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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.

What’s Trending? (23rd Nov 2020)

The light at the end of the tunnel - at least on the pandemic front - appears more evident amid the release of more positive vaccine news; with both Pfizer and Moderna announcing that their respective vaccine candidates have an efficacy rate of above 90%. However, investors were still wary of the rising case numbers around the globe, signaling that things could get worse before it can get better
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.

What’s Trending? (16th Nov 2020)

In China, its biggest sale of the year, the Single’s Day sale generated around USD 75 billion in Gross Merchandise Value (GMV) for Alibaba (up 26% y-o-y) while JD saw approximately USD 41 billion in GMV (up 33% y-o-y), as “revenge spending” and the diversion from outbound spending to domestic served as key drivers for the jump.
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.

What’s Trending? (9th Nov 2020)

All eyes were glued on the US Presidential Election as the country went to the polls to elect its 46th President. Concerns over the rapid spread of the COVID-19 pandemic were temporarily cast aside last week, as investors jumped back into the market.
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
market pulse

Weakness prevails

Bargain hunting activities have lifted the local bourse to recover most of its intraday losses yesterday as investors breathed signs of relief over the political status quo. We think that the local bourse performance will continue to be dictated by the political developments over the foreseeable future, whilst the renewed volatility on Wall Street overnight may pile pressure on Bursa Malaysia stocks. Although the lower liners are demonstrating mild signs of recovery, it is still too early to tell for a meaningful rebound over the near term.

Chin Well Holdings Bhd – 26th Oct 20

Chin Well Holdings Bhd operations were back to full force since early May 2020 following the approval from MITI to resume their operations. Although the operations were back to normal, demand has yet return to pre-Covid-19 levels as global economy remain roiled by the rising new cases of Covid-19, particularly in Europe. We gather that the European markets (excluding FY20) traditionally make up to 30-55% of total revenue over the past years.
technical focus

Technical Focus – 26th Oct 20

Elsoft is positioned as a key player in the back-end semiconductor testing and also for front-end wafer testing. Key clients include multinational companies like Philips, Avago, Osram, Cree Technology and Liteon. A laggard technology play against its peers in the similar industry, trading at forward PE for FY21f at 14.9x; lower than the 5Y historical average of 24.5x as well as Bursa Malaysia’s Technology sector that is trading at 5Y historical average of 27.6x. Technically, a flag-formation breakout above RM0.63 may spur price towards the next resistances at RM0.685-0.72 with long term target at RM0.755.
market pulse

Relief recovery

Given that the speculations over the potential declaration of state of emergency move did not materialise, we reckon that a relief rebound on the FBM KLCI may take shape. Gains, however, is expected to be limited following the rising number of Covid-19 cases that may see the Conditional Movement Control Order (CMCO) to be extended. The lower liners are also bracing for a rebound after enduring some volatility on last Friday, supported by the recent batch of mostly strong corporate earnings.
macquarie structured warrants 20200914

Warrants over glove-related names most active amid increasing Covid-19 cases

Last week warrants trading activity remained robust with the overall warrants turnover surging 26.1% week-on-week (w-o-w) to RM1.3bil, mainly contributed by warrants over the Malaysian shares. With Covid-19 cases worldwide showing no signs of slowing down, coupled with surging cases reported daily in Malaysia recently, the rubber glove sector continues to be in the spotlight as demand for gloves is expected to remain elevated.
market pulse

Finding stability

The FBM KLCI endured a choppy trading session before bargain hunting activities took charge to power the key index higher yesterday. For now, we reckon that the local bourse may attempt to find stability with nibbling on beaten down stocks. Although the prevailing negative market sentiment is deterring investors to take large positions, the lower liners may continue to see rotational play, boosted by the higher than historical average trading activities.
market pulse

Downward bias consolidation resumes

It was another bleak performance on the local bourse that was marred by the selling pressure from gloves heavyweights yesterday. The near term weakness is expected to prevail as any recovery will be tempered by quick profit taking activities. Nevertheless, we still think that rotational play will remain on the table that is buoyed by rise in trading activities as of late, though the negative market sentiment are also keeping gains in check. Hence, we advocate traders to lock in quick profits, avoiding to holding position for too long.
Get Wiz

Is the market too challenging for you?

