THE extension of the first phase of the total lockdown a.k.a full movement control order (FMCO) for a further fortnight till June 28 can be mitigated by leniency in sectors allowed to operate alongside reasonable support from the PEMERKASA+ aid package.
Nevertheless, CGS-CIMB Research anticipates the extension to raise the risk of 2Q 2021F corporate earnings disappointment for gaming, retail, auto, REIT (real estate investment trust), property, construction and tourism-related plays.
“Sectors least affected are export-oriented (tech, glove makers, petrochemicals, plantations) and utilities (including Tenaga Nasional Bhd, telcos, gas players) which are allowed to operate during MCO,” suggested head of research Ivy Ng Lee Fang in a Malaysian strategy note.
The decision to extend the FMCO was made primarily in view of the daily COVID-19 cases which remained above 5,000. The permitted and prohibited activities and standard operating procedures (SOPs) for all activities will remain status quo.
To re-cap, the decision to transition from one phase of the FMCO to another will be based on risk assessment studies done by the Health Ministry (MOH).
On June 13, the Government has mentioned that it is studying the possibility of relaxing some standard operating procedures (SOPs) under the current lockdown if daily COVID-19 cases drop to 4,000 cases or fewer.
Also in focus, according to CGS-CIMB Research are political developments after the king summoned political leaders for meetings at the palace last week.
The various party leaders claimed that discussions with the king were related to the COVID-19 situation, the economy and the re-opening of Parliament which is currently suspended due to the emergency declared (to be lifted on Aug 1).
“The next date to watch is June 16 when the king is expected to convene a special conference of the rulers,” added CGS-CIMB Research.
Until then, the research house reiterates its FBM KLCI target of 1,709 points with its top three picks being Inari Amerton Bhd (“add”; target price: RM3.90); Public Bank Bhd (“add”; target price: RM5.30) and Telekom Malaysia Bhd (“add”; target price: RM7).
On the inoculation front, the research house shared that Malaysia has only received 11% or 7.58 million of the 69.6 million doses the country ordered as per the delivery figures released by Science, Technology and Innovation Minister Khairy Jamaluddin on June 10.
The 69.6 million doses of the Pfizer, AstraZeneca, and Sinovac vaccines – all two-dose – cover 34.8 million people, more than the country’s entire population of 32.7 million residents.
Although the Federal Government has also ordered Russia’s Sputnik V and CanSino Biologics’s vaccines, the National Pharmaceutical Regulatory Agency (NPRA) has yet to approve these for use in Malaysia. – June 14, 2021
