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Stock Digest

SLP Resources Bhd – 25th Feb 21

Moving in FY21f, we believe that sales from the local market will continue to take charge (>50%), after raking 53.3% of total revenue in FY20 as oppose to only 39.0% recorded in FY19. For now, SLP will focus on ramping up the production of kitchen and garbage bag, targeting 25% of production output in FY21f (from less than 20% recorded in FY20).

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Stock Digest

Econpile Holdings Bhd – 25th Feb 21

As of 2QFY21, Econpile’s is equipped with an unbilled construction orderbook of approximately RM930.0m from 23 on-going projects. Moving forward, the group’s unbilled orderbook-to-cover ratio at 2.3x against FY20 revenue of RM403.0m will provide earnings visibility over the next three years.

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market pulse
Market Pulse

Rebound in sight

Selling pressure in the glove counters persisted, pushing the FBM KLCI into the negative territory in the afternoon trading session. Whilst the National Covid-19 Immunisation Programme kickoff did not boost the local bourse yesterday, we opine some bargain hunting activities to arise in lower liners after close to 1,000 counters closing in the red. Meanwhile, the Brent oil price continues to climb above USD67.

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market pulse
Market Pulse

Bargain hunting may take shape

In contrast with the regional gains, the FBM KLCI failed to sustain its intraday gains as the key index slipped into negative territory during the final trading hour. We expect the arrival of the second batch of Pfizer-BioNTech vaccine today and the vaccine distribution to different states will continue to attract buying interest in recovery-theme stocks moving forward. Meanwhile, crude oil price continued to remain firm above the USD65 level for the time being. Also, traders will focus on high earnings certainty sectors during this reporting season.

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Stock Digest

Leong Hup International Bhd – 24th Feb 21

Regionally, LHI plans to (i) strengthen their ready-to-eat (RTE) and ready-to-cook (RTC) products in Singapore market, (ii) improve production of aquatic feed in Vietnam operations and (iii) capitalise on the stability of poultry prices stemmed by the Indonesia’s government effort to enforce aggressive culling activities and improve feed volume to capture additional market share.

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technical focus
Technical Focus

Technical Focus – PPHB

Primarily focused on the production and sale of paper packaging products and is supported by seven manufacturing plants in Malaysia and two sales offices in Malaysia and Singapore. Offers JIT (Just–In-Time) services, Total Packaging Concepts, Designing & Supply Chain Management. Solid balance sheet with a net cash position of RM48.7m in FY20, translating to net cash per share of 25.8 sen (c.25.3% of share price). Technically, a breakout above RM1.03 may target the next resistances at RM1.08-1.17, with long term target at RM1.25.

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market pulse
Market Pulse

Corporate earnings in focus

Selling pressure in glove heavyweights triggered as Covid-19 could come to an end with the arrival of Covid-19 vaccine. Despite selling activities on Wall Street overnight, we believe there could be some fresh buying support given the IDSS and PDT short sale have been extended for another 6 months. We believe traders may lookout for bashed down stocks yesterday. Also, we observed that the Brent oil price has climbed strongly overnight above USD65.

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Stock Digest

Econpile Holdings Bhd – 22nd Feb 21

The latest win bumps Econpile’s outstanding orderbook of approximately RM950.0m, which translates to an orderbook-to-cover ratio of 2.4x against FY20 revenue of RM403.0m that provide earnings visibility over the next 2 years. Following the washout year in FY20, we believe that earnings recovery is largely on track with construction activities begun to normalise which was already demonstrated in 1QFY21.

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technical focus
Technical Focus

Technical Focus – KRONO

Engages in the provisions of business consulting for information technology software and data solution related businesses with key clientele include Jollibee Food Corporation, Toshiba Information Equipment (Philippines), Ocean Park (Hong Kong) and NCS Internal Video & Surveillance Smart City (Singapore). Leveraging on the tabling of MyDigital that aims to achieve 80% of end-to-end online government services integration by 2025 together with 80% usage of cloud storage across government agencies by 2022. Demand is expect to accelerate as businesses are migrating to online processes. Technically, price has formed a flag-formation breakout above RM0.86, targeting the resistances of RM0.925-1.00, with long term target at RM1.10.

