Extended winning streak

Market Review

Malaysia:. The FBM KLCI (+1.0%) marched higher for the fifth straight session as the key index was again boosted by the plantation heavyweights yesterday. The lower liners edged higher, with the plantation sector (+5.1%) surging to 2-year high after CPO prices stayed elevated.

Global markets:. Wall Street rebounded as the Dow (+1.2%) recovered all its previous session losses on the back of the easing geopolitical tension between Ukraine and Russia. The European stockmarkets also turned upbeat, but Asia stockmarkets closed mixed.

The Day Ahead

Despite hitting the overbought territory, the key index closed higher as plantation heavyweights rallied on the soaring CPO prices. Along with the strong net buying from foreign funds over the past 7 consecutive trading sessions, we reckon that the positive run could continue and as the key index’s underlying tone is still broadly positive. Meanwhile, we expect rotational interest on the lower liners as traders take advantage of the improved trading liquidity. Looking ahead, the attention will be shifted towards the US FOMC minutes meeting tonight.

Sector focus:. We reckon that the plantation sector may experience some profit taking after enjoying a good run as of late, while the financial services sector appears to be gaining traction as economic activities gradually return to pre pandemic levels. The technology sector may also see some trading interests on the record high global semiconductor sales registered at US$555.90bn in 2021 as well as the rebound in Nasdaq overnight.

FBMKLCI Technical Outlook

The FBM KLCI continues to outperform as the key index marched higher to close marginally below the 1,600 resistance level. Technical indicators stayed positive as the MACD remained above the zero level, while the RSI has hit the overbought position. The immediate resistances are located at the 1,600-1,620, while support is now set around 1,550, followed by 1,525.

Company Brief

Tenaga Nasional Bhd (TNB) has been notified of an appeal filed by the Inland Revenue Board (IRB) over the RM1.81bn tax claim for the year of assessment 2018 against the former. The Court of Appeal had fixed case management on 28th March 2022. (The Star)

Duopharma Biotech Bhd’s 4QFY21 net profit fell 3.0% YoY to RM15.7m, mainly due to higher expenditures. Revenue for the quarter, however, rose 8.5% YoY to RM145.4m. (The Star)

Asia Media Group Bhd will collaborate with Setia Media Sdn Bhd to carry out the PJ Smart Gateway Project as part of plans to expand the group's digital advertising services into the out-of-home market segment. Asia Media, however, did not disclose the project value. (The Edge)

Berjaya Assets Bhd's 2QFY22 net loss to RM2.0m, from a net loss of RM13.3m recorded in the previous corresponding quarter, on lower impairment of receivables recorded by its property investment, hotel and recreation business segments. Revenue for the quarter, however, slipped 5.8% YoY to RM41.4m. (The Edge)

Capital A Bhd is raising more than RM400.0m for its engineering arm, Asia Digital Engineering, which plans to build maintenance, repair and overhaul facilities at the Kuala Lumpur International Airport. The 380,000 sqf facility will commence in mid- 2022 and is expected to be completed within 2 years. (The Edge)

Dialog Group Bhd’s 2QFY22 net profit improved 5.0% YoY to RM127.9m, on improved topline growth. Revenue for the quarter grew 55.1% YoY to RM544.5m. (The Edge)

IOI Corp Bhd has paused its months-long share-buyback activities amid the gradual rise in share prices on the back of the boom in crude palm oil prices. IOI last purchased its own shares at the end of 2021, at prices of between RM3.59 and RM3.78, ending a buyback streak that had lasted since April 2021, when it bought back 50.7m shares. (The Edge)

MSM Malaysia Holdings Bhd and Wilmar Sugar Pte Ltd have signed an agreement to collaborate in the establishment of a sustainable sugar supply chain. The sustainable sugar programme comes on the heels of Wilmar Sugar’s parent company, Wilmar International Ltd, launching its No Deforestation, No People Exploitation (NDPE) Sugar Policy in September 2021. (The Edge)

Sime Darby Plantation Bhd (SDP) announced several changes and improvements to its governance structures, policies and procedures, which include the planned reimbursement of recruitment fees to the oil palm plantation group's current foreign workers and the establishment of an improved responsible recruitment procedure to ensure SDP's operations are free of the scourge of forced labour. (The Edge)

Malaysian Rating Corp Bhd (MARC) has revised the outlook for Tropicana Corp Bhd’s RM1.5 bn sukuk wakalah and RM2.00bn perpetual sukuk programmes to negative from stable, while maintaining the A+IS and A/S ratings. The revised outlook reflects MARC’s increasing concern over the rise in Tropicana's borrowings, which stood at RM4.50bn as at end-September 2021, from RM2.80bn when the initial rating was assigned in April 2020. (The Edge)

Source: Mplus Research - 16 Feb 2022