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market pulse

Sustaining above 1,600

The FBM KLCI showed marginal gains after flirting between gains and losses yesterday. Given the foreign funds are still buying into our local equities, we expect the bullish momentum to sustain at least for the near term ahead of the tabling of Budget 2022 next week. Also, we still expect recovery theme stocks may remain in focus with the reopening of business activities in various segments following the ongoing vaccination programme. Meanwhile, both the CPO and crude oil prices extended their rally, with the former surging above RM5,000 and the latter trading above USD85 per barrel mark.
technical focus

Technical Focus – AJIYA

Engaged in the production of metal roll forming and production of high value-added safety glass products with established network of 18 factories or warehouses with offices throughout Malaysia and Thailand. Aims to strengthen the technical competencies and the urge to pursue innovation led to the genesis of Ajiya Green Integrated Building System (AGiBS) that is able to reduce construction completion timeline. Equipped with a healthy balance sheet with a net cash position of RM39.9m in 2QFY21, translating to net cash per share of 13.1 sen (c.22.2% of share price). Technically, traders may anticipate for a breakout above RM0.595 to target the next resistances at RM0.635-0.675 with long term target set at RM0.77.
market pulse

Re-capturing 1,600

The FBM KLCI jumped amid continued buying from foreign investors (MTD net inflow: RM1.46bn) amid steady recovery tone in the country coupled with elevated commodities market environment. Investors’ sentiment remained upbeat particularly in recovery theme stocks, while the transportation and logistics counters staged a pullback in tandem with the declining Baltic Dry Index that has fallen eight straight sessions. Also, investors or traders may position themselves ahead of the Budget 2022 end of this month. Meanwhile, the CPO and crude oil prices both climbed, with the latter hovering above the USD85 per barrel level.
macquarie structured warrants 20200914

MYEG call warrants posted moderate gains

The HSI October futures had a choppy start last week with a 1.8% gain on Monday followed by a 1.4% loss on Tuesday. However, the futures saw strong buying interest after the Hong Kong market resumed trading on Friday, finishing the week on a positive note at 25,318 points, up 2.0% w-o-w.
technical focus

Technical Focus – HEXTAR

Over 500 products exported to countries like Vietnam, Hong Kong, the Philippines, Cambodia and Singapore through established distributors, hypermarkets, supermarkets and dealer network. Acquisition of Chempro Group and Noble group comes with a collective profit guarantee of an aggregate of RM81.0m over 3 years, while impending acquisition of ENRA Kimia Sdn Bhd will strengthen bottomline. Entered into a consortium agreement with Arcadia Acres and Ihsan Equity for the application a digital banking licence. Technically, traders may anticipate for a potential flag-formation breakout above RM1.42 to target the next resistances at RM1.50-1.55 with long term target at RM1.65.
market pulse

Heading back onto 1,600

The FBM KLCI advanced on Friday in tandem with the regional peers following the positive cues from Wall Street lifted by optimism in the corporate earning seasons as well as the improved labour data. We expect buying momentum to persist on the local front following a streak of buying interest from foreign funds. Meanwhile, the relaxation in SOPs and the movement of Klang Valley, Melaka and five other states into the next phase of NRP would continue to drive the recovery theme stocks. Meanwhile, both the CPO and crude oil prices rose; the latter is trading above the USD85 per barrel mark at the time of writing.
market pulse

Still eyeing 1,600

The FBM KLCI took a breather following a seven-day winning streak, as the key index retreated from the 1,600 psychological level on the back of profit taking activities. However, tracking the strong gains from Wall Street overnight, we expect local equities to gain momentum and investors could focus on the upcoming Budget 2022 beneficiaries, which we anticipate some goodies to be revealed for construction, telecommunication, and solar sectors. Commodities wise, the CPO price declined after a surge in the previous session, while the crude oil price rebounded above the USD84 per barrel mark.
market pulse

Spurred by foreign buying

The FBM KLCI closed above the 1,600 psychological level amid persistent buying from foreign funds over the past week and sentiment remained positive on the back of the discussion of international borders reopening going forward. The recovery theme sectors such as construction, building material and financial services sectors saw substantial gains and may remain under the limelight in the near term ahead of Budget 2022. Meanwhile, the plantation counters are gaining traction amid a jump in CPO price; the CPO price has rebounded and surged by 3.4% to close above the RM5,000 level.
technical focus

Technical Focus – KERJAYA

One of Malaysia’s leading construction players with strong historical track record of completion of notable projects such as St. Mary Residences, The Shore Mixed Commercial Development, EcoSky Condominum and Vista Residences. Solid unbilled orderbook of RM3.40bn that represents an orderbook-to-cover-ratio of 4.2x against FY20 revenue of RM811.0m will provide earnings visibility for next 3 years. Equipped with a healthy balance sheet with a net cash position of RM195.0m in 2QFY21, translating to net cash per share of 15.7 sen (c.12.3% of share price). Technically, traders may anticipate for a breakout above RM1.29 to target the next resistances at RM1.38-1.41 with long term target at RM1.53.
market pulse

Still on the ascend

Bucking the regional markets, the FBM KLCI extended its winning streak for the sixth session, buoyed by persistent buying interest in index-linked banking and telecommunication heavyweights on the back of positive sentiment in tandem with the rising foreign buying interest. Despite the overnight negative performance on Wall Street, we believe the local bourse may remain bullish over the near term and move closer to the 1,600 psychological level, supported by the reopening of economic activities as vaccination rate of adult population has achieved above 90%. Meanwhile, commodities wise, both the CPO and crude oil prices saw a pullback as inflation concerns picked up.
market pulse

Stretching higher

The FBM KLCI climbed for another session, with banking stocks leading the way higher as investors’ sentiment turned more positive following the government’s announcement on interstate border reopening over the weekend. Despite the selling pressure on Wall Street, we expect the foreign funds that has continuously buying into the local equities, coupled with the firmer commodity prices in crude oil and crude palm oil will provide a healthy sentiment to the local exchange over the near term. As Malaysia is ready to enter the endemic phase, prospects of the economic recovery should persist and positive momentum could continue at least for the near term. The crude oil price was traded above USD83 per barrel mark, while the CPO price is consolidating around the all-time-high region.
macquarie structured warrants 20200914

HSI warrants most active as futures rally

The HSI futures had a sluggish start to the week, down 2.2% to trade slightly below the 24,000 level at 23,974 as the Hong Kong market reopened on Monday (4 October) after being shut on Friday (1 October) in conjunction with the National Day
technical focus

Technical Focus – OPTIMAX

One of the leading eye specialist providers in Malaysia that is supported by 15 eye surgeons and 3 locum doctors and a team of optometrists. Remained on course towards its organic expansion through hiring additional surgeons and setting up more satellite clinics to improve geographical reach within the country. Further relaxation of standard operating procedures (SOP) under the National Recovery Plan bodes well as it would eventually increase traffic patient footfalls. Technically, traders may anticipate for breakout above RM1.34, targeting the next resistances at RM1.47-1.57 with long term target at RM1.66.
market pulse

Sustained buying momentum

The FBM KLCI continued to build on positive sentiment and elevated commodities prices on Friday, taking cue from buoyant regional markets. We expect the buying momentum on the local bourse to continue, backed by brighter economic prospects as the country will resume the interstate and overseas travel from today onwards after adults’ vaccination hitting 90%. Also, with the interstate travel may reboot the tourism and transportation companies specifically for the tourism segment. Meanwhile, the CPO price rallied, trading above RM4,950 level while the crude oil price stood above USD82 per barrel mark.
technical focus

Technical Focus – ABLEGLOB

Total production capacity of 280,000MT for dairy and 48,000MT for tin with products exported to more than 40 countries worldwide. Mexico foray has begun commercial operations in July 2021 for both the condensed and evaporated milk, while the proposed development of an industrial park known as Able Bizpark at Carey Island will provide a new avenue of income stream. Mexico venture will bode will to improve the geographical presence in the South America and also able to mitigate the impact of rising freight charges. Technically, traders may anticipate for a potential flag-formation breakout above RM1.77, targeting the next resistances at RM1.84-1.93 with long term target at RM2.05.
market pulse

Holding up well

The FBM KLCI rose for the third consecutive session as the key index raced higher into the closing bell, in tandem with regional peers that tracked the overnight Wall Street rally. The key index may continue to track the positive sentiment in Wall Street given the fading US debt ceiling worries, coupled with the interstate border reopening talks as well as the firmer crude oil price, which has rebounded and is trading above the USD81 per barrel level. Meanwhile, the CPO price saw a mild pullback. Besides, we believe traders may lookout for sector that may benefit under the Budget 2022, which will be tabled at the end of this month.
market pulse

Turning the tide

The FBM KLCI jumped and closed at intraday high for the second session, lifted by the firm buying momentum in plantation stocks amid the surge in CPO price to above RM4,800. The market sentiment may remain positive-bias with both the Johor and Pahang states moving into the next phase of NRP starting from 8th of October, while vaccination rate for adult population stood at 88.4%. Commodities wise, the CPO price rallied amid tighter supply, while the copper and aluminium prices fell on demand fears. Over to the Brent crude oil, it retraced from the USD83 but still trading above the USD80 per barrel mark for now.

Kelington Group Bhd – 6Oct21

Following The New Win, KGB’s Year-To-Date Orderbook Replenishment Stood At Approximately RM841.0m. This Bumps KGB’s Outstanding Orderbook To Approximately RM979.0m, Which Represents An Orderbook-To-Cover Ratio Of 2.5x Against FY20 Revenue Of RM394.6m That Will Provide Strong Earnings Visibility Over The Next 2 Years.
technical focus

Technical Focus – WASEONG

An international oil & gas and industrial services specialist with established footprints in more than 14 countries worldwide. Outstanding orderbook of RM1.40bn, representing orderbook-to-cover ratio of 1.0x against FY20 revenue of RM1.41bn will provide earnings visibility over the next year and is actively tendering for jobs amounting to RM4.00bn globally, particularly in Africa and Australia. Rising crude oil prices with Brent oil prices which now surpassed USD 80/bbl bodes well for WASEONG to leverage on the rising exploration and production activities. Technically, traders may anticipate for a breakout above RM0.715, targeting the next resistances at RM0.77-0.82 with long term target at RM0.885.
market pulse

Rebound from support

The FBM KLCI snapped three-session losing streak to close in the positive territory, underpinned by bargain hunting activities in selected heavyweights. Tracking the rebound on Wall Street, the key index may continue to trade higher over the near term. Also, the reopening of economic activities should support the market sentiment and the recovery narrative at least for now. Commodities wise, the crude oil price stood above USD82 per barrel mark, while the crude palm oil price advanced, closing above RM4,700. Meanwhile, the Baltic Exchange Dry Index saw gains for the third straight session, rising to above 5,400.
market pulse

Hovering near support

The FBM KLCI ended marginally lower, as foreign funds inflow declined for the session amid mixed regional market performances on the back of concerns over US debt ceiling crisis as well as China Evergrande’s issues. However, trading interest was noticed in recovery theme sector as recovery in sight with the adult vaccination rate hitting 88.0%, and the number of Covid-19 daily confirmed cases trending lower. Meanwhile, the crude oil price settled above USD81 per barrel mark as OPEC+ stick to its schedule of gradual monthly output increases. The CPO price stood firmer above the RM4,500 mark.

Econpile Holdings Bhd – 4Oct21

Once again, we-reiterated that Econpile's outstanding orderbook of approximately RM830.0m as of FY21, which translates to an orderbook-to-cover ratio of 2.0x against FY21 revenue of RM420.4m will provide earnings visibility over the next 2 years. Going forward, the progress of current projects is on course for gradual improvement. Meanwhile, there were also signs of revival in the property market with several soft launches taking place.

Suria Capital Holdings Bhd – 4Oct21

With the port operations remain as the bread and butter of the group’s overall business, Suria will focus on the joint-venture project with SBC Corporation Bhd for the development of Jesselton Quay that sits on 16.3-ac land at Kota Kinabalu, Sabah. The physical works of the first phase of the project have commenced in December 2016 and is slated to be completed in 4Q21. Meanwhile, we note that the termination of JVA also present Suria to tap into other business opportunities on top of the 6.3-ac land over the foreseeable future.
technical focus

Technical Focus – SUNWAY

One of the largest conglomerates in Malaysia that employs more than 16,000 workers and has established geographical presence in more than 50 countries. 1HFY21 property sales of RM1.64bn already make up to 74.5% of the group’s internal target of RM2.20bn for FY21f. Property unbilled sales of approximately RM3.60bn and outstanding construction orderbook of approximately RM4.80bn in 1HFY21 will provide earnings visibility over the next couple of years. Technically, traders may anticipate for a breakout above the RM1.73 level to target further upside towards the next resistances at RM1.79-1.82 with long term target at RM1.90.
market pulse

Sentiment turned murky

The FBM KLCI ended the week in the negative territory, mirroring the overnight losses in Wall Street on the back of inflation fears as well as the regional weaknesses. Entering the final quarter of 2021, investors may expect for further economic recovery as the government eyes international border reopening in December, as well as interstate travelling resume once 90% adults have been fully vaccinated (currently stood at 87.6%). Commodities wise, the crude oil price advanced while the CPO price retreated.
macquarie structured warrants 20200914

Put warrants as a potential hedge for market uncertainty

The HSI October futures were less volatile last week, range trading between 23,910 and 24,666. Despite the slow start, the benchmark Hong Kong futures finished 1.5% higher week-on-week (w-o-w) to 24,524 last Thursday. Investors were actively trading both the HSI calls and puts throughout the week where HSI-HG8 emerged as the most popular warrant with RM59.9mil traded. Put warrants generally move in the opposite direction to the underlying
market pulse

Sideways prolonged

On the final day of 3rd quarter, the FBM KLCI ended lower after hovering mostly in the negative territory as broad-based sentiment remained cautious amid mixed regional performances as well as concerns from the US. Given the weak sentiment from the Wall Street, we expect the consolidation phase to persist for the near term. Commodity wise, we noticed the CPO price traded above RM4,500 per tonne mark on the back of supply concerns as production normally peaks in Sept-Oct and decent prospects of rising demand under the recovery environment. Meanwhile, the Baltic Exchange Dry Index continued to hover above the 5,000 mark.

Econpile Holdings Bhd – 30Sep21

We foresee the piling and foundation for building projects to dominate over the near term. After chalking RM24.4m in revenue for 4QFY21, the Cambodia project is expected to see acceleration in FY22f. We note that local activities have seen improvements since mid-August with the group aiming to operate at full capacity once their workforce hits 100% vaccination rate, tentatively by end of this month.
market pulse

Sustained buying support

The FBM KLCI finished in the positive territory on the back of final hour buying despite cautious sentiment after World Bank revising downwards on Malaysia’s 2021 economic growth projection. Meanwhile, transportation and logistics players were under the limelight amid surging strong result posted by HARBOUR and Baltic Exchange Dry Index. Note that the index climbed near 5,000 amid ongoing shipping constraints and rising global demand. Meanwhile, the energy sector staged a pullback in tandem with declined crude oil price, but CPO rebounded and may retest the RM4,500.

Kim Loong Resources Bhd – 29Sep21

Going forward, the acquisition of 2,722-ac of oil palm plantation land may generate up to additional 30,000MT of FFB per annum for FY22f. Meanwhile, we note that the palm oil milling and plantation operations of the are operating as usual, demonstrating strong improvement from the prior quarter.
technical focus

Technical Focus – PADINI

Operates more than 100 retail stores, covering 1.5m sqf of gross floor area under several household brands such as Vincci, Vincci+, Vincci Accessories, Tizio, Padini Authentics, PDI, Padini, Seed, Miki and P&Co. Improvement in retail malls footfall and adoption of digital marketing channels is expected to support earnings recovery. Equipped with a healthy balance sheet with a net cash position of RM130.2m, translating to net cash per share of RM0.20 (c.6.5% of share price). Technically, traders may anticipate for a potential flag-formation breakout above the RM3.06 level to target further upside towards the next resistances at RM3.15-3.23 with long term target at RM3.37.
market pulse

Outlook still choppy

The FBM KLCI finished higher on the back of positive sentiment as investors digested the positive economic outlook in the 12th Malaysia Plan as well as powered by a rally in the energy sector after the crude oil price climbed above USD80 per barrel mark on the intraday due to improved demand amid reopening of economic activities. However, investors may remain cautious while waiting for the economic activities to return to normalcy, considering the significant pullback on Wall Street overnight. Meanwhile, the CPO price advanced near the RM4450 level.

Protasco Bhd – 28Sep21

On a brighter note, the maintenance segment is expected to support the weakness across other segments, back by the long-term concession agreement that will ensure recurring stream of income till 2029. We remain upbeat on Protasco’s prospects in the concession segment to tap into allocation for the construction and upgrading of rural roads under the upcoming Budget 2022.
market pulse

Finding stability

The FBM KLCI rebounded from the earlier session and edged higher as investors picked up shares in midday after digesting the 12th Malaysia Plan (12MP) that highlighted economy may improve to around 4.5-5.5% and a development expenditure allocation of around RM400.0bn for 2021-2025. Several highlights under the 12MP include nationwide 5G roll-out, infrastructure project resumptions, and a greater focus on renewable energy. On a side note, the crude oil price advanced to close above the USD79 per barrel level.

4Q21 Outlook & Strategy – Recovery begins with an ENDemic

We believe Covid-19 may turn endemic as more than 80% of the adult population has been vaccinated. That may provide potential economic recovery going forward and we are anticipating some goodies for the construction, tourism, and consumer sectors in the upcoming Budget 2022 to boost the economy.
technical focus

Technical Focus – SUPERLN

Engages in the manufacturing of thermal insulation material and operates at combined annual installed capacity of 11,000 tonnes with products exported to more than 70 countries worldwide. It is considering expanding its Vietnam operations of which the plant is already operating at 75-80% of total annual installed capacity of 1,500 tonnes, whilst enjoying tax incentives. Demand to remain stable, owing to the rising adoption of work-from-home that was brought about by the Covid-19 pandemic. Technically, traders may monitor for a recovery above the RM0.90 level, targeting the next resistances at RM0.935-0.98 with long term target at RM1.05.
market pulse

Tabling of 12th Malaysia Plan

The FBM KLCI finished the volatile week in the negative territory, mirroring the weakness across China and Hong Kong stock markets amid investors’ fret over Evergrande debt concerns; the key index was mainly dragged by TENAGA and selected banking heavyweights. The local bourse may remain sideways with investors eyeing on the 12th Malaysia Plan (12MP) which will be tabled today; we noticed construction and property sectors have some trading activities prior to this event. Commodities wise, the crude oil price rose above the USD78 level, while the CPO price declined. Baltic Exchange Dry Index still hovered at its 12 years high despite a retreat on Friday.
macquarie structured warrants 20200914

HSI warrants in the limelight as index plunged

With the HSI’s turbulence and high volatility last week, the HSI warrants were once again in the spotlight. HSI call warrant, HSI-CIG was the most active in terms of volume traded as investors traded more than 142.6mil units and net bought more than 17mil units, while put warrant HSI-HG8 had the highest turnover with RM57.2mil traded.
market pulse

Stability ensured

We think that there will be more immediate upsides for Malaysian equities towards the end of the week, on the back of the extended bargain hunting activities with the key index now finding stability at current levels. With further clarity on US fiscal policy direction and the calmer Chinese markets, this would help to provide some measure of stability after enduring a volatile spell over the past couple of weeks. Elsewhere, the broader market will be largely supported by rotational play with traders capitalising on the improvement in trading activities alongside with the positive market undertone.
market pulse

Recovery in store

The FBM KLCI ended the day mildly negative as investors mulled the possible imposition of capital tax rate and one-off higher tax rate with windfall profits. On the broader market, shares linked to telecommunications network infrastructure soared on the JENDELA tender news, which was said to be issued within 4 weeks. We opine that the overnight gains on Wall Street, news on cross state travel to be allowed when the adult population vaccination rate reaches 90.0% coupled with government’s decision to move three more state to the next phase of NRP could lift investors’ sentiment.
technical focus

Technical Focus – GCB

Ranked as the fourth largest cocoa grinder in the world with total cocoa processing capacity of 257,000MT p.a. New cocoa processing plant in Cote D’Ivoire coming on stream tentatively in 2Q22 brings additional grinding capacity of 60,000MT p.a. and will improve operational efficiency by mitigating the impact from rising freight costs. Demand is expected to be resilient, premised to the recovery in economic activities with higher vaccination rates across the globe. Technically, price has formed a bullish engulfing candle to breakout above the RM2.98 level, targeting the next resistances at RM3.09-3.18 with long term target at RM3.39.
market pulse

Recovery still premature

The FBM KLCI bucked the overnight weakness on Wall Street, staging a rebound after seven straight declining sessions as investors indulged in bargain hunting activities, especially in the technology sector. Mild extension of the rebound might take place in selected sectors as government proposed three more destinations to be opened via domestic tourism bubble on the back of reducing active Covid-19 cases. Meanwhile, both CPO and crude oil prices increased, while the Baltic Exchange Dry Index continued to charge higher to 4,410 after reaching its all-time high since November 2009.
market pulse

Mirroring regional weakness

Tracking the performance in the regional markets, the FBM KLCI registered its 7th straight session of decline as investors’ sentiment remained sour; foreign funds turned net seller for the second session (net selling of RM120.8m). Given the negative Wall Street overnight, we believe market may perform a knee jerk selling at the opening bell and bargain hunting activities may emerge once the selling pressure is overdone. In the meantime, government’s discussion on possibility of allowing interstate tourism which may be seen as a mode for gradual economic recovery might be one of the few catalysts to cushion the downside risk for the near term. Meanwhile, both the CPO and crude oil prices extended their retreat.
technical focus

Technical Focus – VS

One of the leading integrated Electronics Manufacturing Services (EMS) providers in the region, supported by multinational customers from Europe, Japan and US. Newly built 413,682-sqf production plant at i-Park Senai Airport City will cater for several new product models. Compelling prospects, riding onto the increasing adoption of emerging technologies in the Industrial Internet of Things (IIoT) and enhanced communication posed by 5G. Technically, price has experienced a short-term breakout above RM1.47, targeting the next resistances at RM1.55-1.60 with long term target at RM1.75.
market pulse

Dour trend still on horizon

The FBM KLCI finished the week lower last Friday, as foreign funds turned into net seller; the net selling stood at RM72.6m, snapping the 4 days of inflow by the foreign funds. However, the local bourse may see bargain hunting activities emerging on the back of declining daily Covid-19 confirmed cases, while waiting for Malaysia’s inflation rate that will be released this Friday. Meanwhile, both the CPO and crude oil price declined, while Baltic Exchange Dry Index rose to 4,275, its record high since 2009.
macquarie structured warrants 20200914

HSI warrants take on centre stage last week

The warrants market witnessed an overall lower trading activity last week partly due to the shorter trading week as Bursa Malaysia was shut on Thursday in conjunction with the Malaysia Day holiday. The total warrants turnover for the week came in at RM237.8mil versus RM268.9mil in the previous week
technical focus

Technical Focus – HARBOUR

An integrated logistics services provider, shipping and engages in construction works, heavy lifting and haulage as well as property development with established footprint extends across the Intra-Asia region. Capitalising on the increasing charter and freight rates that was stemmed by the global supply chain disruption following the shortage of vessels, coupled with the improving trade activities. Current price at RM1.01 is trading at a discount to its book value per share of RM1.12 which was recorded in 3QFY21. Technically, traders may anticipate for a short-term breakout above RM1.01, to target next resistances at RM1.06-1.13 with long term target set at RM1.20.
market pulse

Cautious undertone prevails

The FBM KLCI drifted lower earlier Wednesday but rebounded to close flat on lastminute buying amid cautious market sentiment. Nevertheless, we believe bargain hunting activities should emerge with the return of foreign participation in our local stock markets on the back of our reopening of economic activities following several relaxations of SOPs under our National Recovery Plan; month-to-date foreigners have registered an inflow of RM904.6m. Commodities wise, the crude oil price hovered above USD75 per barrel, CPO price surged, while the gold price retreated.
technical focus

Technical Focus – MMSV

Involved in the design and manufacture of LED and semiconductor industrial automation systems and machinery as well as software development. Tapping onto the recovery in smartphone sales that fell sharply in 2020 as demand will be driven by the evolution into 5G mobile devices, while sales towards the automotive sector will pick up from the low base effect last year. Riding onto the surge in global demand for semiconductor test equipment across other sectors such as automotive, industrial automation and general lighting. Technically, traders may anticipate for a breakout above RM1.10, to target next resistances at RM1.16-1.26 with long term target set at RM1.43.

Kelington Group Bhd – 15Sep21

We gather that this would be KGB’s single largest project win to-date. The move subsequently boosted KGB orderbook replenishment year-to-date to another record high at approximately RM764.0m (inclusive of smaller scale projects). This also exceeded our orderbook replenishment target of RM450.0m for FY21f. We expect the momentum to continue with another RM50-100m worth of projects coming into the picture for KGB to wrap up the record year, premised to the strong global semiconductor sales.
market pulse

Still downbeat

The FBM KLCI sank for a fourth consecutive session as the key index accelerated to the downside throughout the session, mainly dragged down by PMETAL and most banking heavyweights. Concerns over the possible interest rate exemption for loan moratorium repayments, coupled with the possibility of imposing windfall tax spooked the market. However, we believe market may be turning oversold soon and likely to expect bargain hunting activities to emerge. Meanwhile, both the CPO and crude oil prices extended gains, while the Baltic Dry Index (BDI) continued its uptrend movement.

