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Author: MalaccaSecurities   |   Latest post: Tue, 24 Nov 2020, 10:33 AM

 

Mplus Market Pulse - Not out of the woods

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Market Review

Malaysia: The FBM KLCI (-0.5%) started off the week on a dour note after lingering mostly in the negative territory as the key index underperformed the mostly positive regional peers yesterday. The lower liners closed mixed, while the broader market ended mostly higher with the healthcare sector (+3.4%) took a boost from pharmaceutical-related stocks.

Global markets: US stockmarkets closed at fresh record high levels as the Dow (+1.4%) extended its gains on the back of the positive developments over the vaccine developments for Covid-19. Both European and Asia stockmarkets took cue from the gains on Wall Street.

The Day Ahead

The FBM KLCI failed to build onto its previous session gains and may remain on a sideways mode for a longer period. We reckon that the potential vaccine for Covid19 being fast-tracked may continue to weigh on the underperformance in gloverelated stocks. Despite that, it was a tale of two half with the lower liners continues their quest of recovery supported by the buoyant trading activities.

Sector focus: The strong performance on pharmaceutical-related stocks could remain unabated with further gains on the horizon. At the same time, the technology sector may also extend their gains on reports that Zodiac (China) Applied Science and Technology Research Centre Ltd looks to inject RM1.50bn for the development of 5G chips and encapsulation technology in Malaysia.

The FBM KLCI has formed a bearish engulfing candle as the key index retreated to close below the daily EMA20 level. We see the lack of follow-through buying interest may see the consolidation longer with 1,600 serving as the immediate resistance, followed by 1,615. On the downside, the immediate support remained pegged at 1,550, followed by 1,540. Indicators have turned weaker with the MACD Histogram turning red, while the RSI remains below 50.

Company Brief

FGV Holdings Bhd’s 2QFY20 net profit stood at RM20.6m vs. a net loss of RM52.2m recorded in the previous corresponding quarter, helped by an improvement in the group's oil palm plantation operations. Revenue rose 0.3% YoY to RM3.29bn. (The Star)

Guan Chong Bhd’s 2QFY20 net profit fell 6.6% YoY to RM57.0m, as a result of higher cocoa bean prices resulted in lower margin. Revenue for the quarter, however, rose 21.0% to RM910.8m. (The Star)

Notion VTec Bhd’s 3QFY20 net loss stood at RM10.9m vs. a net profit of RM1.9m recorded in the previous corresponding quarter due to insufficient orders and also cost provision of ESOS requirement which it had locked in July 2020 of RM1.7m. Revenue for the quarter fell 28.9% YoY to RM40.1m. (The Star)

Ho Hup Construction Co Bhd has bagged a RM137.0m contract for upgrading works under phase two of the Klang Valley Double Track project. The three-year contract was awarded by Dhaya Maju Infrastructure (Asia) Sdn Bhd. (The Star)

Dutch Lady Milk Industries Bhd's 2QFY20 net profit rose 23.5% YoY to RM21.2m, driven by higher demand for its products and lower and efficient commercial spend. The earnings, however, were partially impacted by negative mix (channel and portfolio) and increased global dairy raw material prices. Revenue for the quarter increased 12.3% YoY to RM273.5m. (The Edge)

MMC Corp Bhd's 2QFY20 net profit grew 15.1% YoY to RM77.4m, due to higher share of the results of associate Malakoff Corp Bhd, gain on sale of land at Senai Airport City and lower operating expenses. Revenue for the quarter, however, fell 19.5% YoY to RM990.68 m. (The Edge)

Hibiscus Petroleum Bhd’s 4QFY20 net loss stood at RM145.2m vs. a net profit of RM24.7m recorded in the previous corresponding quarter, mainly due to provisions for impairment of oil and gas assets amounting to RM196.3m. Revenue for the quarter slumped 83.3% YoY to RM39.5m. (The Edge)

Tiong Nam Logistics Holdings Bhd’s 1QFY21 net loss stood at RM5.5m vs. a net profit of RM1.9m reported in the previous corresponding quarter due to the MCO which spanned the period under review. Revenue for the quarter fell 18.0% YoY to RM123.0m. (The Edge)

Paramount Corp Bhd’s 2QFY20 net loss stood at RM3.7m vs. a net profit of RM28.5m recorded in the previous corresponding quarter, mainly due to the unprecedented disruption caused by the Covid-19 pandemic to the property division. Revenue for the quarter fell 70.4% YoY to RM64.2m. (The Edge)

Despite physical store closures during the MCO period, Tomei Consolidated Bhd's 2QFY20 net profit jumped 69.6% to RM1.9m, thanks to the rise in gold prices. Revenue for the quarter, however, fell 43.8% YoY to RM76.1m. (The Edge)

Lay Hong Bhd’s 1QFY21 net profit jumped 34.3% to RM5.2m as both food manufacturing and the retail business recorded increases in revenue by 6.6% and 16.1% respectively. Revenue for the quarter grew 17.8% YoY to RM238.2m. (The Edge)

LTKM Bhd’s 1QFY21 net loss stood at RM8.4m vs. a net profit of RM510,000 recorded in the previous corresponding quarter on lower sales volume and average egg prices. Revenue for the quarter fell 42.1% YoY to RM27.9m. (The Edge)

Lagenda Properties Bhd’s 2QFY20 net profit soared 298.8% YoY to RM2.6m. Revenue for the quarter, however, fell 50.1% YoY to RN10.5m caused by the implementation of the MCO which delayed construction progress at all sites. It expects stronger performances in the coming quarters due to the recent acquisitions of two ongoing flagship affordable township projects — Bandar Baru Setia Awan Perdana and Lagenda Teluk Intan and The post-acquisition profits will be incorporated from 3QFY20. (The Edge)

Karex Bhd’s 4QFY20 net profit stood at RM1.4m vs. a net loss of RM1.0m recorded in the previous corresponding quarter, helped by stronger sales of its products in the Americas. Revenue grew 3.9% YoY to RM91.1m. The glove bandwagon with plans to venture into the manufacture and sale of medical gloves. It will spend RM40.0m to set up two production lines 12 months from today, which are expected to have an annual production capacity of 500.0m gloves. (The Edge) Fajarbaru Builder Group Bhd has secured a RM108.0m contract from Malton Bhd to develop the second phase of the Duta Park Residences high-rise residential project along Jalan Kuching. (The Edge)

Revenue Group Bhd has bagged a deal to provide e-wallet services at all Caltex petrol stations nationwide. The deal will see smart digital payment terminals installed at over 420 Caltex petrol stations, accepting local e-wallet payments from Touch 'n Go eWallet, Boost and GrabPay, with the group expecting work to be completed at the end of the month. (The Edge)

Tan Chong Motor Holdings Bhd has been granted an interim stay of the RM180.1m excise duty claim by the Customs Department until 3rd September 2020. Tan Chong intends to apply for leave to appeal against the claim after the Customs Department this month maintained the demand following Tan Chong's request for review back in June. (The Edge)

Pharmaniaga Bhd’s sterile liquid injectable plant, which is suitable to cater to the fill and finish process of a Covid-19 vaccine, can cater to around 10.0m doses per month. Given the readiness of the existing line, only a minimal investment of less than RM2.0m will be needed to further gear up the plant. Pharmaniaga is one of few companies identified by the government recently to use its existing facilities for bottling the vaccine when it becomes available. (The Edge)

Source: Mplus Research - 25 Aug 2020

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