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Author: MalaccaSecurities   |   Latest post: Fri, 19 Apr 2019, 2:48 PM

 

Mplus Market Pulse - 26 Jul 2018

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Easing Trade War Concerns To Lift Market

  • Tracking the positive development in Wall Street overnight, the FBM KLCI (+0.1%) advanced for the third straight session yesterday after recouping all its intraday losses. The lower liners – the FBM Small Cap (+0.7%), FBM Fledgling (+0.4%) and the FBM ACE (+0.7%), all extended their gains, while the broader market ended mixed.
  • Market breadth remained positive as advancers edged decliners on a ratio of 543-to-386 stocks. Traded volumes added 12.0% to 3.75 bln shares amid the more positive market sentiment.
  • Petronas Dagangan (+72.0 sen) led the big board gainers list, followed by Malaysia Airport Holdings (+10.0 sen), Tenaga (+10.0 sen), Hong Leong Bank (+6.0 sen) and MISC (+5.0 sen). Among the biggest advancers on the broader market were United Plantations (+58.0 sen), Panasonic (+44.0 sen), Heineken (+28.0 sen) and Perusahaan Sadur Timah (+25.0 sen). WCT added 3.0 sen after winning a civil suit appeal in Dubai.
  • In contrast, notable decliners on the broader market include MPI (-36.0 sen), Carlsberg (-32.0 sen), Padini (-22.0 sen), Vitrox (-17.0 sen) and Time dotCom (- 17.0 sen). Key losers on the local bourse were Nestle (-60.0 sen), IHH (-10.0 sen) and Genting (-9.0 sen), while Hong Leong Financial Group and Sime Darby Plantation shed 8.0 sen each.
  • Asia benchmark indices closed mostly higher yesterday as the Nikkei gained 0.5%, boosted by gains in steel and metal companies. The Hang Seng Index rose 0.9% on optimism over China’ economic policy, but the Shanghai Composite (- 0.1%) halted a three-day rally after trading in a lackluster manner. ASEAN stockmarkets, meanwhile, closed mostly higher yesterday.
  • U.S. stockmarkets recouped their intraday losses after U.S. President Donald Trump reached an agreement with European Commission President Jean-Claude Juncker aimed at averting a trade war. The Dow climbed 0.7%, while the S&P 500 (+0.9%) recorded its third day winning streak. The Nasdaq (+1.2%) closed at a fresh record high at 7,932.24 level.
  • Earlier, European equities – the FTSE (- 0.7%), CAC (-0.1%) and DAX (-0.9%), all drifted lower, dragged down by concerns ahead of talks between the United States and the European Union on resolving trade dispute. The appreciation of the Euro Currency against the Greenback also attributed to the region’s weakness.

The Day Ahead

  • Expectedly, there were more upsides on Bursa Malaysia stocks yesterday as market players take advantage of the stronger corporate earnings and easing threats of a full blown trade war following Europe and the U.S’ agreement to work on a trade deal, to stay invested in stocks.
  • With global markets still on a high, we expect stocks on Bursa Malaysia to gain further ground over the near term. However, we also think that the near term gains could be milder after the recent gains have left it overbought.
  • Therefore, we see rotational plays escalating as market players lock-in profits on their winning positions and switch to laggards. On the upside the resistances remain at the 1,770 and 1,800 points levels. The supports, on the other hand, are at 1,760 and 1,750 respectively.
  • We also see the lower liners and broader market shares continuing to gain ground, but the toppish environment could also place a lid on their near term upsides. Therefore, we also see rotational plays dominating trades in the above listed shares as investor interest continues to improve.

