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Health DG Brushing off MCO3.0 concerns

The selling on the FBM KLCI yesterday could have overdone as Health DG brushed off concerns over MCO3.0 and broader market could perform a relief rebound today. On the glove related stocks, we believe HARTA’s upbeat result could spillover to buying support on glove manufacturers and glove proxies today. However, investors could stay cautious ahead of the release of Malaysia's Producer Price Index tomorrow. As foreign funds turned into the selling mode, we expect the rebound might face with profit taking activities in the near term.
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market pulse

Bargain hunting may take shape

The FBM KLCI surrendered its gains amid hawkish comments from the Feds, alongside its regional peers. However, with the strong rebound overnight on Wall Street, coupled with the gradual subsiding in Covid-19 daily cases, bargain hunting may lift the sentiment on the local bourse. Also, we believe market participants should focus on recovery theme stocks given the vaccination rate is improving in Malaysia. Meanwhile, the oil price climbed near the USD75 on the back of weaker USD; while the CPO price continued its downtrend move.

Jaks Resources Bhd – 21st Jun 21

JAKS is primed for charting new heights, supported by the diversification into the long-term recurring income from the power generation concession in Vietnam, coupled with the on-going efforts to improve tenancy ratio under the property development segment. Whilst the concession segment will generate earnings sustainability, current construction orderbook of RM281.3m is able to provide earnings visibility till 2022. 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 RM0.72.

technical focus

Technical Focus – UCHITEC

Established track record, backed by key clienteles from the European countries industry top players such as Jura and Nestle (Switzerland), AEG, Krups, Bosch and Siemens (Germany). Expects mild impact from the imposition of Full Movement Control Order (FMCO) whereby only 60.0% capacity are allowed for operation and subsequently recovery is largely on the table, premised to the sustainable strong demand. Prospective dividend yields at 5.4% and 5.5% for FY21f and FY22f deemed to be relatively attractive. Technically, traders may anticipate for a breakout above RM3.22, targeting the next resistances at RM3.35-3.52 with long term target at RM3.60.

market pulse

Striding high, but volatility still a feature

The FBM KLCI snapped the three consecutive sessions of losses on the back of bargain hunting activities after recent selldown, bucking the downtrend in the regional markets. Investors may continue to stay defensive amid the ongoing battle of the Covid-19 health pandemic and the recent political developments, but the downside risks may be cushioned by the rising daily vaccination rate as the government target to achieve 80% herd immunity by the third quarter of this year. Meanwhile, the constituents changes following the semi-annual review of the FTSE Bursa Malaysia Index Series will be taking effect today.

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