Tepid recovery

Market Review

Malaysia:. The FBM KLCI (+0.02%) managed to recover all its intraday losses to inch higher, supported by gains in selected plantation heavyweights yesterday. The lower liners, however, retreated, while the broader market closed mostly negative with the technology sector (-1.5%) underperformed.

Global markets:. Wall Street edged lower as the Dow (-0.02%) erased all its intraday gains as investors brushed off the better-than-expected preliminary 4Q21 GDP data (+6.9% YoY) and focus on the anticipated rising interest rates environment. The European stockmarkets remained upbeat, but Asia markets ended mostly lower.

The Day Ahead

The FBM KLCI registered marginal gains, outperforming the negative regional markets that spooked by the US Federal Reserve’s statement. However, tracking the weaker performance on Wall Street overnight and simmering geopolitical tensions, we reckon the sentiment may turn negative on the local bourses. Nevertheless, with Apple registering all-time revenue record, that may provide support towards technology stocks. Commodities wise, the CPO price remained firm above RM5,400 after Indonesia setting export rules, while the crude oil price traded above USD89 per barrel mark.

Sector focus:. We remained bullish on the plantation and energy sectors at least for the near term amid the uptrend cycle in crude palm oil and crude oil prices. Besides, traders may find opportunity in the technology sector on the back of strong results from Apple, while building material segments may stay positive amid selected metal-related rallies.

FBMKLCI Technical Outlook

The FBM KLCI extended its gains for the second session, but it is hovering below SMA50. Technical indicators were still negative as the MACD Histogram has extended a negative bar, while the RSI hovered below 50. Key support is located at 1,505, while the resistance is set at 1,530-1,570.

Company Brief

Affin Bank Bhd will be selling its asset management arm, Affin Hwang Asset Management Bhd to private equity fund CVC Capital Partners between RM2.30- 2.60bn cash. Affin Hwang Investment Bank has a 63.0% stake in Affin Hwang Asset Management while Nikko Asset Management International Ltd owns a 27.0% stake and managing director Teng Chee Wai owns a 3.1% interest. The remaining 6.9% is held by 13 shareholders with stakes of between 0.3-1.2%. (The Star)

Uzma Bhd’s wholly-owned subsidiary Uzma Engineering Sdn Bhd has been awarded a call-off order from EnQuest Petroleum Production Malaysia Ltd (EnQuest) for the provision of a hydraulic workover unit (HWU) worth RM30.0m. The provision of HWU services is expected to commence in March 2022 and be completed in October 2022. (The Star)

Boustead Heavy Industries Corporation Bhd (BHIC) will extend its fullest cooperation to the Malaysian Anti-Corruption Commission (MACC) and other authorities in any investigation pertaining to the Littoral Combat Ship (LCS) project. The company would also continue to work closely and transparently with the government, the Royal Malaysian Navy and financiers, contractors and vendors, especially in the past 12 months in arriving at a workable outcome to get the LCS back on track. On 24th January 2022, the MACC detained two chief executive officers after finding new leads in its investigation into the procurement of the six combat vessels by Boustead Naval Shipyard Sdn Bhd. (The Star)

Westports Holdings Bhd’s 4QFY21 net profit rose 36.3% YoY to RM222.9m, due to higher container revenue and progressive insurance reimbursement for the vessel incident which damaged two ship-to-shore cranes and a berthing container vessel in 2019. Revenue for the quarter, however, dipped 7.0% YoY to RM503.9m. (The Edge)

Pharmaniaga Bhd chairman Datuk Seri Shazalli Ramly will be redesignated as non-independent director, with Datuk Seri Zainal Abidin Mohd Rafique to take the former’s place. (The Edge)

Lotte Chemical Titan Bhd’s (LCT) 4QFY21 net profit rose 24.0% YoY to RM186.8m, mainly due to tax income arising from reversal of tax expenses. Revenue for the quarter grew 39.6% YoY to RM2.68bn. (The Edge)

AirAsia Group Bhd’s combined operations across Malaysia, Indonesia and the Philippines recorded the group’s highest quarterly load factor 4QFY21 since the beginning of the Covid-19 pandemic in early 2020 at 80.0%. This comes as the budget airline’s number of passengers carried, which more than doubled from a year earlier, surpassed the quantum of the airline’s capacity growth. (The Edge)

Tenaga Nasional Bhd (TNB) has appointed former Lembaga Tabung Haji (TH) chief financial officer Datuk Merina Abu Tahir as the group’s independent and non executive director, effective 1st February 2022. It was reported in November 2021 that Merina stepped down as TH’s CFO, after holding the position for some 22 months. (The Edge)

Malayan Banking Bhd (Maybank) has announced that Datuk Khairussaleh Ramli will be appointed as the banking group’s new president and chief executive officer (CEO), effective 1st May 2022. The appointment of Khairussaleh has been greenlit by Bank Negara Malaysia (BNM). (The Edge)

AMMB Holdings Bhd (AmBank) has reported that Tan Sri Azman Hashim will retire as its non-independent non-executive chairman effective 31st March 2022. Azman will continue to hold the position of chairman in multiple entities including the Asian Institute of Chartered Bankers, Asian Banking School Sdn Bhd, Financial Industry Collective Outreach, Malaysia South-South Corp Bhd, Malaysia-Japan Economic Association and among others. (The Edge)

Pavilion Real Estate Investment Trust’s (PavREIT) 4QFY21 net property income (NPI) rose 20.8% YoY to RM82.7m, on lower operating expenses. Revenue for the quarter, however, slipped 5.0% YoY to RM124.3m. The REIT also declared a final income distribution of 2.58 sen per unit for FY21, payable on 28th February 2022. (The Edge)

Axiata Group Bhd will be acquiring a 66.0% stake in Indonesia’s PT Link Net Tbk for a total cash consideration of 8.72trn Rupiah (about RM2.55bn). The group indirect wholly-owned subsidiary Axiata Investments (Indonesia) Sdn Bhd (AII) and PT XL Axiata Tbk, which is an indirect 61.5% subsidiary of the group, have entered into a conditional share purchase agreement with Asia Link Dewa Pte Ltd (ALD) and PT First Media Tbk (FM) to acquire the 1.82bn shares in Link Net. (The Edge)

Eita Resources Bhd has secured two contracts worth a total of RM58.4m for substation extension and reinforcement of supply at Mambong and Entinggan substations in Sarawak. The projects, which will commence on 7th February 2022 were awarded by Sarawak Energy Bhd to Eita Resources 60.0%-owned unit TransSystem Continental Sdn Bhd (TSC) and Terapan Dinamik (M) Sdn Bhd. (The Edge)

LKL International Bhd wholly-owned unit LKL Advance Metaltech Sdn Bhd (LKLAM) is buying 60.2m shares, representing a 13.8% stake, in travel management company Parlo Bhd at the price of 22 sen each, for a total cash consideration of RM13.2m. (The Edge)

Tasco Bhd’s 3QFY22 net profit fell 24.1% YoY to RM8.8m, on higher non-operating expenses. Revenue for the quarter, however, rose 53.1% YoY to RM455.1m. (The Edge)

China Automobile Parts Holdings Ltd (CAP) is terminating the Memorandum of Understanding (MoU) to buy Master Tec Wire & Cable Sdn Bhd with immediate effect. In December 2021, CAP signed the MoU with Master Tec’s shareholder and director Datuk Lau Kim San to acquire the entire equity interest of the target company, which is principally engaged in the manufacturing, trading and sale of wires and fibre optic cables. (The Edge)

Source: Mplus Research - 28 Jan 2022