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Author: MalaccaSecurities   |   Latest post: Thu, 21 Jan 2021, 12:02 PM


Mplus Market Pulse - 23 Nov 2020

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Market Review

Malaysia: The FBM KLCI (+0.6%) ended the week higher, powered by the resumption of buying momentum in glove heavyweights as investors weighed on rising Covid-19 cases. The lower liners finished in the green, while the broader markets also closed higher with the exception of plantation (-0.1%) and REITs (- 0.4%) sectors.

Global markets: The US stockmarkets as the Dow (-0.8%) slipped on unchecked Covid-19 spreads coupled with ongoing vaccine development. The European stockmarkets closed in the green while the Asia stockmarkets also finished mostly higher.

The Day Ahead

Mild bargain hunting activities took precedence as the FBM KLCI ended the week on a positive tone on bargain hunting in gloves heavyweights. We reckon that a consolidation will be in the picture over the near term amid the lack of fresh leads. In the meantime, gains will be limited by the rising number of Covid-19 cases that may derail the prospect of V-shaped economic recovery. Meanwhile, the lower liners are likely to trend higher, owing to the rotational play, whilst investors will continue to keep an eye on the barrage of corporate earnings releases this week as well as Budget 2021 vote this week.

Sector focus: Following the recovery trend on crude oil prices, we expect the energy sector to garner further trading interest. We also see bargain hunting activities emerging on the healthcare sector as valuations, particularly in gloves manufacturers have turned more appealing.

The FBM KLCI gapped up before lingering mostly in the positive territory as the key index recouped some of its previous session losses. With the daily EMA9 level remains supported, we reckon the consolidation may take place with gains limited towards the immediate resistances at 1,610, followed by 1,640. Supports are at 1,570, followed by 1,540. Indicators are mixed as the MACD Line continues to point higher, while the RSI remains overbought.

Company Brief

Rubberex Corporation (M) Bhd’s 3QFY20 net profit surged 1168.0% YoY to RM39.5m, as demand surged due to the Covid-19 pandemic and its orders have filled up to 2H2021. Revenue for the quarter gained 75.2% YoY to RM109.0m. (The Star)

The Employees Provident Fund (EPF) has emerged as the substantial shareholder of Hartalega Holdings Bhd, after buying 174.3m shares or 5.1% stake in the rubber glove maker company. The block was purchased by EPF on 17th November 2020. However, the transacted price was not disclosed in the filing. (The Edge)

Top Glove Corp Bhd has spent close to RM1.00bn buying back its own shares since September 2020. The world’s largest glove maker forked out RM69.9m to buy 9.6m shares on the open market; marking its ninth-straight day of buybacks at between RM7.25 and RM7.35 apiece. (The Edge)

InNature Bhd’s 3QFY20 net profit fell 38.6% YoY to RM6.6m, on weaker sales. Revenue for the quarter declined 10.3% YoY to RM41.7m. An interim dividend of one sen per share, payable on 15th January 2021 was declared. (The Edge)

CSC Steel Holdings Bhd's 3QFY20 net profit rose 20.8% Y.o.Y to RM12.7m, as it sold more higher-margin products. Revenue for the quarter, however, declined 12.8% YoY to RM306.8m. (The Edge)

Tropicana Corp Bhd’s 3QFY20 net profit dropped 13.6% YoY to RM14.5m, on lower sales and a temporary pause in activities amid Covid-19. Revenue for the quarter slipped 9.0% YoY to RM224.0m. (The Edge)

Perdana Petroleum Bhd’s 3QFY20 net loss stood at RM30.5m, from a net profit of RM18.1m recorded in the previous corresponding quarter, as it saw lower vessel utilisation rates. Revenue for the quarter, however, gained 40.0% YoY to RM87.4m. (The Edge)

Maxis Bhd’s wholly-owned Maxis Broadband Sdn Bhd (MBSB) has been hit with an RM140.0m tax bill, from the Inland Revenue Board (IRB) on 17th November 2020. The notices were raised following the disallowance of MBSB’s deductions of interest expenses during 2016 and 2017. It is challenging the move via legal channels. (The Edge)

AirAsia X Bhd (AAX) has been ordered to pay a total of RM133.1m in two lawsuits brought against it in the UK, involving aircraft leasing. One is a claim from BOC Aviation Ltd (BOCA) over a breach of contract, from which the court has granted a summary judgment against AAX and ordered it to pay BOCA RM97.3m, with costs. In the second lawsuit, the court made a judgment in default and ordered AAX to pay RM35.7m to International Lease Finance Corp, a trustee for two aircraft leased by AAX. (The Edge)

Source: Mplus Research - 23 Nov 2020

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