Oversold and forming a base

Market Review

Malaysia:. The FBM KLCI (-0.1%) marked its fifth consecutive session of decline, on weakness in selected banking and telco heavyweights as the key index fell 1.8% WoW. The lower liners retreated, while broader market was mostly negative with the energy sector (-1.7%) underperformed.

Global markets:. Wall Street’s volatility remained unabated as the Dow (-1.3%), weighed by the on-going concern over the prospects of rising interest rates, geopolitical tension between Russia and Ukraine and mixed bag of earnings report. Both the European and Asia stockmarkets were downbeat.

The Day Ahead

The FBM KLCI ended marginally lower on Friday as the negative sentiment persisted throughout the week, in line with the regional downtrend movements. With Nasdaq being pressured in the recent sessions into the oversold region, we believe investors cherry pick selected big technology names in the local front for short term bargain hunting activities. Meanwhile, the upcoming FOMC meeting on Wednesday will be a crucial for investors to judge the speed of rate hikes going forward. Commodities wise, the CPO price has increased to all-time-high zone, while the crude oil is holding strong above USD85.

Sector focus:. We think traders may look out for commodity related stocks amid firmer uptrend cycle in the Brent oil and CPO; plantation and energy sectors should bode well under this environment. Besides, we expect bargain hunting activities to appear in technology stocks as they are steeply oversold.

FBMKLCI Technical Outlook

The FBM KLCI posted the fifth-session of losses as the key index remained below the daily EMA60 level. Technical indicators remained negative as the MACD Histogram has extended a negative bar, while the RSI continued hovering below the 50 level. As it has breached the support of 1,530 level, it may drag the key index to its next support at 1,505, while the resistance is located at 1,570.

Company Brief

CTOS Digital Bhd’s 4QFY21 net profit fell 8.6% YoY to RM11.8m, due to higher administrative expenses. Revenue for the quarter, however, grew 12.5% YoY to RM38.8m. A third interim dividend of 0.33 sen per share, payable on 25th February 2022 was declared. (The Star)

Eupe Corp Bhd's sub-unit Eupe Land Development Sdn Bhd has signed a sales and purchase agreement for a parcel of vacant freehold land in Bandar Amanjaya in Kuala Muda, Kedah, for RM40.0m cash. The 54.7-ac tract was acquired from Sing Ta Nian Development Sdn Bhd, which has also signed on to be its joint venture partner in developing the land into a mixed-used development.

Separately, Eupe’s 3QFY22 net profit slipped 44.2% YoY to RM8.4m, on weaker sales. Revenue for the quarter dropped 27.4% YoY to RM58.6m. (The Star)

RHB Bank Bhd has announced that its group managing director and group chief executive officer (CEO) Datuk Khairussaleh Ramli will be taking a leave of absence effective 24th January 2022. The announcement comes at a time when Khairussaleh's former employer Malayan Banking Bhd is looking for a successor for its current group president and CEO Datuk Seri Abdul Farid Alias, who will step down on 1st August 2022. (The Edge)

Genting Malaysia Bhd (GENM) has announced that preparations are underway for the opening of the Genting SkyWorlds outdoor theme park at Resorts World Genting (RWG), a key growth initiative for the casino and hotel in Malaysia and that the health and safety of guests, employees and the community remain key priorities amid lingering Covid-19 pandemic concerns. (The Edge)

TH Heavy Engineering Bhd will explore opportunities in the renewable energy (RE) sector with an injection of RE assets mainly comprising hydropower plant developments from OHP Ventures Sdn Bhd after signing a memorandum of understanding (MoU) with the latter. The MoU is part of an exercise to build capacity and capability by having new streams of assets to strengthen its financial footing via the diversification of its revenue stream. (The Edge)

Woodlandor Holdings Bhd has been slapped with an unusual market activity query by Bursa Malaysia on the sharp rise in its share price and volume on 21st January 2022. Shares in Woodlandor hit limit up and soared 35 sen or 29.7% to RM1.53, making it the second top gainer in the local bourse. (The Edge)

ES Ceramics Technology Bhd's 2QFY22 net profit soared 252.6% YoY to RM14.1m, amid higher revenue and improved production activities. Revenue for the quarter leapt 117.1% YoY to RM33.9m. (The Edge)

Jerasia Capital Bhd (JCB) has reported that its subsidiary has defaulted on its repayment of principal and interest in financing facilities worth RM26.4m granted by RHB Bank Bhd. Its wholly-owned subsidiary Canteran Apparel Sdn Bhd defaulted on its payment on 21st January 2022. (The Edge)

TAFI Industries Bhd has received approval for the proposed 2-for-1 bonus issue of 252.9m new ordinary shares and bonus issue of warrants on the basis of 1 warrant for every 2 existing TAFI shares held on the entitlement date. In addition, the company received approval for the proposed new shareholders' mandate for recurrent related party transactions of a revenue or trading nature. (The Edge)

Source: Mplus Research - 24 Jan 2022