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technical focus

Technical Focus – JAG

Total waste management (TWM) solutions provider, involves in recycling of electronic products and equipment that are near their useful life and are replaced by the rapid advances in technology. Expects higher average selling prices (ASP) of precious metals such as metal scrap, aluminum, copper and tin will continue to be driven by strong demand of commodities product globally, resulting in better margin. Diversification into renewable energy will provide earnings visibility over the long run. Technically, traders may anticipate for a breakout above RM0.37 to target the next resistance of RM0.40-0.425, with long term target at RM0.475.
market pulse

Escalating political uncertainties

The FBM KLCI edged lower amid uncertainties surrounding the recent political developments, as well as the Covid-19 pandemic, contributing to the investors staying sidelines. This would result in heightened volatility in the market and traders should turn more cautious over the near term in selecting stocks to trade. On a side note, China’s move to raise export tariffs on some steel materials, and removed rebates on cold-rolled products may exert pressure on the commodities prices as demand continues to rise over the past year.

Jaks Resources Bhd – 29Jul21

While there will be no financial impact on JAKS, we view the matter to be favorable to restore JAKS reputation amongst investors after being clouded by uncertainties over the past 2 years amid concern over potential impairments from the aforementioned matter. Moving forward, JAKS will continue to focus on current operations as well as business expansion plans, particularly in the power and renewable energy business segment.
market pulse

Still in consolidation

The FBM KLCI closed mildly positive following the late bargain hunting activities, but gains were capped amid unrelenting Covid-19 cases as well as the recent political developments. Despite daily Covid-19 infection continue to be on the rise amid ramped up testing in Klang Valley, we expect the vaccination rate should brush off negative sentiment and traders may look for recovery opportunities. Also, both the Hang Seng Futures and overnight Wall Street could be due for a technical rebound and may spillover towards stocks on the local front, especially on the tech sector. Commodities wise, CPO price was down as demand were seen slowing down from India and China, while the crude oil extended its gains.
technical focus

Technical Focus – MSM

Leading local sugar producer, commanding approximately 60.0% market share in the local sugar market after having produced 1.0m MT in 2020 that operates 2 sugar refineries with products consumed locally and shipped mainly to Asia countries. Aims to increase utilisation factor in MSM Johor which is only hovering around 30.0% in 2020, while evaluating for potential disposal to streamline operations. Dry weather in Thailand is expected to prolong to 2022 and the drought that dimmed Brazil productions may support the elevated sugar prices. Technically, traders may anticipate for a potential flag-formation breakout above RM1.32 to target the next resistance of RM1.41-1.52, with long term target at RM1.72.
market pulse

Tepid recovery

Bucking the regional downtrend move, the FBM KLCI rebounded and posted modest gains on the back of bargain hunting activities as well as expectation on the economy reopening by October. Although investors will be shifting their focus from daily Covid-19 infections to the positive vaccination rate locally, the local sentiment may still remain cautious following the negative performances in China and Hong Kong after Beijing announced additional measures for the technology, education and real estate’s sectors. On a side note, foreign investors are net seller for the third session.
market pulse

Mirroring regional weakness

Investors started off the week on a softer note as both the FBM KLCI and the broader market slumped, in line with the negative performances in China and Hong Kong shares amid concerns over tightening regulations on selected sectors. However, we expect bargain hunting activities to emerge on the local bourse after the selldown as market players might have priced in news from China or Hong Kong. Meanwhile, investors should focus on vaccination rate instead of ongoing high number of daily Covid-19 cases as government will be looking on reopening of business activities going forward. Commodities wise, both the CPO and crude oil prices extended their gains.
macquarie structured warrants 20200914

Warrants over HSI, DNEX and JAKS in the spotlight

Last week, despite a shorter week in conjunction with the Hari Raya Haji holiday on Tuesday (20 July), overall warrants turnover surged 85.7% week-on-week (w-o-w) to RM243.5mil due to the increased turnover in warrants over indices (+91% w-o-w) and single stocks (+83% w-o-w).