Overall (after testing for 55 days live in our virtual portfolio), we have some positive days near to 56%, while positive trades just slightly above 50%. You must be asking why the virtual portfolio could stand out so well at above 30% returns?
technical focus

Technical Focus – 21st Oct 20

I-Stone is regarded as a proxy to the rising adoption of automation amongst companies in order to improve production efficiencies & capabilities and to maintain a leaner operational cost structure. Key clients include EMS players like Dyson, V.S. Industry Bhd and ATA IMS Bhd. Capitalising on the adoption of fourth industrial revolution (Industry 4.0) with opportunities under the field of artificial intelligence, big data, robotics and the leasing of automated lines and equipment. Technically, a flag-formation breakout above RM0.215 may lead to further upsides towards the next resistances at RM0.24-RM0.265 with long term target at RM0.28.
market pulse

Keeping gains in check

The FBM KLCI endured a choppy trading session before succumbing to quick profit taking as investors were roiled by the political uncertainty in the local scene, coupled with the selling activities from foreign funds. Meanwhile, the further stringent measures imposed due to the unabated new Covid-19 cases may derail the prospects of economic recovery projection in 2021. Likewise, the lower liners and broader market shares may undergo a consolidation to allow fresh legs return into the picture.
market pulse

Uptick in momentum

Expectedly, the FBM KLCI rebounded from the three-day slump as investors bargain hunt on beaten down stocks and likely to charge higher today. At the same time, the positive Chinese economic data may also serve as a leading indicator of global economic recovery, should Covid-19 were to be contained over the foreseeable future. The lower liners could have follow through buying support, boosted by the sturdy trading activities as market participants capitalise on the positive market breadth.

SLP Resources Bhd – 19th Oct 20

SLP Resources Bhd (SLP) saw its operations returned to full force in recent months as the company ramp up their production to fulfil the backlog orders. Although the recovery is on the cards, we think that production has yet to reach pre-Covid-19 levels as demand remain relatively sluggish, particularly from Europe that is remain beleaguered by the continuous rising new daily cases. Nevertheless, the worst could be over for SLP as days of recovery are set to shape up in FY21f.
technical focus

Technical Focus – 19th Oct 20

Malaysia alongside with numerous countries across the globe is heading into the third wave of Covid-19. Back home, the number of new cases reported has surged to triple digits consecutively since the start of October 2020. The usage of personal protective equipment (PPE) by healthcare workers under the Health Ministry (MOH) is expected to see uptick in recent and upcoming months. Hence, we reckon that demand for rapid test kits to be on the rise in tandem with mass testing conducted in ensuring the safety of the nation’s living environment.
market pulse

Rebound in store

After three consecutive days of pullback, we reckon that a rebound is in store as investors bargain hunt on beaten down stocks. The upcoming release of China 3Q2020 GDP data may serve as a leading indicator to the pace of global economic recovery as China’s economic activities has returned to the norm with only double digits of new daily cases reported since April 2020. Meanwhile, trading activities remain relatively robust will ensure the rotational play remain in place under the prevailing low yield environment.
macquarie structured warrants 20200914

Demand surged for call warrants over Mah Sing and Comfort Glove

The Malaysia warrants market saw a steep recovery in terms of turnover last week which saw a total of RM1.0bil. traded compared to RM767.0mil traded the week before. The warrants over Malaysian shares continued to dominate the warrants space with RM992.5mil turnover, representing 98.7% of the total warrants market. In particular, we saw enormous investors interest in call warrants over Mah Sing Group (Mah Sing) and Comfort Glove last week as both underlyings saw their share prices reaching new highs.
market pulse

Downward bias consolidation

The extended consolidation on the local bourse is likely to continue in view of the lack of fresh leads, coupled with the uncertainties surrounding the political and Covid-19 situation. The negative sentiment across global markets may also weigh on Bursa Malaysia, although bargain hunting activities may also emerge at later stage. Although there were signs of quick profit taking activities, rotational play amongst the lower liners are keep trading activities at a vibrant level as investors continue to seek for higher yield investments.
market pulse

