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AME Elite Consortium Bhd – 26th Feb 21

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

OCK Group Bhd – 26th Feb 21

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

Return of volatility

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

SLP Resources Bhd – 25th Feb 21

Moving in FY21f, we believe that sales from the local market will continue to take charge (>50%), after raking 53.3% of total revenue in FY20 as oppose to only 39.0% recorded in FY19. For now, SLP will focus on ramping up the production of kitchen and garbage bag, targeting 25% of production output in FY21f (from less than 20% recorded in FY20).

Econpile Holdings Bhd – 25th Feb 21

As of 2QFY21, Econpile’s is equipped with an unbilled construction orderbook of approximately RM930.0m from 23 on-going projects. Moving forward, the group’s unbilled orderbook-to-cover ratio at 2.3x against FY20 revenue of RM403.0m will provide earnings visibility over the next three years.
market pulse

Rebound in sight

Selling pressure in the glove counters persisted, pushing the FBM KLCI into the negative territory in the afternoon trading session. Whilst the National Covid-19 Immunisation Programme kickoff did not boost the local bourse yesterday, we opine some bargain hunting activities to arise in lower liners after close to 1,000 counters closing in the red. Meanwhile, the Brent oil price continues to climb above USD67.
market pulse

Bargain hunting may take shape

In contrast with the regional gains, the FBM KLCI failed to sustain its intraday gains as the key index slipped into negative territory during the final trading hour. We expect the arrival of the second batch of Pfizer-BioNTech vaccine today and the vaccine distribution to different states will continue to attract buying interest in recovery-theme stocks moving forward. Meanwhile, crude oil price continued to remain firm above the USD65 level for the time being. Also, traders will focus on high earnings certainty sectors during this reporting season.

Leong Hup International Bhd – 24th Feb 21

Regionally, LHI plans to (i) strengthen their ready-to-eat (RTE) and ready-to-cook (RTC) products in Singapore market, (ii) improve production of aquatic feed in Vietnam operations and (iii) capitalise on the stability of poultry prices stemmed by the Indonesia’s government effort to enforce aggressive culling activities and improve feed volume to capture additional market share.
technical focus

Technical Focus – PPHB

Primarily focused on the production and sale of paper packaging products and is supported by seven manufacturing plants in Malaysia and two sales offices in Malaysia and Singapore. Offers JIT (Just–In-Time) services, Total Packaging Concepts, Designing & Supply Chain Management. Solid balance sheet with a net cash position of RM48.7m in FY20, translating to net cash per share of 25.8 sen (c.25.3% of share price). Technically, a breakout above RM1.03 may target the next resistances at RM1.08-1.17, with long term target at RM1.25.
market pulse

Corporate earnings in focus

Selling pressure in glove heavyweights triggered as Covid-19 could come to an end with the arrival of Covid-19 vaccine. Despite selling activities on Wall Street overnight, we believe there could be some fresh buying support given the IDSS and PDT short sale have been extended for another 6 months. We believe traders may lookout for bashed down stocks yesterday. Also, we observed that the Brent oil price has climbed strongly overnight above USD65.

Econpile Holdings Bhd – 22nd Feb 21

The latest win bumps Econpile's outstanding orderbook of approximately RM950.0m, which translates to an orderbook-to-cover ratio of 2.4x against FY20 revenue of RM403.0m that provide earnings visibility over the next 2 years. Following the washout year in FY20, we believe that earnings recovery is largely on track with construction activities begun to normalise which was already demonstrated in 1QFY21.
technical focus

Technical Focus – KRONO

Engages in the provisions of business consulting for information technology software and data solution related businesses with key clientele include Jollibee Food Corporation, Toshiba Information Equipment (Philippines), Ocean Park (Hong Kong) and NCS Internal Video & Surveillance Smart City (Singapore). Leveraging on the tabling of MyDigital that aims to achieve 80% of end-to-end online government services integration by 2025 together with 80% usage of cloud storage across government agencies by 2022. Demand is expect to accelerate as businesses are migrating to online processes. Technically, price has formed a flag-formation breakout above RM0.86, targeting the resistances of RM0.925-1.00, with long term target at RM1.10.
market pulse