Jaks Resources Bhd – 14Sep21

Moving forward, T&T Group on track to commission 800.0-MW of solar PV and onshore win projects by end-2021. We gather that T&T Group is has recently launch a strategic collaboration with Ørsted, the largest energy company in Denmark for the development of offshore wind in Vietnam. This strategic partnership is expected to generate an estimated total installed capacity of nearly 10.0-GW and total investment value of about USD30.0bn (to be phased in investment over 20 years).
market pulse

Sentiment turns jittery

Tracking the overall negative regional performances, the FBM KLCI dipped for a third straight session amid sour market sentiment on heavy selling in selected heavyweights led by TOPGLOV. However, tracking the positive rebound on Wall Street, coupled with the stability in the political landscape following the MoU inked between the federal coalition and Pakatan Harapan yesterday, we believe the recent bashed down in broader market may to be cushioned out by potential bargain hunting activities at least for this week. Commodities wise, both the CPO and crude oil prices advanced, while aluminium prices continue to charge higher.
technical focus

Technical Focus – MSC

Involved in the upstream and downstream sector of the tin industry through tin mining and custom tin smelting and was ranked as the third world largest supplier of tin metal supplier in 2020, having produced 22,325 tonnes of tin metal. In the midst of relocating and fully commissioning its new smelting plant in Pulau Indah, Selangor, which will improve production capacity by 50% to 60,000 tonnes per year. Prevailing low inventories and tightness in the global tin supply chain arising from shipping constraints may continue to sustain tin prices at record high levels. Technically, price has formed a flag-formation breakout above RM2.33, targeting the resistances at RM2.49-2.65 with long term target set at RM2.86.

SLP Resources Bhd – 13Sep21

We gather that current average selling prices remains favourable for SLP owing to the rise in resin prices. Traditionally, plastic packaging players adopt a cost-pass-through mechanism, though there will be approximately 3 months of time lag. At the same time, the weakening ringgit against the greenback also bodes well for SLP which derived RM39.5m or 45.1% of revenue from overseas in 6MFY21.
market pulse

Finding a footing

The FBM KLCI extended its decline with marginal losses on Friday, after erasing most of the earlier gains and the sentiment remained mixed. Nevertheless, the local bourse continued to see buying support from foreign and retail investors on the back of brighter economic recovery prospects driven by positive developments in NRP and vaccination rate. Meanwhile, aluminium price remained elevated, surging above USD2,900 level as market digested the predictions from the Harbor Aluminum Summit attendees that supply shortage is unlikely to be alleviated in the short term. Crude oil price reversed and closed above USD72 per barrel level, while CPO dropped below RM4300.
macquarie structured warrants 20200914

Volatility in Hong Kong market continues

With structured warrants over a wide range of local and foreign underlyings available on Bursa, investors may gain leveraged exposure to the broader local or foreign market with warrants over the indices, while warrants over stocks allow investors to gain leveraged exposure to specific listed companies.
market pulse

Volatility returns

Overall, the FBM KLCI and broader market declined with the returned of selling pressure from foreign funds; it turned net sellers with a net outflow of RM63.0m, snapping 12 sessions of net buying streak. Glove counters extended their retreat amid the on-going vaccination progress. Going forward, we expect recovery theme to stay focus in the anticipation of the reopening of more economic activities, where most stocks might be oversold after being bashed down yesterday. Commodities wise, both CPO and crude oil prices dipped, while the aluminium price continued trending higher.
market pulse

Bank Negara OPR in focus

The FBM KLCI was up firmly in the positive territory following a volatile session, as last-minute buying in selected heavyweights led by PMETAL (+17.0 sen) and MISC (+30.0 sen) lifted the key index. Economic recovery seems to be on track with Kuala Lumpur, and Putrajaya transitioning to Phase 2 of the NRP from Friday, and active cases dropping for the eighth consecutive day; investors might turn more optimistic going forward. Nevertheless, investors may mildly cautious ahead of the OPR decision by Bank Negara today, where BNM statement may provide clues to the current economic situation and future recovery outlook for Malaysia. Commodities wise, both CPO and crude oil prices advanced.

Jaks Resources Bhd – 8Sep21

On a brighter note, we reckon that the coal fired thermal power plant will continue to anchor the bottom line in 2H21. Although Vietnam has entered into an extended lockdown since July 2021, we reckon that utilisation rate to remain afloat (above 70% level), supported by sustainable demand. Going forward, we see JAKS leaning towards expansion of renewable energy sector, both local and internationally.

Kelington Group Bhd – 8Sep21

Kelington Group Bhd’s (KGB) wholly owned subsidiary, Kelington Engineering Pte Ltd has secured a contract valued at RM49.0m from an un-disclosed global leader in engineering and project management of high-technology facilities to undertake the bulk gas system distribution works for a global leading semiconductor manufacturer’s new fab in Singapore. The contract spans from September 2021 and is expected to be completed by May 2023.
technical focus

Technical Focus – TCS

Principally involved in the construction of building and civil works with notable clients such as Sime Darby Property Bhd, Mah Sing Group Bhd, IJM Corporation Bhd, SP Setia Bhd, Tropicana Corporation Bhd and Worldwide Holdings Bhd. Outstanding orderbook of RM1.57bn, representing an orderbook-to-cover ratio of 6.5x against FY20 revenue of RM242.6m to provide earnings visibility at least for the next 3 years. Recovery in the cards on works resumption in the construction sector that was largely affected by works disruption from MCO 3.0 and FMCO. Technically, price has formed a short-term consolidation breakout above RM0.46, targeting the next resistances at RM0.495-0.515 with long term target set at RM0.56.
market pulse

Turning sideways

After fluctuating between modest gains and losses for most of the day, the FBM KLCI (+0.1%) inched up as gains in PMETAL outweighed losses in selected banking and plantation heavyweights, powered by a surge in aluminium price. However, tracking the weaker performance on Wall Street overnight, the local bourse may turn sideways amid profit taking activities on the broader market. Nevertheless, we expect the support from the recent net foreign buying amid the recovery hopes following more sectors to be allowed to operate in Klang Valley in the anticipation of moving into Phase 2 of NRP should be able to cushion the downside risk in the market. Meanwhile, CPO price climbed while the crude oil price saw a pullback.
market pulse

Quick profit taking

Bucking regional uptrend move, the FBM KLCI dipped into the negative territory in mid-morning as selected plantation, banking and Petronas-linked stocks went through some profit-taking activities. We believe the ongoing discussion on SOP relaxation in preparation for the Covid-19 endemic phase, coupled with the declining Covid-19 daily infections may continue to drive the recovery theme play across the board. Commodities wise, CPO price climbed, while aluminium price also increased on the back of concerns over raw material supply amid a coup in Guinea, the major supplier of bauxite.
technical focus

Technical Focus – FREIGHT

An integrated international logistics provider, offering complete multimodal international freight services covering sea, rail and air freight. Impending acquisition of two parcels of land at Klang measuring 9.3-ac to be developed as an integrated logistics hub will expand the warehousing and distribution services that is currently operating at 90-95% capacity. Trade activities to remain robust and to see further improvement following relaxation of restrictions and reopening of business activities since mid-July 2021 in Malaysia. Technically, price has formed a short-term triangle formation breakout above RM0.795, targeting the resistances at RM0.86-0.935 with long term target set at RM1.04.
market pulse

Eking out last-minute gains

The FBM KLCI finished on a positive note after a volatile session with selected banking, plantation and shipping counters taking the lead, despite mixed performances in the regional markets. Investors may look ahead to Malaysia’s unemployment rate and the Bank Negara’s decision on interest rate which will be released on Thursday. Meanwhile, the CPO price extended its gain to close above RM4,300, the gold price rose, while the crude oil price retreated. Still, we expect the recovery tone for the economic activities to pick up once with the decent vaccination rate at this juncture.
macquarie structured warrants 20200914

Put warrant HSI-HG1 the most active warrant last week

The HSI futures clocked in its second weekly gain last week, ending at 25,845 (+1.9%) with four green days out of 5. Despite a choppy start to the week which saw prices swinging between gains and losses on Monday and Tuesday, the index still managed to regain its footing to close higher over the first four days of the trading week, only to lose some momentum on Friday
technical focus

Technical Focus – QES

Involves in the distribution and manufacturing of automated test equipment (ATE) with offices in Malaysia, Singapore, Thailand, Indonesia, Philippines and Vietnam. Manufacturing segment growth will be driven by new manufacturing facility in January 2021 that boosts capacity from 60 machines to 120 machines per annum. Future prospects supported by robust demand from the semiconductor industry with the rising adoption of Internet of Things (IoT), 5G and smart manufacturing. Technically, price has formed a hammer candle, signalling potential rebound towards the resistances at RM0.785-0.835 with long term target set at RM0.945.
market pulse

Drifting slightly lower

The FBM KLCI witnessed another session of pullback despite buying from local retail and foreign investors, as the index constituents succumbed to further profit taking activities after rebounding in mid-morning. With the average infection rate (R-naught) dipping below 1.0 (based on 1st Sept data), while Melaka and Negeri Sembilan being moved to Phase 2 and 3 of NRP from 4th September 2021, we believe optimism remains in the recovery theme on the local bourse. Meanwhile, the crude oil price rebounded and stood above USD72 per barrel, while CPO price rose above RM4,200 level.
market pulse

Profit taking looms

The FBM KLCI retreated yesterday, snapping a seven-day winning streak and backing away from the 1,600 psychological level as profit taking activities kicked in. However, we believe the local stocks to continue to eke out gains after taking a breather as investors’ confidence could be boosted by the pre-budget statement issued by the Finance Ministry which is believed to spur economic recovery. Meanwhile, OPEC+ is expected to stick to the existing gradual output hike despite revising up the 2022 demand outlook, which may boost the oil price in the long run.
technical focus

Technical Focus – GESHEN

Equipped with 4 factories in Malaysia and Vietnam and 1 sales office in Singapore, comprising 203 injection moulding machines and 78 metal fabrication machines in 2Q21. Relatively large-scale expansion of additional 100,000 clean room and control rooms at Johor and Penang has boosted the manufacturing capacity in Johor and Penang by approximately 20.0% and 10.0% respectively. Sales growth to be underpin by sustainable demand, coupled with the upliftment of 60% workforce restrictions recently. Technically, price has formed a short-term resistance breakout above RM1.67, targeting the next resistances at RM1.77-1.85 with long term target set at RM2.00.
market pulse

FBM KLCI above 1,600

The FBM KLCI jumped to close above the key 1,600 level amid persistent buying interest from foreign funds into heavyweights, in response to the positive cues from regional markets and Wall Street overnight as well as the decent progress heading towards of achieving 80% vaccination rate in Malaysia. However, with the key index notching 7th-straight winning sessions, upside may be capped as the market may digest the recent gains before more sectors showing significant recovery considering the recent overbought signals. Nevertheless, we believe resumption of business activities should bode well for the economy as more states are moving into Phase 3-4 of the NRP going forward. Commodities wise, both CPO and crude oil prices retreated.
technical focus

Technical Focus – HIBISCS

Malaysia’s first public listed independent oil and gas exploration and production firm, focusing on the development and production of oilfield assets in United Kingdom, Malaysia and Australia. Proposed acquisition of Repsol Exploración SA assets which commands approximately 2.0% of global net crude oil output for USD212.5m cash will double HIBISCS daily production to 18,500 bdp. Riding on recovery in crude oil prices, owing to improved demand, supply disruptions and escalating geopolitical tension in the Middle East. Technically, price has formed a flag-formation breakout above RM0.655 level, targeting the next resistances at RM0.68-0.705 with long term target set at RM0.73.
macquarie structured warrants 20200914

MYEG-C2B and CTOS-CE up by 26.9% and 33.3%

On the local front, we saw huge demand for call warrants over MY E.G. Services (MYEG) and CTOS Digital (CTOS) as both underlyings recorded their best performance in August last week. MYEG’s share price rallied 10.8% to finish at RM1.92 while CTOS close 9.8% higher

OCK Group Bhd – 30Aug21

As of 2QFY21, OCK operates 17 solar farms with a combined capacity of 11.3MW in West Malaysia. In bid to reduce the reliance on TNS segment that contributed 90.6% of total revenue in FY20, OCK remains committed in acquisitions of solar farms with decent feed-in tariff rates in Malaysia, participate in large scale tenders and proposed joint ventures with state governments over the foreseeable future.
market pulse

1,600 within reach

The FBM KLCI maintained its winning streak throughout the week, spurred by strong buying interest from foreign funds (positive inflow streak: 5 days, cumulative net buying: RM964.3m) amid easing political risk and reopening of business activities. We believe the positive sentiment will continue to be supported by the Prime Minister’s target to achieve a vaccination rate of over 50.0% for adult population in another 6 states by the end of September, while considering moving Klang Valley into Phase 2 of NRP. Nevertheless, trading may slow down ahead of the National Day public holiday. Meanwhile, the crude oil prices closed above USD72 per barrel and gold prices shot up above USD1800 level.

AME Elite Consortium Bhd – 27Aug21

Moving forward, AME is equipped with an unbilled construction orderbook of approximately RM148.4m, representing orderbook-to-cover ratio at 0.8x against FY21 construction revenue of RM184.7m that will provide earnings visibility over the next 12 months. Given the relatively quiet period for the construction segment due to the Covid-19 pandemic, we have revised a lower orderbook replenishment rate of RM200.0m (from RM300.0m) for the construction segment in FY22f.
market pulse

Turning toppish

The FBM KLCI continued its winning run yesterday as the key index outperformed most of its regional peers following the return of foreign funds which saw a net buying value of RM310.8m. Also, investors will be waiting for the Cabinet line-up that will be releasing today and it is likely to boost investors’ confidence further. On the global front, investors are taking a breath while waiting for the outcome of the Jackson Hole symposium which may provide signals on the US Fed’s monetary policy. Meanwhile, the rising geopolitical tension surrounding the developments in Afghanistan could be concerning the markets at this point of time. Commodities wise, Brent oil retreated while the CPO price increased.

Optimax Holdings Bhd – 26Aug21

Outlook wise, we anticipate an improvement on both top and bottom line for Optimax underpinned by the gradual recovery in number of patients and surgeries conducted following the increasing vaccination rates in Malaysia. Besides, we look forward to seeing growth derived from higher contribution from Seremban ACC, additional 2-3 ACC expansion and more satellite clinics.
market pulse

Another solid performance

The FBM KLCI posted another day of gains, supported by foreign buying which saw highest daily net buying of RM236.5m since mid-June amid a calmer political environment. While the key index continues to building on its rebound momentum, note that potential profit taking activities may emerge following recent strong surge. Internationally, investors are waiting for the outcome of the US Fed annual Economic Policy Symposium to gauge the monetary policy outlook which will affect the market sentiment. Commodities wise, both the CPO and crude oil prices climbed significantly overnight.
technical focus

Technical Focus – DPIH

Market leader with over 25.0% of the local spray paint market in Malaysia which supplies more than 300 colours to over 700 of distributors, including own brand name such as DPI, Anchor and Kromoto as well as OEM products. Expansion of new plant targeting for completion in November 2021 will bump total installed capacity to 20.0m aerosol cans (from current 9.7m aerosol cans). Overall market demand for aerosol spray paint has been improving, owing to the stay-at-home measures as DIY activities gained traction. Technically, Price has experienced a consolidation breakout above RM0.42 level, targeting the next resistances at RM0.455-0.475 with long term target set at RM0.50.

Suria Capital Holdings Bhd – 25Aug21

Moving forward, we reckon cargo activities may stay firm, taking cue from the reopening of economic activities, which is on track towards our projected total tonnage to register 25.0m tonnes in FY21f. Meanwhile, the construction of a new jetty at Sapangar Bay Oil Terminal (SBOT) is progressing well and is slated for completion in March 2022. The move will boost the capacity to undertaking additional port activities as current utilisation rate is averaging at 80.0-90.0%.

Leong Hup International Bhd – 25Aug21

Moving forward, we expect the raw material cost inflation will be gradually priced into ASP, thereby contributing to a relatively stable margin, considering LHI’s stockpiling practice on raw material. LHI remained committed to its downstream expansion plan (The Bakers Cottage) despite the disruptions caused by the implementation of movement restriction measures due to Covid-19 outbreak in Malaysia. To date, LHI is running 139 active outlets in Malaysia, targeting 160 outlets by end of FY21.

Kelington Group Bhd – 25Aug21

We gather that the current orderbook replenishment of RM264.0m accounts to 58.9% of our orderbook replenishment target of RM450.0m for FY21f. Moving forward, KGB’s outstanding order book to RM402.0m (71.9% from UHP segment) which represents an orderbook-to-cover ratio of 1.0x against FY20 revenue of RM394.6m will provide earnings visibility over the next 18 months.
market pulse

Towering higher

Tracking the gains on regional bourses, the FBM KLCI surged mainly spurred by buying interest in plantation and banking heavyweights. While the market may anticipate some potential pullback on profit taking activities, we believe overall sentiment on the local bourse should continue to be supported by broad-based recovery tune amid the rising commodities prices following the smooth vaccination progress as well as investors appears to be optimistic with the ongoing reporting season. Meanwhile, the Baltic Dry Index was above 4,200 point on Tuesday, marking its highest point since mid-2010 and the Brent oil price rebounded to close above the USD71 level.
market pulse

Holding up

The FBM KLCI extended gains for a second session on the back of buying interest in recovery-theme stocks as well as optimism over political stability following the appointment of Malaysia’s new Prime Minister. Also, with the declining trend in Covid-19 daily cases, it may trigger more focus in the recovery theme sectors from market participants. Meanwhile, the local sentiment is supported by optimism amid the earnings season. Commodities wise, both the CPO and crude oil prices rebounded, with the Brent oil closing above the USD68 per barrel level.

BP Plastics Holding Bhd – 23Aug21

Outlook wise, we remained bullish on BPPLAS earnings growth underpinned by its proven product mix strategies, as well as the upcoming capacity expansion with the commissioning of 9th cast line machine by end of FY21. Meanwhile, the improving demand for plastics packaging films following the gradual reopening of economic activities bodes well for BPPLAS’ topline.
technical focus

Technical Focus – ATAIMS

Regarded as one of the top 30 Electronics Manufacturing Service (EMS) provider in the world with products shipped to over 80 countries. Expansion of approximately 378,000 sqf. Pasir Gudang facility is expected to be fully utilised in 2H21 as demand remains relatively robust. EMS players will continue to thrive under the prevailing situation, riding on the semiconductor upcycle with global semiconductor sales that rose 29.2% YoY to US$44.5bn in June 2021. Technically, traders may anticipate for a breakout above RM2.79 to target the next resistances at RM2.91-3.05 with long term target set at RM3.48.
market pulse

SOPs relaxation brings cheer

The FBM KLCI found itself on firmer footing above the 1,500 level over past week and finished the week with modest gains, driven by investors’ optimism over further relaxed SOPs in Phase 1 states. Also, we believe the stability on the political scene following the appointment of the new Prime Minister may give rise to positive sentiment, but risks remain with the elevated Covid-19 cases in Malaysia. Meanwhile, investors are eyeing Malaysia’s inflation rate which will be released on Wednesday. Commodities wise, CPO is trading below the all-time-high zone, while Brent crude oil is trading below USD66 zone.
macquarie structured warrants 20200914

HSI warrants in the spotlight amid tumultuous week

On the local front, warrants over Dagang NeXchange (DNEX) such as DNEX-CG and DNEX-CF continued to be actively traded by investors, recording a total trading volume of 49.9mil units and 29.2mil units, respectively. It’s mother share, DNEX extended its weekly losses, losing another 6.4% w-o-w.

Econpile Holdings Bhd – 20Aug21

The aforementioned contract marks the first major construction contract secured by Econpile for FY22f. Current orderbook replenishment makes up to 4.5% of our expectations of RM500.0m for the year. We believe that further opportunities are in the cards, particularly from end-2021 which is in line with the revival of construction industry as majority of the population is expected to be vaccinated and construction work orders may operate at wider scale.
market pulse

Rebound short-lived

The FBM KLCI snapped two-session winning streak and closed lower in tandem with regional peers, as investors booked profit amid a fragile sentiment following US Fed’s bond-buying taper talks. However, we believe the factors such as a clearer picture on the political front, further relaxed SOPs in NRP Phase 1 states as well as corporate earnings season by this month could contribute to the trading interest within the local bourse. Nevertheless, the downside risks include the high Covid-19 daily infections as well as the declining crude oil price. Also, the CPO price has been retreating below the RM4,500 level.

Kelington Group Bhd – 19Aug21

Following the latest win, we reckon that jobs flow may continue to garner pace in subsequent quarters that will be uplifted by gradual recovery of business activities, coupled with the strong demand in the semiconductor sector. The move will also be supported by the approximately RM1.50bn worth of tenderbook. We re-iterate our stance on KGB as one of the key beneficiaries to leverage on the semiconductor equipment players expansion plans in addressing the global chips shortage.
market pulse

Awaiting more clarity in the political scene

Final hour bargain hunting activities sent the FBM KLCI to close higher for the second session, as the key index booked marginal gains while investors awaiting for more clarity on the political front. Despite the overnight negative Wall Street performance, we believe investors will be monitoring on the news flow regarding the new PM to be appointed and government to be formed to decide their investment exposure. Besides, traders might be brushing off the political developments and focusing on recovery theme sectors in view of the further easing of business SOP in NRP Phase 2 states. Commodities wise, both CPO and crude oil prices declined.

Teo Seng Capital Bhd – 18Aug21

The results came in below expectations and it missed our full year consensus of RM25.5m. Key deviations were mainly due to (i) lower contribution from the poultry segment arising from lower ASP of chicken eggs and (ii) higher-than-expected feed production cost. Outlook wise, the gradual resume of various economic sectors is expected to stimulate egg consumption and improve the averaged egg price in 2H21, in line with the group’s expansion plan. The whole industry is expected to normalise when the commodity prices of maize and soybean normalise gradually towards FY22.
technical focus

Technical Focus – SUCCESS

Engaged in the manufacturing and marketing of electrical apparatus, industrial lighting and metal products focusing on metal casing and stamping parts with products exported to over 40 countries. Demand for light-emitting diode (LED) street lighting, especially from government-related projects will continue to anchor domestic growth. Solid balance sheet with net cash position of RM116.6m in 3QFY21, translating to net cash per share of 46.4 sen (c.52.7% of share price). Technically, price has experienced a trendline breakout above RM0.865, targeting the next resistances at RM0.94-0.99 with long term target at RM1.05.
market pulse

Rising against the tide

The FBM KLCI saw a steep rise as market sentiment was positive brushing off the political uncertainty and buying interest was driven by gradual reopening of more economic activities and steady rise in vaccination rates in Malaysia. Note that foreign fund has been a net buyer for three consecutive sessions. However, we believe the sentiment could remain cautious while waiting for a new Prime Minister being appointed after the king urging the party leaders to unite in addressing the current Covid-19 and economic woes. Commodities wise, the CPO price fell on concerns over production uncertainty in the coming weeks, while Brent oil declined.
market pulse

Some stability ensued

The FBM KLCI edged lower despite bargain hunting activities in the latter of the trading session, as upside has been capped by concerns over lingering political uncertainty after Prime Minister’s resignation. While investors’ sentiment is expected to remain jittery given ongoing battle with Covid-19 pandemic, focus will be on the upcoming corporate earnings season with robust results. Commodities wise, the CPO continued to hover around the all-time high region, while the crude oil price fell below the USD70 level.
macquarie structured warrants 20200914

Call and put warrants for bullish or bearish views

As the FBM KLCI continues to languish around the 1,500-level, investors shifted their focus to the broader markets, with index warrants taking up 56.6% of last week’s turnover versus 52.5% in the previous week
technical focus

Technical Focus – JHM

One of the key players in the Electronics Manufacturing Services (EMS) space in Malaysia for the manufacturing and assembly of surface mount technology and PCBA assembly for LED lighting modules. Aims to strengthen its foothold in the automotive segment through the assembly of battery packs for electric vehicles (EVs). Plans to undertake merger & acquisition activities (M&A) and is eyeing onto 1-2 profitable companies to further grow its industrial business. Technically, price has formed a hammer candle along the daily EMA60 level, suggesting for a recovery towards the next resistances at RM2.28-RM2.45 with long term target at RM2.64.
market pulse

Staying afloat

The FBM KLCI eked out marginal gains after recovering in the final trading hour, underpinned by the gains in plantation stocks. Despite the 2Q21 GDP grew by 16% YoY, BNM has revised the full-year GDP growth forecast lower to between 3-4% (as compared to previous forecast of 6-7.5%) and investors should have digested the downward revision of the numbers. While the non-essential activities in manufacturing, construction, mining and quarrying sectors are allowed to resume operation starting from today may lift investors’ sentiment, the fluid political developments may limit the upside potential in the stock market over the near term.
technical focus

Technical Focus – TASCO

Engaged as a one-stop total logistics solutions provider, equipped with 24 logistics centres and 2,200 employees in Malaysia in FY20. Implementation of full lockdown (FMCO) due to the escalation of Covid-19 positive cases to boost the domestic business segment remain resilient, particularly the contract logistics and cold supply chain business segments. Partnership with GDEX Bhd (GDEX) enable TASCO to leverage GDEX’s last-mile logistics capabilities, while GDEX can tap into TASCO’s international logistics network as well as its local cold supply chain infrastructure and convenience retail logistics network. Technically, traders may anticipate for a breakout above RM1.18 to target the next resistances at RM1.24-1.30 with long term target set at RM1.45.
market pulse

All eyes on 2Q21 GDP

The FBM KLCI retreated on the back of rising Covid-19 cases and investors continue to the recent political developments. Meanwhile, investors are eyeing on the 2Q2021 GDP data which will be released today. Commodities wise, both the CPO and crude oil prices saw a decline, while the metal commodities rose amid booming demand on the global front, coupled with the fresh logistics disruptions in China due to the partial shutdown of the world’s third-busiest container port due to Covid-19 infection.
market pulse

Back above 1,500

The FBM KLCI notched gains for a second consecutive session amid buying interest following the announcement of the relaxation of SOPs for fully vaccinated citizens. While the recovery-theme stocks continued to garner investors’ interest, the market sentiment may still be affected by the ongoing Covid-19 cases and political developments in Malaysia. Meanwhile, the Malaysian Rubber Council’s (MRC) projected a double-digit growth in 2021 on rubber gloves demand in volume. Commodities wise, the CPO price jumped above RM4500 after end-July palm oil stocks slumped due to delayed harvesting amid labour shortages. On a side note, foreign investors have turned into net buyers after 12 session of net selling.
technical focus

Technical Focus – TRIMODE

An integrated logistics service provider, equipped with an established and extensive sea and air freight network with agents located in 53 countries across the globe. New headquarters, warehouse and haulage operation yard on Pulau Indah that commenced operations end-March 2021 improves operational efficiency through the centralised operation and additional source of income from new warehouse. Demand for warehousing activities and as well transportation services will remain robust, premised to the rising adoption of e-commerce activities. Technically, the flag-formation breakout above RM0.66 may lift price higher towards the next resistances at RM0.70-0.77, with long term target at RM0.835.
market pulse

Downward bias consolidation prolongs

The FBM KLCI and broader market turned higher on Monday mainly boosted by gains in consumer-related and transportation & logistics sectors after the announcement on SOP relaxation for fully vaccinated individuals, as well as better than expected Malaysia’s Industrial Production Index (IPI) which rose 1.4% YoY in June. Despite an upward trending mode on Wall Street, the current Covid-19 and political developments in Malaysia may continue to supress buying interest on the local bourse. Meanwhile, CPO price eased as investors stayed on sidelines while awaiting for the August export data from the MPOB today, while the crude oil price climbed to close above the USD70 per barrel.