Another jab from US Department of Labour

We reckon that the consolidation will remain a feature over the foreseeable future as the recent spike in Covid-19 cases may keep a lid on the prospects of economic recovery. US Department of Labour (DOL) move to add Malaysian rubber gloves to its latest list of goods produced with forced labour also trigger some profit taking to gloves heavyweights today. Elsewhere, the re-implementation of Conditional Movement Control Order saw trading activities turning up the heat again as rotational play are shifting towards the healthcare thematic space.
technical focus

Technical Focus – 14th Oct 20

Involved in the design and volume production of high precision metal machining of hard disk drive, computer, camera, consumer electronics and electrical and automotive industries components. Ventured into the production of three-ply surgical mask in early July 2020 under the brand “Novid” and will expand production into kids mask and N95 respirators is deemed timely. Operating with a lean balance sheet with net gearing at 0.04x as of 30th June 2020. Technically, a breakout above RM1.16 may drive share price higher towards the next resistances at RM1.32-1.44 with long term target at RM1.69.
market pulse

Still cautious amid political developments

The FBM KLCI marched higher yesterday as investors as there were no changes in the political agenda in Malaysia. Although the unemployment rate recorded at 4.7% in August 2020 (unchanged from previous month), the number of unemployed person decreased by 3,500, suggesting that the labour market is recovering (albeit gradually). Meanwhile, the continuous rotational play amongst the lower liners provided further room for upsides over the near term.
market pulse

Dragged down by profit taking

Expectedly, the FBM KLCI staged a pullback as investors opted to lock in recent gains following a two-day of rally. At the same time, the rising number of Covid-19 cases triggered the re-implementation of conditional movement control order (CMCO) in Selangor, Kuala Lumpur and Putrajaya may deter the pace of economic recovery. Still, the vibrant trading activities will continue to provide rotational play amongst the lower liners, capitalising on the firmer momentum in recent times.
macquarie structured warrants 20200914

Higher warrants turnover for the week; glove makers still in focus

Besides that, call warrant TOPGLOV-C81 landed on third place last week with a total 94.7mil units traded. The December 2020 expiry call warrant was also the top warrant traded by value with a total traded value of RM62.0mil. Other than warrants over glove makers, the index warrants close to expiry HSI-HAY and HSI-C9V
Get Wiz

Healthcare Stocks Back in Action

We noted that last week was not a good week for healthcare stocks as they underwent some consolidation phase, but it gives us the opportunity to look out for the breakout formation in the near term (as they are still in the uptrend intact position). Bursa Exchange was also mixed with the laggards and leaders being on a neutral tone.

AME Elite Consortium Bhd – 12th Oct 20

AME Elite Consortium Bhd (AME) is regarded as an industrial park specialist that involves in industrial park development, leasing of industrial properties and managed workers’ dormitories. Capitalising on trade diversion with companies relocating their manufacturing facilities amid the on-going US-China trade war. Property investment & management services segment provide sustainable long term earnings visibility. We initiate coverage on AME with a BUY call and fair value of RM2.29, based on 13.0x P/E pegged to its forward FY22f EPS of 17.6 sen.
technical focus

Technical Focus – 12th Oct 20

One of the leading regional retailers of cosmetics and personal care ("CPC") products, under the brand - The Body Shop and Natura. Operates a total of 121 retail stores across West Malaysia, Sabah, Labuan, Vietnam and Cambodia with products also sold via selected third-party online stores such as Hermo, Tiki, Lazada and Shopee. Surge in e-commerce channel will continue to cushion the weakness from the retail stores channel over the foreseeable future. Technically, a flag-formation breakout above RM0.44 suggests for further upside that may drive share price towards the next resistances at RM0.475-0.495 with long term target at RM0.505.
market pulse

Still on the hunt

After two consecutive days of rally (FBM KLCI rallied approximately 40 pts), we reckon that a consolidation may take place at the start of the week as investors would digest recent gains. In the meantime, the recent aggressive move may also tone down in view of the political instability in coming days. On a brighter note, the positive market breadth, coupled with the strong trading volumes in recent days suggests that investors’ appetite remain within the equities market in search for higher yields.
market pulse

Boosted by eleventh hour buying

The eleventh hour buying support that sent the FBM KLCI sharply higher yesterday may warrant a consolidation as investors would opt to digest their gains. The move would come ahead of the political uncertainty next week amid the impending meeting between opposition leader, Datuk Seri Anwar Ibrahim with Yang di-Pertuan Agong. Meanwhile, we continue to see rotational play amongst the lower liners owing to the vibrant trading activities.
market pulse

