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

 

Mplus Market Pulse - 6 Aug 2018

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Directionless Trend

  • The FBM KLCI (+0.1%) ended the week on an upbeat tone, boosted by bargainhunting as the earnings season remains in full swing. On a weekly basis, the keyindex (+0.6% W.o.W) also rallied on buying-support in selected blue-chips. Meanwhile, the lower liners extended their gains, alongside most of the broader market constituents.
  • Market breadth turned positive as advancers overturned the decliners on a ratio of 481-to-326 stocks. On the other hand, traded volumes decreased 11.6% to 1.85 bln shares, weighed down by ongoing trade disputes and concerns over slower global economic growth.
  • Nestle (+40.0 sen), Hong Leong Financial Group (+34.0 sen), Malaysia Airports (+24.0 sen), Tenaga Nasional (+14.0 sen) and Dialog (+10.0 sen) led the Main Board higher, while broader market winners were United Plantations (+RM1.08), Hong Leong Industries (+38.0 sen), Carlsberg (+30.0 sen), Scientex (+17.0 sen) and Malaysian Pacific Industries (+16.0 sen).
  • On the flipside, laggards include Aeon Credit (-18.0 sen), Top Glove (-16.0 sen), Yong Tai (-15.0 sen), Shangri-La Hotels (- 11.0 sen) and C.I. Holdings (-10.0 sen). Telco giants like Telekom Malaysia (-19.0 sen), Axiata (-7.0 sen), and Digi (-7.0 sen) weighed on the key-index, alongside Hong Leong Bank (-8.0 sen) and CIMB Bank (-6.0 sen).
  • Major regional stockmarkets extended their losses on Friday, as investors remain on the sidelines awaiting for further developments on the trade front. The Shanghai Composite (-1.0%) retreated, logging its worse weekly performance since February, while the Hang Seng Index finished 0.1% weaker. The Nikkei, however, eked out gains – contributed by the strength in consumer discretionary stocks, while ASEAN equities ended mixed.
  • Wall Street finished higher as investors shrugged off the weaker-than-expected jobs data and trade war jitters, in-view of strong corporate earnings results. The Dow added 0.5% and closed in the green for the week at 25,462.6 points. Meanwhile, on the broader market, the S&P500 also gained 0.5%, alongside the Nasdaq (+0.1%).
  • European stockmarkets gained traction, lifted by gains in technology stocks following the optimism spilled over from Wall Street on Thursday. The FTSE (+1.1%) finished on a positive note, boosted by Mondi (+7.9%) after the packaging and paper company’s earnings topped analysts’ expectations. The DAX and the CAC also followed suit, closing 0.6% and 0.3% higher respectively.

The Day Ahead

  • Although the key index managed to make headway last Friday, we maintain our view that the general market enviroment lacks impetus for a meaningful uptrend. As it is, there remains substantive global issues that is leaving investor sentiments on the cautious side.
  • As a consequence, many market players are opting to stay on the sidelines and this is manifested in the lackluster volumes over the past week. With market following on the low side, we see few opportunities for the market to make a steady headway. In any case, the market remains overbought and a pullback would be healthy to allow the key index to take a breather. With the key index teethering on at the 1,780 level, which is now a support level, the resistances are at 1,790 and 1,780 respectively. The other supports are at 1,770 and 1,750 respectively.
  • The lower liners and broader market shares are also finding it difficult to make headway amid the lack of catalyst and following. Hence, we see these stocks likely to stay largely rangebound for the foreseeable future.

