformation (Tianjin) Co Ltd (EC). The agreement enables BCM to penetrate into virus attenuation devices business that might yield attractive return to the group. (The Star)

CTOS Digital Bhd has proposed to buy a 49.0% stake in fintech specialist Juris Technologies Sdn Bhd (JurisTech) for RM205.8m cash, the group's largest-ever acquisition since its inception. It has inked a conditional share sale and purchase agreement for the proposed acquisition from Natsoft (M) Sdn Bhd, the holding company controlled by JurisTech founders, and that the buy is pending approval of its shareholders in an upcoming extraordinary general meeting. Separately, CTOS Digital has also proposed to raise its stake in Business Online Public Co Ltd from 22.7% currently by 2.3% to 24.9%, to increase its share of profits from the largest company information bureau in Thailand, with an estimated 59.0% of market share in terms of annual revenue. (The Edge)

Malton Bhd is in talks to sell the Pavilion Bukit Jalil mall to Pavilion Real Estate Investment Trust (REIT). The Pavilion Bukit Jalil mall is located within the 50-acre Bukit Jalil City, a development under Malton. MTrustee Bhd, acting as the trustee of Pavilion REIT, has accepted an invitation from its subsidiary Regal Path Sdn Bhd to commence discussion on the potential sale of the mall. (The Edge)

Pacific & Orient Bhd (P&O) is disposing of its 21.9% stake in Singapore-based data software company HiringBoss Holdings Pte Ltd for US$19.8m (RM83.1m) to capitalise on the high returns on its investment, which will strengthen its cash flow position, in line with the group's investment strategies in start-up companies. Proceeds from the disposal will be used to fund its working capital and future investments. (The Edge)

Carimin Petroleum Bhd has aborted plans to raise RM29.9m via a share placement. The proposed corporate exercise was supposed to be completed by 2Q21, but Carimin on 10th December 2021 submitted an application to seek Bursa Securities' approval for an extension of time to implement it. It has now withdrawn its application for more time from the bourse regulator. (The Edge)

Global Oriental Bhd’s 80.0%-owned unit Pavilion Trading Enterprise Sdn Bhd has inked an agreement to form a joint venture with Japan’s Sojitz and Culture Convenience Club Co Ltd, the franchise holder of Tsutaya Books to establish the first Tsutaya Books outlet in Malaysia, at the Pavilion Bukit Jalil. (The Edge)

Cuscapi Bhd has proposed a private placement of 10.0% of its issued shares to raise up to RM22.3m for its business expansion and working capital. It plans to place out 85.9m new shares to third party investors to be identified at a later date, at an indicative price of 26 sen apiece. (The Edge)

Source: Mplus Research - 27 Dec 2021