Still on pullback

Market Review

Malaysia:. The FBM KLCI (-0.4%) extended its losses for the third straight session with more than half of the key index components finished in red. The lower liners extended their decline, while the broader market closed mostly lower with the exception of energy (+0.3%) and industrial products & services (+0.1%) sector.

Global markets:. Wall Street resume trading on a volatile manner as the Dow (- 1.4%) slumped after US President Joe Biden announced a new tranche of sanctions onto Russia. The European stockmarkets closed mixed, while Asia stockmarkets were painted in red.

The Day Ahead

With the negative sentiment persisted across the regional markets on the back of escalating tensions from Ukraine and Russia, the FBM KLCI continued to trend lower reversing the rally in the past week. We believe market will trade in heightened volatility and may persist at least for the near term following another selloff on Wall Street overnight, due to fears over Russia’s decision to move troops into eastern Ukraine. Meanwhile, investors may keep an eye on Malaysia’s inflation rate which will be released tomorrow.

Sector focus:. Buying interest may be seen in the metal-related stocks, as well as the energy sector given the elevated underlying prices on Brent oil price and aluminium. Elsewhere, we believe investors may look into banking and consumer stocks amid the ongoing earnings season as well as riding the recovery theme.

FBMKLCI Technical Outlook

The FBM KLCI dipped further from the daily EMA9 level and breached the immediate support at 1,580. Technical indicators, however, remained positive as the MACD stayed above the zero level, while the RSI remained above the 50 level. Resistance is located around 1,600-1,620, while the support is now set at 1,570.

Company Brief

Gamuda Bhd’s Singapore joint venture, comprising Gamuda Bhd Singapore Branch (GBSG) and Wai Fong Construction Pte Ltd has bagged the design and construction works contract for the Defu station and tunnels by the Land Transport Authority of Singapore (LTA) worth S$467.0m (RM1.45bn). The project comprises the construction of an underground station and two tunnels and is expected to commence in 2Q22 and be completed in 2030. (The Star)

Wah Seong Corp Bhd has secured a US$254.1m (approximately RM1.06bn) midstream contract by East African Crude Oil Pipeline (EACOP) Ltd, located between the town of Kabaale in Uganda and the port of Tanga in Tanzania. The work and services are expected to be completed within 30 months from 18th February 2022. (The Star)

Leong Hup International Bhd’s (LHI) 4QFY21 net profit fell 27.7% YoY to RM38.0m, due to elevated input cost of feed which affected the group’s livestock and poultry related products segment that offset the increase in the average selling price (ASP) of poultry products. Revenue for the quarter, however, rose 12.8% YoY to RM1.81bn. (The Star)

Axiata Group Bhd’s 4QFY21 net profit stood at RM116.0m vs. a net loss of RM256.0m recorded in the previous corresponding quarter, mainly led by a higher top line and lower depreciation and amortisation. Revenue for the quarter rose 10.2% YoY to RM6.90bn. A second interim dividend of 5.5 sen per share was proposed. (The Edge)

Berjaya Assets Bhd and its wholly-owned unit Tropicfair Sdn Bhd has been sued by Violet Circle Sdn Bhd for RM97.6m for pulling out of an agreement to acquire the remaining 50.0% stake in Sarawak gaming firm Megaquest Sdn Bhd. Tropicfair inked a share sale agreement with Violet Circle for the acquisition on 12th July 2016, but called off the deal in mid-2020. (The Edge)

Berjaya Sports Toto Bhd’s 2QFY22 net profit declined 18.1% YoY to RM53.3m, due to lower contribution from its number forecast operation, partially mitigated by higher income from its auto retailing business. Revenue for the quarter, however, improved marginally by 0.9% YoY to RM1.25bn. A second interim dividend of 1.0 sen per share, payable on 22nd April 2022 was declared. (The Edge)

Complete Logistic Services Bhd’s 3QFY22 net profit leapt 796.8% YoY to RM11.3m, on higher revenue from its trading segment and a one-off gain from the disposal of subsidiaries of RM11.2 m. Revenue for the quarter jumped 277.0% YoY to RM42.6m. (The Edge)