SLP Resources Bhd – 9Aug21

Moving forward, we believe that sales from the local and Japanese market will continue to anchor the overall sales. SLP will focus on ramping up the production of kitchen and garbage bag to meet the pent-up demand as the work-from-home measures are still imposed. Also, SLP aims to undertake new products, namely medical pouches, tacky mats and door handle refills, riding on the rising healthcare awareness.
macquarie structured warrants 20200914

HSI warrants dominate warrant activity last week

Trading activity in the warrants space was rather subdued in the first week of August compared to its previous week with the overall warrants turnover clocking in at RM192mil, down by 22.3% week-on-week (w-o-w). Despite the steep selloff in the previous week, the local benchmark FBM KLCI showed no signs of rebound
technical focus

Technical Focus – PRESTAR

Engaged in the steel-processing and steel-products manufacturing activities as well as distribution of steel related products. Completion of private placement to fund the CAPEX (purchase and installation of solar photovoltaic (PV) system, new racking production line and automation of the pipe packing line and auto slit coils transfer system) will subsequently improve production efficiency. Three bonus shares for five existing shares that will take place on 11th August 2021 will be a sweetener deal for investors and will enhance trading liquidity. Technically, the resistance breakout above RM1.11 may lift price higher towards the next resistances at RM1.20-1.27, with long term target at RM1.46.
market pulse

Volatility unabated

In line with the regional downtrend, the FBM KLCI finished the volatile week in a sour note amid selling in selected heavyweights on the key index. Tracking the recovery in the US and the announcement from the Prime Minister over the weekend on SOP relaxations for fully vaccinated citizens will be positive for the market, especially on the recovery theme sectors. Meanwhile, Malaysia’s 2Q21 GDP growth rate which will be released on the coming Friday may draw attention.
market pulse

Heading towards 1,500 again

Despite regional peers ending mixed, the FBM KLCI rebounded and booked modest gains on the back of bargain hunting activities. We believe the market sentiment should be recovering further with the Finance Minister stating that the hospitalisation rate will be used as a metric to ease curbs for states once they enter the second phase of the national recovery plan, instead of daily confirmed cases; that may boost a little on the recovery theme, in the near term. Commodities wise, the crude oil rebounded and hovers above UD70, while the CPO price retreated after a two-day rebound.
market pulse

Sentiment still dour

The FBM KLCI reversed previous session’s gains to close in the negative territory as investors recoiled following the record high Covid-19 daily confirmed cases and the ongoing political noises in the country. The local bourse witnessed outflow of foreign funds for nine continuous trading sessions on the back of the overall negative market stance. Nevertheless, the Prime Minister’s announcement on the resumption of Parliament sitting next month as well as the increasing vaccination rate could reduce the uncertainties in the market.

Hartalega Holdings Bhd – 4Aug21

Moving forward, remaining 2 surgical lines under Plant 7 will commission progressively in subsequent quarters which will increase annual installed capacity to 44.0bn pieces by end-2021. Beyond that, Plant 8 which is under NGC 1.5 expected to commence operations by end-2021 and upon progressive completion, it will boost annual production capacity to by additional 19.0bn pieces to 63.0bn pieces. We project the demand to remain resilient amid the rising healthcare awareness, grow at approximately 10.0%-15.0% p.a.
technical focus

Technical Focus – TGUAN

Regarded as one of the largest stretch film manufacturers in Malaysia that is supported by 17 factories with more than 2,000 employees and products are exported to 70 countries worldwide. Upcoming three new factories will house additional facilities for stretch film, blown film and messenger bag production will boost production capacity to 175,000 tonnes vs. 150,000 tonnes in 2020. Operates in a healthy balance sheet with net cash position of RM126.1m in 1QFY21, translating to net cash per share of RM0.33 (c.13.0% of share price). Technically, the trendline breakout above RM2.52 may lift price higher towards the next resistances at RM2.67-2.79, with long term target at RM3.00.
market pulse

Re-capturing 1,500

The FBM KLCI snapped a three-day losing streak to close in the positive territory, bucking the regional downtrend. However, sentiment may remain cautious amid heightened uncertainties surrounding the recent political developments. Meanwhile, the move of three more states into Phase Three of the National Recovery Plan starting from today, coupled with the earning season may lift market sentiment. Commodities wise, crude oil price declined amid the spread of the delta virus variant which may pose a risk to oil demand.
macquarie structured warrants 20200914

HSI calls popular amid Hong Kong market selldown

Bullish investors were accumulating HSI call warrants last Monday and Tuesday as the HSI futures plunged more than 2,200 points on the first 2 trading days of the week to finish at 24,972 on Tuesday, the lowest level since 5 November 2020
market pulse

Cautiousness prevails

Bucking the regional uptrend, the FBM KLCI marked the third consecutive session of declines as investors again pulled back from the market amid continuing Covid- 19 woes and recent political developments. Investors are likely to be more cautious in selecting stocks given the heightened political uncertainties, but there might be some buying interest in companies with bright outlook amid the upcoming corporate earnings season. Commodities wise, both the CPO and crude oil prices declined.
technical focus

Technical Focus – LEONFB

Engages in trading and processing of steel products, specialising in rolled long and flat products and has embarked on the construction of a three-phase manufacturing plant on a 16.0-ac. at Port Klang. 2 additional production lines will be added in 2H21 under the Phase 1 of the expansion plan, while Phase 2 of the facilities is currently at development stages and is expected to be fully commissioned in 2H23. Rising steel prices will remain supported by the improving demand outlook amid the boost in infrastructure spending in China and US. Technically, traders may anticipate for a breakout above RM0.97 resistance level to target the next resistance of RM1.05-1.10, with long term target at RM1.21.
market pulse

Below 1,500

The FBM KLCI tumbled on Friday as investors grew wary of the pace of the economic following the spike in the daily Covid-19 confirmed cases as well as recent political developments. Market sentiment dimmed, leading to the selling from foreign funds over the past five trading days. We expect the weakness to continue for this week without any fresh catalyst. Meanwhile, the CPO price dropped despite concerns over lowering output, while the crude oil price stood above the USD76 per barrel level.
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.
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.

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.
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.
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.
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.
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.
macquarie structured warrants 20200914

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).

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.
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.
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.
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.
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.
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.
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.

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.
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.
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.
macquarie structured warrants 20200914

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.

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.
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.
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.
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.
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.
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.
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.
market pulse

Bargain hunting taking charge

The FBM KLCI finished the week on a positive note as the key index rebounded from the previous five consecutive losses on the back of bargain hunting activities. However, investors are likely to remain cautious due to dearth of fresh leads and the concerns over the ongoing political developments as well as the high Covid-19 infection rates which may overshadow the improvements on vaccination rates. Meanwhile, market may watch the Malaysia’s industrial production and retails sales data which will be released today. Commodities wise, both the CPO and oil prices have seen a surge.
macquarie structured warrants 20200914

Index warrants take the spotlight amid market volatility

Among the actively traded index warrants last week were the Hang Seng Index (HSI) warrants following the intense volatility which saw the underlying HSI July futures plunging by up to 4.6% from Monday through Friday to its lowest level in more than 6 months before gaining ground to end the week at 27,247 (-3.2% w-o-w) with 4 red days out of 5

Jaks Resources Bhd – 9th Jul 21

Jaks Resources Bhd’s (JAKS) wholly-owned subsidiary Jaks Solar Power Sdn Bhd (JSPSB) has entered into a memorandum of understanding (MoU) with Qhazanah Sabah Sdn Bhd (QSSB) to establish a formal collaboration and cooperation related to the preparation, development and implementation of solar power and hydro power plants in the state of Sabah.
market pulse

On uneven grounds

The FBM KLCI pulled back for the fifth session as investors’ sentiment stayed cautious on the back of high number of daily confirmed Covid-19 cases which climbed above the 8,000 mark, coupled with recent political development. We expect the current trading tone to persist as market is lack of fresh positive catalysts. However, we believe bargain hunting activities may emerge in the near term due to the significant selldown and oversold tone across the board. Commodity wise, the oil price has seen a rebound following an improved inventory draw.
market pulse

Bank Negara OPR in focus

The FBM KLCI sank for another session despite final hour bargain hunting activities as investors mulled the high number of Covid-19 confirmed cases while awaiting Bank Negara’s interest rate decision today. Meanwhile, there are several developments in the political scene, which may contribute to volatility in the markets. Also, we expect the ongoing lockdown in several localities, coupled with the Covid-19 status in Malaysia will continue to weigh on the local bourse. Commodities wise, both the CPO and oil prices extended their pullback
technical focus

Technical Focus – SDS

Engages in manufacturing and distributing bakery products that are marketed under the trademarked brands of “Top Baker” and “Daily’s”. While retail expansion in the Central region has hit a snag due to the implementation of MCO 2.0 and 3.0 year-to-date, SDS is actively broadening its existing distribution network. PEMULIH aid package to cushion weakness in domestic consumption and demand expected to be sustainable as bakery, particularly sandwich loafs are deemed to be affordable essential food for the mass. Technically, the short-term channel formation breakout above RM0.37 may lift share price higher to target the next resistances at RM0.41-0.435 with long term target at RM0.485.
market pulse

Marking time

The FBM KLCI posted a mild decline as investors remained cautious while awaiting for the release of minutes from the US Fed Reserve June’s meeting for more clarity on the monetary policy. With the Covid-19 cases spiking above 7,000 mark per day despite the improvement in vaccination rate, the local bourse is likely to stay wary, while monitoring Malaysia’s Bank Negara interest rate decision tomorrow. Meanwhile, oil prices dropped after talks between OPEC and the rally was unable to sustain following failure to agree on production policy.
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Relying on tips to trade? Learn to Trade instead

Think of it as learning a new skill in life, which in our modern world, can almost be reasoned as a survival skill (think inflation, the ever-rising cost of living, joblessness, pandemic etc.). Gone are the days where one can just run the rat race, climb their way up the corporate ladder

AME Elite Consortium Bhd – 6th Jul 21

Although the additional tax assessment from IRB may impact on the cash flow and war chest of AME’s balance sheet, we are neutral for the time being. Assuming the aforementioned scenario comes into picture, the impact will be negligible given that it will only reduce less than 1.0% of our annual earnings forecast from to the lower interest income as a result of the potential reduction of cash and bank balances. Also, we are assured that AME will have adequate cash flow to maintain on-going operations, supported by a solid cash and bank balances of RM271.4m in FY21.
market pulse

Base Building

The FBM KLCI started the week with mild losses as market sentiment remained tepid on the back of high number of Covid-19 infections despite improvement in vaccination rates. Nevertheless, the local bourse may see bargain hunting activities emerging especially in most of the oversold counters. Meanwhile, millions of Covid-19 vaccine doses are expected to arrive in Malaysia in July, which could see another breakthrough in vaccination rate. Commodities wise, both the CPO and oil prices extended their uptrend move.
macquarie structured warrants 20200914

HSI warrants and DNEX-CA among most active last week

Among the top active for the week were the HSI warrants, namely the July expiry call warrant HSI-CFQ and put warrant HSI-HGR with a total traded volume of 74.9mil and 51.7mil units respectively, despite the market holiday in Hong Kong on Thursday in conjunction with the HKSAR Establishment Day.
technical focus

Technical Focus – WONG

Engaged in the manufacturing for high precision components and diversified into construction and property development in 2017. Will be undertaking the proposed development of 30 units of 3-storey industrial factories and warehouses in Sepang, Selangor, while aiming to capture additional market share in the healthcare sector for the manufacturing segment. Surge in demand by customers from the electrical & electronics sector to boost manufacturing segment. Technically, the rebound above EMA20 level may lift price higher to target the next resistances at RM1.24-1.34 with long term target at RM1.50.
market pulse

Still subdue

The FBM KLCI edged lower in a volatile week following the implementation of EMCO over in parts of Selangor and Kuala Lumpur. Having said that, market sentiment may improve as five states in the country are moving into Phase-2 of the National Recovery Plan (NRP). Nevertheless, upside could be capped on the FBM KLCI as investors could stay cautious as Covid-19 daily cases remained above 6,000. Meanwhile, investors may monitor BNM’s interest rate decision this week to position themselves in the stock markets. Commodities wise, the CPO price rose for the fourth consecutive day, while Brent oil is trading near USD76.
market pulse

Baby steps recovery

The FBM KLCI started off the second half of year 2021 with modest gains as bargain hunting activities emerged after the heavy selloff in the previous session. The imposition of EMCO in most areas in Selangor and Kuala Lumpur due to the continued high infection rates may further weigh on investors’ sentiment. Crude palm oil surged after India reduced import duty of CPO to 10%, while Brent oil price climbed mildly after OPEC+ postponed its decision on the oil production plan amid recovering demand for oil, while market participants are expecting an increase in oil production going forward.
market pulse

Downward momentum persists

The FBM KLCI wrapped up the first half of 2021 with a new year-to-date low as the high number of Covid-19 daily confirmed cases which stayed above the 6,000 mark, coupled with uncertainties in the recent political developments. However, we expect bargain hunting activities on the local bourse to emerge as Parliament may reconvened by August 2021, where MPs will be able to discuss and resolve issues revolving the nation going forward. Commodities wise, the oil prices rose on the report of lower US inventories. Market may monitor the decision on the next phase of production policy in the upcoming OPEC+ meeting amid demand recovery.

Market chat – 3Q21 Strategy – Recover, restore and reform after the storm

As seen in other countries, the Covid-19 pandemic could be seeing ‘light at the end of the tunnel’ as citizens are being vaccinated. Similarly, we should be anticipating a similar scenario once Malaysia achieves herd immunity and business activities should return to normalcy by 2022. The government has unveiled the National Recovery Plan and the latest stimulus packages worth RM150bn, these should provide some clarity to position in the stock markets. We opine market players may look into the recovery theme, transportation and logistics, plastic manufacturers, technology and building material sectors.
technical focus

Technical Focus – DNONCE

Engages as a supplier of consumable products to the electrical and electronics (E&E) and packaging solutions for healthcare which operates 5 factories in Malaysia and 2 factories in Thailand, employing about 750 staffs. Completion of installation of offset printing machine for glove packaging boxes in Sadao will boost revenue contribution from the healthcare segment, while new equipment at Malaysia facilities will support the pent-up demand of E&E sector. Commands approximately 30.0% market share of the box packaging market for gloves boxes in Sadao, with further expansion in place. Technically, the 2-day breakout above RM0.485 may lift share price higher to target the next resistances at RM0.52-0.54 with long term target at RM0.585.
market pulse

Recovery still premature

The FBM KLCI rebounded from on the back of bargain hunting activities, but gains were capped as investors took cue from the weak sentiment in the regional markets. The bullish momentum, however, might not sustain on the back of the recent political developments as well as ongoing combat of Covid-19 pandemic; daily confirmed cases are still ranging between 5000-7000 levels. Meanwhile, technology stocks remain attractive with the ongoing developments on IoT,5G and electric vehicle. Commodities wise, both the CPO and oil prices moved a tad high.
market pulse

Pemulih aid package alleviation

The FBM KLCI plummeted to hit the lowest level in 2021, while the broader market saw more than 900 stocks closing in the red as investors sentiment was further dampened by the extension of the full lockdown which may derail the economic recovery pace. However, we believe bargain hunting activities should emerge after the heavy selldown, following the Prime Minister’s announcement on the PEMULIH stimulus package amounted to RM150bn to assist households and businesses affected by the pandemic. Commodities wise, both the CPO and oil prices experienced a pullback.
Asset allocation matters for you

Asset Allocation – It matters for your investment!

objective of asset allocation is to diversify and maintain a certain level of returns by assigning your portfolio into different asset classes. Although there is no fixed rule to a right asset allocation for every individual, asset allocation will be one of the most important decisions one investor has to make, which eventually will determine the investment results at the end of the day.

Ramssol Group Bhd – 28th Jun 21

Ramssol Group is regarded as a human capital management (HCM) solution and technology specialist provider with established presence across regional markets and is supported by long-term client relationship spanning up to 8 years. We project core earnings to grow by 6.2% YoY to RM7.4m in FY21f, as a result of penetrating into new regional markets and higher contribution from the provision of HCM technology applications business segment. Ramssol Group is valued by pegging its FY22f core EPS of 4.0 sen to 15.0x PE (-1.5 SD to 5Y technology sector average of 30.0x), leading to a FV of RM0.60.
technical focus

Technical Focus – YOCB

Engaged as an integrated designer, manufacturer, distributor and retailer of home linen and bedding accessories in the Asia Pacific region with products exported to more than 17 countries. Products available in 22 fully-owned Home’s Harmony retail outlets, 6 Niki Cains Home Fashion Concept Stores and in more than 300 consignment counters in Malaysia. Operates in a healthy balance sheet with a net cash position of RM4.9m in 3QFY21, translating to net cash per share of 3.1 sen (c.3.0% of share price). Technically, recovery above RM1.01 may ascertain the breakout-pullback-continuation pattern to target the next resistances at RM1.06-1.11 with long term target at RM1.26.
market pulse

Phase 1 of MCO 3.0 extended

The FBM KLCI moved a tad high alongside the uptrend move in the regional markets on the back of bargain hunting after the key index closing at the year’s low in its previous session. The lower liners and broader market which were traded in a negative bias tone suggesting that investors are still cautious. The local bourse may see another round of pullback following the extension of the MCO3.0 as Covid-19 cases remained above the 4k mark. Meanwhile, investors may look ahead to the announcement of assistance schemes from the government, as well as the OPEC meeting scheduled for 1st July 2021.
macquarie structured warrants 20200914

HSI and SP500 warrants top the chart

Last Monday the SP500 rallied 1.4% to record its best gain since May following the Federal Reserve’s surprise hawkish shift to start raising interest rates and tapering asset purchases sooner than expected. The Fed’s Chairman Jerome Powell reiterated his views the following day that the inflation pressures will be transitory after a notable increase in recent months

Serba Dinamik Holdings Bhd – 25th Jun 21

The on-going saga that resulted in diminishing of investors’ confidence is expected to see both institutional and retail investors continue to keep their hands off for the time being. Hence, we reiterate our stance to advise investors to steer clear of further position, pending for further clarity from the special independent audit review. Under the prevailing market events, on-going coverage is now impracticable to comply with applicable regulations and hence, we have decided to suspend our coverage on Serba Dinamik. Given the prolonged uncertainties, we have now lowered our valuations metrics and our fair value is RM0.57 (down from RM1.30).
market pulse

Dour trend may persist

The unabated Covid-19 spread in the country which may lead to further pressure on the economy, coupled with the concerns over the revised nation’s growth projection by World Bank have sent the FBM KLCI lower. Following a heavy selldown, we might anticipate bargain hunting activities to emerge on the local bourse. On a side note, the government has approved the licence and incentives for Risen Energy Co Ltd to manufacture solar cells and solar modules in Malaysia amounting to RM42.2bn, which would make Malaysia an integrated production hub for solar products.

Chin Well Holdings Bhd – 24th Jun 21

We are ceasing coverage on Chin Well Holdings Bhd due to reallocation of internal resources and the lack of retail and institutional interest. We expect trading activities to also taper in tandem with the commodities price which appears to have peaked as the Chinese government has step in to tame the surging prices by releasing industrial metals from its national reserves this month as it is difficult for manufacturers to transfer these costs to the end-users. Our last recommendation on Chin Well was HOLD with a fair value at RM1.29. The fair value is derived from ascribing a target PER of 11.0x to its FY22f EPS of 11.7 sen.
market pulse

Hovering near support

The FBM KLCI failed to extend its gains amid pervasive negative sentiment and weak buying interest, bucking the regional uptrend. With the World Bank cutting Malaysia’s 2021 GDP growth projection amid slower-than-expected economic recovery, the sideways trade is likely to persist without a fresh catalyst under the current economic and public health crisis. Investors may also look at the US's 1Q21 GDP growth rate, while Bank of England’s interest rate decision, which will be releasing tonight. Commodities wise, the oil price has risen above the USD 75 per barrel level.
technical focus

Technical Focus – SCOMNET

Established track record, backed by long-term clientele such as New York Stock Exchange-listed Edwards Lifesciences Corp and Denmark-based Ambu whom have business dealings for more than 10 years on average. Cables and medical devices are approved by the European Medical Agency and the US Food and Drug Administration (FDA). Commencement of new production namely Rotational Thrombectomy Device for a European company, which has started in the 2Q21 will be a new revenue booster over the foreseeable future. Technically, the short-term consolidation breakout above RM1.64 may lift price higher to target the next resistances at RM1.74-1.84 with long term target at RM2.02.
market pulse

Muted rebound

Mirroring the overnight performance on Wall Street, the FBM KLCI posted mild gains as bargain hunting activities emerged after a heavy selldown in the previous session. With the continuation of the rebound on US stock markets, coupled with the improvement in vaccination rate in Malaysia, we expect buying interest may spillover to stocks on the local front. Meanwhile, the non-ferrous metal prices remained under pressure due to the overall surplus market condition, while the CPO price saw a decline.
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.
macquarie structured warrants 20200914

High demand for the new DNEX call warrant

The Malaysia warrants market recorded a 6.3% increase in trading activity last week with a RM137.2mil turnover. Zooming further into the turnover composition, Malaysia stock warrants posted a lower turnover at RM69.0mil while warrants over indices saw a surge in interest
when you don't have time to invest

When You Don’t Have Time to Invest

Time is precious, or we like to say ‘Masa itu Emas’. That’s right, you don’t have enough hours to take away from your job of earning RM30.00 to RM50.00 an hour because you are so busy spending all your time on your job that earns you RM30.00 to RM50.00 per hour. So you can’t put your time aside. But do you know what’s worse? Putting your investment plans aside!
market pulse

Quadruple witching

Taking cues from most of the regional markets, the FBM KLCI was firmly lower in the negative territory after the US Federal Reserve brought forward its outlook for the interest rate hike. The market may continue to trade sideways to negative bias tone with mild bargain hunting activities as investors mulled on the four-phase National Recovery plan. However, we believe the positive performance on Nasdaq may spillover to tech stocks on the local front. Commodities wise, oil price slipped as the USD strengthened, while the CPO price extended its losses.
market pulse

Cautiousness prevails

The FBM KLCI sank into the negative territory as investors were concern on the outcome of the FOMC meeting. Despite the tepid sentiment, downside risks on the local bourse might be capped by declining Covid-19 cases trend, coupled the acceleration in vaccination rate following the implementation of Public-Private Partnership Industrial Covid-19 Immunisation Programme (PIKAS) yesterday. Meanwhile, selected commodities prices dropped following China’s announcement on its campaign to control raw material prices by expanding its oversight of commodities trading and pledging to release the nation’s reserves of base metals.