Arrival of Covid-19 vaccine

Bucking the regional trend, the FBM KLCI snapped three-day losing streak to close higher on bargain hunting. Sectors such as telecommunication and technology were headed higher following the launch of MyDigital initiative and the Malaysia Digital Economy Blueprint. Whereas the key index is subject to further consolidation, we believe the earlier-than-scheduled national vaccine rollout on coming Wednesday and the declining number of Covid-19 cases should lift the market sentiment and traders may focus on recovery theme again.
macquarie structured warrants 20200914

HSI warrants take centre stage post CNY holidays

It was another buoyant week for the Hang Seng Index (HSI) futures as it extended its win streak to three weeks in a row with prices touching their highest in 32 months. With the market being closed on Monday in conjunction with the Lunar New Year holidays, trading in the HSI futures resumed Tuesday on a higher note as prices..
market pulse

Sentiment remain cautious

In line with most regional peers, the FBMKLCI skidded on profit taking activities for the third straight session and market sentiment may remain cautious ahead of the weekend. Despite ongoing profit taking, we opine the downside risk could be limited as some bargain hunting may start to take place ahead of the full blown reporting season next week. Meanwhile, the Brent crude oil price has loses its grip, pulling back from level above the USD65.
market pulse

Back below 1,600

Following the announcement of MCO extension in several states, the local bourse endured a rough ride as economic recovery progress took another backseat. The weakness was also largely in line with the negative performance across regional peers which we reckon that the pullback is deem to be healthy to allow the recent gains to be digested. While the market liquidity has yet to taper, we think the rotational play amongst the lower liners may prolong with the on-going batch of corporate earnings release largely in focus.
market pulse

Liquidity driven market

Profit taking activities emerged on the FBM KLCI, snapping the four-day positive streak. We believe sentiment should stay positive, despite the mixed trading tone on Wall Street and the MCO extension in several states as we think the ongoing rally in the crude oil price and the clearer timeline for the Covid-19 vaccination programme should be the focus for the economic to recover moving forward. As we are heading into the reporting season, companies with high earnings certainty could be under the limelight.
technical focus

Technical Focus – 17th Feb 21

Specialised in high rise residential, mixed and commercial developments with several notable contracts completed include Menara Hap Seng 3, KL Eco City Phase 1 & 2, One Central Park and Westside III. Outstanding orderbook of RM2.20bn, representing an orderbook-to-cover ratio of 6.8x against FY19 revenue of RM322.8m will sustain earnings growth at least for the next 3 years. Healthy balance sheet with a net cash position of RM65.6m in 3QFY20, translating to net cash per share of 10.1 sen (c.10.9% of share price). Technically, price has rebounded above the daily EMA20 level, suggesting further recovery to target the next resistances at RM0.965-1.08 with long term target at RM1.20.

Economic Recovery | What’s Trending (16th Feb 2021)

We started the year of the Ox with vigour as major indices in the US hit new highs, while equities in China outperformed its regional peers. Investors’ confidence grew on the back of slowing numbers from the pandemic, and optimism that the relationship between US and China would improve. Leaders of the 2 major economies have already met, with President Biden signalling a possible pause to the tech ban previously imposed by the Trump administration. In Malaysia, recovery names took the spotlight following the relaxation of MCO2.0, along with a positive outlook for global economic recovery. 3 of TradePlus ETFs hit record high NAV for the second week in a row.
market pulse

An Oxpicious start

The first trading day after the Lunar New Year break saw the FBM KLCI climbing with all sectors finished in the green, in line with its regional peers. Meanwhile, oil price rose to its highest since January 2020 on the back of the Middle East tensions. With Wall Street inching higher overnight, we opine trading interest on the local front will remain robust as vaccine rollout across more countries may drive the optimism for an economic recovery. Likewise, the lower liners may continue its uptrend in the near term.