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market pulse
Market Pulse

Arrival of Covid-19 vaccine

Bucking the regional trend, the FBM KLCI snapped three-day losing streak to close higher on bargain hunting. Sectors such as telecommunication and technology were headed higher following the launch of MyDigital initiative and the Malaysia Digital Economy Blueprint. Whereas the key index is subject to further consolidation, we believe the earlier-than-scheduled national vaccine rollout on coming Wednesday and the declining number of Covid-19 cases should lift the market sentiment and traders may focus on recovery theme again.

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macquarie structured warrants 20200914
Macquarie Warrants

HSI warrants take centre stage post CNY holidays

It was another buoyant week for the Hang Seng Index (HSI) futures as it extended its win streak to three weeks in a row with prices touching their highest in 32 months. With the market being closed on Monday in conjunction with the Lunar New Year holidays, trading in the HSI futures resumed Tuesday on a higher note as prices..

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market pulse
Market Pulse

Sentiment remain cautious

In line with most regional peers, the FBMKLCI skidded on profit taking activities for the third straight session and market sentiment may remain cautious ahead of the weekend. Despite ongoing profit taking, we opine the downside risk could be limited as some bargain hunting may start to take place ahead of the full blown reporting season next week. Meanwhile, the Brent crude oil price has loses its grip, pulling back from level above the USD65.

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market pulse
Market Pulse

Back below 1,600

Following the announcement of MCO extension in several states, the local bourse endured a rough ride as economic recovery progress took another backseat. The weakness was also largely in line with the negative performance across regional peers which we reckon that the pullback is deem to be healthy to allow the recent gains to be digested. While the market liquidity has yet to taper, we think the rotational play amongst the lower liners may prolong with the on-going batch of corporate earnings release largely in focus.

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market pulse
Market Pulse

Liquidity driven market

Profit taking activities emerged on the FBM KLCI, snapping the four-day positive streak. We believe sentiment should stay positive, despite the mixed trading tone on Wall Street and the MCO extension in several states as we think the ongoing rally in the crude oil price and the clearer timeline for the Covid-19 vaccination programme should be the focus for the economic to recover moving forward. As we are heading into the reporting season, companies with high earnings certainty could be under the limelight.

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technical focus
Technical Focus

Technical Focus – 17th Feb 21

Specialised in high rise residential, mixed and commercial developments with several notable contracts completed include Menara Hap Seng 3, KL Eco City Phase 1 & 2, One Central Park and Westside III. Outstanding orderbook of RM2.20bn, representing an orderbook-to-cover ratio of 6.8x against FY19 revenue of RM322.8m will sustain earnings growth at least for the next 3 years. Healthy balance sheet with a net cash position of RM65.6m in 3QFY20, translating to net cash per share of 10.1 sen (c.10.9% of share price). Technically, price has rebounded above the daily EMA20 level, suggesting further recovery to target the next resistances at RM0.965-1.08 with long term target at RM1.20.

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TradePlus ETF

Economic Recovery | What’s Trending (16th Feb 2021)

We started the year of the Ox with vigour as major indices in the US hit new highs, while equities in China outperformed its regional peers. Investors’ confidence grew on the back of slowing numbers from the pandemic, and optimism that the relationship between US and China would improve. Leaders of the 2 major economies have already met, with President Biden signalling a possible pause to the tech ban previously imposed by the Trump administration. In Malaysia, recovery names took the spotlight following the relaxation of MCO2.0, along with a positive outlook for global economic recovery. 3 of TradePlus ETFs hit record high NAV for the second week in a row.

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market pulse
Market Pulse

An Oxpicious start

The first trading day after the Lunar New Year break saw the FBM KLCI climbing with all sectors finished in the green, in line with its regional peers. Meanwhile, oil price rose to its highest since January 2020 on the back of the Middle East tensions. With Wall Street inching higher overnight, we opine trading interest on the local front will remain robust as vaccine rollout across more countries may drive the optimism for an economic recovery. Likewise, the lower liners may continue its uptrend in the near term.

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Stock Digest

Jaks Resources Bhd – 15th Feb 21

JAKS’s growth trajectory will be supported by the diversification into the long term recurring income from the power generation concession in Vietnam, whilst tapping into the Malaysia’s planned pipe replacement programme nationwide. Whilst the concession segment will generate earnings sustainability, the current outstanding orderbook able to provide earnings visibility for the next 12 months with core net profit expected return to the black at RM98.0m in FY21f. We assigned a P/E multiple of 9.0x to all but the concession segment that is valued on a discounted cash flow approach, arriving at a fair value of RM0.82.

