Below 1,600

Market Review

Malaysia:. The FBM KLCI (-1.3%) turned volatile as profit taking emerges alongside with the weakness across regional peers. The lower liners were also downbeat, while the broader market ended mostly lower with the exception of property (+2.6%), construction (+1.0%) and financial services (+0.1%) sectors.

Global markets:. Wall Street was closed for the US President’s Day public holiday, while futures markets are pointing lower on signs over escalating geopolitical tension between Ukraine and Russia. The European stockmarkets extended their decline, while Asia stockmarkets finished mostly downbeat.

The Day Ahead

The FBM KLCI extended loses along with the regional peers amid escalating geopolitical tensions between Ukraine and Russian; plantation sector tumbled after its 10-session rally, while the technology counters noticed further selling pressure. With the ongoing geopolitical tension, we believe the negative sentiment will persist. However, given the recent inflow of foreign funds, coupled with the firm commodity prices in crude oil and crude palm oil, these will support the plantation and O&G sectors over the near term.

Sector focus:. Bargain hunting activities may be anticipated within plantation and energy counters as the underlying commodity prices remain firm. Besides, investors may look into gold related counters given the rising gold price above USD1900. Meanwhile, traders may see expect rotational play among sectors such as consumer, property and financial services throughout the earnings season in view of the recovering economic activities amid the smooth vaccination progress.

FBMKLCI Technical Outlook

The FBM KLCI breached below the 1,600 psychological level, closing just around the daily EMA9 level. Technical indicators, however, turned slightly negative as the MACD Histogram retraced, while the RSI slid from the overbought zone. Resistance is pegged around 1,620-1,640, while the support is set at 1,570-1,580.

Company Brief

Guan Chong Bhd’s 4QFY21 net profit improved 9.5% YoY, mainly due to an increase in sales volume of cocoa products. Revenue for the quarter rose 6.4% YoY to RM1.08bn. A final single-tier dividend of 2.0 sen per share, subject to shareholders’ approval in the forthcoming annual general meeting was proposed. (The Star)

AirAsia X Bhd (AAX) has announced a 1-for-1 rights issue and a special issue to raise a total of RM166.0m. The long haul budget carrier had earlier obtained shareholders’ approval for a larger rights issue to raise up to RM300.0m and a special issue of RM200.0m as part of its restructuring scheme. The 1-for-1 rights of 414.0m shares are priced at 28 sen per share, to raise RM116.0m with a similarly priced special issue to raise RM50.0m. All approvals have been obtained for the fundraising. (The Star)

Boustead Plantations Bhd’s 4QFY21 net profit jumped 218.5% YoY to RM86.0m, on the back of higher crude palm oil prices. Revenue for the quarter improved 130.4% YoY to RM341.0m. A fourth interim dividend of 4.0 sen per share, payable on 22nd March 2022 was declared. (The Edge)

CTOS Digital Bhd's shareholders approved its RM205.8m acquisition of a 49.0% stake in Juris Technologies Sdn Bhd (JurisTech) as well as a proposal to raise RM270.0m via a placement of 166.7m new shares at its extraordinary general meeting on 21st February 2022. The proceeds will be used to fund the acquisitions of 49.0% stake in JurisTech and an additional 2.3% equity stake in Business Online Public Co Ltd, other acquisitions to be identified as well as to defray placement expenses. (The Edge)

Hextar Global Bhd's 4QFY21 net profit rose 24.4% YoY to RM14.3m from RM7.2 m, mainly contributed by its agriculture and specialty chemicals segment. Revenue for the quarter rose 35.6% YoY to RM138.1m. A second interim dividend of 1.2 sen per share, payable on 25th March 2022 was declared. (The Edge)

Karex Bhd’s 2QFY22 net loss stood at RM2.8m vs. a net profit of RM2.8m recorded in the previous corresponding quarter, amid rising raw material costs and additional distribution expenses. Revenue for the quarter slipped 10.6% YoY to RM103.5m. (The Edge)

KPower Bhd, in a consortium with a China company, has bagged a RM70m contract to undertake engineering, design, procurement, construction, and commissioning works of small hydro power plants in Kota Marudu, Sabah. The job is expected to be completed by the end of 2022. (The Edge)

Ta Win Holdings Bhd’s 2QFY22 net profit stood at RM4.7m vs. a net loss of RM1.5m registered in the previous corresponding quarter, mainly driven by higher production and sales volume, with manufacturing operations resuming as Movement Control Order restrictions eased and further supported by increasing copper price. Revenue for the quarter climbed 39.0% YoY to RM172.5m. (The Edge)

PLS Plantations Bhd's 2QFY22 net profit leapt 476.7% YoY to RM7.4m, mainly attributed to the improved contribution made from the sales of fresh fruit bunch (FFB) due to significant increase in average selling price realised under the plantation segment. Revenue for the quarter jumped 107.1% YoY to RM57.3m. (The Edge)

T7 Global Bhd's 4QFY21 net profit fell 35.1% YoY to RM3.1m, on higher operating expenses. Revenue for the quarter, however, grew 41.5% YoY to RM93.3m. (The Edge)

CSC Steel Holdings Bhd's 4QFY21 net profit jumped 81.3% YoY to RM38.9m, driven by improved product margin due to an uptrend in selling prices. Revenue for the quarter strengthened 44.8% YoY to RM532.4m. A final single-tier dividend of 14.0 sen per share was proposed, subject to the approval of the shareholders. (The Edge)

Jaya Tiasa Holdings Bhd's 2QFY22 net profit swelled 11.0x YoY to RM51.1m, on higher average selling prices for FFB and crude palm oil. Revenue for the quarter rose 57.9% YoY to RM239.2m. (The Edge)

Source: Mplus Research - 22 Feb 2022