Astino Bhd – 16th Jun 2021

Astino is likely to expand its capacity, in line with the broad economic recovery trend following the Covid-19 pandemic, as well as the recent commodity supercycle trend, which may translate to firmer earnings going forward. Also, Astino’s AHMS should see growing demand from the poultry sector within the region as poultry consumption is still relatively low as compared to Malaysia. We project the net income could grow by 3-125% to RM50.5-52.2m in FY21-22f. Astino could justify by pegging its FY22f EPS of 19.76 sen to 11x P/E (c.28% discount vs. peers average of 15.2x), arriving at a fair value of RM2.17.
technical focus

Technical Focus – VS

One of the leading integrated Electronics Manufacturing Services (EMS) providers in the region total production area of 1.7m sqf. New facility will boost total production built-up area to more than 2.1m sqf is deemed to be timely to cater for the new customer secured in October 2020. Compelling prospects, riding onto the increasing adoption of emerging technologies in the Industrial Internet of Things (IIoT) and enhanced communication posed by 5G. Technically, the breakout above RM1.37 may lift price higher to target the next resistances at RM1.51-1.56 with long term target at RM1.70.
market pulse

Marking time

The FBM KLCI finished a see-saw session mildly lower after bargain hunting activities emerged in the previous session as market sentiment remained cautious prior to the National Recovery Plan announcement. We expect the projection that Malaysia might gradually open up the economy by September according to the announcement, coupled with the accelerating daily vaccination rate in the country to lift the market sentiment on the local front. Commodities wise, the CPO price rebounded after a sixth-session decline, while the Brent oil price stayed firmly above USD73.
market pulse

Signs of bargain hunting

Mirroring the overnight gains at Wall Street and advances in regional markets, the FBM KLCI recouped losses from previous sessions as the key index witnessed signs of bargain hunting after recent selldown. There might be some portfolio rebalancing activities by index-linked funds towards the end of the week before the June semi-annual review of the FBM Index Series taking effect after coming Friday. Commodities wise, the CPO price has seen a pullback in line with the weakness in soybean oil as well as concerns over higher production and stock level, while Brent oil steadied above USD70 at this juncture.
technical focus

Technical Focus – LBALUM

One the largest aluminium extrusions manufacturer in Malaysia with production capacity at 100,000MT per annum. Aluminium prices rallied to multi-year high as global demand recovered, given consumption in China soared, owing to the higher usage in ultra-high vacuum cable, automotive, photovoltaics and appliances segments. Global manufacturing PMI for May 2021 rose to 56.0; the strongest reading in 11 years amid the persistent supply constraints and gradual reopening of economic activities. Technically, traders may anticipate for a resistance breakout above RM1.03, to target the next resistances at RM1.09-1.20 with long term target at RM1.33.
market pulse

Extension of FMCO

The FBM KLCI retreated for the third straight session amid mixed regional sentiment as the key index succumbed to the extended profit taking activities. We reckon that sentiment to remain tilted towards the downside following the extension of Full Movement Control Order (FMCO) until 28th June 2021 as new daily Covid-19 cases stayed above the 5,000 level. Meanwhile, investors may focus on the upcoming Federal Open Market Committee (FOMC) meeting, as well as the daily number of vaccination doses administered in the country. Commodities wise, the CPO price may see some buying interest following recent pullback.
macquarie structured warrants 20200914

Attention continues on warrants over Serba Dinamik and MMC Corp

The previous week’s interest in warrants over Serba Dinamik (SERBADK) and MMC Corporation (MMCCORP) carried into the past week. SERBADK shares continued to fall, kicking off Tuesday with a 19% plunge to RM0.620 before staging a slight recovery
market pulse

Prolonged consolidation

The FBM KLCI closed marginally lower on the back of weaker sentiment amid some developments in the political scene. Despite a leap in the US inflation, Wall Street ended slightly higher as investors viewed the spike in consumer prices as a temporary effect of industries reopening following the lockdown. We reckon the positive sentiment on Wall Street, coupled with the climbing vaccination rate in the country should move the local stocks higher. Meanwhile, the oil price continued to stay above USD72.
market pulse

Drifting sideways again

The FBM KLCI reversed its gains from the previous session as the key index languished in the negative territory on profit taking, mirroring the regional declines. However, we believe investors’ sentiment may turn mildly positive following the government’s announcement to commence the dispensing of vaccines to critical economic sectors under phase four of the National Covid-19 Immunisation Programme, targeting to increase the vaccination rate. Commodities wise, the CPO price extended its losses, while the crude oil price remained flat around USD72.
technical focus

Technical Focus – COMPLET

A total logistics services provider that encompasses the integration of both the shipping and land transportation. Completion of factories on vacant lands in late 2020 will cater for the rising in demand for warehousing activities and improve revenue stream from the warehousing segment in FY21f. Surge in e-commerce market to remain fairly strong over the foreseeable future, which in turn boost the demand for delivery services, both locally and internationally. Technically, traders may anticipate for a breakout above RM1.40 to target the next resistances at RM1.53-1.65, with long term target at RM1.77.
market pulse

Tipping higher

Gains on the FBM KLCI was encouraged by the reducing Covid-19 transmission, coupled with the strong performance delivered by the Employees’ Provident Fund that saw gross investment income grew 58.6% YoY to RM19.29bn in 1Q21. We reckon that further upsides are in the cards, premised to the progressive step up in vaccination efforts, while investors may keep an eye on the unemployment rate data that demonstrate sequential improvements since January 2021. Meanwhile, the crude oil prices advanced, but the crude palm oil prices retreated.
market pulse

Back into consolidation

The FBM KLCI finished lower, dragged by pervasive selldown in glove stocks as healthcare weightage in the FBM KLCI declined after SUPERMAX was deleted from the key index, coupled with the ongoing vaccination programme. Tracking the sideways tone on Wall Street, investors may stay sidelines while monitoring Malaysia’s industrial production index to be released on Friday, and European Central Bank’s interest rate decision on Thursday. Also, we might expect the sentiment to stay weak on technology stocks as Joe Biden expands the list of Chinese companies banned from US investment. Commodities wise, both CPO and Brent oil prices are seeing mild pullback.
technical focus

Technical Focus – ECOWLD

Established brand presence across three key economic regions in Malaysia with 20 projects include new townships, integrated commercial developments, luxury high-rise apartments and green business parks. Secured RM2.02bn sales in 1HFY21, largely on track to exceed RM2.30bn sales recorded in FY20 and to meet internal target of RM2.88bn for FY21f. Robust sales to remain stable, anchored by strong brand presence with recent launches mainly comprise products priced to suit the M40 as well as Gen-Y & Z market. Technically, the resistance breakout above RM0.635 may lift price higher to target the next resistances at RM0.685-0.72, with long term target at RM0.755.

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market pulse

Profit taking looms

The FBM KLCI snapped a two-day gain over the rising Covid-19 cases. Meanwhile, selldown was noticed in gloves and vaccine-related stocks, pulling the health care index down. Tracking the negative tone from the US stock markets, we expect the local exchange to trade sideways with the lack of fresh catalyst in the market. On a side note, MRDIY will be replacing SUPERMX in FBM KLCI following the FTSE semi-annual review. Commodities wise, we expect mild pullback on crude palm oil (tracking the soy bean futures movement), while crude oil has firmly stood above USD70 for now.

AME Elite Consortium Bhd – 3rd Jun 21

We attended AME Elite Consortium Bhd’s (AME) post 4QFY21 results briefing and came away feeling slightly upbeat on the prospects of AME moving into FY22. After a quiet period in 1HFY21 due to the impact of Covid-19, we gather that AME has secured new property bookings of RM107.8m in FY21. Moving into FY22f, AME targets RM200.0m of new sales, subject to the Covid-19 situation. This will exceed the RM140.0m new sales recorded in FY21.
market pulse

1,600 within reach

The FBM KLCI climbed for the second session as market sentiment was aided by the higher CPO and Brent oil prices on the back of OPEC+ decision to gradually restore supply to the market amid stronger demand in view of the Covid-19 recovery. The CPO price surged more than 5.0%, while the Brent oil price stayed firmer above USD70 per barrel. Despite the rising Covid-19 cases, we expect the expedition of vaccination rollouts and FMCO should eventually translate to market players focusing in recovery theme at least for the near term.
technical focus

Technical Focus – K1

An integrated cloud advisory firm that represents four principals, namely Amazon Web Services (AWS), Google Cloud, Microsoft Cloud and Alibaba Cloud. Businesses and consumers at large resorted to work from home (WFH) and adopted new behavioral habits such as online shopping which augur well for Cloud usage and benefitted the K-One Group. Diversification into production of medical ventilators in 2020 will bear fruit in subsequent quarters and entry into manufacture Covid-19 Rapid Antigen Saliva Test Kit will generate new revenue stream. Technically, traders may anticipate for a flag-formation breakout above RM0.305 to target the next resistances at RM0.335-0.35, with long term target at RM0.38.
market pulse

Inching higher

The FBM KLCI staged a mild rebound on the first day of full lockdown as investors were anticipating that the vaccination drive could boost the appetite for recovery theme stocks, restoring some optimism in selected heavyweights. Meanwhile, traders may be rotate into technology stocks as we believe the consolidation phase might be at the tail-end after stabilising over the past two weeks. Commodities wise, the CPO price extended its losses, but the oil price crossed above the USD70 level.
market pulse

PEMERKASA+ stimulus booster

Bucking the trend in most regional markets, the FBM KLCI kicked off the week on a dour note as market sentiment was dampened by the imposition of full lockdown nationwide amid spiking Covid-19 confirmed cases. However, we believe market sentiment might be lifted by the PEMERKASA+ stimulus package that was unveiled yesterday prior to the full lockdown. Meanwhile, investors may see buying interest in essential sectors that are able to operate during the lockdown. Commodities wise, the CPO price fell below RM4,000 level, while the oil price climbed above USD 69.
macquarie structured warrants 20200914

Rocky week for glove names despite FBMKLCI moving higher

Call warrant TOPGLOV-C1L made it into the top warrants list with 35.7mil units traded, while other warrants such as call warrant SUPERMX-C1Z and put warrant SUPERMX-HF also led the pack. TOPGLOV-C1L has relatively longer time to expiry as it expires on 8 October 2021, meaning it experiences relatively lower time decay i.e. lower holding costs for investors.

Serba Dinamik Holdings Bhd – 31st May 21

While the verdict has yet to be determined, current uncertainties may dampen investors sentiment against Serba Dinamik which we expect a negative near-term impact upon the upliftment of suspension of trading in the securities. We also expect potential downgrade from two-star rating ESG Grading Band that is in accordance with FTSE Russell ESG Ratings Methodology. We also do not discount the possibility of removal of Serba Dinamik from the FTSE4Good Bursa Malaysia Index in the next semi-annual review in June 2021.

Hartalega Holdings Bhd – 31st May 21

We attended a virtual briefing hosted by Hartalega Holdings Bhd (Hartalega) on last Friday pertaining to the social compliance matters in view of the heated topic over the mistreatment of foreign workers in Malaysia, particularly in the manufacturing industry. Already, US Customs and Border Protection (CBP) labour rights activist Andy Hall has petitioned the agency to investigate on Hartalega as well as another public listed glovemaker in Malaysia. We came away feeling re-assured on Hartalega’s strong compliance with all workers hostels adhering to the Act 446. Employees’ Minimum Standards of Housing, accommodations and amenities.
technical focus

Technical Focus – WASEONG

An international oil & gas and industrial services specialist with established footprints in more than 14 countries worldwide. Outstanding orderbook of RM1.18bn, representing orderbook-to-cover ratio of 0.8x against FY20 revenue of RM1.41bn will provide earnings visibility over the next year and is actively tendering for jobs globally, particularly in Africa and Australia. Higher crude oil prices with Brent oil prices nearing USD 70/bbl bodes well for Wah Seong to leverage on the rising exploration and production activities. Technically, traders may monitor for further recovery above RM0.79, targeting the next resistances at RM0.855-0.90 with long term target at RM1.00.
market pulse

Full lockdown imposed

The FBM KLCI closed marginally higher after erasing all its intraday losses last Friday despite the gains in TM and selected index-linked banking stocks, marking its fourth straight session of gains. However, the local stocks may face selling pressure today following the National Security Council’s (MKN) decision to implement a total lockdown nationwide from 1st June 2021 on the back of spiking Covid-19 cases. Meanwhile, the CPO price climbed above RM4,000 while the oil price is hovering around USD68-69 level.

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Suria Capital Holdings Bhd – 28th May 21

Moving forward, we reckon cargo activities may pick-up, taking cue from the rebound in economic activities, which we expects total tonnage to register 25.0m tonnes in FY21f. Suria has also allocated a capex of RM60.0-70.0m, mainly for the construction of a new jetty at Sapangar Bay Oil Terminal (SBOT) that is on track for completion in March 2022 as the construction has begun since December 2020. The move will boost the capacity to undertaking additional port activities as current utilisation rate is averaging at 80.0-90.0%.

Protasco Bhd – 28th May 21

Moving forward, we reckon that the Movement Control Order (MCO) 3.0 may continue to dampen the prospects of recovery 1HFY21. The delay in physical works and progress billings may continue keep cash flow tight, while the fewer projects secured in recent quarters and lower student population may pose a risk to earnings recovery. Hence, the periodic maintenance works under the concession segment will play a pivotal role for earnings sustainability.

OCK Group Bhd – 28th May 21

As of 1Q21, OCK owns and manages over 4,300 telco sites in ASEAN regional with Malaysia (500 sites), Myanmar (1,100 sites) and Vietnam (2,700 sites) that will provide stream of recurring income over the long term. Under the National Digital Network Initiative (Jendela) plan with RM4.0bn infrastructure works for more than 1,700 sites, OCK has secured orders in excess of RM60.0m. On the overseas ventures, OCK aims to drive the tenancy ratio in Vietnam to 1.6x (from 1.3x) in 2021 by deploying more aggressive marketing strategy.

Econpile Holdings Bhd – 28th May 21

To-date, Econpile is equipped with an unbilled construction orderbook of approximately RM820.0m from more than two dozen of on-going projects. Moving forward, the group’s unbilled orderbook-to-cover ratio at 2.0x against FY20 revenue of RM403.0m will provide earnings visibility over the next two years.

AME Elite Consortium Bhd – 28th May 21

Moving forward, AME is equipped with an unbilled construction orderbook of approximately RM147.6m, representing orderbook-to-cover ratio at 0.8x against FY21 construction revenue of RM182.7m that will provide earnings visibility over the next year. We also note that AME has conducted immediate sanitisation in any detection of new Covid-19 cases and set up a separate off-site quarantine centre.
market pulse

Buoyed by heavyweights’ solid earnings

The FBM KLCI climbed for the third straight session, following the final hour buying particularly in the index-linked banking and telecommunication companies. Market sentiment may turn positive as the recovery theme is gaining traction following their release of growing earnings in selected corporates this reporting season. Moreover, the ongoing Covid-19 vaccination programme should support the economic recovery moving forward and investors should shift from pandemic beneficiaries to reopening of economic activities theme. Commodities wise, CPO staged a pullback while the oil price rose above USD 69.

Optimax Holdings Bhd – 27th May 21

We foresee more surgeries to be postponed following the reimplementation of MCO3.0 in May 2021, which is expected to impact Optimax’s earnings as more than 90.0% of Optimax’s revenue was generated from eye specialist services. However, the impact of MCO3.0 may be less severe on the company in comparison to that of MCO1.0, as the restrictions imposed are less restrictive.

Kelington Group Bhd – 27th May 21

Kelington Group Bhd (KGB) has evolved to become a multi-disciplinary engineering services provider, specialising in ultra high purity (UHP) and industrial gas services with regional presence in countries across South East Asia and China. Record high orderbook of RM364.0m as of 1QFY21 to anchor earnings growth over the next 2 years. Leveraging on semi-conductor upcycle with the newly setup equipment fabrication plant at China in 2020. We initiate coverage on KGB with a BUY call and fair value of RM2.55, based on 28.0x P/E pegged to its forward FY22f EPS of 9.1 sen.
technical focus

Technical Focus – VSTECS

One of the leading local ICT distributors with more than 6,600 resellers, comprising retailers, system integrators and corporate dealers nationwide. 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. Demand will be bolstered by the work-from-home order for 40% of workers under MCO 3.0 and the RM15.0bn Perlindungan Ekonomi dan Rakyat Malaysia (Permai) assistance package. Technically, price has recently formed a short-term resistance breakout above RM2.66, targeting the next resistances at RM2.79-2.94 with long term target at RM3.05.
market pulse

On higher ground

The FBM KLCI finished higher on Tuesday after a volatile session, boosted by late bargain hunting following recent selldown, coupled with the firmer crude oil prices. Market sentiment is likely to remain weak as Malaysia’s Covid-19 cases continued to increase as of this juncture, while vaccine rollout schedule is having slight delay. However, as the market sentiment has stabilised in the global context amid the easing concerns over interest rate prospects, traders may re-look into growth companies.

Chin Well Holdings Bhd – 25th May 21

With the recovery still at infant stage, we reckon that outlook remains challenging as global economic recovery remains at an uneven patch with temporary shutdown in manufacturing activities and tepid demand. While the North America and European countries sales are upbeat, the softer demand from other regions of the world continues to bog down the overall performance.
market pulse

Change in sentiment

The FBM KLCI snapped three-session losing streak as investors cheered the government’s decision to mandate a tighter Movement Control Order (MCO) instead of a full lockdown in the country. Although investors started to accumulate oversold stocks yesterday, we expect profit taking activities may emerge ahead of the Wesak holiday tomorrow. Commodities wise, the CPO continued in the pullback formation, while Brent oil price marched higher above USD68.
technical focus

Technical Focus – GCB

Ranked as the fourth largest cocoa grinder in the world with total cocoa processing capacity of 257,000MT p.a. New cocoa processing plant in Cote D’Ivoire coming on stream in 2H21 brings additional grinding capacity of 60,000MT p.a. Demand expected to be resilient premised to the stable cocoa prices averaging USD2,400/MT in 1Q21 as consumer spending recovers gradually, while production utilisation rate remains above 90%. At RM2.75, GCB valuations have turned slightly appealing, trading at prospective P/E at 11.8x and 9.6x for FY21f and FY22f respectively, which is below the 2Y average of 12.1x. Technically, traders may monitor for a recovery above RM2.75 to target the next resistances at RM2.88-2.98 with long term target at RM3.20.
market pulse

Volatility remains a feature

The FBM KLCI finished lower for the third straight session as investors’ sentiment remains tilted to the downside amid record high Covid-19 confirmed cases. With the enhanced movement control order (EMCO) being implemented in wider areas in the country, we expect weaker trading sentiment for this week (do note that market will be closed for Wesak Day on Wednesday). Meanwhile, the selldown in technology stocks may continue following overnight declines in Nasdaq. Investors may focus on high earning certainties stocks amid reporting season.
macquarie structured warrants 20200914

HSI warrants, SUPERMX-C1Z among most active

Investors continued to remain in cautious mode amid reports of record high Covid-19 cases in the country and concerns of potential stricter economic and social restrictions. The benchmark FBMKLCI ended its fourth consecutive week in red territory, down by

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Leong Hup International Bhd – 21st May 21

Leong Hup International Bhd’s (LHI) 1QFY21 net profit climbed 222.8% YoY to RM70.3m, primarily resulted from favorable average selling price (ASP) and sales volume of day-old-chicks (DOC) and broiler chickens in Indonesia and Philippines which led to better revenue and margin, coupled with the increase in ASP of broiler chickens in Malaysia, as well as emerging contribution from downstream business focus in the business-to-consumer channel since June 2020. Revenue for the quarter improved 16.9% YoY to RM1.68bn. First interim dividend of 0.66 sen per share was declared for 1QFY21.

Econpile Holdings Bhd – 21st May 21

The latest win marks the fifth major construction contract secured by Econpile for FY21f, bringing orderbook replenishment at RM512.0m (inclusive of smaller scale projects that was unannounced) and exceeds our expectations of RM500.0m for the year. Moving into FY22f, we have pencilled a similar orderbook replenishment amount at RM500.0m. As a result, Econpile's outstanding orderbook now stands at RM820.0m, which translates to an orderbook-to-cover ratio of 2.0x against FY20 revenue of RM403.0m that will provide earnings visibility over the next 2 years.
market pulse

On the mend

The FBM KLCI extended losses for the second session as persistent fears over stricter lockdown offset the optimism over the ongoing vaccination programme, given the Covid-19 daily confirmed cases continued to stay above the 6,000 level. Mild bargain hunting may emerge, but market sentiment may remain cautious as investors will monitor the decision on a full MCO at National Security Council (NSC) meeting today. Commodities wise, both the CPO and oil prices staged a pullback following the recent rally.
market pulse

Beset by rising Covid-19 cases

The FBM KLCI succumbed to selling pressure as the Covid-19 daily confirmed cases jumped to all-time-high in the country. The ongoing pandemic, however, benefited the healthcare sector. Despite concerns over possible stricter lockdown in Selangor that could dampen the market sentiment, we expect mild bargain hunting activities to emerge following yesterday’s strong selldown. Meanwhile, buoyant crude palm oil prices have benefited companies’ performance in the plantation sector.

Econpile Holdings Bhd – 19th May 2021

The latest win marks the fourth major contract secured by Econpile for FY21f, bringing orderbook replenishment at RM428.4m, which makes up to 85.7% our assumption of RM500.0m for the year. We have also imputed an orderbook replenishment of RM500.0m for FY22f. Thereafter, Econpile's outstanding orderbook rose to approximately RM900.0m, which translates to an orderbook-to-cover ratio of 2.2x against FY20 revenue of RM403.0m that provide earnings visibility over the next 2 years. Following the strong earnings recovery demonstrated in 1HFY21, we expect subsequent quarters to remain sturdy, backed by the stabilising orderbook replenishment in recent quarters.
market pulse

Looking at 1,600 again

The FBM KLCI tracked regional uptrend to close at intraday high on bargain hunting following the selldown on broader market in the previous session, as well as the global commodities rally. CPO price surged close to 5.0% to end above RM4,450 in tandem with the rise in soybean oil on estimation of weaker output in Malaysia. Nevertheless, the commodities-fuelled rally may consolidate over the near term if concerns over stricter lockdown persist amid high Covid-19 infection rate in the country.
technical focus

Technical Focus – DAYANG

An integrated services provider to the oil and gas industry with established track record of 30 years, supported by 2,000 employees. Earnings growth will be sustained by a solid outstanding orderbook of approximately RM2.50bn, translating to a healthy cover ratio of 3.4x of FY20 revenue of RM731.4m. Geopolitical tension in the Middle East, supply disruptions and improving demand may continue to sustain the crude oil prices above US$60/bbl. Technically, the uptrend formation was recently re-established and price has formed a breakout above RM1.48, targeting the next resistances at RM1.69-1.65 with long term target set at RM1.80.
market pulse

Recovery still premature

The FBM KLCI started the week on a flattish tone after the festive holiday and market sentiment remained cautious as significant selldown was noticed on the broader market. While investors may be on bargain hunting following yesterday’s selldown, market’s concern over the possibility of a full lockdown in Selangor to curb further Covid-19 infections may weigh on the local bourse. Meanwhile, we expect commodities prices such as iron ore, CPO and oil prices to stay on upbeat note over the near term.
technical focus

Technical Focus – CCK

Fully integrated supply chain poultry player with capacity to process up to 600-700MT/month with businesses located at East Malaysia and Indonesia. New factory and logistics centre in Pontianak, Indonesia that has commenced operations since 1Q21 will boost process up to 1,000MT/m. Expansion of retail network with additional 4 retail stores and 2 supermarkets in 2020 boosted the distribution channel to 65 Fresh Mart retail stores and 2 CCK local supermarkets. Technically, traders may anticipate for a breakout above RM0.685, targeting the next resistances at RM0.73-0.76 with long term target set at RM0.82.
market pulse

Bargain hunting taking shape

Last week, the FBM KLCI finished with modest gains ahead of the festive holiday with buying interest being noticed in the healthcare sector amid rising Covid-19 infections globally. Despite the positive performance on Wall Street overnight, we expect the sentiment may remain weak given the MCO3.0 environment, as well as the geopolitical tension in the middle east; which has brought the Brent oil price slightly higher last Friday. Meanwhile, the CPO futures climbed above RM4,500 per ton last week.
market pulse

Neutral tone ahead of festive break

The FBM KLCI settled lower in tandem with the regional peers as market sentiment was dampened by nationwide expansion of MCO. Taking cues from the negative Wall Street overnight performance, we expect lacklustre trade on the local bourse ahead of the Aidilfitri holiday. However, we believe bargain hunting activities may emerge within the energy sector as Brent oil price gained momentum due to the lingering fears of gasoline shortage as North America’s biggest petroleum pipeline was affected for days following the cyberattack.
market pulse

Muted sentiment

The FBM KLCI retreated yesterday after a two-session gain as investors stayed cautious sidelines of the release of Malaysia's 1Q21 GDP data today as well as trading activities were softer on the holiday-shortened trading week. Tracking the weakness from the Wall Street overnight, we expect market sentiment to remain weak following the announcement regarding the expansion of MCO 3.0 to the whole country starting from Wednesday. Meanwhile, the CPO future price contracted after registering a hefty rally recently.

Teo Seng Capital Bhd – 10th May 21

Teo Seng Capital Bhd’s (Teo Seng) 1QFY21 net loss stood at RM0.8m, vs. a net profit of RM1.9m recorded in the previous corresponding quarter due to lower contribution from the animal health products segment on the back of lower demand, and higher feed production cost, coupled with increased depreciation cost.

SLP Resources Bhd – 10th May 21

Moving forward, we believe that sales from the local market will continue to dominate, contributing slightly more than 50.0% of total revenue in FY21 as the shortage of containers and high logistic charges may continue to delay export shipment to the overseas customers. SLP will focus on ramping up the production of kitchen and garbage bag, targeting approximately 25.0% of production output in FY21f (from less than 20% recorded in FY20). Following the rising healthcare awareness, SLP aims to undertake new products, namely medical pouches, tacky mats and door handle refills.

Serba Dinamik Holdings Bhd – 10th May 21

Serba Dinamik Holdings Bhd (Serba Dinamik) through its wholly-owned subsidiary, Serba Dinamik Group Berhad (SDGB) has sponsored Data Knights Acquisition Corp., a special purpose acquisition company (SPAC) of its initial public offering of 10.0m shares. The shares have commenced trading on the Nasdaq Capital Market on 7th May 2021, under the symbol DKDCU.
technical focus

Technical Focus – JFTECH

Research & development centre and manufacturing facility housed on a 46,000 sqf area of factory revolves around the design, development, manufacture and sale of integrated circuit test probes and test sockets for the semiconductor market. Partnership with Huawei via newly setup plant at China commencing in 3Q21 and was recently granted a new patent for 5G testing applications expects generate new income stream. Strong financial track record and healthy balance sheet with a net cash position of RM82.5m in 2QFY21, translating to net cash per share of 8.9 sen (c.6.4% of share price). Technically, traders may anticipate for recovery above RM1.45, targeting the next resistances at RM1.58-1.68 with long term target set at RM1.85.
market pulse

1Q21 GDP in focus

The FBM KLCI finished the Friday’s session on a positive note on the back of bargain hunting activities in glove and plantation heavyweights. However, market sentiment may remain cautious throughout the holiday-shortened trading week while focusing on Malaysia’s 1Q2021 GDP growth rate, which might still be weak on the back of Covid-19 affected environment. Nevertheless, traders may focus on commodities that are on a rising tone such as CPO, which has jumped more than 5.0% last week as well as Brent oil price that has a slight uptick as of this juncture.
market pulse

Spurred by bargain hunting

The FBM KLCI closed with modest gains after paring the morning session losses, but gains were capped by the weakness in index-linked glove counters amid softer glove ASP expectation and market talks over windfall tax on glove companies. Meanwhile, Bank Negara Malaysia (BNM) kept the OPR unchanged at 1.75% and this may suggest that Malaysia’s economic outlook may be neutral to upward bias despite the resurgence of Covid-19 cases as well as the implementation MCO3.0. In the US, however, jobless claims fell more than forecast as market condition improved following the economy reopen. Commodities wise, the copper price rose above USD10,000 while the CPO price surged above RM4,200.
market pulse

Bank Negara’s OPR decision in focus

The FBM KLCI declined for the fourth consecutive session due to persistent selling pressure from the foreigners and the broader market may further consolidate as concerns over the expansion of MCO 3.0 to several districts in Johor, Perak and Terengganu, which may dampen the buying interest today. Investors will keep an eye on the overnight policy rate (OPR) announcement by Bank Negara Malaysia (BNM). On a side note, the government has launched a RM3.5bn Jaringan Prihatin stimulus package to subsidise data plan subscriptions and mobile device purchases. Commodities wise, oil prices have been rising, boosted by higher fuel demand amid easing of lockdowns in the US and parts of Europe during summer.