COMPANY BRIEF

  • Westports Holdings Bhd’s 2Q2018 net profit fell 18.1% Y.o.Y to RM121.8 mln, owing to higher depreciation and finance costs following the completion of Container Terminal 8 (CT8) and CT9, as well as the absence of an investment tax allowance that was previously claimed in 2Q2017. Revenue was also 21.0% Y.o.Y lower to RM394.0 mln, from RM501.4 mln last year. Nevertheless, the group has declared a first interim dividend of 5.4 sen per share, payable on 20th August 2018. (The Edge Daily)
  • Cuscapi Bhd has set up a subsidiary to operate a cryptocurrency exchange in the Philippines, after obtaining a licence from the Cagayan Economic Zone Authority (CEZA). Its subsidiary, Cuscapi Blockchain Sdn Bhd will also conduct other information technology related businesses. (The Edge Daily)
  • Uzma Bhd has been awarded a five-year umbrella contract from Petronas Carigali Sdn Bhd for the provision of drilling fluids and associated services for Petroleum Arrangement Contractors (PACs). No fixed value was provided for the umbrella contract, as it depends on work orders to be issued to it from time to time at the discretion of PACs.
  • The five-year contract had commenced on 30th May 2018. (The Star Online)
  • Marine & General Bhd (M&G) has secured a three-year contract worth RM17.0 mln to provide a straight supply vessel (SSV) in support of a client's operations. The contract was awarded by Hess Exploration and Production Malaysia B.V. and will commence on 1st August 2018. The project also comes with two annual extension options for Hess. (The Edge Daily)
  • Vizione Holdings Bhd posted another quarter of record earnings as 4QFY18 net profit soared by 60.4x to RM11.0 mln, from RM183,000 a year ago – due to construction works undertaken during the period by a newly acquired subsidiary. Revenue for the quarter also grew by about 6.9 times to RM110.7 mln vs. RM16.1 mln a year ago.
  • Consequently, full-year net profit jumped by 43.8x to RM26.2 mln, from RM598,000 in the previous year, while revenue was 8.4x higher at RM413.2 mln compared with RM49.1 mln in FY17. (The Edge Daily)
  • D'nonce Technology Bhd (DTB) has inked a development rights agreement for the sole and exclusive rights to carry out development on a piece of freehold land measuring 6,774 sq. m. in Seberang Perai Tengah, Penang for RM10.0 mln cash as part of its plan to diversify into property and construction for additional income streams.
  • The agreement was made with the two vendors — Tan Than Kau and Tan Tiang Yang, whereby DTB will be paying the vendors RM5.0 mln each in cash, funded by a combination of bank borrowings (60%) and internally-generated funds (40%). The proposals are expected to be completed by 4Q2018. (The Edge Daily)
  • CapitaLand Malaysia Mall Trust (CMMT) has announced that it achieved a 2Q2018 net property income (NPI) of RM53.4 mln (-10.8% Y.o.Y) compared to its previous year NPI of RM59.8 mln.
  • The group also noted that Gurney Plaza in Penang and East Coast Mall in Kuantan recorded stronger performances which partially mitigated lower contributions from its Klang Valley shopping malls, including Sungei Wang, which is currently undergoing asset enhancement to reconfigure its annex space into a new lifestyle zone, called "Jumpa".
  • Consequently, distributable income for 2Q2018 was RM40.8 mln and distribution per unit (DPU) for the quarter was 2.0 sen. (The Edge Daily)
  • Gadang Holdings Bhd recorded a 21.7% Y.o.Y drop in 4QFY18 net profit to RM23.3 mln, from RM29.7 mln in the same period last year on poorer construction earnings, mitigated by stronger property profits. However, revenue increased 4.1% Y.o.Y to RM182.0 mln, from RM174.9 mln previously, on the back of continuing progress of its construction projects, including those related to the refinery and petrochemical integrated development project (RAPID) in Pengerang, Johor, second line of the Klang Valley Mass Rapid Transit, Tun Razak Exchange, and Cyberjaya Hospital. (The Edge Daily)
  • M-Mode Bhd's founder, Datuk Lim Thean Keong has stepped down as the group's Managing Director, in order to allocate more time to operation matters at subsidiary level. In addition, M-Mode’s new single largest shareholder, Ong Chee Koen, will be re-designated as Chief Executive Officer (CEO) from his previous position as Executive Director. (The Edge Daily)
  • Mega First Corp Bhd has announced that the construction of the Don Sahong Hydropower Project (DSHP) in Laos has not been affected by the collapse of the Xepian-Xe Nam Noy dam reported on Monday. The Board concurs with the management of DSPC and its consultants that the incident is unlikely to result in any delay in the completion of the Don Sahong Project or a material change in the overall cost of the project.
  • To recap, a dam that formed part of the Xe-Pian Xe-Namnoy hydroelectric power project collapsed, causing flooding in six villages in the Attapeu province on 16th July, 2018, killing at least 20 people and resulted in more than 6,000 villagers being made homeless. (The Star Online)  

Source: Mplus Research - 26 Jul 2018

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