Bargain hunting may emerge

The eleventh hour sharp selling pressure in selected index heavyweights sent the local bourse spiraling lower yesterday. After the previous session slump, we think that bargain hunting activities may emerge on the local bourse as investors nibble on beaten down stocks. It was a tale of two sides as the lower liners managed to march higher on the back of the rotational play, coupled with the favourable market sentiment.
technical focus

Technical Focus – 7th Oct 20

Focused on delivering complete and customisable payment solution to key partners across various industries such as AmBank, Affin Bank, Visa, MasterCard, MEPS, Petronas, Taobao.com, Touch ’n Go and Giant. Capitalising on the rising adoption of e-payment nationwide, whilst the Covid-19 pandemic has sped up adoption for QR payments in order to minimise contact. Acquisition of 40.0% equity stake in artificial intelligence (AI) company Wannatalk Malaysia Sdn Bhd value-add into the business to business to consumer (B2B2C) solution. Technically, a trendline breakout above RM1.18 may drive share price higher towards the next resistances at RM1.27-1.30 with long term target at RM1.40.
market pulse

Knee jerk retreat

The knee-jerk reaction selldown was due to the projected number of Covid-19 cases at end-October 2020 by the health director-general Tan Sri Dr Noor Hisham Abdullah. Nevertheless, speculations over MCO 2.0 have been quashed by the Prime Minister’s latest announcement may provide some alleviation to the selldown. The lower liners and broader market shares have turned downbeat which may see any gains to be tempered by quick profit taking over the near term amid the rising cases of Covid-19.

Embrace the winter – with gloves and healthcare stocks

Although economy is likely to contract in 2020, we think several stimulus measures across the globe should be able to cushion the downside risk and market players are expecting a recovery in 2021; similar case for Malaysia. For local exchange, we opine the trading activities will hover around gloves and related proxies and healthcare stocks without any meaningful drop in Covid-19 cases. Besides, trade diversions and trade catalyst should turn out well for 4Q20. We have picked CAREPLS, ESCERAM, DNONCE, PECCA, TOMYPAK, AME and WEGMANS for this quarter.

Teo Seng Capital Bhd – 6th Oct 20

Moving forward, TSCB aims to ramp-up their promotional activities in order to maintain and increase their market share. At the same time, TSCB is strengthening their downstream business by introducing new products such as hard-boiled eggs, soft-boiled eggs and herbal eggs in order to diversify their products base.
market pulse

Still ascending

With the slight bullish mode on the local bourse amid the resurgence of buying momentum in glove heavyweights due to spike in Covid-19 cases, we believe that the FBM KLCI movement will now be dictated by the glove heavyweights again. In the meantime, government authorities have quashed rumours for re-implementation of Movement Control Order (MCO) provided some alleviation to the economic recovery progress. The lower liners and broader market also on a recovery mode as investors capitalise on the rising trading activities.
macquarie structured warrants 20200914

Lower warrants turnover for the week, in line with broader market

Total warrants turnover last week saw a 21.3% decline from the previous week to RM681.4mil, in line with the reduced activity in the broader market, in addition to the Hong Kong market having a much shorter trading week pursuant to the market holidays on Thursday and Friday. Market making for warrants over Hong Kong underlyings such as the Hang Seng Index (HSI) and the iShares China A50 ETF will resume on Monday (5 Oct).
technical focus

Technical Focus – 5th Oct 20

Distributes 88 brands of electrical products and accessories, comprising of 85 third-party brands and remainder 3 brands of their own. Aims to open additional 7 new outlets that will ramp up the total number of outlets to 15 over the next 3 years by penetrating into second-tier cities across Peninsular Malaysia. Entered into a collaboration agreement with Prima Nexus Sdn Bhd (PNSB) to distribute rapid test kits for the detection of Covid-19 which have been approved by the Ministry of Health Malaysia (MOH). Technically, a short-term consolidation breakout above RM0.375 will boost price towards the next resistances at RM0.405-RM0.435 with long term target at RM0.47.
market pulse

Anchored by gloves heavyweights

Despite the FBM KLCI marched higher, gains were mostly induced by recovery in gloves heavyweights. We reckon that the trend may continue over the foreseeable future amid the spike in Covid-19 cases locally, coupled with news that US President Donald Trump has also contacted the aforementioned virus. The lower liners and broader market, however, may continue to endure choppiness as volatility takes charge.
market pulse

Down, but not out

Amid the lack of follow-through buying interest, we reckon that the downward bias consolidation on the key index will remain in place. Additionally, the recent increase in Covid-19 cases across Peninsular Malaysia will pose a stumbling block for the nation economic recovery. Nevertheless, the lower liners are attempting to find their footing, with rotational play across sectors will keep trading interests at a decent level.