Hartalega Holdings Bhd – 5th May 21

While ASPs for the quarter under review is still on the rise, we reckon that the upward trajectory has already hit an inflection point. Still, demand remains relatively robust as it continues to outweigh the current supply. At the same time, the resurgence of Covid-19 cases globally will continue to support the demand over the near term.
technical focus

Technical Focus – PESTECH

An international electrical power technology company that offers solutions for High Voltage (HV) and Extra High Voltage (EHV) electrical system with products and services exported to 20 countries across the globe. Outstanding orderbook of RM2.21bn will provide earnings visibility till FY27, supported by 3 concession projects. Aims to venture into the electric vehicle industry, though it is still on the premature stage, particularly in Malaysia market. Technically, traders may anticipate for a breakout above RM1.10, targeting the next resistances at RM1.22-1.28 with long term target set at RM1.43.
market pulse

No reprieve yet

The FBM KLCI posted losses for the third consecutive session as upward momentum on glove heavyweights has waned quickly on profit taking in the afternoon session. Tracking the negative performance on overnight Dow, our local exchange is expected to remain subdued on the back of rising Covid-19 cases which led to a tighter MCO implementation on six districts in Selangor. Meanwhile, the technology sector may see further pullback following the overnight decline of Nasdaq in Wall Street. On commodities, Brent oil price has seen a spike near to 2-month high on the back of demand optimism, while lumber futures charged towards all-time-high region.
market pulse

Dour trend persists

The FBM KLCI stayed on a downbeat note despite solid expansion of Malaysia’s PMI in April as the key index succumbed to selling in most index components, led by PETDAG and glove heavyweights. The key index is likely to trade in consolidation over the near term as investors’ are still cautious switching among recovery and healthcare-related stocks. Commodities wise, the CPO price jumped around 5.0% to close above the RM4,000 level, while tin futures are at another record high position. On a side note, according to Intel’s CEO, the global chip shortages situation may not resolve anytime soon.

Tuju Setia Bhd – 3rd May 21

Tuju Setia has completed a total of 18 high-rise building construction projects with an aggregate value of RM2.23bn since commencing operations in 2006. We like Tuju Setia for its strong earnings visibility, backed by an outstanding orderbook of RM953.1m and a strong clientele base. We project earnings to grow by 45.2% YoY to RM23.7m in FY21f, mainly due to the resumption of projects execution from the strong outstanding orderbook. Tuju Setia is valued by pegging its FY21f core EPS of 7.5 sen to 11.0x PE (slight premium to peers average of 9.6x), leading to a FV of RM0.82.
technical focus

Technical Focus – LUXCHEM

One of the leading industrial chemicals suppliers in Malaysia with over 1,000 types of different products across various grades exported to more than a dozen of countries. Earnings growth will emanate from the acquisition of a 55.0% equity stake in Lexis Chemical, Lexis Specialties and Lexis that comes with a profit guarantee of RM60.0m in net profit over three years till FY23. Healthy balance sheet with a net cash position of RM150.9m in 1QFY21, translating to net cash per share of 15.1 sen (c.16.4% of share price). Technically, the flag-formation breakout above RM0.91 may lift price higher, targeting the next resistances at RM1.01-1.10 with long term target set at RM1.27.
market pulse

Struggling above 1,600

In tandem with regional weakness, the FBM KLCI ended the week lower with persistent selling in technology counters on the broader market. Investors are likely to stay cautious as Covid-19 daily confirmed cases remained elevated and may keep an eye on Malaysia's Markit Manufacturing PMI that will be released today and the Bank Negara Malaysia’s interest rate decision on Thursday. Commodities wise, both the CPO and Brent oil prices have seen a decline. In the US, growth momentum is building in line with higher estimated payrolls and lower unemployment in April on the back of climbing vaccination rate.
macquarie structured warrants 20200914

SUPERMX-C1I and MAHSING-C32 among most active

The FBM KLCI started last week on an upbeat note, rising 0.9% to its month-high of 1,623.47 points on Monday (26 April). On Monday, among the big four rubber glove makers, Kossan saw the biggest intraday rally, gaining 6.9% followed by Supermax
market pulse

Hovering around 1,600

After recouping all the intraday losses, the FBM KLCI closed with marginal gains of 0.1% and remained above 1,600 psychological level. Meanwhile, we expect the glove heavyweights to resume its rebound move over the near term given the rising Covid-19 infections globally. On the commodities wise, the CPO price staged a pullback after recent rallies, while the oil price climbed above USD68.
technical focus

Technical Focus – SALUTE

Engages as a one-stop vertically integrated solutions for electronics and plastic manufacturing industry, supported by notable clientele such as Sony, Canon, Hewlett Packard, Panasonic, Vodafone, Hitachi and Nokia. Focus on the hearing devices segment with development of Bluetooth 5 reduces battery power consumption and improves connectivity range. Healthy balance sheet with a net cash position of RM42.1m in 2QFY21, translating to net cash per share of 10.9 sen (c.18.3% of share price). Technically, traders may anticipate for a short-term resistance breakout above RM0.59 to target the next resistances at RM0.63-0.66 with long term target set at RM0.75.
market pulse

Back into consolidation

The FBM KLCI staged a pullback partly dragged by profit taking activities in glove heavyweights following the recent rebound. We expect investors to remain on tenterhooks and focus on sectors with high earning certainties with the interstate travel ban remaining in force while stricter Covid-19 curbs were implemented in more parts of the country. Commodities wise, the CPO price has seen a surge on the back of gains in soybean oil, while Brent oil price has seen a mild spike. Meanwhile, a 10-year O&G services blueprint was launched to push export and R&D.
market pulse

Momentum building up

The FBM KLCI extended gains for the third consecutive session, partly powered by the persistent buying interest in glove counters on the back of surging Covid-19 infections in several countries such as India and Brazil. Nevertheless, the upward momentum in glove stocks may be waning once the Covid-19 cases, coupled with the ongoing vaccination programme. Meanwhile, we believe market sentiment may remain cautious ahead of any potential lockdown announcement in the near future.
technical focus

Technical Focus – LCTITAN

Regarded as Malaysia’s largest integrated producer of olefins and polyolefins as well as one of the largest polyolefins producers in Southeast Asia. Lotte Chemical Indonesia New Ethylene (LINE) project expansion is largely on track for completion in 2023. Average selling prices (ASP) is expected to improve, on the back of pick-up in commercial demand as well as the uptrend seen in naphtha price amid the recovery in crude oil prices. Technically, a breakout above RM2.79 may lift price to target the next resistances at RM2.95-3.08 with long term target set at RM3.35.
market pulse

Rising Covid-19 cases kept gains in check

The FBM KLCI finished the week on a flat note amid tepid market sentiment, but the key index was supported by buying interest in glove counters over the past week. We opine the key index may continue to trend sideways in the holiday-shortened week without significant catalyst in the market. The market may focus on the US’s Federal Reserve interest rates decision to gauge their investing direction. Trading interest may remain robust on small cap and lower liners.
macquarie structured warrants 20200914

Gloves, HSI warrants continue to take centre stage

As Covid-19 cases in the country and globally continued to mount, there were renewed interest especially in the rubber glove makers which were hard hit over the first quarter of 2021. Shares of glove makers continued to log impressive gains for a third week in a row with Kossan Rubber Industries and Supermax Corporation leading gains, rallying by 13% and 12.1% respectively for the week.
technical focus

Still within consolidation

Positive cues from the regional peers coupled with extended buying momentum in glove heavyweights pushed the FBM KLCI to close above the 1,600 level. While investors may be piling into stocks with higher earnings certainties ahead of the earnings season, market sentiment could remain jittery on the back of higher local daily Covid-19 confirmed cases as well as weak performance on Wall Street overnight. Commodities wise, the CPO price was on firmer footing, trending nearer to the RM4,000 level, while the Brent oil may be heading higher above for the session. Besides, lumber futures are trading around the all-time-high region.
market pulse

Dampened by rising Covid-19 cases

The FBM KLCI mirrored the regional weakness to dip below the 1,600 level, but the glove counters finished in the positive region following the release of Kossan’s remarkable results, bucking the market downtrend. However, the sector may see some pullback due to concerns over glove’s ASP on the back of the ongoing Covid-19 vaccination programme. Meanwhile, the CPO prices continue to hover near the RM4,000 level, but positive impact was not reflected on the plantation counters. Tracking the overnight gains on Wall Street, the local bourse may see some mild rebound.
technical focus

Technical Focus – MYNEWS

Largest homegrown retail convenience store chain in Malaysia with 542 outlets, supported by 2,000 employees that are currently serving over 6.0m customers on monthly basis. Allocated RM50.0m as capital expenditure to target additional 100 stores under existing four brands in 2021, namely myNEWS, myNEWS SUPERVALUE, WHSmith and CU. Recovery in store sales is largely on track, backed by the higher stores-footfall, coupled with the rising number of stores. Technically, a recovery above RM0.95 may lift price towards the next resistances at RM1.04-1.12 with long term target set at RM1.20.
market pulse

Still in consolidation

The FBM KLCI bucked regional downtrend to close higher on the back of bargain hunting activities in selected beaten-down stocks. Although market sentiment may remain tepid tracking the overnight losses on Wall Street, the local bourse may be supported by buying interest in high earning certainty stocks ahead of the earnings season. Meanwhile, the CPO price has seen a surge back above RM3,800/MT following a mild pullback in the previous session.
market pulse

Re-visiting 1,600

The FBM KLCI closed lower as market sentiment remained cautious despite the roll-out of the second phase of Covid-19 vaccination. We expect the local bourse to continue its sideways movement on the back of market concerns over inoculation rate coupled with the daily Covid-19 confirmed cases staying above the 2,000 level for the fifth consecutive day. Meanwhile, the technology sector has seen a surge after the announcement regarding Microsoft partnership under the US$1.0bn Bersama Malaysia initiative.

Kim Loong Resources Bhd – 19th Apr 21

Kim Loong continues to maintain a healthy tree profile (Immature: 21%, Young Mature: 5%, Prime Mature: 32%, Old Mature: 16% and Pre-replanting: 26%), of which more than 50% of the group’s palm trees will be able to generate sustainable earnings over the foreseeable future.
technical focus

Technical Focus – AEMULUS

Engages in the design and development of automated test equipment (ATE) and test and measuring instruments (TMI) for the semiconductor industry. Expansion into the China market through a joint venture with facility at China able to produce own AMB 7600-SR 5G testers and AMB 7300 Radio Frequency filter testers able to cater for China-based RF and 5G-related design in-house demand. Returned to the black over the past 3 quarters with 1QFY21 net profit at RM1.5m on top of revenue at RM11.5m. Technically, traders may anticipate for a breakout above RM0.885 to target the next resistances at RM0.975-1.04 with long term target set at RM1.15.
market pulse

Recovery in progress

The FBM KLCI finished marginally higher last week on the back of persistent buying support in glove counters despite weak market sentiment on the broader market. Investors’ interest returned to the glove stocks as concerns loomed over the possible new wave of Covid-19 cases. We expect the local bourse to extend its sideways move as investors may weigh the progress of the vaccination programme and the recent spike in the number of daily Covid-19 confirmed cases which will be detrimental to the economy. Meanwhile, the CPO price has seen a surge back above RM3,700/MT.
market pulse

Momentum build-up

Market update: The FBM KLCI marched higher to brush off the negative sentiment on the broader market, powered by the buying interest in glove counters as global Covid-19 cases ticked higher. Although the key index may trend higher in line with overnight gains in Wall Street, concerns over a possible fourth wave to hit the country may continue to dampen investors’ sentiment with the daily Covid-19 confirmed cases breaching the 2,000 mark yesterday. Commodities wise, both the CPO and oil prices climbed with the latter marking its fourth straight winning streak.
market pulse

Finding a footing

The FBM KLCI finished on a flattish note as buying interest interspersed with profit-taking activities on selected heavyweights. With Covid-19 infections in the country showing an upward trend, overall market sentiment may remain jittery. Despite that, the surged in crude oil prices amid the optimism about returning demand after the Covid-19 lockdowns may provide some alleviation, particularly to the oil & gas players.
technical focus

Technical Focus – ATAIMS

Regarded as one of the top 30 Electronics Manufacturing Service (EMS) provider in the world with products shipped to over 80 countries. Expansion of approximately 378,000 sqf. Pasir Gudang facility is expected to be fully utilised by early 2H21 as demand remains relatively robust. EMS players will continue to thrive under the prevailing situation, riding on the semiconductor upcycle with global semiconductor sales that rose 14.7% YoY to US$39.6bn in February 2021. Technically, traders may anticipate for a short-term symmetrical triangle formation breakout above RM3.27 to target the next resistances at RM3.42-3.50 with long term target set at RM3.80.
market pulse

Back below 1,600

Again, the extended selling pressure dragged the FBM KLCI below the critical 1,600 level amid the cautious market sentiment as Covid-19 cases remained obstinately high. We believe local bourse may continue to trade sideways with negative-bias mode in view of the lack of fresh catalyst. In the US, the Nasdaq outperformed other major indexes with more than 1% gains. Commodities wise, the CPO price may continue to face downside pressure as inventory level continues to build-up.
market pulse

Profit taking looms

In tandem with the regional weakness, the FBM KLCI staged a pullback after a three-session climb as profit taking on telecommunication and selected heavyweights weighed. Amidst the lack of fresh catalyst, the local bourse may stage a further pullback, but the weakness may be cushioned by technical rebound. The unstable number of Covid-19 daily confirmed cases has resulted in the extension of CMCO and RMCO in several states may also impact on the smoother economic recovery. Commodities wise, the CPO price slipped below RM3,700/MT.
technical focus

Technical Focus – KPOWER

Engages in sustainable energy and utilities business in relation to construction activities that are specialised engineering services and subsequently diversified into the healthcare and logistics business. Outstanding orderbook as of end-Feb 2021 at approximately RM1.60bn implies an orderbook-to-cover ratio of 16.7x against FY20 revenue of RM95.8m will sustain earnings over the next 3-4 years. Shortlisted for the development of Large Scale Solar (LSS4) programme with 50MW capacity will be able to generate recurring income for 21 years. Technically, the short-term consolidation breakout above RM1.96 may power price to target the next resistances at RM2.20-2.32 with long term target set at RM2.58.
market pulse

Still on the ascend

The FBM KLCI locked in third consecutive gains last Friday, as focus was shifted from glove counters to the telecommunication sector following Celcom-DiGi merger talks. Tracking the overnight improvement on Wall Street, the local bourse may trend on a slightly positive tone after hovering firmer above the critical 1,600 level. However, we believe the market sentiment will remain choppy amid rising Covid-19 cases (albeit the ongoing vaccine rollout plan for Covid-19), coupled with the development regarding the new wave of Covid-19 outbreak in some countries and Europe and Asia.
macquarie structured warrants 20200914

HSI-HGK dominates the warrants market

The Malaysia warrants market saw a total of RM233.3mil traded on the second week of April, which is 15.4% higher than RM202.1mil in the prior week. Out of which, the warrants over Malaysian underlyings were the largest contributor with RM167.4mil traded (71.8% to the total turnover) followed by warrants over the Hang Seng Index (HSI) with RM56.3mil traded (24.1% of total turnover) as the Hong Kong market was shut on Monday and Tuesday.
market pulse

Defending 1,600

The FBM KLCI posted mild gains yesterday as investors piled into glove heavyweights with the narrative of potential surge in demand for gloves amid the recent waves of Covid-19 outbreak in Europe and parts of Asia. Tracking the overnight gains on Wall Street, Nasdaq especially, we expect the positive sentiment to spill over to technology stocks on the local front. Commodities wise, the CPO prices saw a modest decline while the Brent oil price edged higher.
market pulse

Back above 1,600

The FBM KLCI snapped the two-day losing streak and buying interest pushed the key index to close above the 1,600 psychological level. We believe the foreign buying support yesterday may continue to lift the FBM KLCI members in the near term. Given the higher oil prices resulting from the recovery of global economy, coupled with the smooth on-going Covid-19 vaccination, it should bring some optimism to the market. Meanwhile, the crude palm oil price has rebounded again above the RM3,800 level.
technical focus

Technical Focus – TASCO

Engaged as a one-stop total logistics solutions provider, equipped with 24 logistics centres and 2,200 employees in Malaysia in FY20. To spend RM400.0m over the next five years to support long-term logistics capacity requirements and partner with GD Express Carrier Bhd (GDEX) will enhance logistics delivery services between end consumers in Malaysia. Memorandum of understanding (MoU) with MAB Kargo SdnBhd (MASkargo) for logistics delivery services of Covid-19 vaccines will boost the cold chain logistic business segment overtime. Technically, traders may anticipate for a breakout above RM1.14 to target the next resistances at RM1.29-1.45 with long term target set at RM1.60.
market pulse

Dour trend to persist

The FBM KLCI extended its losses for the second straight session after Sri Lanka banned imports of palm oil. However, we expect bargain hunting to emerge in the near term amid higher crude palm oil price. Nevertheless, taking cues from the overnight Wall Street, we expect the sentiment to remain on the sidelines without any significant market leads and the FBM KLCI may continue to trend sideways. On a side note, the use of e-wallet payment method may pick up at farmer and public markets soon following the Retail Digitalisation Initiative (ReDI) framework being implemented.
market pulse

Still sideways

The FBM KLCI struggled to sustain its gains during the first trading hour as the key index succumbed to profit taking led by gloves counters and selected banking heavyweights. On the broader market, we believe the MRT3 project, coupled with the reversion of ECRL to the original alignment may continue to serve as an upside catalyst for the construction sector. Meanwhile, the Covid-19 vaccination phase 2 programme is set to begin on 19th April 2021 in eight states. On the Brent crude oil, it has fallen 3.7% overnight.
technical focus

Technical Focus – SAMCHEM

Samchem’s chemical distribution segment is well positioned to undertake the higher demand for pharmaceutical products that are used as active ingredients or excipients for the production of medicinal products. Key clientele includes well established oil & gas players such as ExxonMobil Chemical, Shell, Petronas and BASF. Delivered its record breaking single financial performance with revenue and net profit rising 33.3% and 161.3% to RM304.6m and RM18.0m respectively in 4Q20. Technically, traders may anticipate for a breakout above RM1.39 to target the next resistances at RM1.53-1.60 with long term target set at RM1.75.
market pulse

Tip-toeing higher

The FBM KLCI finished the week on a softer note after a sharp sell down last Wednesday and we expect the market to remain on the cautious tone. However, we opine that investors are likely to remain optimistic on the technology stocks given the positive close last week on Wall Street. As some of the global markets are still off for public holiday, we expect the trading activities may tone down for the day and the FBM KLCI should hover below 1,600 psychological level for the time being.
macquarie structured warrants 20200914

HSI warrants top traded despite shorter trading week

The HSI and HSTECH traded mostly in the green last week with both surging the most on Thursday (1 April) as the second quarter of 2021 (2Q21) kicked off. Both indices rose 2.1% and 5.4% week-on-week (w-o-w), respectively, as China’s Purchasing Managers’ Index (PMI) March 2021 expanded to the highest level this year to 51.9% (+1.3%)
market pulse

Broad-base recovery

The FBM KLCI rebounded after a heavy selldown in the prior session, supported by bargain hunting as investors took cue from the regional gains and the 8-month high IHS Malaysia Manufacturing PMI in March 2020. Tracking the overnight improvement at Wall Street, we expect the local bourse may extend the rebound formation, especially in the technology stocks, mirroring the gains in Nasdaq. Commodities wise, both crude palm oil price and oil price have seen a strong surge of more than 3.0%.

Suria Capital Holdings Bhd – 1st Apr 21

Moving forward, we reckon cargo activities may pick-up, taking cue from the rebound in economic activities, coupled with the higher commodity prices, which we expect total tonnage to register 26.0m tonnes in FY21f. At the same time, the construction of a new jetty at Sapangar Bay Oil is on track for completion by mid-2022 will further boost the capacity to undertaking rising port activities with several ports in Malaysia experiencing yard congestion.
market pulse

Bargain hunting may emerge

The FBM KLCI tumbled over 2.2% as investment jitters mounted over US bond yields surge and political uncertainties on the local front; the healthcare sector took the biggest downfall on continued selling in glove counters. However, we think the FBM KLCI is steeply oversold, bargain hunting may emerge over the near term tracking Wall Street overnight gains on technology stocks. We believe the broader market may recover, but we expect the rebound to be short lived and traders may adopt selling into strength strategy. Meanwhile, the CPO price rose on solid exports data for March 2021.
technical focus

Technical Focus – FPI

One of the leading manufacturers of high quality sound system in Malaysia with manufacturing facilities span across 954,666 sqf of land area at Port Klang, Selangor and Sungai Petani, Kedah. Global speaker market will post a 5Y CAGR growth of 13.1% to reach USD29.3bn in 2024, backed by the ever-evolving automotive industry, coupled with the growing adoption of smart home devices. Equipped with a solid balance sheet with a net cash position of RM267.0m in FY20, translating to net cash per share of RM1.08 (c.35.9% of share price). Technically, the resistance breakout above RM2.96 suggests further upside towards the next resistances at RM3.30-3.43 with long term target at RM3.70.
market pulse

Keeping gains in check

The FBM KLCI closed with modest losses as the key index succumbed to the selldown in index-linked glove counters. Tracking the negative performance on the Wall Street overnight, we expect the FBM KLCI and the broader to trend sideways at least for the near term. Meanwhile, oil prices declined as investors looked beyond the Suez Canal incident and traded cautiously prior to the upcoming OPEC+ meeting. However, we noticed that the media is reporting on the chip crunch situation amid the US-China tensions, this might see some trading interest within the technology stocks going forward.

Protasco Bhd – 30th Mar 21

We were unperturbed by the absence of new contracts flow in 4QFY20, suggesting that the tapering construction orderbook may continue to pose a risk to earnings recovery. Moving forward, Protasco’s construction activities will be supported by the PPAM Phase 4 project following the completion of Pulau Indah Industrial Park Phase 3C. Still, we reckon that the Movement Control Order (MCO) 2.0 may also result in delay of physical works in 1QFY21.
market pulse

Gaining traction

Mirroring the regional positive performance, the FBM KLCI extended last Friday’s gains as market sentiment was lifted by higher YoY trade surplus data announced yesterday. Meanwhile, Malaysia will retain its membership in FTSE World Government Bond Index. With Malaysia's Covid-19 daily confirmed cases falling below 1,000, the lowest since December 2020, we believe the local bourse is generally on an uptrend move, barring any unpredicted political developments. Commodities wise, the CPO price has seen some improvement following three days of pullback.
macquarie structured warrants 20200914

Index warrants continue to take centre stage amid volatility

Trading activity in structured warrants was slower last week with the overall warrants market turnover dropping to RM225.4mil from RM295.4mil the previous week, which represented a drop of 23.7% week-on-week (w-o-w). The trading turnover last week saw increased dominance by index warrants, making up approximately 54.7% of the week’s warrants turnover at RM123.4mil compared to 41.9% in the previous week.

1Q21 Review and 2Q21 Outlook: Post-pandemic recovery: One step at a time

With the Covid-19 vaccine programme being rolled out gradually in Malaysia, coupled with the subsiding daily confirmed cases over the past weeks, we think the recovery is in sight as more and more business activities are getting back on track. Hence, market players could position themselves for the recovery-theme stocks. We think the winner for 2Q will be broad based as most of the stocks were bashed down in 2020 amid the healthcare pandemic. We like sectors such as travel, gaming, construction, packaging, plantation, O&G and healthcare.

Suria Capital Holdings Bhd – 29th Mar 21

Future earnings growth and cash flow, however, may be dented by the additional Real Property Gain Tax (RPGT) settlement which could also result in the delay in expansion of Sabah ports over the longer term. Still, we lauded Suria’s corporation with LHDNM to the settlement of the said income tax which signifies the seriousness in ensuring that legal risk exposures arising from any act of default in fulfilling tax obligations are adequately managed and mitigated.
technical focus

Technical Focus – WILLOW

Engaged in provision of technological solutions under the highly sophisticated remote monitoring and control system and is supported by approximately 400 highly trained, committed staffs. Despite global economy was beset by Covid-19 last year, Willowglen was largely unperturbed, bagging a total of 6 major contracts with a combined value of RM98.3m that will sustain earnings visibility will 2025. Equipped with a solid balance sheet with a net cash position of RM73.3m in FY20, translating to net cash per share of 14.8 sen (c.29.0% of share price). Technically, the flag-formation breakout above RM0.495 may spur the price higher towards next resistances at RM0.53-0.555 with long term target at RM0.625.
market pulse

Back above 1,600

In line with the regional market improvements, the final-hour buying pushed the FBM KLCI into positive territory. The local market sentiment may extend its positive move on Wall Street last Friday, but the continued political developments may cap the upside potential on the local bourse. Meanwhile, oil price may see improvement amid concerns over Suez Canal blockage which may potentially lead to some supply disruptions. Moreover, market players may focus on shipping rates in the near term.
market pulse

Prolonged muted trading

The FBM KLCI surrendered its early gains yesterday weighed by the losses in index-linked plantation counters, while technology stocks went lower as investors took cue from the sell down in Chinese technology stocks. As trading volume and value has declined over the past 3 days, we expect the local bourse to trade in a consolidation mode as market sentiment remained cautious due to the absence of fresh catalysts amid lower oil and CPO price. Given the subdued trading interest on the market, traders will be selective in looking out for trading opportunities.