BP Plastics Holding Bhd – 26Jul21

BP Plastics Holding Bhd (BPPLAS) is a specialty plastics packaging manufacturer backed by high customer retention rate, supplying high quality stretch film and customised PE film for various essential sectors. Capitalising on the growing demand for plastics packaging film, BPPLAS is in a position to undertake new capacities and technology by commissioning new machines, supported by its strong cash position. We initiate coverage on BPPLAS with a BUY call and fair value of RM2.43, based on 14.0 P/E pegged to its forward FY21f EPS of 17.3 sen.
technical focus

Technical Focus – SLVEST

One of the leading solar turnkey engineering, procurement, construction and commissioning (EPCC) service provider with established track record in Large Scale Solar PV, residential, commercial and industrial properties projects. Unbilled orderbook of RM157.4m (as of 1QFY21) will provide earnings visibility over the next 12-18 months and is supported by 1.0GW of tenderbook from Malaysia, Philippines and Taiwan. Leveraging on Malaysia government’s power generation plan to reach 40.0% in renewable energy capacity by 2035. Technically, price has experienced short-term a consolidation breakout above RM1.17, targeting the next resistance of RM1.26-1.33, with long term target at RM1.46.
market pulse

Still wobbly

The FBM KLCI finished the week on a negative note, in line with the mixed regional performances due to resurgence of Covid-19 infections globally. While the local bourse has been trading in upward bias consolidation mode last week, investors may remain cautious with the five-day special Parliament sitting this week. Nevertheless, we expect investors to shift their attention from the daily Covid-19 infection rates to the current ongoing vaccination rate, which is above the 400k doses per day; this should provide some booster in stabilising the market sentiment and focus on recovery theme stocks. Meanwhile, both the CPO and Brent oil price surged last week.
market pulse

On better footing

The FBM KLCI is expected to build onto its previous session gains with the focus now shifting back towards the economic recovery progress. Still, we remain cautious as there were few domestic leads over the near-term outlook and this will further curtail any extended potential upsides. Nevertheless, the general market undertone is improving and this will allow the lower liners to develop decent recovery after a difficult two-month period that has seen many stocks veering into the oversold region.
market pulse

Sentiment still murky

The FBM KLCI extended its losses after a volatile session due to persistent selling activities as Covid-19 infection rates stayed high amid the Delta variant. However, we believe the high numbers in Covid-19 cases may shift investors’ focus on healthcare sector, while broader market sentiment could stay tepid without any fresh catalysts. Investors may watch Malaysia's inflation rate which will be released tomorrow. Commodities wise, oil price has staged a rebound in expectation for a higher demand amid economic recovery.
technical focus

Technical Focus – TSH

Plantation operations span over 42,000-ha across Sabah and Indonesia, while 67.0%-owned subsidiary; Ekowood International Bhd has a production capacity up to 27.0m sqf of engineering hardwood flooring (EHF) per annum. Disposal of 2 oil palm estates and 1 palm oil mill in Sabah for RM248.0m to Kuala Lumpur Kepong Bhd (KLK) is expected to generate a divestment gain of RM104.0m which will unlock the land value as well as pare down borrowings. Following the rising CPO prices (above RM4,000/MT), we expect average selling prices to remain on a higher ground over the foreseeable future. Technically, price has experienced a consolidation breakout above RM1.02, targeting the next resistance of RM1.06-1.09, with long term target at RM1.15.
market pulse

Still sideways

The FBM KLCI retreated on Monday due to last minute profit taking activities prior to the Hari Raya Haji public holiday, mirroring the weakness across the regional markets. Nevertheless, buying interest emerged in selected recovery theme sectors after the EMCO was lifted in Selangor and Kuala Lumpur. Despite the rebound on Wall Street, we expect some initial selling activities on the local bourse before recovering for the session, but upside is likely to be capped amid the high number of daily Covid-19 cases, which may be a concern that could dampen the pace of the economic recovery.

