Market Review

Malaysia:. The FBM KLCI (+0.6%) managed to recover most of its previous session losses, boosted by the second half buying interest in plantation and gloves heavyweights on last Friday. The lower liners also rebounded, while the technology sector (-0.2%) was the sole underperformer amongst its sectorial peers.

Global markets:. Wall Street ended mildly lower as the Dow (-0.01%) after the strong unemployment data that fell to 3.9% in December 2021 piles pressure to the US Federal Reserve to roll back stimulus measures. The European stockmarkets were mixed, while Asia stockmarkets closed mostly higher.

The Day Ahead

The FBM KLCI wrapped up the first week of 2022 with gains driven mainly by gains in the plantation heavyweights. Wall Street, however, continued its losing streak overnight after the US jobs data showing that the unemployment rate is falling in December 2021, which may suggest that the interest rate hike path could be on track or might hasten in 2022. Hence, investors may take a cautious approach in the technology sector. Nevertheless, traders may position themselves within the commodity related sector given the firm CPO and crude oil prices recently; the CPO price hovered above RM4,990, while the Brent oil is above USD81.

Sector focus:. We expect to see some pullback in the technology counters following Nasdaq’s decline, but it may be an opportunity to bargain hunt given the long-term earnings visibility with the rising adoption of 5G and IoT equipment. Meanwhile, we remain upbeat on the banking, consumer and commodity sectors amid the potential interest rate hikes going forward and firmer commodity prices.

The FBM KLCI (+0.6%) rebounded to close at intraday high above the daily EMA9 level. Technical indicators remained positive as the MACD Histogram is flat, while the RSI hovered above the 50 level. The next resistance is envisaged at 1,560, while the support is located at 1,520.

Company Brief

Grand Hoover Bhd’s (GHB) wholly-owned subsidiary, Pembinaan ATT Sdn Bhd has bagged three letters of award (LOA) from Widad Builders Sdn Bhd for sub-contract works worth RM373.8m. The projects included the construction of a highway from Kota Bharu to Kuala Krai, Kelantan which commencing from 6th January 2022 to 26th December 2024 as well as upgrading two water treatment plants in Kedah beginning from 6th January 2022 to December 2023 and 6th January 2022 to October 2023 respectively. (The Star)

MSM Malaysia Holdings Bhd (MSM) through its wholly-owned subsidiary, MSM Prai Bhd (MSM Prai) has secured a RM290.0m refined sugar supply contract with The Coca-Cola Company (Coca-Cola) for both domestic and international production. MSM has been serving Coca-Cola domestically for more than 10 years. For this two-year contract with Coca-Cola Bottlers (Malaysia) Sdn Bhd, MSM will supply refined sugar supply for the year 2022 and 2023. (The Star)

Minetech Resources Bhd is teaming up with a local private company to import and trade processed food products from South Korean food manufacturer Samyang Food Co Ltd. Minetech’s unit Diman KS Chin Sdn Bhd (DKSCSB) had inked a teaming agreement with Vitamin 2U Sdn Bhd (V2SB) for the trading business. As such, it is proposing to diversify into the business of food and beverage trading. (The Edge)

Mah Sing Group Bhd met its RM1.60bn sales target for FY21. In anticipation of a better year, the group is targeting to launch RM2.40bn worth of properties in 2022, 71.4% more than the RM1.40bn in new properties launched in 2021. (The Edge)

SMTrack Bhd has appointed Datuk Lim Hwa Tat as executive director, concurrent with his emergence as a substantial shareholder with a 5.1% stake. Lim, who is also managing director of Sersol Bhd, has acquired 29.0m shares in SMTrack in the open market on last Friday. It also appointed Datuk Seri Tan Choon Hwa as a non-independent non-executive director after he raised his stake to 5.4% from 3.2% previously. The duo joined the substantial shareholders' list a week after Tan Sri Lee Kim Yew, who acquired 5.1% in SMTrack on 29th December 2021. (The Edge)

Solution Group Bhd, which has secured conditional approval from the Malaysian government for the Covid-19 vaccine Convidecia (Cansino) to be used as a booster shot for those who received the same vaccine previously, is now working to get Cansino to be approved as a booster for other primary vaccination recipients. It also expects to start local production of the vaccine soon, as its filling and finishing plant is undergoing a Good Manufacturing Practice (GMP) audit by the NPRA. Certification is expected to be granted in February 2022. (The Edge)

UMW Holdings Bhd ended 2021 on a high note as it sold 72,394 vehicles in 2021, 22.0% more than the 59,320 it sold in 2020. Toyota Vios continues to reign as Toyota’s best-selling model as it accounts for 31.0% of sales, while the Hilux remains uncontested as the best-selling pickup truck in Malaysia since 2005. (The Edge)

VS Industry Bhd is putting aside approximately RM150.0m in capital expenditure to expand and enhance its capacity and capabilities. The group spent RM30.0m to acquire three parcels of adjacent land measuring 3.6-ha in Senai, Johor for future expansion in November 2021. (The Edge)

Port of Tanjung Pelepas (PTP), a joint venture between Malaysian based MMC Corp Bhd and Hague based APM Terminals, will invest RM750.0m to expand its capacity in 2022. Spurred by the double-digit growth in 2021, the port currently with a capacity of 11.5m twenty-foot equivalent units (TEUs), would grow to 12.5m TEUs within the next six months. (The Edge)

Sarawak Cable Bhd has proposed to settle its debts totalling RM124.6m owing to AmBank (M) Bhd, Bank Muamalat Malaysia Bhd and Hong Leong Islamic Bank Bhd (HLISB) by restructuring the payment/repayment terms under the existing facilities. It is proposing to issue redeemable convertible debt (RCD) worth RM19.2m with an interest rate of 5.0% per year to AmBank and redeemable convertible Islamic debt (RCD-i) of RM30.0m with a profit rate of 5.0% per year to Bank Muamalat, to settle approximately RM49.1m of the debt owed to the two lenders. (The Edge)

Source: Mplus Research - 10 Jan 2022