Optimax Holdings Bhd – 25th Mar 21

Optimax Holdings Bhd (Optimax) is an eye specialist services provider with established track record, offering a range of eye surgeries and services across its network of 13 eye specialist centres in Malaysia. Having a strong presence throughout Peninsular Malaysia and Sarawak, Optimax is now eyeing on expansion to East Malaysia. The solid revenue growth was underpinned by the increase in surgeries and surgeons. We initiate coverage on Optimax with a BUY call at a target price of RM2.05, based on 40.0x P/E pegged to its forward FY22f EPS of 5.1 sen.
market pulse

Signs of bargain hunting

The FBM KLCI managed to stage a recovery, despite the weaker-than-expected inflation data, but we remain cautious on the possible extended gains, given the prevailing uncertainties, coupled with the lack of fresh leads. Nevertheless, we think that the bargain hunting activities may emerge on selected beaten down stocks as investors’ risk appetite remains strong within the equities market (as defined by the surge in the recent oversubscription rates of IPO). Meanwhile, the rebound in crude oil prices may provide further alleviation to the market sentiment.
technical focus

Technical Focus – KAWAN

One of Malaysia’s leading exporter and largest manufacturer of frozen Asian food delicacies worldwide that operates 3 factories, of which products are exported to 38 countries globally that are sold in local groceries and supermarkets. Rising demand for frozen food due to changes in society living conditions, coupled with the increasing workforce adopting work from home stance. Aims to strengthen their presence in the export markets in bid to capture additional market share. Technically, a potential consolidation breakout above RM1.91 may suggests for further technical rebound towards the next resistances at RM2.03-2.12 with long term target at RM2.28.
market pulse

Back below 1,600

The FBM KLCI extended its losing streak for the third straight session, despite the earlier positive momentum on Wall Street. Although bargain hunting may emerge in certain bashed-down stocks, but we believe the upside may be capped in the near term as investors may trade in a cautious mode given the overnight losses at Wall Street amid concerns over US bond yield, weaker oil price and intensifying Covid-19 cases in Europe. Meanwhile, the CPO price has continued its uptrend move.
market pulse

Mild Reprieve

The FBM KLCI retreated for the second session in line with the regional weakness. Mirroring overnight gains on Wall Street, Nasdaq in particular, we reckon there will be some bargain hunting activities emerging on the local bourse despite cautious market sentiment amid continued political developments. Commodities wise, Brent oil price remain sideways while crude palm oil price surged. On a side note, another batch of Sinovac Covid-19 vaccine arrived yesterday in the country.
macquarie structured warrants 20200914

Index warrants regain focus with global market developments

Last week, the Malaysian warrants market saw a dip in turnover to RM295.4mil, 29.8% lower from the previous week, led by a decline in turnover for warrants over Malaysian shares with its turnover falling 33.6% week-on-week
technical focus

Technical Focus – SUNCON

Malaysia’s largest pure play construction company listed on Bursa Malaysia, capable of delivering integrated construction services works with over the past 40 years of experience. Outstanding orderbook of RM5.1bn will sustain earnings visibility over the next 3 years. Diversifying into other countries with active tenders of RM5.4bn (>50.0% from overseas such as India, Singapore and Philippines). Technically, we may anticipate for a potential breakout above the upper band of the consolidation of RM1.81 to target the next resistances at RM1.93-2.00 with long term target at RM2.10.
market pulse

Still sideways

The FBM KLCI finished the week mildly lower in line with the regional weakness last week and tracking the mixed sentiment on Wall Street overnight, we expect the local bourse to trade in a cautious mode as investors will monitor the status of the US bond yield, as well as the emergence of geopolitical tensions after North Korea cut off diplomatic ties with Malaysia. However, we expect recovery theme should remain intact at least for the near term. On CPO, we expect to see some rebound on following the recent pullback.
market pulse

Profit taking may set in

The FBM KLCI climbed higher driven by the index-linked recovery-theme stocks market optimism over economic recovery following PM’s announcement on the “Pemerkasa” economic stimulus package. However, we believe the overnight declines on Nasdaq may spillover to the broader market and tech sector today. Meanwhile, on the Brent oil and crude palm oil price, both have performed a significant pullback, after hitting their respective peaks, which may set a negative tone for the energy sector as well.
market pulse

Pemerkasa stimulus booster

The FBM KLCI extended mild gains for the third session driven by buying interest prior to PM’s announcement of another stimulus package – “Pemerkasa”. The RM20bn economic stimulus package includes several programmes such as an increase in micro credit financing and the extension of wage subsidy, which we believe will strengthen the economic recovery and market sentiment moving forward. Meanwhile, the government intends to implement a more targeted approach in combating the Covid-19 pandemic to replace the MCO nationwide or in a state.
technical focus

Technical Focus – JHM

A key player in the Electronics Manufacturing Services (EMS) space in Malaysia for the manufacturing and assembly of surface mount technology and PCBA assembly for LED lighting modules. Prospects are resilient, owing to the strong automotive sales in recent months and transitioning into 5G evolution. Joint-venture with MASS Precision with a new 66,000 sqft plant with state-of-the-art robotics production line to produce front-end semiconductor equipment with delivery commencing in 3Q21 will be a key avenue growth driver. Technically, we may monitor for a recovery above RM2.00 to target the next resistances at RM2.19-2.35 with long term target at RM2.68.
market pulse

Consolidation beckons

The FBM KLCI finished higher yesterday as the key index tracked overnight gains on Wall Street despite weaker oil price and crude palm oil prices. Meanwhile, we believe the year-to-date low Covid-19 daily confirmed cases recorded yesterday may continue to drive market sentiment on the positive tone, but the upside may be capped by the overnight Wall Street mixed sentiment. Commodity wise, the Brent crude oil has seen a decline on renewed demand concerns due to the new wave of Covid-19 cases in Europe, while the crude palm oil dropped on market expectation on production improvement.
market pulse

Marching on

In line with most regional peers, the FBM KLCI started off the week on a positive tone on bargain hunting activities following the two-session pullback last week. With the arrival of another batch of Pfizer-BioNTech and Sinovac vaccines yesterday, we believe the key index should be trending higher amid expectation on brighter economic outlook as well as firmer crude palm oil and Brent oil prices. Also, tracking the rebound in Nasdaq, we expect some minor rebound in technology counters today.
technical focus

Technical Focus – KMLOONG

One of the leading plantation players in Malaysia, with oil extraction rate over the past five years was above 21.0%; outperform the Malaysia industry average at 19.0-20.0%. Surge in CPO prices to 3Y high (above RM4,000/MT) bodes well for the overall crude palm oil plantation sector to mitigate the seasonally weaker production during the period, due to the historically lesser rainfall. Net cash position and prospective dividend yields at 6.7% for both FY21f and FY22f respectively are attractive. Technically, we may monitor for a breakout above RM1.50 to target the next resistances at RM1.60-1.65 with long term target at RM1.80.
market pulse

Bargain hunting may emerge

The FBM KLCI extended its losses amid profit taking activities prior to the weekend following the mixed performance in the regional markets. Although the Wall Street was traded higher overnight, we expect the market sentiment on the local bourse to remain cautious ahead of the upcoming US Federal Reserve (Fed) Meeting where the Fed will deliver its decision on interest rate. Meanwhile, the technology sector may see a mild pullback after its four-day rallies, mirroring the overnight losses on Nasdaq overnight. For commodities, crude palm oil has hit multi-year highs, while crude oil is hovering near USD70.
macquarie structured warrants 20200914

Great debut for the new HSTECH-C1

The HSTECH March futures started the week with a 6.2% dive to close at 8,007 last Monday but found some support at the 7,700 level on Tuesday following close to a month of decline. The index futures subsequently traded higher in the next two days before erasing some weekly gains on Friday to end the week at 8,430.
market pulse

Sentiment still strong

The FBM KLCI took a breather following its rally since last Friday, mainly dragged by the losses in NESTLE, Petronas-related counters and telecommunication heavyweights. Tracking the gains on Wall Street overnight after the US President Joe Biden signing the Covid-19 relief bill, we expect the local bourse to see some rebound amid growing optimism in the market, especially after a bash down in technology stocks recently. Meanwhile, we believe the lower liners should continue to move higher at this juncture. Commodities wise, the CPO price has climbed above the RM4,000 per tonne level, recorded at RM4,060.

Hartalega Holdings Bhd – 11th Mar 21

The acquisition marks Hartalega’s latest phase of growth, with a CAPEX allocation of RM7.00bn to build 16 new manufacturing facilities over the next 20 years. The move also imprints Hartalega’s foray into the northern region of Peninsular Malaysia which is in line with government’s efforts to drive the economic growth in the northern corridor regions as well as Hartalega’s long term annual capacity plans that targets approximately 95.0bn pieces by 2027, from 43.0bn presently.
market pulse

Striding higher

Taking cues from the overnight rally on Wall Street, where the Dow made a record closing, we believe the buying interest may pick up on the local front and the FBM KLCI may extend its gains today. Also, as the daily Covid-19 confirmed cases continues to dip below the 2,000 mark, market players are likely to favour on the reopening of business activities moving forward; we believe the domestic travel will kick start the tourism economy as of this juncture. However, the technology sector may see mild consolidation phase as Nasdaq took another round of breather. On commodities, the CPO has climbed higher to RM3,974 per tonne level, while the Brent oil price has seen some mild rebound.

Kim Hin Joo (Malaysia) Bhd – 10th Mar 21

Kim Hin Joo (KHJ)’s proven track record of over 35 years in marketing new-born and parenting products makes it one of the most trusted retail specialists in Malaysia, operating a wide retail network across the country. Following a decline in net income to RM5.2m in FY20, we project earnings to grow by 56.5% and 29.0% YoY to RM8.2m and RM10.5m, respectively in FY21-22, underpinned by its outlets expansion and improved consumers’ purchasing power. KHJ is valued by pegging its FY21f core EPS of 2.2 sen to 13x PE (c.28% discount to peers’ average of 18.0x), leading to a FV of RM0.28.

Serba Dinamik Holdings Bhd – 10th Mar 21

With the exclusion of the O&M contract located at Malaysia due to the nature of work scopes being call-out basis, the remainder O&M and ICT contracts secured has a combined value of approximately USD99.6m (c.RM408.8m). The move has bumped the outstanding orderbook at approximately RM18.9bn (slightly increased from RM18.7bn recorded at end-December 2020), representing 3.1x orderbook cover ratio against FY20 revenue of RM6.0bn.
technical focus

Technical Focus – HSSEB

One of the leading engineering consultancy groups in Malaysia, involved in major notable large-scale projects. Proxy to the economic recovery play as works for current projects shifted into higher gear. Equipped with an unbilled orderbook of RM443.4m, representing an orderbook-to-cover ratio of 2.6x against FY20 revenue of RM170.0m to sustain earnings over the next 3 years. Tapping into the highest development expenditure amounting to RM69.0bn for public infrastructure development in Budget 2021. Technically, we may monitor for a breakout above RM0.59 to target the next resistances at RM0.625-0.66 with long term target at RM0.68
market pulse

Still on the ascend

As the economic recovery is taking shape following the declining of Covid-19 cases, the FBM KLCI continued its upward march; the key index is hovering steadily above the 1,600 psychological level. Meanwhile, tracking the strong rebound in tech heavyweights on Wall Street, we expect bargain hunting activities to emerge on the local technology stocks, which have been hammered down over the past week. Also, the CPO price has been trading firmer near the RM4,000 level.
market pulse

Profit taking looms

The FBM KLCI extended its winning streak and outperformed its regional peers as recovery play gained strength, offsetting the losses in glove heavyweights. The shift in investors’ interest to recovery play stocks, coupled with the selldown on Wall Street may continue to weigh on the technology sector. Commodity wise, the CPO price has surged near its 10-year high around RM3,963 per tonne level. Meanwhile, investors may look forward to Malaysia's unemployment rate today. At this moment, we believe the key index should hold above the 1,600 level.
technical focus

Technical Focus – O&G

In the latest OPEC meeting, OPEC and its allies have collectively cast aside proposals for expanding output and decided to keep production in lid by sticking with current quotas for April 2021. The unexpected move has led to a tighter production has subsequently sent oil prices to their highest level since January 2020. We reckon that the move bodes well for oil & gas players, capitalising on the recent recovery with Brent oil prices surging towards the USD70/bbl. Back home, the higher CAPEX allocation at RM40-45bn by PETRONAS for 2021 (compared to RM33.4bn spent in 2020) is also welcoming for domestic oil & gas players.
market pulse

Back above 1,600

Last Friday, the FBM KLCI bucked the losses on Wall Street and surged above the 1,600 psychological level; the continued buying interest in banking heavyweights after BNM’s decision to remain the OPR, coupled with the gains in energy stocks spurred the key index rally. We reckon the positive momentum of the key index to continue as the rallies in the banking sector may indicate market’s hope for economic recovery. Meanwhile, the Brent oil price continued seeing its uptrend after OPEC and its allies decided to keep production steady through April.
macquarie structured warrants 20200914

Good demand for HSI and KLCI warrants amid volatile market

Overall warrants turnover for the first week of March increased slightly by 3.2% week-on-week (w-o-w) to RM419.3mil, mainly driven by the increased trading activity in warrants over the Hang Seng Index (HSI) and FBM KLCI Index (KLCI) with both contributing a total of 34.5% of the total warrants turnover.
market pulse

Still within consolidation mode

The FBM KLCI settled in red in tandem with the regional peers as selling pressure in the glove stocks returned, offsetting the gains on the banking heavyweights following the unchanged Overnight Policy Rate (OPR) by Bank Negara Malaysia. Tracking the losses on Wall Street overnight, we expect the local bourse may continue to consolidate further as market players are likely to trade on a cautious tone on the broader market. Nevertheless, we expect traders to position themselves for the recovery theme as Covid-19 vaccination is taking place. Meanwhile, the Brent oil price has surged firmly above USD65.
market pulse

Bank Negara’s OPR in focus

Bargain hunting activities emerged on the glove counters after more than one week of pullback, lifting the FBM KLCI and the healthcare sector higher. Market will be looking forward to the second Monetary Policy Committee meeting today to gauge market movements. However, economists anticipate an unchanged stance on the Overnight Policy Rate (OPR) amid expectation of an economic recovery. We believe the lower liners will continue to remain upbeat if the positive market sentiment persists. Meanwhile, the Brent oil price has seen a rebound.
market pulse

Streched valuations

Bucking the downturn across the regional markets, the FBM KLCI ended modestly higher as continued selling in glove heavyweights were offset by buying support in IHH and selected banking heavyweights. We believe the local bourse should trade in an upward bias tone following the change of MCO status for Selangor, Johor, Penang and KL. Meanwhile, the number of Covid-19 confirmed cases daily has dropped to year-to-date low. However, note that the negative sentiment on Wall Street overnight could cap the upside potential on the local front.
technical focus

Technical Focus – LHI

One of the largest fully integrated producers of poultry, eggs and livestock feed in Southeast Asia with strong presence in Malaysia, Indonesia, Vietnam and Singapore. Committed to expand the Malaysia, Philippines and Vietnam operations via additional capacities and infrastructures, whilst targets 160 Baker’s Cottage outlets by end-FY21 (from 103 outlets since end-FY20). Sequential earnings recovery is on the table, premised to the stabilising poultry prices in Malaysia as well as Indonesia in recent months. Technically, the flag-formation breakout above RM0.71 may lead price towards the immediate resistances at RM0.775-0.82, with long term target at RM0.885.
market pulse

Rebound in sight

The FBM KLCI ended the first trading session of March in red amid continued selling pressure in glove heavyweights following further developments on Covid-19 vaccine. Although the arrival of the Covid-19 vaccine has dented the sentiment on healthcare sector, the local bourse was supported by the positive sentiment on the recovery-theme sectors. Meanwhile, we also expect 5G and tech stocks to trade firmer following overnight Nasdaq performance.

Chin Well Holdings Bhd – 1st Mar 21

With the recovery still remain at infant stage, we reckon that outlook remains challenging as global economic recovery remains at an uneven patch with temporary shutdown in manufacturing activities and tepid demand. While the North America segment remains upbeat, the softer demand from other regions of the world continues to bog down the overall performance.

OCK Group Bhd – 1st Mar 21

We attended the post quarter results analyst briefing and came away feeling re-assured on OCK Group Bhd (OCK) recovery moving into FY21f. FY20 was largely affected by the slowdown of sites deployment due to the Covid-19 pandemic with domestic mechanical & engineering works were halted for several months. Moving into the FY21f, we note that the re-implementation of Movement Control Order (MCO 2.0) will be less severe given the relaxation of business operations, whilst the deployment of Covid-19 vaccination may provide some relieve, particularly towards end-2021.

Serba Dinamik Holdings Bhd – 1st Mar 21

While the oil & gas business segment will continue to anchor the overall earnings growth, Serba Dinamik is gradually shifting towards other business segments, particularly the ICT business segment. For the time being, the ICT segment orderbook of approximately RM2.2bn (close to 12.0% of total orderbook of RM18.7bn) will sustain earnings visibility over the foreseeable future.
technical focus

Technical Focus – MESB

Primarily involved in the retailing and trading of quality leatherwear products and operates a few boutiques and over 270 consignment retail counters throughout premier departmental store in Malaysia. Consumer spending may accelerate following the roll-out of Covid-19 vaccine across the globe. Solid balance sheet with a net cash position of RM19.1m in 2QFY21, translating to net cash per share of 18.0 sen (c.35.2% of share price). Technically, price has rebounded to form a flag-formation breakout above RM0.55, targeting the next resistances at RM0.575-0.595, with long term target at RM0.63.
market pulse

Sentiment still dour

Mirroring regional downtrend, the FBM KLCI ended the week in red despite final hour bargain hunting. However, we believe buying support could emerge as the market sentiment is likely to turn positive following the news on the arrival of China’s CoronaVac vaccine in Malaysia. Nevertheless, we expect the political developments may provide the volatility to the market. On the side note, commodities upcycle in crude palm oil and Brent crude oil are likely to sustain over the near to mid-term based on the current momentum.

AME Elite Consortium Bhd – 26th Feb 21

As of 3QFY21, AME is equipped with an unbilled construction orderbook of approximately RM200.0m, representing unbilled orderbook-to-cover ratio at 1.1x against FY20 construction revenue of RM185.2m that will provide earnings visibility over the next two years. While there were 22 Covid-19 cases reported at the worker’s dormitory, AME has conducted immediate sanitisation and set up a separate off-site quarantine centre.

OCK Group Bhd – 26th Feb 21

As of FY20, OCK owns and manages over 4200 telco sites in Malaysia (500 sites), Myanmar (1,000 sites) and Vietnam (2,700 sites) that will provide stream of recurring income over the long term. We note OCK will actively participate on the National Digital Network Initiative (Jendela) plan with RM4.0bn infrastructure works for more than 1,700 sites to be tendered by 1Q2021, whilst capitalising on the 5G transition that may see demand for telecommunication sites quadruple against the number of 4G sites.
market pulse

Return of volatility

The FBM KLCI has rebounded strongly amid bargain hunting activities as steel-related and technology stocks were traded higher following several strong sets of results under the respective sectors. Meanwhile, healthcare sector was the sole decliner in the broader market. We believe the market will be pricing in Covid-19 vaccination progress and market may trend on an upward bias tone, focusing on recovery theme stocks. On the commodity side, the crude palm oil price has climbed above RM3,700, while Brent oil price is firmly trading above USD65.

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).

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.
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.
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.

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.
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.
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.

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.
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.
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.
macquarie structured warrants 20200914

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..
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.
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.
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.
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.
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.

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.
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.
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.
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.

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.
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.
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.
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.

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.
technical focus

Technical Focus – 8th Feb 21

Supported by key clientele include public listed companies (PLC) such as Maybank, Hong Leong Bank, RHB bank, Tenaga, Telekom, Celcom, Sarawak Energy and Aeon Credit with 9MFY20 net profit expanded 21.1% YoY to RM7.3m. Capitalising on the adoption of digitalisation of financial services via the introduction of the SmartCIT cash-in-transit cash collection and management with IoT secured logistic solution. Launch of buySolar online marketplace platform will generate a new avenue of income stream. Technically, the short-term consolidation breakout above RM0.53 ensue further recovery towards the next resistances at RM0.58-0.61 with long term target at RM0.685.
market pulse

Still wobbly

The FBM KLCI underperformed its regional peers last Friday, as gloves and plantation heavyweights lost their ground following their recent rallies. The selling pressure among local and foreign institutions continued to weigh on the local bourse despite buying interest among local retail investors. With the US stockmarkets inching higher last Friday, we expect the local bourse may see some rebound, but traders should be trading cautiously ahead of the Lunar New Year holiday. The lower liners may see some rebound ahead of the vaccine rollout.
macquarie structured warrants 20200914

Warrants over Greatech, HSI and Top Glove among most active

Despite another shorter trading week, trading activity in structured warrants remained active with its total traded value inching up 0.4% week-on-week (w-o-w) to RM319.2mil last week. Warrants over stocks contributed more than 72% of the total warrants turnover, followed by warrants over the Hang Seng Index (HSI) and iShares China A50 ETF, which contributed 24.8% and 1.8%, respectively.
market pulse

Improving sentiment

Mirroring the gains on Wall Street, the FBM KLCI edged mildly higher after Prime Minister Tan Sri Muhyiddin Yassin’s update on the scheduled rollout of Covid-19 vaccination programme by the end of February 2021. The announcement coupled with the positive performance on Wall Street overnight may lift the overall market sentiment on the local front. Meanwhile, the lower liners will continue to enjoy their upward momentum as liquidity remains well on the equities market.
market pulse

Choppiness prevails

After experiencing a downward trend since mid-January, the FBM KLCI delivered a second session of gain as most of the counters ended positive except for healthcare stocks. As investors likely to have priced in news of further lockdown measures, buying interest in selected counters with high earning certainty during the February reporting period should be seen, while the broader market should be lifted by the mildly positive performance on Wall Street overnight.
technical focus

Technical Focus – 3rd Feb 2021

Over 500 products exported to countries like Vietnam, Hong Kong, the Philippines, Cambodia and Singapore through established distributors, hypermarkets, supermarkets and dealer network. Agrochemical business to play a key role in earnings sustainability, while the manufacture and distribution of healthcare disposable products will be boosted by higher demand from the elevated number of Covid-19 cases. Net cash position of RM11.3m in 3QFY20, translating to net cash per share of 0.1 sen (c.1.5% of share price). Technically, price has experienced a breakout-pullback-continuation pattern above RM0.89 accompanied by rising volumes, targeting RM0.94-0.965 with long term target at RM1.00.
market pulse

Recovery in progress

While the broader market may price in the extension of MCO2.0 (except for Sarawak), we believe market players may turn their focus to Sarawak-related stocks following the uplift of MCO2.0 as more economic sectors are allowed to operate moving forward. Also, tracking the positive sentiment on Wall Street overnight that should lift the overall market sentiment on the local front.
technical focus

Technical Focus – 2Feb21

Engages in manufacturing and distributing bakery products that are marketed under the trademarked brands of “Top Baker” and “Daily’s”. Retail outlets expansion plan in the Central region by setting up more new retail outlets in Klang Valley and plans to establish a franchise system, whilst continue to expand its distribution network in the Northern region. Demand for bakery to be sustainable as bread and related products, particularly sandwich loafs are deemed to be affordable essential food for the mass. Technically, we may anticipate for a resistance breakout above the RM0.25 level to target the next resistances at RM0.27-0.29 with long term target at RM0.335.

Silver lining ahead

Tracking the regional and Wall Street gains overnight, market players could be factoring in a Conditional MCO instead of a strict MCO (albeit in a rising Covid-19 cases environment) moving forward to avoid further breakdowns in the economy. Thus, we may anticipate a mild rebound moving forward. However, the rebound may attract profit taking activities as Malaysia’s Covid-19 status has not flattened out at this current juncture. We might observe some trading interest within healthcare and vaccine related sectors in the near term.
market pulse

On a better footing

The FBM KLCI outperformed its regional peers to end mildly higher on Wednesday following the announcement by the Health Ministry on the supply of 18.4m doses Covid-19 vaccines by Pharmaniaga and Dpharma in March 2021. Given the rebound on Wall Street overnight, coupled with the relaxation of MCO to allow all businesses to operate until 10pm which may contribute to some positive impact to the market, albeit rising Covid-19 cases may still dampen the economic recovery. Meanwhile, the lower liners are seeing some rebound signs.
technical focus

Technical Focus – 27th Jan 21

10 manufacturing plants located across Peninsular Malaysia, supported by approximately 700 employees. Notable completed roofing projects include Pantai Hospital (Penang), SMJK Jit Sin (Penang), Toyo Tires plant, Fedex (Batu Kawan), Econsave (Taiping) and Inari (Batu Kawan). Demand in the local market to remain firm over the foreseeable future as building projects resume operations, while higher steel prices may contribute to improvement in margins. Technically, a trendline breakout above the RM0.91 level may drive price higher towards the next resistances at RM0.97-1.00 with long term target at RM1.04.
market pulse

Finding stability

In tandem with the regional peers, the FBM KLCI inched lower due to heavy selling in glove heavyweights and Petronas-related counters. With growing concerns over the still-rising Covid-19 cases, that may contribute to the potential extension of MCO (albeit with some relaxation in SOP). Hence, it may limit the upside potential on the key index over the near term until the vaccine rollout. Nevertheless, we expect some bargain hunting activities to emerge in the near term on high certainty sectors ahead of the February reporting season.