Kim Loong Resources Bhd – 19Jul21

Going forward, the acquisition of 2,722-ac of oil palm plantation land that may generate up to additional 30,000MT of FFB per annum is expected to be completed in 3Q21. While CPO prices has tapered from the recent peak, we expect the prices to remain alleviated, hovering above RM3,000/MT amid the sustainable demand, particularly from China and India.
technical focus

Technical Focus – DNEX

Engages in the provision of IT & eServices, oilfield services and subsea telco services with established presence in Malaysia, Thailand, Indonesia, Bangladesh and United Kingdom. Growth trajectory will be underpinned by the acquisition of 60.0% equity stake in SilTerra Malaysia Sdn Bhd with wafer fabrication utilisation rate expected to tower above 90.0%, supported by current backlog orders stretching to 2Q22. Recent completed acquisition of an additional 60.0% equity stake in Ping Petroleum Ltd (Ping) deem to be timely, riding onto the firmer crude oil prices. Technically, price has formed a flag-formation breakout above RM0.725, targeting the next resistances at RM0.81-0.855 with long term target at RM0.935.
market pulse

Holding well

The FBM KLCI registered modest gains for the week on the back of bargain hunting activities after a recent downtrend move, but daily Covid-19 cases which remained above the 10k mark continued to weigh on market sentiment. Nevertheless, the new immunisation target set by the government to fully vaccinate 100 percent of the adult population by October 2021 is expected to boost investors’ confidence towards the path of economic recovery. On a side note, OPEC+ has agreed to increase oil production beginning in August amid improving demand, which may ease the pressure on the supplies as well as oil prices.
macquarie structured warrants 20200914

Dagang NeXchange warrants in focus as underlying rises 10.3% for the week

Last week’s warrant trading activity rose a slight 1.2% to RM131.2mil, with warrants over shares making up 61.3% of total turnover. Index warrants took a step back this week, with warrants over the Hang Seng Index (HSI) contributing 36.0% of turnover, and the remaining largely taken up by warrants over the local benchmark FBM KLCI and the S&P 500® Index.

Kelington Group Bhd – 16Jul21

We foresee stronger billings from the Ultra-High Purity segment for projects in China and Singapore may provide cushion for any weakness in the local operations. Beside, the strong global semiconductor sales that rose 26.2% YoY to USD43.6bn in May 2021 suggest that the global demand remains relatively solid. Hence, we reckon that KGB is in prime position.
market pulse

Base building

The FBM KLCI marched higher amid mixed regional sentiment, underpinned by the buying interest in glove stocks after successive days of record-high Covid-19 daily cases in the country. The overall market sentiment was also lifted by the Fed’s dovish comment as well as the improvement in China’s economic data. Nevertheless, upside might be capped as investors are still waiting for more economic sectors to reopen. Commodities wise, the CPO price has surged in tandem with soybean futures, while the crude oil price extended its losses.
market pulse

Prolonged consolidation

The FBM KLCI trended lower on the back of the alarming rise in Covid-19 daily cases, overshadowing optimism on the improving vaccination rates in the country. We reckon the local bourse should continue to trade in consolidation mode until Malaysia could transition into Phase 2 in the National Recovery Plan. Meanwhile, the market may watch a series of China’s economic data which will be released today. Commodities wise, the CPO price climbed above the RM4,000 level in line with soybean futures, while the crude oil price staged a pullback.
technical focus

Technical Focus – FPGROUP

Engages in the design development, manufacture, marketing and sale of precision engineering parts with key business associates include multinational semiconductor companies such as Broadcom, Synergie - CAD, Bece Pte Ltd, U4Global Solutions and GFMI. In the process of obtaining the International Automotive Task Force (IATF) 16949 certification, targeting in August 2021 to supply automotive parts. Healthy balance sheet with net cash position of RM60.1m in 3QFY21, translating to net cash per share of RM0.11 (c.13.2% of share price). Technically, traders may anticipate for a breakout above RM0.865 for further recovery to take towards the next resistances at RM0.91-0.95 with long term target at RM1.04.
market pulse

