A technical rebound

Market Review

Malaysia:. The FBM KLCI (+0.5%) halted a 7-day losing streak, boosted by bargain hunting activities with more than two-thirds of the key index components ended higher yesterday. The lower liners also advanced, while the plantation sector (- 0.5%) was the sole underperformer on the positive broader market.

Global markets:. Wall Street erased all its intraday gains in the final trading hour as the Dow (-0.4%) fell after US Federal Reserve signals that interest rate hike will be coming soon in March.. The European stockmarkets extended their recovery, while Asia stockmarkets ended mostly higher.

The Day Ahead

The FBM KLCI rebounded, fuelled by bargain hunting activities emerged after seven sessions of losses. However, we believe profit taking activities might emerged in the local bourse taking cue from the softer performances on Wall Street following the Fed’s confirmation on the upcoming rate hikes direction and continuous bond tapering moving forward. On a side note, the Festive Season Maximum Price Control Scheme (SHMMP) for the Chinese New Year may impact the poultry and consumer-related sectors. Commodities wise, both the CPO and crude oil prices rose, with the latter closing just slightly below the USD90 per barrel mark.

Sector focus:. We expect trading interest will persist in the commodities related sectors such as plantation and energy stocks, as the CPO and crude oil price remained firm. Selectively, bargain hunting activities may still be seen in the technology sector as most of them are oversold.

FBMKLCI Technical Outlook

The FBM KLCI snapped the seven-session losses to close higher. Currently, the FBM KLCI is hovering below the SMA50 level. Technical indicators remained negative as the MACD Histogram has extended a negative bar, while the RSI continued to hover below 50. Key support will be at 1,500-1,505, while the resistances will be pegged around 1,530-1,570.

Company Brief

Genetec Technology Bhd’s 3QFY22 net profit soared 20.6x YoY to RM18.3m, underpinned mainly from the Electric Vehicle (EV) sector. Revenue for the quarter jumped 98.3% YoY to RM65.3m. (The Star)

Central Global Bhd subsidiary CIC Construction Sdn Bhd has entered into a sale and purchase agreement for the acquisition of 1.4m shares or 70.0% stake in RYRT International Sdn Bhd for RM30.1m in equity. The stake acquisition will be wholly satisfied via the issuance of 28.8m new shares in Central Global at an issue price of RM1.04 per consideration share. The purchase comes with a profit guarantee of not be less than RM43.0m for a period of 2 financial years ending 31st August 2022 and 31st August 2023. (The Star)

AirAsia X Bhd (AAX) announced a major new air logistics partnership with global transport and logistics provider GEODIS, providing additional cargo capacity and boosting revenue during the downtime in commercial flying. The agreement is set to run for an initial period of 6 months commencing from 20th January 2022 with further extensions to be contemplated. (The Edge)

RHB Bank Bhd's managing director/group chief executive officer Datuk Khairussaleh Ramli has tendered his resignation, effective 25th March 2022. Khairussaleh, 54, has held the post since 2015. The group said it has initiated its transition plan and the selection process is currently ongoing. (The Edge)

Nextgreen Global Bhd has entered into a Memorandum of Understanding (MOU) with the Kelantan State government to develop sustainable projects in the State with an estimated valuation of RM2.23bn. The valuation is subject to technical assessment, finance and certificates by the State’s One-Stop Investment Committee or any committee agreed upon by the State authority. (The Edge)

Toyo Ventures Holdings Bhd (TVHB) is unable to release its annual report for the financial period ended 30th September 2021 (FY21) as it needs additional time to resolve outstanding issues. The company has reported that it cannot meet the 31st January 2022 deadline, but said it will endeavour to issue the annual report, that includes the annual audited financial statements, auditors' and directors' reports, no later than one month from the date. (The Edge)

CAB Cakaran Corp Bhd has entered into a joint venture (JV) agreement with MATA Aerotech Sdn Bhd to undertake the provision of drone spraying for the oil palm sector in Peninsular Malaysia, as part of its efforts to diversify its income stream. CAB Cakaran will be primarily responsible for providing operational support under the partnership, in the aspect of human resource management, financial reporting and reviewing of the JV company's overall performance. (The Edge)

IGB Real Estate Investment Trust’s (REIT) 4QFY21 net property income (NPI) improved marginally by 0.6% YoY to RM93.7m, amid reversal for impairment of trade receivables and higher rental support provided to its tenants. Revenue for the quarter, however, declined 19.1% YoY to RM119.4m. (The Edge)

IGB Commercial Real Estate Investment Trust’s (IGBCR) 4QFY21 NPI stood at RM31.8m, on the back of RM46.3m in revenue. No comparisons were available as the group was only listed on 20th September 2021. A dividend per unit (DPU) of 0.99 sen, payable on 25th February 2022 was declared. (The Edge)

IOI Corp Bhd is targeting to reduce its reliance on oil palm by planting 200.0-ha of durian within five years (2020-2024). The group is also aiming to plant 5,000.0-ha of coconut and 300.0-ha of kenaf, a type of cordage crop. (The Edge)

Source: Mplus Research - 27 Jan 2022