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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.

What’s Trending (3rd May 2021)

The US financial markets continued its upward climb with the support of better than expected financial results, and optimism that the economy may be gradually shifting back into gear after being clouded by virus concerns for more than 1-year. Bond yields also climbed marginally higher towards the end of the month after staying quiet for the earlier part of the month

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.
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.
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