Jaks Resources Bhd – 15th Feb 21

JAKS’s growth trajectory will be supported by the diversification into the long term recurring income from the power generation concession in Vietnam, whilst tapping into the Malaysia’s planned pipe replacement programme nationwide. Whilst the concession segment will generate earnings sustainability, the current outstanding orderbook able to provide earnings visibility for the next 12 months with core net profit expected return to the black at RM98.0m in FY21f. We assigned a P/E multiple of 9.0x to all but the concession segment that is valued on a discounted cash flow approach, arriving at a fair value of RM0.82.
technical focus

Technical Focus – 15th Feb 21

Regarded as one of the leading local ICT distributor with more than 6,600 resellers, comprising retailers, system integrators and corporate dealers nationwide. More than 40 renowned leading principals like Hewlett Packard, Asus, Lenovo, Apple, Dell, Microsoft, Cisco, Samsung, VMWare and IBM. Partnership formed with NetApp in mid-2020 and the existing gradual growth from enterprise systems business with notable clients such as Heitech Padu Bhd and Mesiniaga Bhd will anchor growth. Technically, price has formed a flag-formation breakout above RM2.47, targeting the next resistances at RM2.65-2.76 with long term target at RM3.00.
market pulse

Re-testing 1,600 again

Despite the sharper-than-expected economic contraction of -3.4% in 4Q20, the FBM KLCI inched up ahead of the Lunar New Year holiday as investors may have priced in the impact of the ongoing MCO. We expect the positive sentiment on Wall Street overnight may spillover to stocks on the local front as market players should refocus after the long break ahead of the full blown reporting season. Meanwhile, we noticed crude oil price has surged above USD62 firmly last week.
market pulse

Focus on 4Q20 GDP data

The FBM KLCI charged higher yesterday, mainly boosted by the gains in banking heavyweights as traders tagged along with the recovery theme. However, we believe the tone may turn slightly cautious ahead of the Bank Negara Malaysia’s (BNM) announcement on Malaysia’s economic performance for 4Q20. Also, market participants might reduce trading activities prior to the long weekend. Hence, the FBM KLCI may stay within a rangebound mode throughout the session.

Teo Seng Capital Bhd – 10th Feb 21

We reckon that chicken eggs prices will linger around RM0.30 per Grade C chicken egg as on increasing demand as more business activities are allowed following the reducing number in Covid-19 cases. Meanwhile, poultry players will continue their expansion plans once the MCO is lifted.
technical focus

Technical Focus – 10th Feb 21

Established relationship with past and existing clientele with repeating notable customers include Worldwide Holdings Bhd, UM Land Group and Tropicana Group. Bagged a total of 5 major construction contracts with combined value at RM646.6m since listing in July 2020, bumping unbilled orderbook to approximately RM950.0m to provide earnings visibility over next 2 years. Proposed 1-for-2 free warrants as part of the initiative to reward existing shareholders. Technically, price has formed a flag-formation breakout above RM0.545, targeting the next resistances at RM0.59-0.605 with long term target at RM0.65.
market pulse

Upward bias view on broader market

Despite mixed trading tone on Wall Street overnight, the FBM KLCI tracked its regional peers to close higher yesterday. We reckon the local bourse to remain upside bias view at the current juncture, lifted by buying interest in recovery-themed stocks and the energy sector – the latter could be focused on the back of firmer crude oil price. In view of the number of Covid-19 cases dropped below 3,000 level yesterday, market should position themselves into recovery themed stocks at least for this week.
market pulse

Bargain hunting may emerge

As the local bourse saw cautious trading sentiment ahead of the Lunar New Year celebration, investors may continue to reduce their exposure in the stock markets. Meanwhile, with the National Covid-19 Immunisation Plan came closer, and the daily cases stayed within the below the 4,000 mark for the fourth day running, investors may point towards recovery play moving forward. Also, Brent oil price has surged above the US$60 level, which may set a positive tone on the local front.