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technical focus
Technical Focus

Technical Focus – 15th Feb 21

Regarded as one of the leading local ICT distributor with more than 6,600 resellers, comprising retailers, system integrators and corporate dealers nationwide. More than 40 renowned leading principals like Hewlett Packard, Asus, Lenovo, Apple, Dell, Microsoft, Cisco, Samsung, VMWare and IBM. Partnership formed with NetApp in mid-2020 and the existing gradual growth from enterprise systems business with notable clients such as Heitech Padu Bhd and Mesiniaga Bhd will anchor growth. Technically, price has formed a flag-formation breakout above RM2.47, targeting the next resistances at RM2.65-2.76 with long term target at RM3.00.

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market pulse
Market Pulse

Re-testing 1,600 again

Despite the sharper-than-expected economic contraction of -3.4% in 4Q20, the FBM KLCI inched up ahead of the Lunar New Year holiday as investors may have priced in the impact of the ongoing MCO. We expect the positive sentiment on Wall Street overnight may spillover to stocks on the local front as market players should refocus after the long break ahead of the full blown reporting season. Meanwhile, we noticed crude oil price has surged above USD62 firmly last week.

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market pulse
Market Pulse

Focus on 4Q20 GDP data

The FBM KLCI charged higher yesterday, mainly boosted by the gains in banking heavyweights as traders tagged along with the recovery theme. However, we believe the tone may turn slightly cautious ahead of the Bank Negara Malaysia’s (BNM) announcement on Malaysia’s economic performance for 4Q20. Also, market participants might reduce trading activities prior to the long weekend. Hence, the FBM KLCI may stay within a rangebound mode throughout the session.

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Stock Digest

Teo Seng Capital Bhd – 10th Feb 21

We reckon that chicken eggs prices will linger around RM0.30 per Grade C chicken egg as on increasing demand as more business activities are allowed following the reducing number in Covid-19 cases. Meanwhile, poultry players will continue their expansion plans once the MCO is lifted.

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technical focus
Technical Focus

Technical Focus – 10th Feb 21

Established relationship with past and existing clientele with repeating notable customers include Worldwide Holdings Bhd, UM Land Group and Tropicana Group. Bagged a total of 5 major construction contracts with combined value at RM646.6m since listing in July 2020, bumping unbilled orderbook to approximately RM950.0m to provide earnings visibility over next 2 years. Proposed 1-for-2 free warrants as part of the initiative to reward existing shareholders. Technically, price has formed a flag-formation breakout above RM0.545, targeting the next resistances at RM0.59-0.605 with long term target at RM0.65.

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market pulse
Market Pulse

Upward bias view on broader market

Despite mixed trading tone on Wall Street overnight, the FBM KLCI tracked its regional peers to close higher yesterday. We reckon the local bourse to remain upside bias view at the current juncture, lifted by buying interest in recovery-themed stocks and the energy sector – the latter could be focused on the back of firmer crude oil price. In view of the number of Covid-19 cases dropped below 3,000 level yesterday, market should position themselves into recovery themed stocks at least for this week.

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market pulse
Market Pulse

Bargain hunting may emerge

As the local bourse saw cautious trading sentiment ahead of the Lunar New Year celebration, investors may continue to reduce their exposure in the stock markets. Meanwhile, with the National Covid-19 Immunisation Plan came closer, and the daily cases stayed within the below the 4,000 mark for the fourth day running, investors may point towards recovery play moving forward. Also, Brent oil price has surged above the US$60 level, which may set a positive tone on the local front.

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Stock Digest

Mobilia Holdings Bhd – 8th Feb 21

Mobilia offers a wide range of home furniture and consistently launch new designs to suit the latest market trends and preferences. We are sanguine on Mobilia’s prospects due to the resilient demand from the adoption of work-from-home trend. We project earnings to recover by 48.1% to RM10.8m in FY21f, boosted from expansion of the new factory in March 2020 that is able to undertake additional orders, rising trend of work-from-home and steady global population growth. Mobilia is valued by pegging its FY21f core EPS of 2.7 sen to 10.0x PE (15% discount to peers average of 11.8x), leading to a FV of RM0.27.

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