In search for stability

The FBM KLCI rebounded from losses as the key index was buoyed by bargain hunting activities, coupled with positive sentiment in the regional market following upbeat China economic data. Nevertheless, we expect the buying interest may be limited as the daily Covid-19 cases in the country increased to record high as more Delta variant cases were detected. Meanwhile, International Energy Agency (IEA) warned of a tighter oil market as OPEC+ is set to keep output levels unchanged despite rising global demand underpinned by global economic growth amid rising vaccination rates; the crude oil is hovering above USD75, while CPO traded closer to RM4,000.
market pulse

Marred by political developments

Consumer, banking and glove stocks pulled the FBM KLCI down amid regional uptrend, reflecting negative sentiment in the market affected by political developments and potential downward revision of country’s economic growth projection. However, we still expect mild bargain hunting activities to emerge amid the improvement in vaccination rate across the country. Commodities wise, oil price fell marginally (but still hovering above USD75) over concerns about global economic recovery on the back of spreading Covid-19 variants.
technical focus

Technical Focus – SCGM

Regarded as one of the largest thermoform F&B packaging manufacturers in Malaysia with extensive network distribution in Singapore, Australia, Vietnam, Brunei and New Zealand market. Venture into production of face shields and face mask has bear fruit amid the rising demand, while sales for food & beverage (F&B) packaging will remain resilient due to society’s preference for take-away and ready-to-eat meals. Margins are expected to be stable following the upward revision of average selling prices (ASP), coupled with the favourable product mix. Technically, traders may anticipate for a potential flag-formation breakout above RM2.45 to target the next resistances at RM2.65-2.80 with long term target at RM3.00.
market pulse

Bargain hunting taking charge

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

Index warrants take the spotlight amid market volatility

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

Jaks Resources Bhd – 9th Jul 21

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

On uneven grounds

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

Bank Negara OPR in focus

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

Technical Focus – SDS

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

Marking time

The FBM KLCI posted a mild decline as investors remained cautious while awaiting for the release of minutes from the US Fed Reserve June’s meeting for more clarity on the monetary policy. With the Covid-19 cases spiking above 7,000 mark per day despite the improvement in vaccination rate, the local bourse is likely to stay wary, while monitoring Malaysia’s Bank Negara interest rate decision tomorrow. Meanwhile, oil prices dropped after talks between OPEC and the rally was unable to sustain following failure to agree on production policy.
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What’s Trending (5 July 2021)

In other parts of the Asia region, markets continued to show underperformance to its western counterparts as most parts of the region continue to battle the highly contagious Delta variant of the COVID-19 virus.

AME Elite Consortium Bhd – 6th Jul 21

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

Base Building

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

HSI warrants and DNEX-CA among most active last week

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

Technical Focus – WONG

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

Still subdue

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

Baby steps recovery

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

Downward momentum persists

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

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

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

Technical Focus – DNONCE

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

Recovery still premature

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

Pemulih aid package alleviation

The FBM KLCI plummeted to hit the lowest level in 2021, while the broader market saw more than 900 stocks closing in the red as investors sentiment was further dampened by the extension of the full lockdown which may derail the economic recovery pace. However, we believe bargain hunting activities should emerge after the heavy selldown, following the Prime Minister’s announcement on the PEMULIH stimulus package amounted to RM150bn to assist households and businesses affected by the pandemic. Commodities wise, both the CPO and oil prices experienced a pullback.
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Ramssol Group Bhd – 28th Jun 21