Optimax Holdings Bhd – 1st Oct 20

Established in 1995, Optimax is as one of the most reputable eye care providers, supported by the high volume of surgeries conducted over the years as well as its established network of eye specialist centres. We project its earnings to decline by 16.2% YoY to RM7.2m in FY20 due to the impact of Covid-19 outbreak and MCO, while the earnings is projected to grow at 57.0% YoY to RM11.4m in FY21, underpinned by its expansion plans with 2 additional surgeons on board by FY21. Optimax is valued by pegging its FY21f core EPS of 4.2 sen to 24x PE (c.30% discount to peers average of 34.8x), leading to a FV of RM1.00.
market pulse

Tempered by quick profit taking

Gains on the local bourse were largely tepid as investors were quick to book profits amid the on-going volatility. Therefore, we reckon that any gains will be tempered by opportunity to sell into strength, particularly from foreign funds (YTD net outflow at RM22.3bn). Elsewhere, the lower liners are will continue to endure a rough ride amid the fading trading interest ahead of the end of blanket loan moratorium that saw trading value slumping to the lowest level since June 2020.
technical focus

Technical Focus – 30th Sep 20

Operates 5 factories sitting on a built-up area of 510,000 sqf, supported by 850 employees with revenue contributed by more than 50 countries across the globe. Benefiting from the US-China trade war following the trade diversion to manufacturers in the South East Asia countries due to import tariffs being placed in Chinese furniture makers. Healthy balance sheet with net cash position at 73.8m as of 3QFY20. Prospective dividend yields are relatively decent at 4.1% for both FY20f and FY21f respectively. Technically, the flag-formation breakout above RM0.725 signals for further upside towards the next resistances at RM0.77-RM0.825 with long term target at RM0.87.
market pulse

Not ripe for further upside

The FBM KLCI succumbed to another round of selling pressure as investors were quick to lock in their gains on the dour economic outlook presented by World Bank. We continue to think that significant upsides will be difficult to come by as the tepid economy recovery remains beset by the unabated new cases of Covid-19. In the meantime, the lower liners are also in a choppy mode as valuations have turned less unappealing at current juncture.

Kim Loong Resources Bhd – 29th Sep 20

With the reported earnings coming above our forecast, we raised our FY21f and FY22f net profit higher by 60.3% and 61.8% to RM92.5m and RM101.4m respectively, accounting for the higher CPO prices assumption at RM2,600/MT (initial assumption at RM2,300/MT). Consequently, we upgrade KLR to BUY (from Hold) with a higher target price of RM1.74 (from RM1.16).
market pulse

Tepid Gains

It was another choppy trading session on the FBM KLCI as quick profit taking activities are now limiting further upsides. Hence, the consolidation is expected to remain in shape for an extended period. Elsewhere, the dwindling trading interests ahead of the end of blanket loan moratorium may also keep gains across the lower liners in check. Investors are opting to remain at the side lines, waiting for further leads before pouncing aggressively into the market again.
macquarie structured warrants 20200914

Rubber glove and HSI warrants among most active

The total warrants turnover fell 13.7% to below RM1.0bil at RM863.8mil for the week ended 25 September 2020. Warrants over the Malaysian counters continued to be the biggest contributor to the warrants market, representing almost 90% of turnover, followed by warrants over the Hang Seng Index (HSI) which contributed 7.9% to the overall warrants’ market share.