Dayang Enterprise Holdings Bhd’s 4QFY21 net loss stood at RM288.5m vs. a net profit of RM13.2m recorded in the previous corresponding quarter, dragged down by impairment losses on goodwill of RM219.4m and impairment loss on property, plant and equipment (PPE) of RM101.5m. Revenue for the quarter, however, rose 26.5% YoY to RM200.2m. (The Edge)

Kerjaya Prospek Group Bhd has bagged its largest ever construction contract worth RM710.1m for the construction of the main building and external works for a proposed residential development project; Astrum Ampang. The project is expected to be completed in 53 months from its commencement date in June 2022. (The Edge)

Lagenda Properties Bhd’s 4QFY22 net profit rose 21.4% YoY to RM56.5m, as a result of its catch-up initiatives. Revenue for the quarter, however, slipped 7.9% YoY to RM251.1m. A second interim dividend of 3.5 sen per share, payable on 11th April 2022 was declared. (The Edge)

MSM Malaysia Holdings Bhd’s 4QFY21 net loss stood at RM16.2m vs. a net profit of RM56.2m recorded in the previous corresponding quarter, mainly due to lower gross margins caused by higher raw sugar, and freight and gas costs. Revenue for the quarter, however, improved 1.9% YoY to RM642.0m. (The Edge)

NCT Alliance Bhd’s 4QFY21 net profit surged 255.6% YoY to RM17.0m, mainly contributed by stronger take-up rate of its Grand Ion Majestic project in Genting Highlands, Pahang. Revenue for the quarter jumped 236.9% YoY to RM119.6m. (The Edge)

Nestlé (Malaysia) Bhd’s 4QFY21 net profit fell 15.4% YoY to RM112.1m, mainly due to the impact of higher commodity prices and operating expenses. Revenue for the quarter, however, rose 7.3% YoY to RM1.47bn. A third interim dividend of RM1.02 per share, payable on 19th May 2022 was declared. (The Edge)

Petronas Dagangan Bhd (PetDag)’s 4QFY21 net profit rose 53.8% YoY to RM137.2m, supported by reopening of more economic sectors which catalysed demand for fuel. Revenue for the quarter increased 60.8% YoY to RM7.06bn. An interim dividend of 26.0 sen per share, payable on 24th March 2022 was declared. (The Edge)

Petronas Gas Bhd’s (PetGas) 4QFY21 net profit fell 10.1% YoY to RM452.6m, dragged by higher operating costs. Revenue for the quarter, however, increased 7.8% YoY to RM1.49bn. A special dividend of 10.0 sen per share and fourth interim dividend of 22.0 sen, both payable on 22nd March 2022 was declared. (The Edge)

Revenue Group Bhd is teaming up with China UnionPay’s subsidiary UnionPay International to provide a Health Declaration Certificate (HDC) application for Malaysians travelling to China via its recently launched super app; The Wanna App. The HDC is a health code that specifies an individual’s health and Covid-19 vaccination status. (The Edge)

Supermax Corp Bhd’s 2QFY22 net profit slumped 95.5% YoY to RM47.8m, hit by a US market ban and an order freeze in Canada, which added to sharp contraction in margins and industry demand. Revenue for the quarter plunged 73.8% YoY to RM523.5m. (The Edge)

TH Plantations Bhd’s 4QFY21 net profit improved 15.1% YoY to RM1.8m, amid higher sales volume for crude palm oil (CPO) and palm kernel (PK), as well as higher average realised prices for CPO, PK and fresh fruit bunch. Revenue for the quarter, meanwhile, rose 71.3% YoY to RM247.6m. (The Edge)

Tomei Consolidated Bhd’s 4QFY21 net profit added 42.7% YoY to RM16.7m as demand improved amid the gradual reopening of the economy. Revenue for the quarter rose 38.9% YoY to RM233.2m. (The Edge)

Source: Mplus Research - 23 Feb 2022