COMPANY BRIEF

  • Bumi Armada Bhd has secured a six-year bare boat charter contract extension for its floating, production, storage and offloading (FPSO) vessel in Vietnam for a contract value of US$285.0 mln (RM1.16 bln). The FPSO Armada TGT 1 has been operating in the Te Giac Triang (TGT) field since 1st September 2009 with the existing contract expiring on 26th August 2018. The new contract will extend its service in the same area to 14th November 2024. (The Star Online)
  • SLP Resources Bhd's 2Q2018 net profit soared 310.8% Y.o.Y to RM10.5 mln, driven by better product mix that boosted its margins. Revenue for the quarter added 2.7% Y.o.Y to RM44.4 mln.
  • For 1H2018, cumulative net profit jumped 177.6% Y.o.Y to RM11.8 mln. Revenue for the period, however, fell marginally by 0.8% Y.o.Y to RM88.5 mln. A dividend of 1.5 sen per share, payable on 5th October 2018, was declared. (The Star Online)
  • Tan Sri Azman Mokhtar has stepped down as Chairman of Axiata Group Bhd from 3rd August 2018 after a 10-year tenure following his resignation from Khazanah. (Bernama)
  • Gamuda Bhd and Kumpulan Perangsang Selangor Bhd (KPS) are set to resume trading after Pengurusan Air Selangor Sdn Bhd offered a cash offer of RM2.55 bln to take over Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) on 3rd August 2018. The offer price is a 28.0% discount to Splash's net book value of RM3.54 bln as at June 30,2018 and the consideration will be fulfilled over nine years. (The Edge Daily)
  • Frontken Corp Bhd’s Chairman and Chief Executive Officer, Ng Wai Pin has emerged as the largest shareholder of the semiconductor cleaning firm after an indirect acquisition of 291.0 mln shares or a 27.8% stake at a total of RM113.0 mln. The acquisition was made via Dazzle Clean Ltd, an indirect, wholly-owned unit of Singapore-based private equity firm, Dymon Asia in which Ng is a substantial shareholder.
  • With two blocks traded at 39 sen per share and 38 sen per share respectively, the stake was purchased at a RM51.4 mln or 31.3% discount to the closing value of the shares. (The Edge Daily)
  • Anzo Holdings Bhd is in the midst of identifying a new external auditor as its current auditor, Messrs UHY's term of office will end after 21 days from 31st July 2018. UHY had expressed its intention to resign as auditor of the company due to the change of financial year of Anzo Group, which was not part of the auditor's plan. As a result, the auditor has no spare staff and resources to complete the audit for the respective periods. (The Edge Daily)
  • Lay Hong Bhd is allocating RM13.0 mln or about 50.0% of the proceeds from the disposal of its land in Ijok, Selangor, to build a broiler grand parent stock farm in Raub, Pahang in 2019. The balance of the proceeds from the RM27.6 mln sale will be used to pare down existing borrowings, which totalled RM230.5 mln as at 31st March 2018. (The Edge Daily)
  • Parlo Bhd’s substantial shareholder, Thirty Keystone Sdn Bhd will settle the group’s RM1.3 mln profit shortfall by releasing its 11.5 mln or a 3.2% stake to Malaysian Trustee Board for the latter to sell the shares to satisfy the shortfall. Although Thirty Keystone’s share release will lower its stake in Parlo to 10.0%, it remains the group’s second largest shareholder. (The Edge Daily)
  • Nylex (Malaysia) Bhd’s Executive Chairman, Tan Sri Mohamed Al Amin Abdul Majid has resigned, citing other commitments. Separately, Ancom Bhd, the holding company of Nylex with a 14.9% stake, also announced the resignation of Tan Sri Mohamed as its Non-Independent and Non-Executive Director. (The Edge Daily)
  • T7 Global Bhd has teamed up with Hong Kong-based DIV Diving Engineering Co Ltd and Singapore's Cornerstone Offshore Pte Ltd to carry out underwater subsea engineering services for the O&G industry in Malaysia. T7 Global entered into a shareholder agreement with the two companies to jointly form a special purpose vehicle (SPV) for the proposed business. T7 Marine will hold a 55.0% stake in the SPV, while DIV Diving will own 30.0% and Cornerstone the remaining 15.0%. (The Edge Daily)  

Source: Mplus Research - 6 Aug 2018

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