Sweet End to 2021

Market Review

Malaysia:. The FBM KLCI (+1.6%) delivered another solid performance, backed by the window dressing activities amongst the broad-based key index components. The lower liners remained upbeat, while the broader market closed mostly positive, led by the telecommunications & media sector (+2.5%).

Global markets:. The US stockmarkets edged mildly lower as the Dow (-0.2%) extended its losses on a light trading day amid lingering concern over the effect of Omicron variant over pace of economic recovery. Elsewhere, both the European and Asia stock markets ended mixed.

The Day Ahead

The FBM KLCI ticked higher on the last trading day of 2021 as bargain hunting activities mainly in banking and telecommunication heavyweights picked up in the final trading hour. Following a volatile year of trading, the local bourse may stage for a recovery moving forward with recovery-themed sectors being the main focus. However, sentiment may still be dampened by the surging Omicron variant cases around the world. Nevertheless, the market players might cheer on the return of the share trading stamp duty capping at RM1,000 starting today. On the commodities market, the CPO price is hovering near the RM4,700 level, while the crude oil price declined but remained firm above the USD77 per barrel mark.

Sector focus:. Moving into 2022, we expect investors will focus on beaten-down stocks in 2021 and well as recovery theme amid recovering footfall in malls and improving consumer spending. Meanwhile, the technology sector may trend higher in tandem with global technology counters on the back of firm earning visibility.

FBMKLCI Technical Outlook

The FBM KLCI (+1.2%) notched higher on the final trading day breaking above the previous resistance level at 1,560. Technical indicators remained positive as the MACD Histogram has extended a positive bar; note that the RSI is hovering above the oversold 70 level. The next resistance is located at 1,585-1,600, while the support is envisaged along 1,560, followed by 1,530.

Company Brief

My EG Services Bhd's unit MY EG Capital Sdn Bhd has entered into a share sale agreement with S7 Holdings Sdn Bhd for the purchase of an additional 118.0m shares or 10.0% stake in S5 Holdings Inc for RM86.5m, bringing its total interest in the company to 20.0%. The acquisition will be made with internally generated funds and is not expected to have any material effect on the gearing of the company for FY22. (The Star)

Top Glove Corp Bhd aims to cement its position as the world’s leading glove manufacturer, as well as aspires to become a Fortune Global 500 company by 2030. The rubber glove maker aims to continue expanding its global market share via an incremental increase in its production capacity from 2022 to 2025. Additionally, the group also said it aims to expand upstream as well, as it plans to build an NBR latex processing plant with a 200,000-tonne capacity, which is expected to be completed by the end-2024. (The Edge)

Sarawak Consolidated Industries Bhd (SCIB) has reported that its external auditor Nexia SSY PLT has expressed a qualified opinion on the group’s audited financial statement for the year ended 30th June 2021 (FY21). The qualified opinion was expressed in relation to the settlement agreements signed by the group on 10th November 2021 with several parties concerning six engineering, procurement, construction and commissioning (EPCC) projects carried out in Qatar and Oman. The annual report is now expected to be issued on 31st January 2022. (The Edge)

FGV Holdings Bhd has announced that it is ending a two-year memorandum of understanding with Johor Port Bhd, which is controlled by Tan Sri Syed Mokhtar Al Bukhary, for the purpose of exploring holding an equity of up to 25.0% in Fauji Akbar Portia Marine Terminals Ltd in Pakistan. The MoU which will expire on 2nd January 2022, will not be renewed. (The Edge)

The Employees Provident Fund (EPF) has raised its stake in Petronas Dagangan Bhd (PDB) to 11.4%, after the latter’s foreign shareholding fell to a record low of 7.7% as of 30th November 2021. EPF had acquired 85,000 shares at an undisclosed price, bringing its total shareholding to 113.1m shares. (The Edge)

Westports Holdings Bhd has appointed three new board members effective 1st January 2022. They are Datuk Siti Zauyah Md Desa and Ahmad Zubir Zahid as independent non-executive directors, and Diana Tung Wan Lee as a non independent non-executive director. (The Edge)

ATA IMS Bhd, which is embroiled in allegations of forced labour has announced that Datuk Balachandran Govindasamy resignation as the group’s chief operating officer effective 31st December 2021. He resigned due to health issue, according to the Johor-based electronic manufacturing services provider. (The Edge)

The conditional voluntary takeover offer on Complete Logistic Services Bhd (CLSB) made on 7th December 2021 by its 29.1% major shareholder Datuk Eddie Ong Choo Meng via his special purpose vehicle Hextar Tech Sdn Bhd, is viewed as fair and reasonable, and shareholders are urged to accept the offer. MainStreet Advisers reported that the offer price represents a premium of 96 sen or approximately 62.3% over the estimated value of CLSB shares, which is approximately RM1.54 per share based on the realised net asset value (RNAV) valuation method. (The Edge)

Astino Bhd’s 1QFY22 net profit rose 53.3% YoY to RM17.6m, on higher profit margin. Revenue for the quarter, however, fell 14.8% YoY to RM136.5m. (The Edge)

Malayan United Industries Bhd (MUI) has reported that its British unit is disposing of a land, together with a 111-room hotel in Shirley, West Midlands for £6.5m (RM36.2m). The Regency Hotel Hospitality Ltd, its wholly-owned indirect subsidiary is selling the property to Westbourne Leisure Ltd. Proceeds from the disposal will enable the group to strengthen its cash flow, and will provide additional funds for its capital and operating expenditure, as well as working capital. (The Edge)

SC Estate Builder Bhd’s (SCBuild) shareholders voted out eight directors at the company’s AGM, only to have all eight “reappointed” to the board. The eight had offered themselves for re-election but were voted out by a majority of shareholders. Later, two remaining directors who were not up for re-election convened a special meeting of the board to reappoint the eight directors who were voted out. The development comes two days after tycoon Tan Sri Lee Kim Yew accused the company’s 10 directors of acting unlawfully in rejecting the nominations of eight other candidates aspiring to be new directors of the company. (The Edge)

Source: Mplus Research - 3 Jan 2022