Mobilia Holdings Bhd – 8th Feb 21

Mobilia offers a wide range of home furniture and consistently launch new designs to suit the latest market trends and preferences. We are sanguine on Mobilia’s prospects due to the resilient demand from the adoption of work-from-home trend. We project earnings to recover by 48.1% to RM10.8m in FY21f, boosted from expansion of the new factory in March 2020 that is able to undertake additional orders, rising trend of work-from-home and steady global population growth. Mobilia is valued by pegging its FY21f core EPS of 2.7 sen to 10.0x PE (15% discount to peers average of 11.8x), leading to a FV of RM0.27.
technical focus

Technical Focus – 8th Feb 21

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

Still wobbly

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

Warrants over Greatech, HSI and Top Glove among most active

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

Improving sentiment

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

Choppiness prevails

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

Technical Focus – 3rd Feb 2021

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

Recovery in progress

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

Technical Focus – 2Feb21

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

Silver lining ahead

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

On a better footing

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

Technical Focus – 27th Jan 21

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

Finding stability

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

Hartalega Holdings Bhd – 26th Jan 21

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

Health DG Brushing off MCO3.0 concerns

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

Technical Focus – 25th Jan 21

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

Volatility beckons

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

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

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

Below 1,600

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

Still searching for a footing

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

Technical Focus – 20th January 2021

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

BNM’s OPR decision in focus

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

Serba Dinamik Holdings Bhd – 19th Jan 2021

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

Containing MCO 2.0 impact through PERMAI

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

Technical Focus – 18th Jan 2021

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

Turning wobbly

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

Hang Seng Index on a bull run for the second week

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

Marking time

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

Striding higher

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

Technical Focus – 13th Jan 2021

Primarily focused on the production and sale of paper packaging products and is supported by seven manufacturing plants in Malaysia and two sales offices in Malaysia and Singapore. PPHB offers JIT (Just–In-Time) services, Total Packaging Concepts, Designing & Supply Chain Management. Relatively low gearing at 0.1x in 3QFY20 and PPHB is trading well below the book value of RM1.39. Technically, price has rebounded above the daily EMA9 level, targeting the next resistances at RM1.09-1.14, with long term target at RM1.25.
market pulse

Recovery in progress

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

Economic recovery derailed

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

Technical Focus – 11th Jan 2020

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

Towering higher

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

Warrants over glove makers start the new year roaring

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

Re-capturing 1,600

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

Marred by political uncertainty

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

Technical Focus – 6th Jan 2021

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

Rebound in store

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

Volatility persists

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

Technical Focus – 4th Jan 2021

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

Welcoming 2021

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

Technical Focus – 31st Dec 2020

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

FBM KLCI may rebound higher

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

Kim Loong Resources Bhd – 30th Dec 2020

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

FBM KLCI may be supported along 1,620

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

FBM KLCI may revisit 1,660

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

Window dressing activities to persist

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

Econpile Holdings Bhd – 24th Dec 2020

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

Recovery-themed stocks may trade higher

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

FBM KLCI could be due for a rebound

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

KLCI may find support along 1,640

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

Steel sectors are heating up

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

Market may be due for a rebound

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

Water-related stocks to focus

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

Broader market to remain positive

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

Technical Focus – 16th Dec 2020

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

Buying interest to return

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

Econpile Holdings Bhd – 15th Dec 2020

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

Hartalega Holdings Bhd – 15th Dec 2020

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

Profit taking activities to persist

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

Warrants over rubber gloves and banks among most active

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

2020 Review and 2021 Outlook

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

Recovery tone may persist

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

Sentiment to recover amid vaccine optimism

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

Likely to take a pause

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

Recovery in sight for FBM KLCI

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

What’s Trending (7th Dec 2020)

Hopes for an added stimulus in the US was reignited last week after news that a bipartisan group of senate members proposed a USD908 billion package. The US Treasury, which previously requested the return of emergency lending funds from the
market pulse

Mild profit taking activities ahead

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

Warrants market robust with wider interest

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

Technical Focus – 7th Dec 2020

Established track record, backed by key clienteles from the European countries industry top players such as Jura and Nestle (Switzerland), AEG, Krups, Bosch and Siemens (Germany). Earnings recovery will be largely in place as the 1HFY20 was impacted by the global supply chain disruption with both China and Malaysia operations were affected by the temporary shutdown in production due to the Covid-19 pandemic Prospective dividend yields at 5.1% and 5.4% for FY20f and FY21f deemed to be relatively attractive. Technically, price has experienced a resistance breakout above RM2.75, targeting the next resistances at RM2.89-2.94 with long term target at RM3.12.
market pulse

Recovery still intact

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