MARKET REVIEW

Global. Asian Bourses Rallied as Investors Welcomed US Presidential Election Results That Showed a Firming Lead for Biden, Who Is Widely Seen to be More Prone to Multilateral Approach and Less Combative on Trade Policy and in Relations With China Than Trump. Overnight, the Dow Surged 542 Pts to 28390, as Investors Bet a Possible Presidency Win by Biden and the Likelihood of a Divided Government Would Reduce Chances for Major Legislative Changes That Might Pose a Threat to Corporates’ Earnings. Sentiment Was Also Boosted by the Fed’s Promise to Keep Its Loose Monetary Policy Intact and Vowed More Actions to Sustain An Economy Severely Damaged by the Covid-19.

Malaysia. In tandem with higher regional markets, KLCI surged 36.9 pts to 1501.5 as investors are optimistic that the tabling of an expansionary and people-centric Budget 2021 today will be approved. Sentiment was also helped by the less combative and more predictable Biden as he edged closer to victory in the presidential race. About 6.92bn securities worth RM3.89bn changed hands, supported by bullish markets breadth with 1096 gainers thumped 204 decliners.

TECHNICAL OUTLOOK: KLCI

On the back of a 37-pt relief rally at 1501.5, swiftly reclaiming above our Head & Shoulder (H&S) neckline at 1474 (10 Sep) and 1490 (200D SMA) overhead resistances, KLCI could regain further strength today amid overnight gains on Wall St and hook -up in technical indicators. A strong breakout above 50D SMA near 1508 will spur the index towards 1521 (23.6% FR), 1534 (100D SMA) and 1541 (17 Sep high) levels in the short term. On the contrary, a sharp pullback below the Head & Shoulder (H&S) neckline at 1474 (10 Sep) will accelerate further retracement towards 1452 (2 Nov low), 1428 (20 Apr high) and 1413 (50% FR) levels.

MARKET OUTLOOK

KLCI is likely to stay sideways with upside bias pending the final US elections outcome and awaiting the tabling of an expansionary and people-centric Budget 2021 today. Key supports are pegged at 1490-1474-1452 whilst resistances are situated near 1508-1521- 1534 levels.

Stock wise, we believe DPIH’s superior netcash of RM54m or RM0.11 will help the company ride through the Covid-19 crisis successfully and preparing the group for future expansions. Listed in Jan 2019, DPIH (0.26-NOT-RATED) is an established aerosol manufacturer with more than 30 years track record, primarily engaged in the development, manufacturing and distribution of aerosol spray paint (via OBM and OEM status). The group also trades industrial aerosols, solvents and thinners.

Standing testimony for their reliable track record (80% local and 20% exports), the group has successfully developed, manufactured and distributed more than 300 colors under its in-house brands namely Anchor, DPI and Kromoto. DPIH has also started selling disinfectant products due to the increasing awareness of maintaining good hygiene under the Covid-19 pandemic. At RM0.26, the group is trading at 16.6x trailing PE (33% below peers). Ex-cash, PE is only at 9.6x.

Technically, DPHI (EPF is 3rd largest shareholder with a 3.3% stake) is poised for a triangle breakout. A successful breakout above 0.27 will lift prices higher towards 0.29-0.32 territory. Supports are pegged at 0.22-0.24.Cut loss at 0.215.

Source: Hong Leong Investment Bank Research - 6 Nov 2020