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Author: MalaccaSecurities   |   Latest post: Fri, 16 Nov 2018, 10:13 AM

 

Mplus Market Pulse - 16 Apr 2018

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Calmer Environment To Spur Trading

  • The FBM KLCI lost 0.3% and ended sixstraight sessions’ of gains to close lower, alongside key regional stockmarkets. Still, the key index managed to record a 1.7% W.o.W gain. The lower liners – the FBM Small Cap (+1.1%), FBM Fledgling (+0.9%) and FBM ACE (+2.7%), however, rebounded to recover all their previous session losses, while the broader market closed mixed.
  • Market breadth turned positive as winners overtook losers on a ratio of 601- to-325 stocks. Traded volumes, however, narrowed by 16.9% to 2.72 bln shares as concern over geopolitical uncertainty lingered.
  • More than half of the key index constituents fell, dragged down by KLK (- 42.0 sen), followed by Nestle (-40.0 sen), Petronas Gas (-18.0 sen), MISC (-16.0 sen) and Telekom (-13.0 sen). Consumer products stocks like Panasonic (-30.0 sen), BAT (-28.0 sen), Padini (-25.0 sen) and Cocoaland (-11.0 sen) sank, while Genting Plantations declined 16.0 sen.
  • Significant gainers on the broader market include KESM Industries (+76.0 sen), Aeon Credit (+62.0 sen), Carlsberg (+30.0 sen) and Tasek Corporation (+30.0 sen). MMSV added 6.0 sen after securing the Securities Commission approval to transfer to the Main Board of Bursa Malaysia. Meanwhile, Petronas Dagangan (+12.0 sen), Genting Malaysia (+8.0 sen), IHH (+3.0 sen), Press Metal (+3.0 sen) and IOI Corporation (+2.0 sen) led the big board advancers list.
  • Chinese stockmarkets closed lower on the back of a surprise trade deficit in March, potentially attributed to seasonal factors like the Lunar New Year holiday in February 2018. The Shanghai Composite fell 0.7%, with all of its sectors in red, with the exception of the Telecommunications Services (+0.4%). The Hang Seng Index (-0.1%) also declined on a weaker Hong Kong Dollar, although the Nikkei (+0.6%) finished higher on Friday, boosted by a weakened Yen. ASEAN stockmarkets, meanwhile, closed mostly in the green.
  • U.S. equities took a turn for the worst as investors booked profits despite betterthan-expected 1Q2018 corporate earnings from major banking stocks. The Dow erased 0.5% - led by the weakness in JP Morgan Chase (-2.7%) and Boeing (- 2.4%). On the broader market, the S&P 500 and the Nasdaq also ended 0.3% and 0.5% lower respectively, amid concerns of lofty valuations and lingering geopolitical uncertainties.
  • European benchmark indices traded in the lackluster manner before inching higher last Friday as the FTSE (+0.1%), CAC (+0.1%) and DAX (+0.2%) all extended their gains for the third straight session. Gains were limited, howeverm as geopolitical concern in Syria remained unabated.

The Day Ahead

  • We think Malaysia stocks could resume their near term upsides as the geopolitical issues in Syria has abated somewhat and this could entice fresh bouts of bargain hunting again. This would also allow the key index to cast aside last Friday’s market weakness on Wall Street and key Asian markets.
  • Although we think the upside could resume, we continue to think that the 1,880 level remains a formidable level to breach convincingly as there are few still few sustainable catalysts with market participants await for the upcoming General Election. Above 1,880, there is resistance at 1,890, while the supports are at 1,860 and 1,850 respectively.
  • The lower liners and broader market shares, meanwhile, should continue to see bargain hunting activities after their rout over the past two months as retail players will capitalise on the calmer market conditions to undertake trading activities.

