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Author: MalaccaSecurities   |   Latest post: Thu, 20 Jun 2019, 10:00 AM

 

Mplus Market Pulse - 4 Sept 2018

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Still Consolidating

  • The FBM KLCI ended firmly in the red, following rising trade tensions and weakness in emerging stockmarkets. The lowers – the FBM Small Cap (-1.3%), FBM Fledgling (-1.0%) and FBM Ace (-2.3%) remained southbound amid an equally bearish broader market.
  • Market breadth was still negative as decliners beat the advancers by more than two-fold. Traded volumes, however, inched higher by 0.7% to 2.65 bln stocks as investors retreated to the sidelines amid a broad decline in global equities.
  • Blue-chip underperformers include Genting-related companies like Genting (- 20.0 sen) and Genting Malaysia (-12.0 sen), followed by Nestle (-50.0 sen), Hong Leong Bank (-16.0 sen) and Hartalega (- 12.0 sen). Other losers include KESM Industries (-68.0 sen), BAT (-54.0 sen), Hengyuan Refining (-54.0 sen), Carlsberg (-36.0 sen) and United Plantations (-30.0 sen).
  • On the contrary, Panasonic Manufacturing (+20.0 sen), Petron Malaysia (+17.0 sen), DKLS Industries (+13.0 sen), Shangri-La Hotels (+12.0 sen) and Astro Malaysia (+10.0 sen) bucked the general downtrend seen in the broader market and closed higher on Monday. Less than half of the key index members rallied, mainly Kuala Lumpur Kepong (+20.0 sen), PPB Group (+8.0 sen), Hong Leong Financial Group (+6.0 sen), Maybank (+6.0 sen) and Petronas Chemicals (+5.0 sen).
  • Asian equities were mostly splashed in red as trade concerns continued to weigh on market sentiments. The Nikkei ended 0.7% lower with the majority of its subsectors in the negative territory. The Shanghai Composite also lost 0.2%, weighed down by weaker-than-expected manufacturing data. The Hang Seng Index (-0.6%) followed suit, while ASEAN stockmarkets finished mostly lower yesterday.
  • Wall Street was closed for the Labor Day holidays.
  • Earlier, U.K. stockmarkets ended its three-day losing streak, following the weakness in Pound after a key E.U. negotiator criticised U.K.’s Brexit plans. The FTSE and the CAC rallied 1.0% and 0.1% respectively, although the DAX (- 0.1%) weakened to 12,346.4 points amid holiday-thinned trading.

The Day Ahead

  • As it is, the buying strength of FBM KLCI listed stocks continue to wane amid the toppish conditions, but they are still finding institutional support to leave the index tethering on the overbought zone, even after their consolidation over the past few sessions.
  • With the key index still toppish, coupled with the lack of sustainable catalysts, we see the consolidation spell continuing over the near term. The recently concluded results reporting season saw few improvements to set a new tone for the market and as a consequence, the buying interest is likely to remain muted for longer.
  • Consequently, we see the key index tracking back to around the 1,800 points level in the ongoing consolidation spell which is deemed healthy after the key index surged more than 9% over the past two months. The intermediate support is at 1,810, while the resistances are at 1,820 and 1,830 respectively.
  • Meanwhile, many lower liners and broader market shares are already oversold after their incessant fall over the past month. Hence, a rebound is already due, albeit there are still few signs of a recovery as yet, given that the buying interest is still weak. Therefore, the downside bias is still prevalent for now and we see further near term weakness.

COMPANY BRIEF

  • Lotte Chemical Titan Holdings Bhd has commenced commercial operations of its new polypropylene production plant. The plant has an annual capacity of 200 kilotonnes and will cater for both the domestic and export markets. Construction of the plant began in March 2018 with mechanical completion achieved in June 2018. (The Star Online)
  • AirAsia Group Bhd has received US$201.5 mln in gross proceeds from the transfer of 15 aircraft to entities managed by BBAM Ltd Partnership, as part of its divestment plan for the aircraft-leasing unit currently managed by wholly-owned subsidiary Asia Aviation Capital Ltd.
  • The proceeds include a cash consideration of US$151.5 mln cash and 3.3 mln FLY Leasing Ltd equity issued at US$15.00 per FLY depository share to AirAsia in accordance with the FLY subscription agreement.
  • To date, AirAsia has transferred 54 out of a total 84 aircraft up for transfer, for which the group has already received total gross proceeds of US$703.1 mln. (The Edge Daily)
  • FGV Holdings Bhd’s several board members and management staffs have been investigated on some transactions and investment decisions undertaken by the group previously. The group expects to obtain legal advice from its lawyers on the outcome of completed investigations. The full report on all six investigations is expected to be ready by year-end. (The Edge Daily)
  • Marine & General Bhd has received a oneyear extension on its contract from Repsol Oil & Gas Malaysia Ltd for the provision of two anchor handling tug supply vessels. The extended contract is estimated to have a value of about RM25.0 mln. (The Edge Daily)
  • Uzma Bhd has appointed its Independent Non-Executive Director, Datuk Abdullah Karim as the group’s new Independent Chairman, replacing Datuk Seri Syed Ali Syed Abbas Alhabshee who resigned after serving as Independent Chairman for over 10 years to pursue his personal interest. Datuk Abdullah brings with him over 41 years of experience in the oil and gas industry after joining Petroliam Nasional Bhd (Petronas) in 1977. (The Edge Daily)
  • A joint venture between Vertice Bhd and Vizione Holdings Bhd has won a RM815.0 mln contract from Consortium Zenith Construction Sdn Bhd to undertake construction work for a package in the Penang mega infrastructure project. The contract entails the construction work for a 5.7km by-pass from Bandar Baru Ayer Itam connecting to Lebuhraya Tun Dr Lim Chong Eu, was awarded to Buildmarque Construction Sdn Bhd, a newly incorporated wholly-owned subsidiary of Vertice Construction Sdn Bhd, which in turn is fully owned by Vertice.
  • Vertice and Vizione are in the midst of arranging for the subscription of new shares in Buildmarque so that each party will eventually hold 50.0% equity interest in the new company. The construction period is 36 months from the commencement date or from the date of issuance of the notice to proceed. (The Edge Daily)
  • DBE Gurney Resources Bhd has received a conditional mandatory takeover offer from its largest shareholder, Doh Properties Holdings Sdn Bhd, at 3.5 sen per share or a total amount of RM62.8 mln. The offer was made after Doh Properties, through open market acquisitions, increased its shareholding in the integrated poultry group to 33.0% from 32.9%.
  • Doh Properties intends to maintain DBE Gurney's listing status on the Main Market of Bursa Malaysia. Under the Capital Markets and Services Act, Doh Properties is obliged to extend a mandatory takeover offer to acquire the remaining shares and warrants it does not own of 1.79 bln and 580.64 mln, respectively.
  • The offer price for the shares represents a 7.4% premium to DBE Gurney's five-day volume-weighted average price of up to 30th August 2018 of 3.26 sen, while the offer price for the warrants is one sen per warrant or RM5.8 mln in total. (The Edge Daily)
  • Supermax Corp Bhd has reported that its factory in Sungai Buloh, which caught fire on 24th August 2018, is fully covered by insurance against all risks and including consequential loss claims. The financial and operational impact on the group would be minimal as the plant contributes to less than 1.0% of its sales turnover. (The Edge Daily)  

Source: Mplus Research - 4 Sept 2018

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