Extension of the Santa Claus rally

Market Review

Malaysia:. Bucking the mixed performances across regional markets, the FBM KLCI (+1.2%) posted solid gains for the fourth straight session on the back of window dressing activities. The lower liners climbed higher, while all the 13 main sector indexes ended in the positive territory.

Global markets:. The US stockmarkets rallied heading into the final week of the year as the Dow (+1.0%) charged higher on strong retail sales report that eased investors’ fears over economic impact from Omicron Covid variant. The European stock markets were mostly positive, while the Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI was lifted strongly by most of the heavyweights under the window dressing period, albeit in a softer trading environment; the healthcare sector was the leader as compared to the other sub-sectors. Given the positive performance from Wall Street overnight, we expect the buying interest to be expected on the local equities. Meanwhile, foreign funds are net buyer over the past 5 trading days; the cumulative 5-day trading value stood at RM67.4m. On the commodity markets, the Brent crude oil has surged firmly above USD78, while the CPO price is hovering above RM4,600.

Sector focus:. With the ongoing window dressing activities, we expect heavyweights to sustain its upward momentum over the near term. Meanwhile, we expect O&G sector to trade actively for the session on the back of firmer Brent oil price. Besides, we believe traders may focus on recovery theme stocks amid fading Omicron fears.

FBMKLCI Technical Outlook

The FBM KLCI extended gains to close above the daily EMA60 level as the key index broke above the prior resistance level at 1,530. Technical indicators remained positive as the MACD Histogram has extended a positive bar, while the RSI is hovering above the 50 level. The next resistance is envisaged at 1,560, while the support is set along 1,500-1,530.

Company Brief

Pestech International Bhd’s wholly-owned subsidiary, Pestech Technology Sdn Bhd (PTECH), has secured a contract for works in relation to design, supply, installation, testing and commissioning of automated people mover (APM) and associated works at KL International Airport (KLIA) from Malaysia Airports (Sepang) Sdn Bhd (MASSB) worth RM743.0m. The commencement date of the project shall be from 14th March 2022, for three years on the D&B Works while the O&M Services for 10 years will be from 14th March 2025 until 11th February 2034. (The Star)

Sunway Construction Group Bhd (SunCon) has secured two letters of intent for the construction of two solar photovoltaic energy generating facilities under the large scale solar 4 (LSS4) programme, one worth RM200.0m in Kampar, Perak, and the other worth RM185.0m in Klang, Selangor. Both LSS4 projects are scheduled for completion on 31st December 2023. (The Star)

Ranhill Utilities Bhd has won a 32.0m baht (RM4.0m) contract to upgrade a wastewater plant in Amata City Industrial Estate, Rayong, Thailand. The plant was developed under the build-operate-transfer concept for a 30-year concession period until 21st October 2043. The upgrading will take six months from 24th December 2021. (The Edge)

A consortium led by Coastal Contracts Bhd’s joint venture company Coastoil Dynamic SA de CV has secured a gas conditioning plant construction project in Mexico worth RM4.50bn. The project was awarded by Pemex Exploracion y Produccion, a subsidiary of Mexican state-owned petroleum company Petroleos Mexicanos. The plant will have a capacity of 300.0m standard cubic feet per day. The firm period for the contract is 3,902 days, including the construction period of 250 days and the operation and maintenance period of 10 years. (The Edge)

Lambo Group Bhd said the aggregate value of quoted securities acquired by its wholly-owned subsidiary Oriented Media Holdings Ltd has exceeded 5.0% of the group's consolidated net assets. Lambo's subsidiary Oriented Media — which is involved in the investment in marketable securities — paid a total of RM9.8m for the acquisition of shares in the 12 months ended 24th December 2021, accounting for 8.2% of Lambo's latest audited consolidated net assets as at 31st May 2021. (The Edge)

AirAsia Group Bhd's RM974.5m cash call received valid acceptances for 1.11bn or 85.1% of the total available redeemable convertible unsecured Islamic debt securities (RCUIDS). There were 193.2m RCUIDS or 14.9% of the total available RCUIDS that were not subscribed by entitled shareholders. The exercise would net AirAsia RM829.6m based on the offer price of 75 sen each for the 1.11bn RCUIDS. (The Edge)

Techna-X Bhd has proposed a backdoor listing of its 50.0%-owned HK Aerospace Beidou New Technology Co Ltd (HKAB) via Singapore-listed food-and-beverage group Chaswood Resources Holdings Ltd. The exercises value HKAB at US$500.0m and will see HKAB assume Chaswood's listing status. Chaswood is currently suspended and undergoing a scheme with creditors. Techna-X will also dispose of its 50.0% stake in HKAB for S$339.3m (US$250.0m) to Chaswood in exchange for 8.93bn new Chaswood shares at 3.8 Singapore cents apiece. Chaswood will also acquire the other 50.0% in HKAB. The reverse takeover will result in Techna-X owning 48.2% of Chaswood's enlarged share capital. (The Edge)

Censof Holdings Bhd has bagged a RM5.1m contract to maintain and upgrade server application and data storage for an accounting system from the Social Security Organisation. The contract, which will start from 1st February 2022, will last for three years. (The Edge)

Source: Mplus Research - 28 Dec 2021