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technical focus
Technical Focus

Technical Focus – JAG

Total waste management (TWM) solutions provider, involves in recycling of electronic products and equipment that are near their useful life and are replaced by the rapid advances in technology. Expects higher average selling prices (ASP) of precious metals such as metal scrap, aluminum, copper and tin will continue to be driven by strong demand of commodities product globally, resulting in better margin. Diversification into renewable energy will provide earnings visibility over the long run. Technically, traders may anticipate for a breakout above RM0.37 to target the next resistance of RM0.40-0.425, with long term target at RM0.475.

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market pulse
Market Pulse

Escalating political uncertainties

The FBM KLCI edged lower amid uncertainties surrounding the recent political
developments, as well as the Covid-19 pandemic, contributing to the investors
staying sidelines. This would result in heightened volatility in the market and
traders should turn more cautious over the near term in selecting stocks to trade.
On a side note, China’s move to raise export tariffs on some steel materials, and
removed rebates on cold-rolled products may exert pressure on the commodities
prices as demand continues to rise over the past year.

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Stock Digest

Jaks Resources Bhd – 29Jul21

While there will be no financial impact on JAKS, we view the matter to be favorable to restore JAKS reputation amongst investors after being clouded by uncertainties over the past 2 years amid concern over potential impairments from the aforementioned matter. Moving forward, JAKS will continue to focus on current operations as well as business expansion plans, particularly in the power and renewable energy business segment.

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market pulse
Market Pulse

Still in consolidation

The FBM KLCI closed mildly positive following the late bargain hunting activities,
but gains were capped amid unrelenting Covid-19 cases as well as the recent
political developments. Despite daily Covid-19 infection continue to be on the rise
amid ramped up testing in Klang Valley, we expect the vaccination rate should
brush off negative sentiment and traders may look for recovery opportunities. Also,
both the Hang Seng Futures and overnight Wall Street could be due for a technical
rebound and may spillover towards stocks on the local front, especially on the tech
sector. Commodities wise, CPO price was down as demand were seen slowing
down from India and China, while the crude oil extended its gains.

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technical focus
Technical Focus

Technical Focus – MSM

Leading local sugar producer, commanding approximately 60.0% market share in the local sugar market after having produced 1.0m MT in 2020 that operates 2 sugar refineries with products consumed locally and shipped mainly to Asia countries.
Aims to increase utilisation factor in MSM Johor which is only hovering around 30.0% in 2020, while evaluating for potential disposal to streamline operations. Dry weather in Thailand is expected to prolong to 2022 and the drought that dimmed Brazil productions may support the elevated sugar prices. Technically, traders may anticipate for a potential flag-formation breakout above RM1.32 to target the next resistance of RM1.41-1.52, with long term target at RM1.72.

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market pulse
Market Pulse

Tepid recovery

Bucking the regional downtrend move, the FBM KLCI rebounded and posted
modest gains on the back of bargain hunting activities as well as expectation on
the economy reopening by October. Although investors will be shifting their focus
from daily Covid-19 infections to the positive vaccination rate locally, the local
sentiment may still remain cautious following the negative performances in China
and Hong Kong after Beijing announced additional measures for the technology,
education and real estate’s sectors. On a side note, foreign investors are net seller
for the third session.

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market pulse
Market Pulse

Mirroring regional weakness

Investors started off the week on a softer note as both the FBM KLCI and the
broader market slumped, in line with the negative performances in China and Hong
Kong shares amid concerns over tightening regulations on selected sectors.
However, we expect bargain hunting activities to emerge on the local bourse after
the selldown as market players might have priced in news from China or Hong
Kong. Meanwhile, investors should focus on vaccination rate instead of ongoing
high number of daily Covid-19 cases as government will be looking on reopening of
business activities going forward. Commodities wise, both the CPO and crude oil
prices extended their gains.

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macquarie structured warrants 20200914
Macquarie Warrants

Warrants over HSI, DNEX and JAKS in the spotlight

Last week, despite a shorter week in conjunction with the Hari Raya Haji holiday on Tuesday (20 July), overall warrants turnover surged 85.7% week-on-week (w-o-w) to RM243.5mil due to the increased turnover in warrants over indices (+91% w-o-w) and single stocks (+83% w-o-w).

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Stock Digest

BP Plastics Holding Bhd – 26Jul21

BP Plastics Holding Bhd (BPPLAS) is a specialty plastics packaging manufacturer backed by high customer retention rate, supplying high quality stretch film and customised PE film for various essential sectors. Capitalising on the growing demand for plastics packaging film, BPPLAS is in a position to undertake new capacities and technology by commissioning new machines, supported by its strong cash position. We initiate coverage on BPPLAS with a BUY call and fair value of RM2.43, based on 14.0 P/E pegged to its forward FY21f EPS of 17.3 sen.

