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market pulse

Sustaining above 1,600

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

Technical Focus – AJIYA

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

Re-capturing 1,600

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

MYEG call warrants posted moderate gains

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

Technical Focus – HEXTAR

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

Heading back onto 1,600

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

Still eyeing 1,600

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

Spurred by foreign buying

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

Technical Focus – KERJAYA

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

Still on the ascend

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

Stretching higher

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

HSI warrants most active as futures rally

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

Technical Focus – OPTIMAX

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

Sustained buying momentum

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

Technical Focus – ABLEGLOB

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

Holding up well

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

Turning the tide

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

Kelington Group Bhd – 6Oct21

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

Technical Focus – WASEONG

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

Rebound from support

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

Hovering near support

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

Econpile Holdings Bhd – 4Oct21

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

Suria Capital Holdings Bhd – 4Oct21

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

Technical Focus – SUNWAY

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

Sentiment turned murky

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

Put warrants as a potential hedge for market uncertainty

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

Sideways prolonged

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

Econpile Holdings Bhd – 30Sep21

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

Sustained buying support

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

Kim Loong Resources Bhd – 29Sep21

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

Technical Focus – PADINI

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

Outlook still choppy

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

Protasco Bhd – 28Sep21

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

Finding stability

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

4Q21 Outlook & Strategy – Recovery begins with an ENDemic

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

Technical Focus – SUPERLN

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

Tabling of 12th Malaysia Plan

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

HSI warrants in the limelight as index plunged

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

Stability ensured

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

Recovery in store

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

Technical Focus – GCB

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

Recovery still premature

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

Mirroring regional weakness

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

Technical Focus – VS

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

Dour trend still on horizon

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

HSI warrants take on centre stage last week

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

Technical Focus – HARBOUR

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

Cautious undertone prevails

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

Technical Focus – MMSV

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

Kelington Group Bhd – 15Sep21

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

Still downbeat

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

Jaks Resources Bhd – 14Sep21

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

Sentiment turns jittery

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

Technical Focus – MSC

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

SLP Resources Bhd – 13Sep21

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

Finding a footing

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

Volatility in Hong Kong market continues

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

Volatility returns

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

Bank Negara OPR in focus

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

Jaks Resources Bhd – 8Sep21

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

Kelington Group Bhd – 8Sep21

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

Technical Focus – TCS

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

Turning sideways

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

Quick profit taking

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

Technical Focus – FREIGHT

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

Eking out last-minute gains

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

Put warrant HSI-HG1 the most active warrant last week

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

What’s Trending? (2 Sept 2021)

The FANG+ Index continued to underperform the broader tech index, having been dragged down by Alibaba and Baidu’s weaker performance. Over last month the index gained 1.47% in MYR terms, while the 0830EA, which provides 200% daily exposure into the index upped 5.19%.
technical focus

Technical Focus – QES

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

Drifting slightly lower

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

Profit taking looms

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

Technical Focus – GESHEN

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

FBM KLCI above 1,600

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

Technical Focus – HIBISCS

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

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

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

OCK Group Bhd – 30Aug21

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

1,600 within reach

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

AME Elite Consortium Bhd – 27Aug21

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

Turning toppish

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

Optimax Holdings Bhd – 26Aug21

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

Another solid performance

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

Technical Focus – DPIH

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

Suria Capital Holdings Bhd – 25Aug21

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

Leong Hup International Bhd – 25Aug21

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

Kelington Group Bhd – 25Aug21

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

Towering higher

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

Holding up

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

BP Plastics Holding Bhd – 23Aug21

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

Technical Focus – ATAIMS

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

SOPs relaxation brings cheer

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

HSI warrants in the spotlight amid tumultuous week

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

Econpile Holdings Bhd – 20Aug21

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

Rebound short-lived

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

Kelington Group Bhd – 19Aug21

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

Awaiting more clarity in the political scene

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

Teo Seng Capital Bhd – 18Aug21

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

Technical Focus – SUCCESS

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

Rising against the tide

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

Some stability ensued

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