Minor quick profit taking

Market Review

Malaysia:. The FBM KLCI (-0.04%) erased all its intraday gains to close marginally lower as quick profit taking sets in for gloves heavyweights yesterday. The lower liners and the broader market, however, ended mixed, with the healthcare sector (- 1.2%) underperforming significantly following the release of HARTA’s result.

Global markets:. Wall Street advanced as the Dow (+1.1%) rallied on the back of the broad base recovery. Meanwhile, 299 out of S&P 500 companies that have reported earnings, 76% have exceeded expectations. Both the European and Asia stockmarkets ended mostly upbeat.

The Day Ahead

Following the gains on Wall Street overnight, we reckon that recovery may resume on a tepid manner as gains will be capped by the lack of fresh local leads. On a brighter note, the unemployment rate continues to demonstrate improvement; falling to 4.2% in December 2021, where it highlights that the economic recovery is largely on track. Meanwhile, the upcoming batch of corporate earnings will be followed closely that may provide signs of the earnings recovery as majority of the states moved into the Phase of 4 National Recovery Plan in 4Q21.

Sector focus:. While the building materials-related stocks remain in the limelight on the rising prices, consumer products sector may pick-up in anticipation of better retail sales data for December 2021 following the easing of Covid-19 restrictions. Meanwhile, the tourism-related and recovery theme sectors may garner some trading interest after the National Recovery Council (NRC) agreed to fully reopened Malaysia’s international borders in March 2022 without compulsory quarantine.

FBMKLCI Technical Outlook

The FBM KLCI ended on a flattish note to stay afloat above the 1,530 and the daily EMA 60 level as recovery progress took a backseat. Technical indicators stayed positive as the MACD remained above the zero level, while the RSI hovered marginally above 50. The immediate resistances are located at the 1545-1,570, while support is set around 1,520, followed by 1,500.

Company Brief

Fraser & Neave Holdings Bhd’s (F&N) 1QFY22 net profit fell 32.1% YoY to RM93.0m, disrupted by the recent floods that inundated its manufacturing facilities in Shah Alam. Revenue for the quarter, however, increased 2.2% YoY to RM1.10bn. (The Star)

YTL Power International Bhd has divested its 33.5% stake in ElectraNet Pty Ltd in Australia to Australian Utilities Pty Ltd as trustee of Australian Utilities Trust for A$1.03bn (approximately RM3.08bn). YTL Power will realise a gain on disposal of approximately RM2.22bn upon completion of the transaction. The divestment contributes a 16.8% to YTL Power’s proforma net assets per share and would result in proforma earnings per share of 26.02 sen. (The Star)

Genting Malaysia Bhd's (GenM) operating unit Resorts World Genting's Genting SkyWorlds Theme Park in Malaysia officially opened on 8th February 2022. The outdoor theme park cost the group some US$800.0m (RM3.30bn). (The Edge)

The High Court has dismissed the bid by Serba Dinamik Holdings Bhd to bring in Securities Commission Malaysia and Bursa Malaysia Securities as parties in its injunction application. The court set 16th February 2022 to hear the interim injunction application to block the release of the fact-finding update (FFU) on its financials by special independent reviewer Ernst & Young Consulting Sdn Bhd. (The Edge)

AirAsia Group Bhd is changing its name to Capital A Bhd effective 10th February 2022. The company's securities will be traded under new stock short name CAPITALA. Its seven-year redeemable convertible unsecured Islamic debt securities will be quoted as CAPITALA-LA and its warrants which expire in 2028 CAPITALA-WA. (The Edge)

Tenaga Nasional Bhd (TNB) confirmed that the High Court has allowed with cost the government-controlled utility's judicial review application to set aside or invalidate the Inland Revenue Board's notice of additional assessment for tax amounting to RM1.81bn for 2018. (The Edge)

Hartalega Holdings Bhd’s 3QFY22 net profit declined 74.6% YoY to RM259.1m, due to the normalisation of ASP and sales volume as demand dipped amid an increase in supply by major and new glove entrants. Revenue for the quarter declined 52.8% YoY to RM1.01bn. A second interim dividend of 14.8 sen per share, payable on 9th March 2022 was declared. (The Edge)

Yinson Holdings Bhd has reported that the final acceptance of the group's estimated US$5.20bn (RM21.70bn) floating production storage and offloading (FPSO) contracts with Brazil national oil company Petrobras is expected to take place in 4Q24 and that the FPSO, which will be based offshore Brazil, is expected to commence operations upon achieving final acceptance. (The Edge)

Rhone Ma Holdings Bhd plans to undertake a private placement of 10.0% of its issued shares to raise between RM13.5-18.8m to fund the setting up of a milk processing plant and for working capital purposes. Rhone Ma hopes to use RM7.5m of the proceeds to build the plant with a capacity of 14.4 m litres per year in Kapar, Selangor by 3Q25. Another RM2.5m of the proceeds will be used for marketing expenses, while the balance will go towards working capital. (The Edge)

Supermax Corp Bhd has expanded its remediation plan to include former direct hire and contract workers who left the company before 1st October 2019. The group has recently rolled out a new and comprehensive policy to strengthen its human resource management and migrant worker policies and practices. (The Edge)

British American Tobacco (Malaysia) Bhd's (BAT Malaysia) 4QFY21 net profit dipped marginally by 1.7% YoY to RM71.5m, owing to higher operating and tax expenses. Revenue for the quarter, however, rose 30.5% YoY to RM861.9m. A fourth interim dividend of 27.0 sen per share, payable on 4th March 2022 was declared. (The Edge)

CI Holdings Bhd's 2QFY22 net profit rose 34.5% YoY to RM29.5m, as a result of the restructuring of its operations and the revamping of credit terms and policies. Revenue for the quarter climbed 40.9% YoY to RM958.8m. A dividend of 12.0 sen per share was declared. (The Edge)

Source: Mplus Research - 9 Feb 2022