Green shoots of recovery

Market Review

Malaysia:. The FBM KLCI (+1.0%) recovered from a three-day pullback on the back of broad-based bargain hunting on the key index components yesterday. The lower liners also rebounded, while the healthcare sector (-0.4%) was the sole decliner on the broader market following the weak quarterly results from Top Glove (-10.2%).

Global markets:. Wall Street rebounded sharply as the Dow (+2.0%) jumped on signs of positive progress between Ukraine and Russia as the former is open to discuss on the latter demand of neutrality, provided with security guarantees. The European stockmarkets turned upbeat, but and Asia stockmarkets ended mixed.

The Day Ahead

The FBM KLCI outperformed the mixed regional bourses despite the overnight negative performances on Wall Street, as bargain hunting activities took place. With the rebound in Wall Street overnight amid the easing tension between Ukraine and Russia, we reckon the gains on the local bourse could be extended, in most of the sectors that were being bashed down over the past month. On the commodity markets, crude oil cooled down after the positive progress between Ukraine and Russia and OPEC is willing to raise output, while palm oil price may stay elevated on the further restrictions of export in Indonesia that may lead to tighter supply of CPO in the global markets.

Sector focus:. Upside on the O&G counters may be capped over the near term following the retracement in oil prices. Outlook for the plantation counters should remain bright amid tighter supply environment in the global markets. Also, investors may turn their focus to technology and financial stocks following the overnight rallies on Wall Street.

FBMKLCI Technical Outlook

The FBM KLCI closed above the daily EMA60 level and the previous support at 1,550. Technical indicators are still mixed; the MACD Histogram still below zero, while RSI is improving towards 50. The resistance is located at 1,570-1,580, while the support is pegged at 1,550, followed by 1,520.

Company Brief

Top Glove Corp Bhd’s 2QFY22 net profit slumped 97.0% YoY to RM87.6m, as average selling prices normalised closer to pre-pandemic levels, which offset an uptick in sales volume. Revenue for the quarter tumbled 73.0% YoY to RM1.45bn. (The Star)

Comfort Gloves Bhd has proposed to acquire the entire stake in Goldhill Melody Sdn Bhd from five parties for RM25.8m. Comfort Gloves, which has total cash and bank balances of about RM334.2m as at end-2021, will fund the proposed acquisition via internally generated funds. Goldhill is the registered owner of five parcels of freehold agriculture land that are zoned for residential use. (The Star)

WZ Satu Bhd has proposed to change its name to Citaglobal Bhd for a better representation of its nature of business moving forward. An extraordinary general meeting (EGM) to obtain shareholders’ approval for the proposed agenda would be held at a date to be announced later. The group intends to transform into a conglomerate that is involved in facilities management, telecommunications, energy, infrastructure and technology sectors. (The Star)

Tenaga Nasional Bhd (TNB) has set aside capital expenditure of RM11.80bn for FY22. Of the total capex, RM6.90bn will be for regulated recurring expenditure, while RM4.90bn will be for others. (The Edge)

Petronas Dagangan Bhd’s (PDB) partnership with Petroleum Sarawak Bhd (PETROS) in the liquified petroleum gas (LPG) business in Sarawak has moved a step closer with the signing of the business transfer and share subscription agreement. The partnership involves the divestment of PDB’s LPG business in Sarawak to PetrosNiaga Sdn Bhd (PNiaga), a wholly-owned subsidiary of PETROS, and the subscription of a 49.0% stake in PNiaga by PDB. (The Edge)

CTOS Digital Bhd has increased its associate stake in Thailand-based Business Online Public Company Ltd (BOL) to 24.8%, from 22.7% previously, as the group continues to strengthen its presence in Thailand as part of its regional expansion strategy. Its acquisition of 17.8m shares via a direct business transaction on the Thai stock exchange, representing a 2.2% stake in BOL for 205.2m baht (RM26.2m). The acquisition will be fully funded by proceeds raised from the recently-completed private placement. (The Edge)

Zakiah Jaafar has resigned as a non-independent non-executive director of Bintulu Port Holdings Bhd, representing the Minister of Finance (Incorporated), effective 9th March 2022. This comes as Zakiah, 55, vacated her post as the Ministry of Finance’s deputy secretary-general (policy), which she held since June 2020. (The Edge)

Nexgram Holdings Bhd will offer services such as Covid-19 screening and sample processing to all registered members of the Malaysian Association of Employment Agencies. The group, through its subsidiary Associate Partners Laboratories Sdn Bhd (APLSB) which provides medical laboratory testing and analytical services, as well as biotechnology research and experimental development has signed a Memorandum of Understanding with Malaysian Association of Employment Agencies (PAPA). (The Edge)

Source: Mplus Research - 10 Mar 2022