The FBM KLCI extended its rebound, mainly buoyed by gains in banking heavyweights as investors shrugged off the negative tone across the regional markets and focused on the economic recovery following the reopening of travel borders. While foreign funds continue to support the local bourse, the overnight selldown on Wall Street may impact negatively in the technology sector. Investor may also monitor Malaysia’s inflation data which will be releasing later today.

Malaysia Smelting Corporation Bhd (MSC) history traces back to 1902 and is now ranked as one of the largest producer of tin metal and tin-based products in the world with total smelting capacity of 80,000 MT pa. Tin mining production is gradually on the uptrend, owing to better production efficiency, while new smelting plant at Pulau Indah is expected to anchor the smelting division’s growth. We initiate coverage on MSC with a HOLD call and fair value of RM5.36, based on 13.0x P/E pegged to its forward FY23f EPS of 41.2 sen.

Renewed buying interest in most of the index heavyweights led by the banking stocks pushed the FBM KLCI higher following the positive overnight performance on Wall Street. However, we believe selected rebound on our local front, specifically the technology stocks are likely to give back the recent gains on the back of the weaker Nasdaq performance. Nevertheless, traders could monitor few other catalysts like (i) reopening travel borders theme, (ii) elevated commodity prices and (iii) recovering construction activities for trading purposes.

Innoprise Plantations Bhd (INNO) is principally involved in cultivation of oil palm, processing of Fresh Fruits Bunches (FFB) to produce crude palm oil (CPO) and palm kernel (PK). INNO is currently undertaking the development on 22,763-ha of land across 6 estates of which approximately 12,500-ha are suitable for oil palm planting and 1 palm oil mill in Sabah.

The FBM KLCI marked a third session of decline amid mixed regional sentiment as traders took profit prior to the public holiday; financial stocks lagged within the broader market. However, we expect the bargain hunting activities to emerge on the local bourse amid declining Covid-19 confirmed cases, coupled with the rebound on Wall Street overnight. Meanwhile, the acceptance of the highway deal by GAMUDA may trigger some buying interest within the construction and building material segments.

We believe that Econpile will be able to leverage onto the acceleration of mega infrastructure projects towards 2H22. At the same time, property developers that held back their launches over the past 2 years may also turn slightly more aggressive over the foreseeable future. Already, we note that the property market demonstrated green shoots of recovery in 2021 after recording 300,497 (+1.5% YoY) property transactions worth RM144.87bn (+21.7% YoY).

RCE Capital Bhd (RCECAP) history traces back to 1953 and has evolved throughout the years and is now involve in the provision of financing services to members who are mainly government employees, payroll collections and financing services to small medium enterprises primarily involved in trading, construction and manufacturing.

The FBM KLCI ended the week on a negative note in a subdued market environment, in line with the regional downtrend move. While external risks remained in place, the border reopening should continue to bode well for the local economy especially the aviation and consumer sectors. Meanwhile, investors should monitor China’s key economic data which will be released today and Malaysia’s inflation rate later this week to gauge the BNM’s interest rate directions moving forward.