COMPANY BRIEF

  • Serba Dinamik Holdings Bhd has agreed to acquire 24.8% of the shares in Singapore-listed technology firm, CSE Global Ltd for RM170.6 mln to expand its international reach. The move will give Serba Dinamik a stake in a profitable company with its own financial capabilities and ready order books without the requirement for further capital injection.
  • CSE has a strong presence in North America with its businesses in the US contributing 57.0% of the group’s total revenue. As of end of last year, CSE Global has cash balances and short-term investments amounting to S$46.9 mln (RM138.7 mln). The deal valued the Singapore firm at about S$0.45 a share. The stock was last traded at S$0.43, giving it a market value of S$221.9 mln. (The Star Online)
  • Digi.Com Bhd’s 1Q2018 saw its net profit rise 3.5% Y.o.Y to RM386.1 mln on the back of improved service revenue. Revenue for the quarter grew 3.8% Y.o.Y to RM1.63 bln. A first interim dividend of 4.9 sen per share, payable on 29th June 2018, was declared. (The Star Online)
  • UEM Sunrise Bhd has acquired a 72.0 ac. land near a lake garden in Kepong to undertake a mixed commercial development with an estimated GDV of RM15.00 bln. Its wholly-owned subsidiary, Sunrise Bhd, has entered into an agreement with Mega Legacy Equity Sdn Bhd to collaborate in developing the land. The development is expected to be carried out over 15 years. (The Edge Daily)
  • Datasonic Group Bhd has secured a contract worth RM270.7 mln from the Home Affairs Ministry to supply 9.96 mln polycarbonate biodata pages to the Immigration Department. The contract is for a period of 46 month from 1st February 2018 until 20th November 2021. DTSB is also required to furnish a performance bond for an amount of RM3.5 mln to the Ministry, from 1st February 2018 until 30th November 2022. (The Edge Daily)
  • Tropicana Corp Bhd is disposing of a 9.1-ac plot of land in Pekan Country Height within the Petaling district in Selangor to MCT Bhd for RM143.0 mln. MCT plans to build some 1,400 serviced apartments on the land. It has a development cost of around RM570.0 mln with an expected a gross profit of RM280.0 mln.
  • The project is currently in the initial planning stage and MCT expects to commence building in 2019 and complete the project by 2024. The proposed acquisition and eventual development cost of the land will be funded via a combination of internallygenerated funds and/or bank borrowings. (The Edge Daily)
  • MK Land Holdings Bhd has been served with a writ of summons and statement of claim dated 10th April 2018 for RM64.6 mln in taxes allegedly owing for the years of assessment 2009 and 2010. STSB is of the view that there are reasonable grounds to challenge the claim brought against them on the basis that there is a valid appeal pending before the Special Commissioners of Income Tax. (The Edge Daily)
  • WZ Satu Bhd’s Bhd has secured a RM68.0 mln subcontract from Mujur Minat Sdn Bhd to construct two carriageway bridge structures in Kuala Langat, Selangor. The contract has two sections with the first one commencing on 16th April 2018 and completing on 31st March 2019, while the second one will tentatively begin around January or February 2020 and be completed 12 months later. (The Edge Daily)
  • Ireka Corp Bhd is projected to kick-start its Rimbun Kasia development in Nilai, Negeri Sembilan which has a GDV of RM1.30 bln. The development is a new residential enclave covering a commercial and five residential projects on a 30.6-ac piece of land. The project is set to kick off by July 2018 with the initial phase having GDV exceeding RM400.0 mln and which will be jointly developed with Hankyu Hanshin Properties Corp. (The Edge Daily)
  • Nexgram Holdings Bhd has teamed up with China’s Shanghai Zhida Science and Technology Development Co Ltd to jointly distribute electronic vehicle (EV) charging products and services in Southeast Asia. Malaysia will be a sole distribution hub. A proposed joint venture (JV) will be formed with Nexgram holding a 85.0% stake in the JV and Zhida Group holding the remaining 15.0%, which will initially see an investment injection of RM10.0 mln. Zhida Group is the No 1 EV homecharging service provider in China. (The Edge Daily)
  • Vizione Holdings Bhd has landed a road upgrading contract worth RM137.1 mln. It received the award from Vertice Construction Sdn Bhd (VCSB) to upgrade Federal Road 12 (FR 12) from Gambang, Pahang to Segamat, Johor — Phase 1. The contract is to supply materials, labour, necessary tools and equipment to carry out the upgrading works with a date of completion on 30th April 2019. (The Edge Daily)  

Source: Mplus Research - 16 Apr 2018

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