Pullback beckons

Market Review

Malaysia:. The FBM KLCI (-0.1%) halted a 7-day winning streak as profit taking activities emerged amongst oil & gas and banking heavyweights on last Friday. The lower liners turned mixed, but the broader market closed mostly upbeat with the plantation sector (+1.9%) continues to anchor the winners list.

Global markets:. Wall Street remained volatile as the Dow (-0.7%) fell amid the on going concerns over the geopolitical risk between Russia and Ukraine, while traders also locked in profits ahead of the extended weekend break. The European stockmarkets also trended lower, while Asia stockmarkets closed mostly lower.

The Day Ahead

Buying momentum fizzled on the FBM KLCI, in line with most of the regional peers last Friday following the slump on Wall Street amid the ongoing tension between Ukraine and Russia. Hence, with the negative sentiment that took place on Wall Street, we expect the local technology counters are likely to continue underperforming the broader market. Investors may turn their heads to commodities related or consumer stocks over the near term as commodity prices remains elevated at this juncture. The CPO price hovered above the RM5,500 level, while the Brent oil price traded above USD90 per barrel mark.

Sector focus:. Given the Brent oil is holding up well last week, we reckon the rally in energy stocks may continue. Meanwhile, the recent resurgence of Covid-19 cases and the increase in number of hospitalisations may boost trading activities within the vaccine and glove related players.

FBMKLCI Technical Outlook

The FBM KLCI snapped its seven-session gains, but the key index managed to stay above the 1,600 psychological level. Technical indicators are positive but could be extended as the MACD is above the zero level, while the RSI is in the overbought region. Resistance is pegged around 1,620-1,640, while the support is set at 1,570- 1,580.

Company Brief

KPJ Healthcare Bhd’s 4QFY21 net profit fell 29.8% YoY to RM18.5m, mainly due to the increase in materials cost as a result of complying with the Covid-19 standard operating procedure (SOP) requirement, usage of personal protective equipment (PPE) by employees and compulsory requirement for RT-PCR test for all inpatients. Revenue for the quarter, however, increased 10.7% YoY to RM689.1m. (The Star)

Inari Amertron Bhd‘s 2QFY22 net profit rose 19.1% YoY to RM107.3m, backed by growth in revenue in all business segments. Revenue for the quarter increased 11.5% YoY to RM420.3m. A second interim single tier dividend of 2.3 sen per share, payable on 8th April 2022 was declared. (The Star)

Malaysia Smelting Corp Bhd’s (MSC) 4QFY21 net profit surged 329.4% YoY to RM64.1m, on favourable average tin prices. Revenue for the quarter grew 9.7% YoY to RM255.1m. A first and final single-tier dividend of 7.0 sen per share was proposed, subject to shareholders’ approval at its forthcoming annual general meeting. (The Star)

Four mobile network operators (MNOs); Axiata Group Bhd, Digi.com Bhd, Maxis Bhd and U Mobile Sdn Bhd have recommended that the government allow a dual wholesale network (DWN) model which will be developed and operated by two consortiums involving the government, Digital Nasional Bhd (DNB), and MNOs who are ready to invest. The MNOs have submitted their proposal for the establishment of DWN in a joint statement on 18th February. (The Edge)

Solution Group Bhd has announced that its wholly-owned subsidiary Solution Biologics Sdn Bhd (SOLBIO) has received the Good Manufacturing Practices (GMP) approval from the National Pharmaceutical Regulatory Agency (NPRA) to commence local formulation, filling and finishing of CanSino's single-dose vaccine Convidecia in Malaysia. The facility is located in Technology Park Malaysia in Bukit Jalil, which is capable of producing up to 3.0m vaccine vials per month. (The Edge)

Jerasia Capital Bhd (JCB) wholly-owned subsidiary, Jerasia Apparel Sdn Bhd (JASB) has received a winding-up petition from AmBank (M) Bhd over unpaid debts amounting to RM22.4m. The sum comprises of revolving credit facilities, banker acceptance and invoice financing, bank guarantees and legal cost. (The Edge)

Sime Darby Plantation Bhd's 4QFY21 net profit surged 214.1% YoY to RM468.0m, driven by both upstream and downstream segments. Revenue for the quarter climbed 52.5% YoY to RM5.55bn. A final dividend of 12.38 sen per share, payable on 17th May 2022 was declared. (The Edge)

Petra Energy Bhd’s 4QFY21 net profit improved 19.7% YoY to RM12.5m, as All of its segments except for services recorded higher profits. Revenue for the quarter, however, fell 41.3% YoY to RM77.3m. A single-tier interim dividend of 2.0 sen per share, payable on 15th April 2022 was declared. (The Edge)

Source: Mplus Research - 21 Feb 2022