Hartalega Holdings Bhd – 26th Jan 21

The strong performance was attributed to the elevated ASPs, which we expect the trend to stay put over subsequent quarters. Moving forward, 4 production lines will be commissioned in March 2021, whilst the remaining 4 surgical lines under Plant 7 will be commission in subsequent quarters which will increase annual installed capacity to 44.0bn pieces. Beyond that, Plant 8 is expected to commence operations by end-2021, followed by NGC 2.0 in 2022.
market pulse

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.
technical focus

Technical Focus – 25th Jan 21

17 manufacturing operations located in Malaysia, China and Thailand with products exported to 70 countries worldwide. Earmarked a sizeable expansion plan with planned CAPEX of RM150.0m for 2021 & 2022 with RM30-40m will be allocated to set up a manufacturing plant in Myanmar that provides lower cost of production and better margins. Healthy balance sheet with net cash position of RM118.3m, translating to net cash per share of RM0.31 (c. 12.4% of share price) in 3QFY20. Technically, a consolidation breakout above RM2.54 may drive share price higher towards the next resistances at RM2.70-2.88 with long term target at RM3.26.
market pulse

Volatility beckons

Tracking a mixed performance on Wall Street last Friday, we think the mild rebound on the FBM KLCI last Friday could further fizzle off today and market sentiment is expected to be cautious ahead of the first US Federal Reserve meeting under the Biden’s administration as well as the holiday-shortened week. As we are heading into the reporting season, investors may turn to selected sectors with high earnings certainty while the Covid-19 cases continued to rise.
macquarie structured warrants 20200914

Investors ‘put’ the Hang Seng Index as it breaches 30,000

The Malaysia warrants market posted a 22.3% week-on-week (w-o-w) decline in terms of turnover at RM313.1mil last week. Warrants over stocks continued to dominate the warrants space with RM223.8mil traded which account for 71.5% of the total warrants turnover. Meanwhile, the Hang Seng Index (HSI) warrants saw an uptick in trading interest last week at RM76.3mil which is 11.3% higher than the prior week.
market pulse

Below 1,600

With Wall Street charging towards its all-time-high region after Joe Biden’s transition into the White House, we expect mild bargain hunting activities to emerge on our local front. However, following the extension of the Movement Control Order for the six states to 4th February, we reckon the upside could be capped today as Covid-19 infections are still rising. Hence, it could be translating to another consolidation day. Nevertheless, we believe market players to rotate into several laggard plays in the stock market.
market pulse

Still searching for a footing

Tracking the strong gains on Wall Street overnight after Joe Biden was sworn in as the 46th US president, we expect rebound could be seen on the local front especially on the technology sector. Nevertheless, market volatility remains in place amid the expansion of MCO to all states except for Sarawak due to the worsening of the Covid-19 situation. On the banking sector, we expect trading interest will be seen after BNM’s move to keep the interest rate unchanged until the next meeting. Meanwhile, we expect the vaccine rollout plan that could come in 1Q21 may benefit the distribution segment.
technical focus

Technical Focus – 20th January 2021

Operates 141 retail stores, covering 1.5m sqf of gross floor area under several household brands such as Vincci, Vincci+, Vincci Accessories, Tizio, Padini Authentics, PDI, Padini, Seed, Miki and P&Co. Decline in shopping complexes footfall has attributed to the weaker performance in FY20 will see recovery from own digital marketing channels and third-party online portals such as Lazada platform. Healthy balance sheet with net cash position of RM25.2m, translating to net cash per share of RM0.04 in 1QFY21. Technically, a breakout above RM2.84 may drive share price higher towards the next resistances at RM3.00-3.17 with long term target at RM3.30.
market pulse

BNM’s OPR decision in focus

We expect the negative sentiment could persist over the near term as investors will be waiting for the Bank Negara Malaysia’s (BNM) decision on the overnight policy rate (OPR) later in the afternoon; any further cut in the OPR may cause downward pressure on banking stocks. Also, there have been some negative selling activities amongst the glove heavyweights and we believe it may continue for another session today. Meanwhile, consolidation might be seen for selected lower liners following the recent gains.

Serba Dinamik Holdings Bhd – 19th Jan 2021

With the exclusion of the O&M and EPCC contracts located at Malaysia due to their nature of work scopes being call-out basis, the remainder eight O&M and ICT contracts secured has a combined value of approximately US$135.8m (c.RM548.2m). The move has sustained the outstanding orderbook at approximately RM18.7bn (relatively unchanged since early December 2020), representing 4.1x orderbook cover ratio against FY19 revenue of RM4.5bn.
market pulse

Containing MCO 2.0 impact through PERMAI

The FBM KLCI extended another red bar as the talks around OPR cut in the mid-week continued to weigh on the major constituents of the key index – banking stocks. Meanwhile, the technology sector outperformed the local bourse yesterday as investors continued to like the sector for its higher earning certainty. We reckon the announcement by the Prime Minister of a RM15.00bn Malaysian Economic and Rakyat’s Protection Assistance Package (PERMAI) might lift the market sentiment, albeit investors’ sentiment to stay cautious ahead of the BNM MPC meeting.
technical focus

Technical Focus – 18th Jan 2021

Engages in the design development, manufacture, marketing and sale of precision engineering parts. Key business associates include multinational semiconductor companies such as Broadcom, Synergie - CAD, Bece Pt Ltd, U4Global Solutions and GFMI. Venturing into the production to manufacture critical automotive parts in mid-2021. Improving fundamentals and operates in a healthy balance sheet with net cash position of RM53.6m, translating to a net cash per share of RM0.10 in 1QFY21. Technically, breakout above RM0.96 may drive share price higher towards the next resistances at RM1.03-RM1.11 with long term target at RM1.23.
market pulse

Turning wobbly

With the retreat of crude palm oil prices, coupled with the speculation of another round of Overnight Policy Rate (OPR) cut, investors could further reduce their position in plantation and banking heavyweights; that may translate to potential negative trading tone amongst banking stocks and dragging down the FBM KLCI this week. Also, market sentiment may remain weak amid the ongoing rising Covid-19 cases despite the re-imposition of MCO. On the flipside, we expect some rotational play towards building materials segment amid the firmer commodity prices such as tin, iron, aluminium and etc.
macquarie structured warrants 20200914

Hang Seng Index on a bull run for the second week

The second trading week of the year saw investors continuing to focus on glove names such as Top Glove, Supermax, Kossan Rubber and Hartalega. Warrants over stocks made up 79% of total warrants turnover for the week which came in at RM402.9mil, while warrants over the Hang Seng Index (HSI) and iShares China A50 Index (A50CHIN) took up 17% and 2.6% of total turnover, respectively.
market pulse

Marking time

Tracking the negative sentiment on Wall Street, coupled with the pullback in the FBM KLCI yesterday, we expect trading tone on the local front to further consolidate. Also, the overheated rally in the technology stocks may take a breather with traders digesting their gains over the next few days. Given some of the essential sectors are still operating under MCO 2.0, companies shall be able to register some earnings at least for this quarter. Meanwhile, we expect traders to lookout for LSS4 and immigration related news over the near term.
market pulse

Striding higher

Tracking the gains on regional markets, the FBM KLCI has closed at the highest level since the beginning of the year, with buying interest seen in the recovery themed stocks such as banking and gaming heavyweights. Investors shrugged off concerns on the first day of MCO 2.0 while the essential sectors remain opened. The key index may take a little following yesterday’s rallies, but we expect the downside to be limited. The lower liners saw some rebound signs as the indexes made significant headway yesterday after recent consolidation.
technical focus

Technical Focus – 13th Jan 2021

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. PPHB offers JIT (Just–In-Time) services, Total Packaging Concepts, Designing & Supply Chain Management. Relatively low gearing at 0.1x in 3QFY20 and PPHB is trading well below the book value of RM1.39. Technically, price has rebounded above the daily EMA9 level, targeting the next resistances at RM1.09-1.14, with long term target at RM1.25.
market pulse

Recovery in progress

The FBM KLCI recouped most of its intraday losses in the afternoon session yesterday, as market sentiment was lifted by a nationwide state of emergency proclaimed by the Yang di-Pertuan Agong that will be enforced until 1st August 2021. While the move should be reducing some of the political uncertainties in the country, the key index still closed lower as the number of Covid-19 cases remains high. However, we believe the local bourse should find stability soon as some bargain hunting activities were noticed in the market. The lower liners may extend their gains yesterday as the rise in the indexes was supported by rising trading volume throughout the day.
market pulse

Economic recovery derailed

Fear over the new lockdown measures has driven profit taking activities on the local bourse, leading the FBM KLCI to close lower after a choppy trading session yesterday. Following the Prime Minister’s special address on the implementation of tighter movement restrictions in most parts of the country, we expect the market outlook to remain subdued today as further lockdowns may cause further stress to the economy. However, the negative market sentiment may not last long while the market awaits for vaccine rollout. The lower liners might also see greater selling pressure.
technical focus

Technical Focus – 11th Jan 2020

Hong Seng Consolidated Bhd (Hong Seng) turnaround fortune is on the table, following the venture into the healthcare segment which allows the group to provide pharmaceutical, medical and healthcare supplies. We also note that further diversification into gloves manufacturing with production of 2 nitrile gloves lines in April 2021 is timely. Total of 6 nitrile gloves production lines in September 2021 will produce approximately 1.5bn pieces of gloves per annum. Technically, a consolidation breakout above RM1.06 may drive price towards the next resistances at RM1.17- 1.25, with long term target at RM1.40.
market pulse

Towering higher

Sharp gains in gloves heavyweights came as investors feared for another round of nationwide or certain states lockdown being imposed as buying activities have now catered towards the healthcare sector. As it is, all heads will turn to the Covid-19 public health measures that are expected to be more stringent today. With the prospects of economy recovery remain clouded by the rising number of Covid-19 cases, we think that the lower liners may continue to remain under pressured over the near term on mounting concerns over the disruption of supply chain with numerous factories and retail outlets were temporary closed.
macquarie structured warrants 20200914

Warrants over glove makers start the new year roaring

The first week of 2021 saw the Malaysia warrants market clocking in an overall turnover of RM404.9mil with warrants over single stocks making up over 79.6% of the total turnover while warrants over the Hang Seng Index came in second, constituting up to 14.4%. Warrants over other indices and foreign underlyings made up the rest of the total turnover for the week.
market pulse

Re-capturing 1,600

Following the rebound yesterday, we believe that the local bourse is now attempting to find stability as investors bargain hunt and nibble on beaten down stocks. While there are signs of return in foreign funds, we remain cautious amid the negative market undertone as the number of new Covid-19 cases in Malaysia surpassed 3,000 mark yesterday. The lower liners are expected to remain in the purple patch, though we do not discount the possibility of rotational play may take precedence amid the improved trading liquidity.
market pulse

Marred by political uncertainty

It was another lacklustre performance on the FBM KLCI as sentiment was largely dented by the renewed political uncertainty. With the volatility has yet to abate, we reckon that the sentiment will remain largely indifferent over the foreseeable future. At the same time, the elevated new cases of Covid-19 will continue to pile pressure on the pace of economic recovery as the prospects of more stringent measures on the CMCO being discussed. The lower liners will also remain choppy as traders are opting to keep their trades on a shorter time frame to reduce exposure to the volatile market environment.
technical focus

Technical Focus – 6th Jan 2021

Following the recent retracement, valuations amongst glove players have turned appealing to investors as future prospects remain well supported by the strong demand and rising ASPs. At the same time, the ramping in production capacity will accelerate topline contribution over the foreseeable future. Although the vaccine for Covid-19 was rolled out in certain part of the globe recently, we think that the demand will remain relatively intact with spot orders for major glove players fulfilled till end-2021. At the same time, the rising number of Covid-19 cases across the globe will continue to spur demand in subsequent quarters before the vaccine is available for the mass.
market pulse

Rebound in store

Bargain hunting activities emerged on the FBM KLCI as the key index returned into the positive territory in the second half of the trading session, lifted by gains in glove heavyweights. We reckon that further recover is in store as investors may start to accumulate on the beaten down gloves stocks. Gains, however, is expected to be limited by the high number of new Covid-19 cases that may continue to pose a hurdle for a smooth economic recovery. Elsewhere, the lower liners may creep higher on the back of the rotational play amid the returning of risk appetite into the equities market.
market pulse

Volatility persists

Although there were signs of recovery at the start of the trading bell, stocks across Bursa Malaysia were hammered by the uplift of regulated short selling activities. For now, we think that the volatility may persist, taking cue from the selldown on Wall Street overnight. On a brighter note, the recovery in Malaysia Manufacturing Purchasing Managers’ Index (PMI) may provide some cushion to further weakness. Meanwhile, we also think that the lower liners may continue to endure further profit taking as investors risk appetite dwindled due to the rising number of Covid-19 cases.
technical focus

Technical Focus – 4th Jan 2021

Established track record, backed strong export sales to Asia countries over the years. Annual production capacity of 525,000m3 that is running at utilisation rate of approximately 90%. Adoption of work-from-home will continue to spur demand for office furniture with current orderbook fulfilled until March 2021. Embarking into the green initiative via the installation of 2,000 kw/h solar photovoltaic panels, targeting in 2021. Technically, we may anticipate for a potential flag-formation breakout above RM0.72, targeting the next resistances at RM0.78-RM0.815 with long term target at RM0.90.
market pulse

Welcoming 2021

After recording 2.4% YoY gain in 2020, we reckon that the FBM KLCI is poised for further upsides moving into 2021. The extended gains will largely be dictated by the pace of economic recovery, coupled with the roll-out of Covid-19 vaccine progress in Malaysia. Coming closer, bargain hunting activities may emerge from the previous session selldown, but gains are likely to be tepid owing to the surge in number of new Covid-19 cases reported. We also expect the lower liners to march higher, driven by the resumption of improve trading liquidity.
technical focus

Technical Focus – 31st Dec 2020

Since vaccine news has been surfacing in the news media, the Brent oil has been establishing its upward move above USD46. The trend has been more stable with the stimulus hopes in the US as well as vaccine rollout in several countries; Brent oil price has been trading above USD50 over the past two weeks. Should the Brent oil charges above USD52, we expect buying interest may return on O&G sector on Bursa Exchange. Under the O&G sector we like PENERGY and SERBADK.
market pulse

FBM KLCI may rebound higher

With the US stock markets closing marginally higher, coupled with the year-end window dressing activities, we expect trading interest on the local exchange will be positively skewed for the final day of 2020. Meanwhile, we believe Brent oil price may trade firmer on the back of greater-than-expected oil inventory draw of 6.1m barrels for the week ended 25th Dec. Besides, we opine market players may focus on recovery themed stocks given more countries allow vaccine for emergency use.

Kim Loong Resources Bhd – 30th Dec 2020

Back home, we reckon that stockpiling activities will peak towards end-2020. The move will come as Malaysia will impose the export tax for CPO at 8.0% from January 2021 and will revise subsequently on monthly basis. On Kim Loong, do note that the impending acquisition of oil palm estates in Sabah, tentatively in January 2021 will boost the group’s FFB production by approximately 10.0%.
market pulse

FBM KLCI may be supported along 1,620

Wall Street ended in the negative territory after hitting the record highs throughout the session may set a mixed tone on the local front, but the FBM KLCI could be supported by mild window dressing activities. On the broader market, traders could focus on the automotive segment on the back of the SST exemption extension until mid-2021. Meanwhile, crude palm oil price remains firmly on the upward trend (RM3,550 as of yesterday closing). Also, we believe traders may anticipate that the LSS4 contracts to be awarded by 1H2021.
market pulse

FBM KLCI may revisit 1,660

With the US stock markets trended towards the all-time-high region as well as yearend window dressing activities, we expect the buying support to persist on the local stock exchange. Meanwhile, traders may focus on the stronger-than-expected November exports numbers, which could lift export related sectors. Also, Pharmaniaga’s vaccine distribution news is likely to spur interest within the logistic companies. While we believe the rising commodities prices may support the steel related counters, the upside might be limited after several rounds of rally over the past few weeks.
market pulse

Window dressing activities to persist

Heading into the final week of 2020, we believe the market may still focus on window dressing activities, but upside could be limited given the new Covid-19 variant that is haunting the reopening of the major economies. Meanwhile, market participants may lookout for trading ideas along the construction and building materials sectors on the back of ongoing and new infrastructure projects that will be expected moving into 2021 as well as rising commodities (copper, iron, aluminium and etc) prices. Besides, crude palm oil price has hit multi-year high which could translate to firmer corporate earnings.

Econpile Holdings Bhd – 24th Dec 2020

We remain sanguine that earnings recovery will be materialise in coming quarters on the back of the resumption of physical works as well as the supply chain such as concrete, cement, steel and etc.
market pulse

Recovery-themed stocks may trade higher

We expect the positive momentum on the local front could sustain today ahead of the long weekend. We believe market participants are still expecting newsflow on the KL-SG HSR as well as LSS4 contracts to surface in the news media in the near term. Meanwhile, crude palm oil price has hit the multi-year high above the RM3,500 level; this could translate to firmer earnings moving forward for plantation companies. Also, health experts commented that vaccines in production would be effective against the new variant and this could rekindle trading interest on recovery-themed stocks.
market pulse

FBM KLCI could be due for a rebound

Without any fresh catalyst, we expect the selling pressure to continue on the local front. However, the silver lining for today will be the commitment of vaccine rollout plan by Malaysia’s government. Meanwhile, market participants could also take part in the glove manufacturers following the new virus strain in the UK which resulted in a faster pace of infected cases. Besides, investors are waiting for HSR and LSS4 contracts to be dished out in the near term.
market pulse

KLCI may find support along 1,640

As the market was spooked by the new Covid-19 virus strain that caused another lockdown in the UK; the negative sentiment may spillover to stocks on the local front. However, we opine that the downside risk might be limited given the vaccine rollout is on the way. Investors could remain focus on the potential emergence of HSR news flow, coupled with the LSS4 that is expected by year-end. Meanwhile, focus could turn to the vaccine distribution candidates this week.
Get Wiz

Steel sectors are heating up

we have positioned ourselves for building materials and construction related stocks. That gave us some potential trades today after we have put in
market pulse

Market may be due for a rebound

Although the US stock markets ended the week on a negative tone, we expect stocks on the local front could be due for a technical rebound after the 3-day pullback last week. We believe the KL-SG HSR and water-related stocks may remain in focus given the news on RM4bn Rasau water treatment plant calling for tender next year is still fresh. Meanwhile, we expect trading interest to rekindle in plantation sector as CPO surged and closed firmly above RM3,400 last Friday.
market pulse

Water-related stocks to focus

With the Wall Street trending higher overnight, we opine buying support may spillover towards our local front after a two-day pullback. Mainly, traders will continue to build their interest on the back of the KL-SG HSR news. Meanwhile, we think the surfacing of the RM4bn Rasau water treatment plant to be called for tender next year would spur trading interest amongst water-related counters. Besides, some of the commodities such as crude oil, CPO and gold have remained quite resilient over the past few sessions and trading interest should be noted within those sectors.
market pulse

Broader market to remain positive

With the US stockmarkets inching higher overnight, we believe stocks on the local may proceed higher, but profit taking could emerge on glove manufacturers on the back of Covid-19 cases was observed in several glove companies, which may attract profit taking activities after a two-day rebound. Meanwhile, with the ongoing market talks on the KL-SG HSR, we opine traders will continue to trade within the construction and property sector. Meanwhile, Brent oil price has surged above USD51 on the back of crude oil inventory declined by 3.1m barrels last week.
technical focus

Technical Focus – 16th Dec 2020

Established in 1977, 3A is one of the leading food and beverage ingredients manufacturer which supply its products locally (61%), to Singapore (9%) and other foreign countries (30%). 3A has been constantly upgrading its plant to improve its production efficiencies. Meanwhile, in respond to the increasing demand for the HVP and caramel products, the group has been expanding both the HVP and caramel plants. Also, 3A has invested in R&D to broaden the range of their existing products. Technically, price has experienced a resistance breakout above RM0.90, targeting the resistances at RM1.05-1.10-1.15, while the support is at RM0.91.
market pulse

Buying interest to return

Tracking the positive sentiment on Wall Street, coupled with the approval of third budget reading yesterday, we expect the buying interest could spillover towards stocks on the local front. Also, with the ongoing window dressing activities, the FBM KLCI could be lifted higher as funds maybe rotating back towards value and recovery themed stocks over the next two weeks. On commodities side, crude oil and crude palm oil has been traded on a firmer tone, while lumber price has shot up strongly since October.

Econpile Holdings Bhd – 15th Dec 2020

Outstanding orderbook has now risen to approximately RM1.00bn, which translates to an orderbook-to-cover ratio of 2.5x against FY20 revenue of RM403.0m that will provide earnings visibility till FY23. We remain sanguine that earnings recovery will be materialise in coming quarters on the back of the resumption of physical works as well as the supply chain such as concrete, cement, steel and etc.

Hartalega Holdings Bhd – 15th Dec 2020

As the availability of Covid-19 vaccine at the doorstep across the glove in near future, we think that the pent-up demand trend may likely to taper in 2022. The move, coupled with the impending new entrants of gloves manufacturers and expansion of existing capacities will subsequently bring the meteoric rise of gloves ASPs to an inflection point. Nevertheless, we reckon that despite the retracement in ASPs of gloves, it will still come higher against pre-Covid-19 levels.
market pulse

Profit taking activities to persist

Wall Street started the week on a mixed note amid the additional Covid-19 restrictions and it may spillover towards stocks on the local front. Also, with the recent political developments ahead of the third budget reading in the parliamentary session today, that may limit the upside potential on the FBM KLCI as well as the broader market at least for the near term. Once there is more clarity on the third budget vote, we might experience rekindling of buying interest moving forward. On a side note, the Brent oil price is hovering near the USD50 despite the new Covid-19 measures in the US.
macquarie structured warrants 20200914

Warrants over rubber gloves and banks among most active

Trading activity in structured warrants continued to remain strong as overall turnover rose by 19.8% to RM826.5mil. Warrants over rubber gloves and banks were in the spotlight last week following Top Glove’s record 1Q21 profit which surged 2,041% year-on-year (y-o-y) to RM2.38bil on higher demand due to the pandemic, while the banking stocks saw Public Bank leading the rally, gaining 17.7% week-on-week (w-o-w), following its four-for-one bonus issue proposal announced recently.

2020 Review and 2021 Outlook

2020 is a washed out year and we believe the economy may recover in 2021, given the resumption in business activities and potential vaccine availabilities next year. On the market outlook, we think it could be a broad based upward move next year as recovery-themed sectors will be in focus. Hence, we believe, market participants are positioning in that direction for 2021. Sector wise, we like travel, logistics, consumer, construction, plantation, O&G, packaging and healthcare as we opine broad recovery will be anticipated.
market pulse

Recovery tone may persist

Despite sentiment on the Wall Street trended mixed last week, we believe trading interest on the local front will remain robust, riding on the recovery theme as well as the ongoing window dressing period. Also, the positive vaccine development such as the emergency rollout of Covid-19 vaccine in the UK, US and Canada in the near term may point towards the optimism on economic recovery moving forward. With the anticipated recovery in business activities, we expect Brent oil and crude palm oil prices to remain firm within USD45-50 and RM3,200-3,400, respectively over the near term.
market pulse

Sentiment to recover amid vaccine optimism

Although Wall Street ended on a mixed note, we expect the trading activities on the local front may skew towards the positive side given the US FDA panel recommends the approval of Pfizer’s Covid-19 vaccine for emergency use; this may boost recovery-theme stocks on the local front as market players may continue to take profit on healthcare related stocks. Also, we noticed Brent oil and crude palm oil prices have trended higher overnight, which is in line with the optimism of vaccine news developments.
market pulse

Likely to take a pause

Tracking the negative sentiment on Wall Street, coupled with the selling pressure on the healthcare stocks, we expect broader market sentiment on the local front to stay muted and market players may digest their gains further. Also, FBM Small Cap has formed a bearish engulfing bar, which may suggest some pullback to be seen in the near term. Nevertheless, we believe traders will be monitoring for recoverytheme stocks today given the re-opening of business activities as well as optimism on Covid-19 vaccine positive developments.
market pulse

Recovery in sight for FBM KLCI

Tracking the recovery in healthcare stocks led by Top Glove ahead of its release of result, we believe healthcare segment could rebound further at least for the first session of the day. Meanwhile, for the recovery-theme stocks, generally they may take a breather as market players are focusing on healthcare segment. Selectively, we may anticipate higher trading interest on banking stocks due to Public Bank’s bonus issue announcement. Besides, for the relaxation of CMCO, it should translate to higher demand for food consumption.
market pulse

Mild profit taking activities ahead

Given the Wall Street traded on a mixed note, we expect mild profit taking activities to emerge on the local front within some of the recovery-theme stocks as the market could be overheated after trading volume on the local exchange surged above 10bn for the third trading day. Nevertheless, trading interest on the technology stocks could remain positive owing to the all-time-high move on Nasdaq. Meanwhile, we expect buying support to surface within the construction, building materials, as well as transportation and logistics companies today on the back of relaxation of CMCO measure.
macquarie structured warrants 20200914

Warrants market robust with wider interest

Call warrant over Supermax, SUPERMX-C1I, took the crown last week with 171.4mil units traded as the underlying shares traded lower for the majority of last week following the 6.8% surge on Monday, ending the week at RM8.29, 2.7% lower week-on-week (w-o-w).
technical focus

Technical Focus – 7th Dec 2020

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). Earnings recovery will be largely in place as the 1HFY20 was impacted by the global supply chain disruption with both China and Malaysia operations were affected by the temporary shutdown in production due to the Covid-19 pandemic Prospective dividend yields at 5.1% and 5.4% for FY20f and FY21f deemed to be relatively attractive. Technically, price has experienced a resistance breakout above RM2.75, targeting the next resistances at RM2.89-2.94 with long term target at RM3.12.
market pulse

Recovery still intact

We believe that the pullback owing to the mild profit taking is healthy to allow for some gains to be digested with the recovery trend still intact at current juncture. Tracking the gains on Wall Street on last Friday, coupled with the higher commodity prices (both crude oil and crude palm oil), further upsides are largely in the cards. The relaxation of CMCO measures also bodes well the economic growth. The lower liners are also expected to trend higher amid the liquidity driven market, though some toppish signs are returning to the fore.

Serba Dinamik Holdings Bhd – 4th Dec 2020

The latest win is a testament of Serba Dinamik’s position as one of the major players in the oil & gas industry. Assuming a burn rate of approximately RM400.0m in December 2020, Serba Dinamik’s outstanding orderbook will come at RM18.3bn by end-2020; within our assumption of RM18.5bn.
market pulse

Commendable breakthrough

The FBM KLCI delivered another commendable performance amid optimism that Malaysia economy is widely touted to emerge from the Covid-19 pandemic slump following the recent progress of Covid-19 vaccine developments. Still, we reckon that the strong upsides may also attract quick profit taking activities over the interim. At the same time, the lower liners are set for the extended rally that is largely driven by the ample of liquidity as investors continue to seek for higher yields investments.
market pulse

Market momentum still sturdy

The FBM KLCI edged mildly lower as sentiment turned downbeat as investors booked in gains from the previous session rally. While the local bourse is demonstrating some mild weakness, we reckon that the general recovery trend is still intact as the attention remains focus on the pace of economic recovery. The positive development over the Covid-19 vaccine will also continue to aid the recovery progress. Meanwhile, the lower liners are expected to charge higher, driven by the ample liquidity with the equities market remain in favour.