Serba Dinamik Holdings Bhd – 28th Sep 20

Serba Dinamik Holdings Bhd (Serba Dinamik) and Huawei Technologies (M) Sdn Bhd have formed a partnership to drive digital transformation in urban and rural Malaysia. Both signed a memorandum of understanding (MOU) which marks the start of the partnership to develop digital solutions via the adoption of Huawei Cloud and Artificial Intelligence (AI) technology.
technical focus

Technical Focus – 28th Sep 20

Operates at a production space in excess of 3.5m sqf in both Malaysia and Vietnam with products sold to over 60 countries in 5 continents across the globe. • A one-stop furniture manufacturer; well equipped to capitalise on the stronger demand from the US-China trade diversion. Demand to remain stable on the recovery in US housing starts data that is currently near pre-Covid19 levels, coupled with the rising adoption of work from home. Technically, price has formed a flag-formation breakout above RM1.42 which may propel share price higher towards the next resistances at RM1.59-RM1.70 with long term target at RM1.80.
market pulse

On track for more

We continue to think that the glove heavyweights will dictate the direction on the local bourse which is gaining momentum as of late. The conclusive of the Sabah state snap election may bring about some calamity with the focus now shifting back to the political scene at West Malaysia. In the meantime, we reckon that retail players may continue to nibble on the mild recovery mode from the lower liners and broader market shares, capitalising on the recent positive market sentiment.

Gloves up again

Although most of the key index components trended lower, the FBM KLCI managed to trend higher owing to gains in glove heavyweights as the number of Covid-19 cases across the globe remained elevated. In the meantime, FTSE Russell has retained Malaysia bonds in the watch list will provide some alleviation for the prospects of further foreign capital flight. The lower liners and broader market shares are expected to experience a consolidation phase as investors may turn more defensive ahead of the Sabah state election over the weekend.
market pulse

Marred by political uncertainty

Following the renewed local political uncertainty, coupled with the dour note set by Wall Street overnight, we see the FBM KLCI to endure further volatility. The selling was more pronounced as foreign funds (YTD: outflow of RM21.65bn) continue to shy away from Malaysia equities. The lower liners and broader market shares will remain under pressure as sentiment turned dour as of late, while investors will be keeping an eye on the FTSE Russell decision on keeping Malaysia in the World Government Bond Index.
technical focus

Technical Focus – 23rd Sep 20

Established presence across regional markets; backed by notable clients include Infineon, Panasonic, Taiwan Semiconductor Manufacturing Company (TMSC), Seagate, Western Digital and Biocon. Supported by outstanding orderbook of RM488.0m to provide earnings visibility over the next 12-18 months. KGB has maintained a healthy balance sheet with a relatively low net gearing of 0.1x in 2QFY20. Technically, a breakout above RM1.18 may signal for further upside towards the next resistances at RM1.24-RM1.27 with long term target at RM1.33.
market pulse

Finding stability

Despite yesterday recovery which was mainly led by bargain hunting activities, the near term outlook remains indifferent with uncertainties remain on the table. We also note that significant upsides over the near term will be capped by the lack of fresh catalyst which may keep investors at bay. In the meantime, the lower liners are also going on an extended consolidation spell as traders were quick to lock in any profits.
market pulse

Accelerated selling

Following the tepid market sentiment, we continue to see the local bourse to undergo an extended downward bias consolidation spell. The uncertainty in both domestic and overseas political avenue, rising number of Covid-19 cases and toppish market condition continues to weigh on the performance on the local bourse. The lower liners were not spared as trading activities starts in taper ahead of the end of blanket loan moratorium.
macquarie structured warrants 20200914

Warrants over glovemakers remain in focus

The Malaysian warrants market saw a dip in trading last week with the total warrants turnover coming in at RM932.2mil, down by approximately 10.4% from RM1.04bil a week ago due to a shorter trading week in conjunction with the Malaysia Day holiday on 16 September. Warrants over Malaysian shares were still the major contributor to the total warrants turnover making up approximately 93.3% with a total value traded of RM869.6mil, followed by warrants over the Hang Seng Index (HSI) which recorded a total value traded of RM56.8mil, approximately 6.1% of the total warrants turnover.
wiz-plantation-stocks

A good week for Plantation Stocks?

Shown in the figure below, we noticed the strong trend for the FCPO since the range of RM2795-2800 to above RM3000, closing at RM3080 last Friday and we believe this trend may still sustain over the near term, targeting RM3150 and longer term target will be set around the RM3400 level. With the firm trend in FCPO, traders would have noticed the buying support for plantation has grown in the past few trading days on Bursa Exchange.
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