Surpassing 1,600

Market Review

Malaysia:. The FBM KLCI (+0.2%) trended higher for the sixth straight session as gains were in line with the positive developments across regional peers yesterday. The lower liners, however, closed mixed, while the broader market ended mostly positive, led by the technology sector (+1.4%).

Global markets:. Wall Street ended mixed as the Dow (-0.2%) fell, while the S&P 500 (+0.3%) recovered all its intraday losses after the minutes from the latest US Federal Reserve was released. The European stockmarkets closed mixed, while Asia stockmarkets finished mostly upbeat.

The Day Ahead

Although there were signs of quick profit taking activities, the FBM KLCI managed to hold onto its intraday gains as the key index surpassed the 1,600 psychological level. While the FBM KLCI is overbought, we think that further upsides are still on the table as buying momentum may persists over the well contained volatility on Wall Street overnight and the sustained buying interests from foreign funds that recorded the 8th straight session of inflow yesterday. The lower liners are expected to remain supported by the on-going batch of corporate earnings that may provide some pockets of trading opportunities over the near term.

Sector focus:. We continue to favour the technology sector as dip buying emerges amid the on-going semi-conductor chip shortages and expansion plans. The plantation sector may continue to outperform, taking cue from the release of upbeat corporate results of KLK and BKAWAN.

FBMKLCI Technical Outlook

The FBM KLCI remained upbeat as the key index advanced to close above the 1,600 resistance level. Technical indicators remained positive as the MACD remained above the zero level, while the RSI hovered in the overbought position. The next resistances are located at the 1,620-1,640, while support is now set around 1,570, followed by 1,540.

Company Brief

MR DIY Group Bhd’s 4QFY21 net profit climbed 24.3% YoY to RM134.6m, attributable to an increase in the total number of stores as well as the lifting of lockdown and other restrictions which were imposed in the prior period. Revenue for the quarter widened 26.9% YoY to RM975.4m. An interim dividend of 0.9 sen per share, payable on 1st April 2022 was declared. (The Star)

Kuala Lumpur Kepong Bhd’s (KLK) 1QFY22 net profit surged 67.7% YoY to RM599.3m, as its plantation division was boosted by significantly higher crude palm oil (CPO) and palm kernel (PK) prices. Revenue for the quarter jumped 58.8% YoY to RM6.83bn. (The Star)

AirAsia X Bhd’s (AAX) 2QFY22 net loss stood at RM11.9m, on the back of revenue of RM119.3m. There was no comparative financial information available for the preceding year’s corresponding period as the group’s financial year has been changed from 31st December 2020, to 30th June 2021. (The Star)

Capital A Bhd unit, AirAsia Aviation Group Ltd has entered into a non-binding Memorandum of Understanding with international aircraft leasing company Avolon Aerospace Leasing to establish a joint working group to study the feasibility of urban air mobility in the ASEAN region and evaluate the possibility of leasing up to 100 VX4 electric vertical take-off and landing aircraft. (The Edge)

Sime Darby Bhd’s 2QFY22 net profit fell 45.5% YoY to RM345.0m, which saw a one off gain of RM272.0m on the divestment of the group’s stake in Tesco Malaysia in the previous corresponding quarter. Revenue for the quarter fell 6.3% YoY to RM10.54bn. A first interim dividend of 4.0 sen per share, payable on 11th May 2022 was declared. Separately, Sime Darby has also put plans to spin-off its healthcare unit; Ramsay Sime Darby Health Care Sdn Bhd on the backburner. However, there was no specific reason provided for the delay. (The Edge)

Malaysian Genomics Resource Centre Bhd’s (MGRC) 2QFY22 net profit stood at RM1.0m vs. a net loss of RM1.6m recorded in the previous corresponding quarter, on the back of higher margins from the distribution of immunotherapy and cell therapies as well as Covid-19 vaccine distribution and administration. Revenue for the quarter ballooned 56.1x YoY to RM7.6m from RM136,000. (The Edge)

Heineken Malaysia Bhd’s 4QFY21 net profit surged 76.9% YoY to RM95.9m, on improved sales for its products following the reopening of the domestic economy. Revenue for the quarter grew 33.4% YoY to RM692.3m. A single-tier final dividend of 66.0 sen per share was proposed, subject to approval of the shareholders at the forthcoming Annual General Meeting. (The Edge)

InNature Bhd’s 4QFY21 net profit surged 10.7x YoY to RM7.8m, following the reopening of the economies of Malaysia and Vietnam. Revenue for the quarter jumped 95.8% YoY to RM43.7m. A final dividend of 1.5 sen per share, payable on 31st March 2022 was declared. (The Edge)

Scomi Group Bhd’s 51.0%-owned subsidiary Scomi SGSB Sdn Bhd has accepted a Letter of Intent for an engineering, procurement, construction and commissioning project valued at RM23.9m, awarded by renewable energy developer Synergy Generated Sdn Bhd, which owns the remaining 49.0% stake in Scomi SGSB. The project involves the development of a 8.0-MWp rooftop photovoltaic plant for a local educational institution. (The Edge)

Gas Malaysia Bhd’s 4QFY21 net profit increased marginally by 0.1% YoY to RM69.3m, on the back of higher revenue. Revenue for the quarter improved 6.7% YoY to RM1.94bn. A second interim dividend of 6.0 sen per share, payable on 31st March 2022 was declared. (The Edge)

SAM Engineering & Equipment (M) Bhd’s 3QFY22 net profit soared 102.9% YoY to RM25.2m, on the back of an increase in demand at its aerospace and equipment divisions. Revenue for the quarter grew 71.0% YoY to RM351.1m. (The Edge)

Sunzen Biotech Bhd has proposed to undertake a bonus issue of up to 408.9m warrants on the basis of 1 warrant for every 2 existing shares. The warrants will be issued at no cost to entitled shareholders, with a tenure of 5 years. (The Edge)

Bintai Kinden Corp Bhd has redesignated its deputy chief executive officer Noor Azri Azerai as the group’s executive director. Noor Azri, 23, has a direct interest of 10.2m shares, representing 1.5% of the total issued share capital of the company. (The Edge)

Source: Mplus Research - 17 Feb 2022