AME Elite Consortium Bhd – 2nd Dec 20

The proposed AME REIT would also provide stable and recurring income to investors, with at least 90.0% of its income to be distributed as dividends to unitholders. We note that slightly more than half of the current tenants of the industrial properties has more than 5 years of lease under their agreements. Additionally, AME REIT is expected to benefit from lower tax rate compared to prevailing corporate tax rate at an average of 23.4% recorded over the past 4 years.
technical focus

Technical Focus – 2nd Dec 20

Established historical track record since inception in 1975 with strong brand presence in the Malaysia household market. Demand will be relatively healthy, owing to the rising awareness of personal hygiene following the Covid-19 pandemic. Disposal of loss-making toilet rolls and tissue manufacturing subsidiary; NTMP Paper Mill (Bentong) Sdn Bhd allow the group to streamline and focus on the existing core businesses. Technically, price has experienced a flag-formation breakout above RM0.73, targeting the next resistances at RM0.795-0.815 with long term target at RM0.90.
market pulse

Swift recovery

Expectedly, the FBM KLCI performed a swift recovery as the key index recouped most of its previous session losses to re-claim the 1,600 psychological level. We reckon some stability will ensue with further upsides are in the cards as investors continue to focus on the economic recovery progress. Meanwhile, we believe that the lower liners will continue to enjoy their upward momentum as liquidity remains well on the equities market with investors capitalising on the positive market sentiment.
market pulse

Tempered by MSCI portfolio re-balancing

The FBM KLCI started off the week on a dour note alongside with the weakness across regional peers on the increasing geopolitical tension between US and China. Still, the FBM KLCI recorded 95.82 pts on gain (+6.5% MoM) during November 2020. Although we see renewed volatility unfolding, we reckon that bargain hunting activities may take precedence after the sharp fall yesterday. On the other hand, we think that the lower liners are poised for further upsides, driven by the improved trading liquidity which may extend the rotational play.
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Final day of November, what have you traded?

The Bursa Exchange has been quite volatile last week and the FBM KLCI has turned negative at the time of writing going into the final day of the reporting season. Although the market was slightly negative, things are going well for our Daily Pick list
macquarie structured warrants 20200914

Lower overall warrants turnover for the week; HSI warrants back in focus

The overall warrants market turnover came in at RM593.0mil last week, dropping by approximately 26.8% versus the previous week as stocks over glove makers took a breather. Warrants over Malaysian shares still dominated the total turnover, making up approximately 85.2% of the total warrants turnover at RM505.5mil, followed by warrants over indices with RM41.8mil (7.0%) and warrants over foreign underlyings which made up the balance.

Suria Capital Holdings Bhd – 30th Nov 20

Moving forward, we reckon that a recovery is largely remained in place following the improvement in shipments amid the recovery in economic activities that sent commodity prices (CPO) to multi-year high. We note that the installation of 80 reefer points at Sapangar Bay Container Port was completed in September 2020, bringing the total to 292. Meanwhile, the construction of a new jetty at Sapangar Bay Oil Terminal will commence in December 2020 and is targeted for completion by end-March 2022.
technical focus

Technical Focus – 30th Nov 20

A leading construction player with strong historical track record of completion of notable projects such as St. Mary Residences, The Shore Mixed Commercial Development, EcoSky Condominum and Vista Residences. Equipped with an unbilled orderbook of RM3.60bn that represents an orderbook-to-cover-ratio of 3.4x against FY19 revenue of RM1.06bn that will provided earnings visibility for the next 3 years. Backed by a net cash position of RM182.0m in 3QFY20, representing net cash per share of 14.7 sen. Technically, price has experienced a resistance breakout above RM0.965, targeting the next resistances at RM1.02-1.07 with long term target at RM1.12.
market pulse

Defending 1,600

After delivering a two consecutive days of solid performance, mild profit activities set onto course as the FBM KLCI staged a mild pullback on last Friday. Still, we maintain our positive tone on the local bourse as investors will continue to pin their expectations over the economic recovery following the recent batch of corporate earnings that appears to have bottomed-out. The lower liners may continue to edge higher, largely supported by the liquidity-driven momentum as investors continue their quest for higher yields.

Protasco Bhd – 27th Nov 20

We note that new contracts flow remain absent in 3QFY20, implying tapering of construction orderbook. On a brighter note, the maintenance segment is expected to provide some alleviation to the weakness across other segments, backed by an outstanding orderbook to approximately RM3.70bn that ensure recurring stream of income till 2029. We expect Protasco to tap into the RM1.30bn allocation for construction and upgrading of rural roads for 920km under Budget 2021.

Econpile Holdings Bhd – 27th Nov 20

As of 1QFY21, Econpile’s is equipped with an unbilled construction orderbook of approximately RM680.0m from 25 on-going projects. Moving forward, the group’s unbilled orderbook-to-cover ratio at 1.4x against FY20 revenue of RM403.0m will provide earnings visibility over the next two years.
market pulse

Towering above 1,600

The passing of Budget 2021 has instilled further confidence into the Malaysian market as the FBM KLCI soared beyond the 1,600 psychological level yesterday. With the uncertainty from the aforementioned event being eliminated, the focus has now reverted back to the economic recovery progress. Hence, we reckon that the positive momentum may resume over the near term. The lower liners are also on a positive note with investors nibbling on beaten down stocks, capitalising on the positive market sentiment.

OCK Group Bhd – 26th Nov 20

We attended the post quarter results analyst briefing and came away feeling re-assured on OCK Group Bhd (OCK) expansion moving into FY21f. 9MFY20 was largely affected by the slowdown of sites deployment due to the Covid-19 pandemic. Moving into the final quarter of FY20, we understand that the 4Q results are traditionally stronger over the years may see an exception in FY20 due to the current implementation of Conditional Movement Control Order (CMCO) that is impacting the engineering services segment via restriction of interstate travel.

Chin Well Holdings Bhd – 26th Nov 20

Although there were signs of recovery taking shape after emerging from a net loss position in 4QFY20, we reckon that the pace of recovery is expected to remain tepid as companies scaled down their operations. With several countries in Europe returning to lockdown mode, the outlook appears to be relatively challenging.

AME Elite Consortium Bhd – 26th Nov 20

Moving forward, we believe that AME will be able to capitalise on the initiative delivered under Budget 2021 which entails RM100.0m for the maintenance of infrastructure of industrial parks and RM42.0m under JENDELA to improve internet connectivity in 25 industrial parks. Manufacturers of pharmaceutical products will enjoy 0-10% tax rate for 10 years for investment in Malaysia which may attract foreign investors to re-locate or expand their facilities also bodes well for AME.

OCK Group Bhd – 26th Nov 20

As of 3QFY20, OCK owns and manages over 4200 telco sites in Malaysia (500 sites), Myanmar (1,000 sites) and Vietnam (2,700 sites) that will provide stream of recurring income over the long term. Moving forward, OCK remain committed to drive their overseas expansion via brownfield acquisitions in Vietnam and greenfield acquisitions in Myanmar. At the same time, the group remains committed to increase their tower tenancy ratios in Myanmar and Vietnam which could further strengthen their bottomline margins.
market pulse

All eyes on Budget 2021 vote

It was a firm performance on the FBM KLCI, mirroring the gains on Wall Street overnight as US President-elect Joe Biden is stepping up to improve global trade relations. Back home, investors will be keeping an eye on the Budget 2021 vote to provide further clarity on the political landscape in Malaysia. The lower liners are attempting for a recovery, but gains will be choppy as quick profit taking remains on the table with investors opting to keep their trades short due to the recent volatility.

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.
technical focus

Technical Focus – 25th Nov 20

A leading content and consumer company, serving 5.7m or 75.0% of Malaysian households. Stay at home trend saw the streaming services, AstroGo recorded 65.9% YoY growth to 1.4m active monthly users in 1HFY21. Home shopping and commerce business segment; Go Shop recorded its strongest revenue in 2QFY21 at RM145.0m (+59.3% YoY). Technically, the flag-formation breakout above RM0.795 may lead to further upside with next resistances at RM0.84-RM0.88 with long term target at RM0.945.
market pulse

Escalated selling activities

Selling pressure across the board escalated as the FBM KLCI underperformed its regional peers to finish sharply lower yesterday. Market sentiment has turned dour as the recent spikes in Covid-19 cases are dampening the prospects of economic recovery. Meanwhile, the uncertainty over voting of Budget 2021 deters investors to take further positions. We leave our views unchanged that the lower liners are toppish, hovering largely in the overbought territory that may see further pullback over the near term.
Get Wiz

Another option to spot for decent entries

This is because not all the stocks being chosen will perform during that particular day, thus it may be triggered in the following 5 days due to the ongoing trading activities on those stocks that we have picked. 

Let us show you one of the counters that we have put in on 17th of November - APPASIA

Serba Dinamik Holdings Bhd – 24th Nov 20

Moving forward, Serba Dinamik will continue to eye its overseas expansion, focusing in the Middle East region which is traditionally their strong foothold. Long-term recurring income remains to be seen from projects such as the Teluk Ramunia Yard, Pengerang Integrated Development and Bintulu Integrated Energy hub; the latter was recently completed.
market pulse

Still in consolidation

The FBM KLCI was traded in a lacklustre manner as the key index re-tested the 1,600 psychological level. As there was absence of follow-through buying beyond the aforementioned level, we reckon that the local bourse will be poised for further consolidation. At the same time, the uncertainty surrounding the vote on Budget 2021 are also keeping investors on their toes. The lower liners are looking increasingly toppish which may prompt profit taking activities over the near term.
technical focus

Technical Focus – 23rd Nov 20

One the largest aluminium extrusions manufacturer in Malaysia with production capacity at 100,000MT per annum. Aluminium prices have bottomed-out since April 2020 and subsequently rallied to 2Y high as demand from China soared. Also, effective 1st November 2020, China’s Ministry of Ecology and Environment has lifted the import restrictions on high-grade aluminium scrap. Technically, we may anticipate for a potential flag-formation breakout above RM0.55, to target the next resistances at RM0.59-RM0.615 with long term target at RM0.68.
market pulse

Sideways to linger

Mild bargain hunting activities took precedence as the FBM KLCI ended the week on a positive tone on bargain hunting in gloves heavyweights. We reckon that a consolidation will be in the picture over the near term amid the lack of fresh leads. In the meantime, gains will be limited by the rising number of Covid-19 cases that may derail the prospect of V-shaped economic recovery. Meanwhile, the lower liners are likely to trend higher, owing to the rotational play, whilst investors will continue to keep an eye on the barrage of corporate earnings releases as well as Budget 2021 vote this week.
macquarie structured warrants 20200914

Mah Sing and AirAsia warrants joined the bandwagon

The Malaysia warrants market recorded a RM809.8mil turnover last week, which is 1.7% higher than the prior week due to renewed interest in stocks which were badly beaten down due to the Covid-19 pandemic. Nonetheless, warrants over rubber glove stocks continued to dominate the warrants space with RM455.4mil traded, which made up more than 56.2% of the total warrants market.
market pulse

Finding stability

Expectedly, the toppish condition that warrants a pullback saw the FBM KLCI retreated. The meteoric rise since the start of the month has seen a shift in sentiment as investors were quick to lock in recent gains. Meanwhile, the uncertainty over the passing of Budget 2021 also weighed on the recent market sentiment. Going forward, we expect choppiness to prevail with mild bargain hunting activities to take place. Elsewhere, the lower liners are likely to trend higher, boosted by the liquidity driven market, coupled with the rotational play.
market pulse

Consolidation beckons

Signs of profit taking activities are emerging on the FBM KLCI following the key index breakthrough above the 1,600 psychological level. We now expect a consolidation to take place as investors digest their recent gains. The sideways trend is expected to allow fresh legs for further upside over the near term. In the meantime, the lower liners are expected to consolidate as well with the investors focusing on the barrage of corporate earnings releases.

Teo Seng Capital Bhd – 18th Nov 20

Following the previous quarter upswing in chicken egg prices, the ASP of chicken eggs began to show a downward trend, dropped by 21.8% QoQ in 3Q2020 to average of RM0.23 per egg in September. The decline was dragged by lower consumer demand due to shrinking economic activities amid second wave of Covid-19 pandemic. The downturn in ASP of chicken eggs has been a drag on the company’s top-line growth, albeit the growth in sales quantities of eggs QoQ and stable contribution from the animal health products segment.
technical focus

Technical Focus – 18th Nov 20

Crude palm oil prices (CPO) have now retained its position RM3,000/MT level since late October 2020; amid the improving demand prospects. The positive momentum will be back by the higher export shipments to India and China with the latter will be stocking up their inventory ahead of the festive season. While, the export tax exemption 2H2020 will drive price to be competitive at international levels, the resumption of operations under the agriculture and plantation sector at Sabah since the start of November bodes well. The improved domestic ties following the signing of Regional Comprehensive Economic Partnership also bodes well for export to the world’s second largest importer.
market pulse

Defending 1,600

Following the breakthrough above the 1,600 psychological level, we now expect the higher possibility of profit taking over the near term. Still, further upsides remains on the table over signs over resurgence of bargain hunting in gloves-related stocks amid their attractive valuations, coupled with the strong near term fundamentals. Elsewhere, the rotational play amongst the lower liners remains in place, spurred by the higher-than-average trading activities as investors continue to search for higher yields.
market pulse

Looking beyond 1,600

It was another firm performance on the local bourse, despite a choppy trading session yesterday. We reckon that gains would likely to extend for the FBM KLCI to power beyond the 1,600 psychological level owing to the positive progress over the Covid-19 vaccine development from Moderna. At the same time, gains will be backed by the positive momentum on Wall Street overnight, coupled with expectations that the economy will continue to deliver a quicker-than-expected recovery. We also think that the lower liners may continue their upbeat momentum, spurred by the liquidity driven market.

Buying interest yet to taper

The stronger-than-expected 3Q2020 GDP (-2.7% YoY) vs. consensus forecast of -4.0% YoY contraction boosted the FBM KLCI to recover most of its intraday losses last Friday. The three consecutive days of foreign fund inflow will continue to lend support for any weakness over the near term. Meanwhile, we view the conclusion of Regional Comprehensive Economic Partnership (RCEP) bodes well for Malaysia alongside with 14 nations that will strengthen the trade partnership between these countries. Moving forward, investors will be focusing on the barrage of corporate earnings releases, which expects to record sharp QoQ recovery.

Technical Focus – 16th Nov 20

Regarded as a concessionaire for Malaysian Electronic-Government (E-Government) MSC flagship application. Builds, operates and owns the electronic channel to deliver services from various Government agencies to Malaysia citizens and businesses. Volume transactions to remain upbeat for immigration and JPJ-related services and motor vehicle trading related services premised to the gradual re-opening of economic activities. Meanwhile, the one-stop portal for Covid-19 health screening will see a boost from the recent spike in number of Covid-19 cases. Technically, the flag-formation breakout above RM1.45 may drive price higher towards the next resistances at RM1.53-1.61 with long term target at RM1.70.
macquarie structured warrants 20200914

Warrants over HSI and rubber gloves most active

Despite the surge in stock markets, overall warrants turnover last week fell slightly by 6.1% to RM796.4mil. Active trading remained in warrants over the Malaysian shares with a trading value recording at RM724.1mil, representing approximately 90% of overall warrants turnover last week.
market pulse

All eyes in 3Q GDP

It was another exceptional performance on the FBM KLCI that recovered all its year-to-date losses, lifted by the gains across the board. Moving forward, investors will shift their focus on the 3Q2020 GDP data which may see the contraction to be milder against the prior quarter as economic activities resumed gradually. For now, we think that the key index is increasingly toppish and may warrant a pullback over the near term. The lower liners, meanwhile, remain supported by the liquidity driven market as investors capitalise on the positive market sentiment.
market pulse

Consolidation beckons

Expectedly, the FBM KLCI retreated after staging a sharp rally over the course of past 5 trading days. A consolidation is expected to take place over the near term as the FBM KLCI as investors continue to lock in recent gains, which we deem to be a healthy move at current juncture. Meanwhile, we also think that the lower liners will undergo a consolidation with any weakness to be supported by the improved trading liquidity with investors continue their quest to hunt for higher yields.

Market down, but M+ Wiz positive

First of all, the market turned negative amid profit taking activities. However, what we have selected for M+ Wiz list was with a good recovery theme in it as well as some sectors with earnings certainty. Our picks are
market pulse

Turning toppish

It was another exceptional performance on the FBM KLCI, spurred by the positive developments on the potential Covid-19 vaccine, coupled with the higher crude oil prices. We reckon that further upsides are still in the cards, although the move may also attract profit taking activities in the interim. Investors may start to lock in their gains to digest the recent run-up before returning with fresh legs for further upside. Although the lower liners are also looking toppish, any weakness will be cushioned by the improvement in trading liquidity in recent days.
technical focus

Technical Focus – 11th Nov 20

Started off in 1997 and subsequently grown into one of the largest express delivery service provider in Malaysia. Implementation Conditional Movement Control Order (CMCO) across several states at Peninsular Malaysia, coupled with extension of CMCO in states that were already affected may continue to boost demand. Singles’ day sales (11.11) may also provide an additional leg for further online delivery orders. Technically, a potential symmetrical triangle formation breakout above RM0.445, to target the next resistances at RM0.49-0.545 with long term target at RM0.60.
market pulse

Another milestone on vaccine progress

After delivering a solid performance last week, the FBM KLCI was supported by the eleventh hour buying in selected index heavyweights. While further upsides are still on the cards, we think that any firmer upward move may attract quick profit taking activities. A consolidation beckons owing to the positive signs of vaccine development by Pfizer and BioNTech which could be a boon for economic recovery, but a bane for glove makers stocks. The lower liners are still on course for further upside, driven by the improved trading liquidity.

SLP Resources Bhd – 9th Nov 20

While the exports sales are expected to remain sluggish as certain European countries have returned to lockdown, we reckon that the weakness will be cushioned by the improved sales from the local market. Already, 3QFY20 bottomline rose 7.8% QoQ alongside with the recovery at topline that registered 6.6% QoQ improvement.
technical focus

Technical Focus – 9th Nov 20

We reckon that gloves-related stocks will retain their position as favourites amongst investors following the tabling of Budget 2021. Investors will breathe a sigh of relief as the possibility of implementation of windfall tax did not materialise. Instead, glove manufacturers will collectively voluntary contribute a combined sum of RM500.0m to combat against Covid-19, which includes partially covering the cost of the Covid-19 vaccine as well as expenses for healthcare equipment. Meanwhile, we expect demand to remain relatively robust in subsequent quarters owing to the pent-up demand that has yet abated alongside with the rising average selling prices (ASP)
market pulse

Cheering on Budget 2021

The all-rounded Budget 2021 that aims ensure sustainable living and rejuvenate economic activities is well received by majority which could provide a catalyst for further up strides. Foreign funds net buying rose to the highest level since mid-January 2020, coupled with the diminishing uncertainties surrounding the US political situation will ensure stability, moving forward. The lower liners are expected to remain robust, owing to the positive market momentum that is driven by the resurgence in trading liquidity.
macquarie structured warrants 20200914

Higher warrants turnover for the week; US election outcome in focus

The overall warrants turnover for first week of November jumped by approximately 17.9%, surging to RM868.7mil from RM736.9mil a week ago. The event-packed week saw warrants over Malaysian shares still dominating the total turnover, making up approximately 86.4% of the total warrants turnover at RM750.6mil, followed by warrants over the Hang Seng Index

Budget 2021 – Contain and Reboot

We believe Budget 2021 is perceived as mildly positive; it focuses on containing the Covid-19 health crisis and rebooting the economy, as well as supporting the welfare of the rakyat. Covid-19 fund will help to contain the health crisis, while higher development expenditure could translate to improved construction activities. Meanwhile, the budget allocated for the technology sector may drive FDI into Malaysia. We are positive on healthcare, construction, technology, telco sectors, while neutral on property, tobacco and consumer sectors.
market pulse

Budget 2021 in focus

Strong gains on Wall Street overnight spill over to Asia markets, including the FBM KLCI as foreign funds net buying rose to the highest level since mid-August 2020. Moving forward, investors will be anticipating on the announcement of Budget 2021 that points to further measures to be dished out to rejuvenate the economy. Under the prevailing largely positive market sentiment, we expect the market undertone to remain buoyant as investors’ quest to search for higher yields returned.
market pulse

Finding stability

The FBM KLCI managed to hold onto its gains as the key index snapped a four-day losing streak mild bargain hunting activities in beaten down stocks. Although the US presidential election race remains on course, investors breathed sigh of relief that the neckline race will see neither party holds the neither majority in Senate nor in House of Representatives; which suggest that any broad policy changes are off the table. Meanwhile, we still think that rotational play amongst the lower liners may take charge over the interim, owing to the positive market sentiment.
technical focus

Technical Focus – 4th Nov 20

Renewable energy diversification equipped Advancecon with a total of 3 major solar projects with combined 3,710.5kWp solar photovoltaic system that will provide long term recurring income to sustain earnings visibility over the years. Outstanding construction orderbook of RM730.9m will provide earnings visibility to the construction segment over the next 24 months. Proxy to the potentially higher spending on infrastructure developments under Budget 2021, backed by its strong track record in execution of mega-infrastructure projects. Technically, a recovery beyond RM0.36 may drive share price towards the next resistances at RM0.395-RM0.41 with long term target at RM0.455.
market pulse

All eyes on US election

Despite Bank Negara move to keep the benchmark interest rates unchanged, it was another volatile session as the FBM KLCI that was bogged down by the extended selling activities from foreign funds. Moving forward, we expect the tepid momentum to continue as investors will be monitoring on the US election results that has been keep investors on their toes. Meanwhile, we expect rotational play to take charge on the lower liners, although sentiment remain rocky as US enters into the ballot tallying during market trading hours today.
market pulse

Rebound in store

The FBM KLCI took a dive before recovering most of its intraday losses on the back of strong Chinese economic data. We reckon that bargain hunting activities may take precedence over the near term, although sentiment remains largely indifferent at current juncture. At the same time, investors will be focusing on Bank Negara’s monetary policy decision today that may provide further clarity on the economic recovery progress. The lower liners are also attempting to find stability, following the recent rout.

Selling continues on the broader market

On Bursa Exchange, it has been fairly negative as market players continue to sell off on several heavyweights last week. Despite the higher Covid-19 confirmed cases globally on a daily basis, selling pressure continues to mount on healthcare stocks especially the glove segment and this has contributed to the negative broad market sentiment
macquarie structured warrants 20200914

Volatility Index hits 4-month high, U.S. election coming up

Warrants over the S&P 500® Index (SP500) captured interest last Friday with the U.S. presidential election coming up on 3 November 2020. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), which is a measure of U.S. market volatility and often referred to as the fear index

Kimlun Corporation Bhd – 2nd Nov 20

Kimlun Corporation Bhd’s long-term prospects remains uncertain owing to the depleting construction orderbook (approximately RM1.40bn as of 30th June 2020) that will provide earnings visibility over the next 2 years, whilst the manufacturing segment orderbook of RM370.0m will also sustain the segment earnings over the next 2 years. We are ceasing coverage on Kimlun Corporation Bhd due to reallocation of internal resources and the lack of retail and institutional interest.
technical focus

Technical Focus – 2nd Nov 20

Under the prevailing market volatility, we see gold proxy companies as a hedging methodology. Gold prices is expected to remain steady above US$1,900/oz in view of the barrage of uncertainties such as the upcoming US election, rising Covid-19 cases and lesser optimism over the pace of global economic recovery after several countries across Europe have returned to the state of lockdown. At the same time, the CBOE Volatility Index (VIX) that represents the market expectations of 30-day forward volatility has jumped to near 40.0 in recent day; the highest since mid-June 2020. The low interest rate environment will continue to entice investors into gold as an alternative investment.
market pulse

A barrage of uncertainties ahead

The sluggish global equities performance permeates to stocks across Bursa Malaysia and we see the volatility to remain unabated owing to several factors; rising political tension domestically, impending US election and rising number of Covid-19 cases globally. We reckon that the extended volatility may take place this week as investors’ sentiment remains cautious. The lower liners are expected to remain on a choppy mode as investors prefer to adopt the wait and see approach before taking further risks.
market pulse

Sentiment remain indifferent

We reckon that the consolidation may prolong owing to uncertainties surrounding the political developments on the local front, impending US election, rising number of Covid-19 cases globally and pace of economic recovery in the final quarter of 2020. The lower liners are also in a purple patch as sentiment remain cautious with quick profit taking are limiting any significant gains. Hence, we continue to advocate the “hit and run” technique, keeping trades in a shorter time frame.
technical focus

Technical Focus – 28th Oct 20

LKL engages in the provision of medical/healthcare beds, medical equipment, composite dressing, medical peripherals and accessories and it is well equipped to undertake further expansion, targeting annual production capacity of 6,500 beds in FY22 (from 5,000 in FY20). Earnings growth will be supported by the acquisition of 60% equity stake in Tahmaz Meditech Sdn Bhd that comes with a minimum net profit of RM15.0m from FY22-FY24. Technically, a rebound above RM1.05 may target the next resistances at RM1.19-1.27 with long term target at RM1.43.

Hartalega Holdings Bhd – 27th Oct 20

With the reported earnings coming above expectations, we raised our earnings forecast by 61.9% and 84.3% to RM1.86bn and RM2.12bn for FY21f and FY22f respectively to account for the higher-than-expected ASPs. Consequently, we upgrade our recommendation to BUY (from Hold) with a higher target price of RM23.34 (from RM18.44). Our target price is derived by ascribing a targeted PER of 43.0x to their FY21f EPS of 54.3 sen. The target PER is in line with the 5Y historical forward average.
Get Wiz

Bloodbath yesterday do we have any signals?

Out of 6 counters, there are only 2 being triggered. ELSOFT in the first session and PCHEM during the last 30 minutes were flashed in our M+ Wiz. However, today we have a whole set of new components (8 of them) in our list
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