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

Technical Focus – YOCB

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

Phase 1 of MCO 3.0 extended

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

HSI and SP500 warrants top the chart

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

Serba Dinamik Holdings Bhd – 25th Jun 21

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

Dour trend may persist

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

Chin Well Holdings Bhd – 24th Jun 21

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

Hovering near support

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

Technical Focus – SCOMNET

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

Muted rebound

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

Bargain hunting may take shape

The FBM KLCI surrendered its gains amid hawkish comments from the Feds, alongside its regional peers. However, with the strong rebound overnight on Wall Street, coupled with the gradual subsiding in Covid-19 daily cases, bargain hunting may lift the sentiment on the local bourse. Also, we believe market participants should focus on recovery theme stocks given the vaccination rate is improving in Malaysia. Meanwhile, the oil price climbed near the USD75 on the back of weaker USD; while the CPO price continued its downtrend move.

Jaks Resources Bhd – 21st Jun 21

JAKS is primed for charting new heights, supported by the diversification into the long-term recurring income from the power generation concession in Vietnam, coupled with the on-going efforts to improve tenancy ratio under the property development segment. Whilst the concession segment will generate earnings sustainability, current construction orderbook of RM281.3m is able to provide earnings visibility till 2022. We assigned a P/E multiple of 9.0x to all, but the concession segment that is valued on a discounted cash flow approach, arriving at a fair value of RM0.72.
technical focus

Technical Focus – UCHITEC

Established track record, backed by key clienteles from the European countries industry top players such as Jura and Nestle (Switzerland), AEG, Krups, Bosch and Siemens (Germany). Expects mild impact from the imposition of Full Movement Control Order (FMCO) whereby only 60.0% capacity are allowed for operation and subsequently recovery is largely on the table, premised to the sustainable strong demand. Prospective dividend yields at 5.4% and 5.5% for FY21f and FY22f deemed to be relatively attractive. Technically, traders may anticipate for a breakout above RM3.22, targeting the next resistances at RM3.35-3.52 with long term target at RM3.60.
market pulse

Striding high, but volatility still a feature

The FBM KLCI snapped the three consecutive sessions of losses on the back of bargain hunting activities after recent selldown, bucking the downtrend in the regional markets. Investors may continue to stay defensive amid the ongoing battle of the Covid-19 health pandemic and the recent political developments, but the downside risks may be cushioned by the rising daily vaccination rate as the government target to achieve 80% herd immunity by the third quarter of this year. Meanwhile, the constituents changes following the semi-annual review of the FTSE Bursa Malaysia Index Series will be taking effect today.
macquarie structured warrants 20200914

High demand for the new DNEX call warrant

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

When You Don’t Have Time to Invest

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

Quadruple witching

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

Cautiousness prevails

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

Astino Bhd – 16th Jun 2021

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

Technical Focus – VS

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

Marking time

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

Signs of bargain hunting

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

Technical Focus – LBALUM

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

Extension of FMCO

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

Prolonged consolidation

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

What’s Trending (June 2021)

Technology stocks underperformed the broader market in May, as investors transitioned into recovery plays. The broader S&P gained 1.61%, while the tech-focused Nasdaq dipped 0.5%, and the FANG+ Index slid 1.47% in MYR terms
market pulse

Drifting sideways again

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

Technical Focus – COMPLET

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

Tipping higher

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

Back into consolidation

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

Technical Focus – ECOWLD

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

Profit taking looms

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

AME Elite Consortium Bhd – 3rd Jun 21

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

1,600 within reach

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

Technical Focus – K1

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

Inching higher

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

PEMERKASA+ stimulus booster

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

Rocky week for glove names despite FBMKLCI moving higher

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

Serba Dinamik Holdings Bhd – 31st May 21

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

Hartalega Holdings Bhd – 31st May 21

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

Technical Focus – WASEONG

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

Full lockdown imposed

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

Suria Capital Holdings Bhd – 28th May 21

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

Protasco Bhd – 28th May 21

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

OCK Group Bhd – 28th May 21

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

Econpile Holdings Bhd – 28th May 21

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

AME Elite Consortium Bhd – 28th May 21

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

Buoyed by heavyweights’ solid earnings

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