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technical focus
Technical Focus

Technical Focus – SLVEST

One of the leading solar turnkey engineering, procurement, construction and commissioning (EPCC) service provider with established track record in Large Scale Solar PV, residential, commercial and industrial properties projects.
Unbilled orderbook of RM157.4m (as of 1QFY21) will provide earnings visibility over the next 12-18 months and is supported by 1.0GW of tenderbook from Malaysia, Philippines and Taiwan.
Leveraging on Malaysia government’s power generation plan to reach 40.0% in renewable energy capacity by 2035. Technically, price has experienced short-term a consolidation breakout above RM1.17, targeting the next resistance of RM1.26-1.33, with long term target at RM1.46.

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market pulse
Market Pulse

Still wobbly

The FBM KLCI finished the week on a negative note, in line with the mixed regional
performances due to resurgence of Covid-19 infections globally. While the local
bourse has been trading in upward bias consolidation mode last week, investors
may remain cautious with the five-day special Parliament sitting this week.
Nevertheless, we expect investors to shift their attention from the daily Covid-19
infection rates to the current ongoing vaccination rate, which is above the 400k
doses per day; this should provide some booster in stabilising the market
sentiment and focus on recovery theme stocks. Meanwhile, both the CPO and
Brent oil price surged last week.

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market pulse
Market Pulse

On better footing

The FBM KLCI is expected to build onto its previous session gains with the focus now shifting back towards the economic recovery progress. Still, we remain cautious as there were few domestic leads over the near-term outlook and this will further curtail any extended potential upsides. Nevertheless, the general market undertone is improving and this will allow the lower liners to develop decent recovery after a difficult two-month period that has seen many stocks veering into the oversold region.

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market pulse
Market Pulse

Sentiment still murky

The FBM KLCI extended its losses after a volatile session due to persistent selling
activities as Covid-19 infection rates stayed high amid the Delta variant. However,
we believe the high numbers in Covid-19 cases may shift investors’ focus on
healthcare sector, while broader market sentiment could stay tepid without any
fresh catalysts. Investors may watch Malaysia’s inflation rate which will be
released tomorrow. Commodities wise, oil price has staged a rebound in
expectation for a higher demand amid economic recovery.

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technical focus
Technical Focus

Technical Focus – TSH

Plantation operations span over 42,000-ha across Sabah and Indonesia, while 67.0%-owned subsidiary; Ekowood International Bhd has a production capacity up to 27.0m sqf of engineering hardwood flooring (EHF) per annum. Disposal of 2 oil palm estates and 1 palm oil mill in Sabah for RM248.0m to Kuala Lumpur Kepong Bhd (KLK) is expected to generate a divestment gain of RM104.0m which will unlock the land value as well as pare down borrowings. Following the rising CPO prices (above RM4,000/MT), we expect average selling prices to remain on a higher ground over the foreseeable future. Technically, price has experienced a consolidation breakout above RM1.02, targeting the next resistance of RM1.06-1.09, with long term target at RM1.15.

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market pulse
Market Pulse

Still sideways

The FBM KLCI retreated on Monday due to last minute profit taking activities prior
to the Hari Raya Haji public holiday, mirroring the weakness across the regional
markets. Nevertheless, buying interest emerged in selected recovery theme sectors
after the EMCO was lifted in Selangor and Kuala Lumpur. Despite the rebound on
Wall Street, we expect some initial selling activities on the local bourse before
recovering for the session, but upside is likely to be capped amid the high number
of daily Covid-19 cases, which may be a concern that could dampen the pace of
the economic recovery.

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Stock Digest

Kim Loong Resources Bhd – 19Jul21

Going forward, the acquisition of 2,722-ac of oil palm plantation land that may
generate up to additional 30,000MT of FFB per annum is expected to be completed
in 3Q21. While CPO prices has tapered from the recent peak, we expect the prices to remain
alleviated, hovering above RM3,000/MT amid the sustainable demand, particularly
from China and India.

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technical focus
Technical Focus

Technical Focus – DNEX

Engages in the provision of IT & eServices, oilfield services and subsea telco services with established presence in Malaysia, Thailand, Indonesia, Bangladesh and United Kingdom. Growth trajectory will be underpinned by the acquisition of 60.0% equity stake in SilTerra Malaysia Sdn Bhd with wafer fabrication utilisation rate expected to tower above 90.0%, supported by current backlog orders stretching to 2Q22. Recent completed acquisition of an additional 60.0% equity stake in Ping Petroleum Ltd (Ping) deem to be timely, riding onto the firmer crude oil prices. Technically, price has formed a flag-formation breakout above RM0.725, targeting the next resistances at RM0.81-0.855 with long term target at RM0.935.

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market pulse
Market Pulse

Holding well

The FBM KLCI registered modest gains for the week on the back of bargain hunting
activities after a recent downtrend move, but daily Covid-19 cases which remained
above the 10k mark continued to weigh on market sentiment. Nevertheless, the
new immunisation target set by the government to fully vaccinate 100 percent of
the adult population by October 2021 is expected to boost investors’ confidence
towards the path of economic recovery. On a side note, OPEC+ has agreed to
increase oil production beginning in August amid improving demand, which may
ease the pressure on the supplies as well as oil prices.

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macquarie structured warrants 20200914
Macquarie Warrants

Dagang NeXchange warrants in focus as underlying rises 10.3% for the week

Last week’s warrant trading activity rose a slight 1.2% to RM131.2mil, with warrants over shares making up 61.3% of total turnover. Index warrants took a step back this week, with warrants over the Hang Seng Index (HSI) contributing 36.0% of turnover, and the remaining largely taken up by warrants over the local benchmark FBM KLCI and the S&P 500® Index.

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Stock Digest

Kelington Group Bhd – 16Jul21

We foresee stronger billings from the Ultra-High Purity segment for projects in China and Singapore may provide cushion for any weakness in the local operations. Beside, the strong global semiconductor sales that rose 26.2% YoY to USD43.6bn in May 2021 suggest that the global demand remains relatively solid. Hence, we reckon that KGB is in prime position.

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market pulse
Market Pulse

Base building

The FBM KLCI marched higher amid mixed regional sentiment, underpinned by the
buying interest in glove stocks after successive days of record-high Covid-19 daily
cases in the country. The overall market sentiment was also lifted by the Fed’s
dovish comment as well as the improvement in China’s economic data.
Nevertheless, upside might be capped as investors are still waiting for more
economic sectors to reopen. Commodities wise, the CPO price has surged in
tandem with soybean futures, while the crude oil price extended its losses.

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market pulse
Market Pulse

Prolonged consolidation

The FBM KLCI trended lower on the back of the alarming rise in Covid-19 daily cases, overshadowing optimism on the improving vaccination rates in the country. We reckon the local bourse should continue to trade in consolidation mode until
Malaysia could transition into Phase 2 in the National Recovery Plan. Meanwhile, the market may watch a series of China’s economic data which will be released today. Commodities wise, the CPO price climbed above the RM4,000 level in line
with soybean futures, while the crude oil price staged a pullback.

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technical focus
Technical Focus

Technical Focus – FPGROUP

Engages in the design development, manufacture, marketing and sale of precision engineering parts with key business associates include multinational semiconductor companies such as Broadcom, Synergie – CAD, Bece Pte Ltd, U4Global Solutions and GFMI.
In the process of obtaining the International Automotive Task Force (IATF) 16949 certification, targeting in August 2021 to supply automotive parts.
Healthy balance sheet with net cash position of RM60.1m in 3QFY21, translating to net cash per share of RM0.11 (c.13.2% of share price). Technically, traders may anticipate for a breakout above RM0.865 for further recovery to take towards the next resistances at RM0.91-0.95 with long term target at RM1.04.

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market pulse
Market Pulse

In search for stability

The FBM KLCI rebounded from losses as the key index was buoyed by bargain
hunting activities, coupled with positive sentiment in the regional market following
upbeat China economic data. Nevertheless, we expect the buying interest may be
limited as the daily Covid-19 cases in the country increased to record high as more
Delta variant cases were detected. Meanwhile, International Energy Agency (IEA)
warned of a tighter oil market as OPEC+ is set to keep output levels unchanged
despite rising global demand underpinned by global economic growth amid rising
vaccination rates; the crude oil is hovering above USD75, while CPO traded closer
to RM4,000.

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market pulse
Market Pulse

Marred by political developments

Consumer, banking and glove stocks pulled the FBM KLCI down amid regional uptrend, reflecting negative sentiment in the market affected by political developments and potential downward revision of country’s economic growth projection. However, we still expect mild bargain hunting activities to emerge amid
the improvement in vaccination rate across the country. Commodities wise, oil price fell marginally (but still hovering above USD75) over concerns about global economic recovery on the back of spreading Covid-19 variants.

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technical focus
Technical Focus

Technical Focus – SCGM

Regarded as one of the largest thermoform F&B packaging manufacturers in Malaysia with extensive network distribution in Singapore, Australia, Vietnam, Brunei and New Zealand market.
Venture into production of face shields and face mask has bear fruit amid the rising demand, while sales for food & beverage (F&B) packaging will remain resilient due to society’s preference for take-away and ready-to-eat meals.
Margins are expected to be stable following the upward revision of average selling prices (ASP), coupled with the favourable product mix. Technically, traders may anticipate for a potential flag-formation breakout above RM2.45 to target the next resistances at RM2.65-2.80 with long term target at RM3.00.

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