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Author: MalaccaSecurities   |   Latest post: Mon, 18 Mar 2019, 11:10 AM

 

Mplus Market Pulse - 11 Mar 2019

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More Of The Same

  • After lingering mostly in the negative territory, the FBM KLCI (-0.4%) trended lower, taking cue from the weakness on Wall Street overnight. Consequently, the key index retreated for the second straight week, falling 1.2% W.o.W. The lower liners, however, ended mostly higher as the FBM Small Cap and FBM ACE added 0.2% and 0.6% respectively, while the broader market closed mixed.
  • Market breadth stayed negative as losers outnumbered winners on a ratio of 524- to-328 stocks. Traded volumes fell 14.7% to 2.61 bln shares amid the negative market sentiment.
  • More than half of the key index constituents fell, dragged down by Nestle (-30.0 sen), followed by Petronas Gas (- 16.0 sen), Press Metal (-13.0 sen), Tenaga (-12.0 sen) and Genting (-7.0 sen). Notable decliners on the broader market were Dutch Lady (-30.0 sen), MPI (-22.0 sen), Tasek Corporation (-22.0 sen), Apex Healthcare (-20.0 sen) and Carlsberg (-16.0 sen).
  • Anchoring the broader market advancers list were Dayang Enterprise (+18.0 sen), Prestar Resources (+12.5 sen), TimedotCom (+12.0 sen) and Southern Acids (+10.0 sen). KNM climbed 0.5 sen after bagging a contract to supply carbon steel pressure vessels in Bahrain. Meanwhile, PPB Group (+8.0 sen), RHB Bank (+8.0 sen), Petronas Chemicals (+7.0 sen), Hartalega (+3.0 sen) and Maxis (+3.0 sen) advanced on the key index.
  • Asia’s benchmark indices closed in the red last Friday on concerns over the sluggish economic outlook in the Eurozone resulting in the Nikkei slipped 2.0%. The Hang Seng Index fell 1.9%, while the Shanghai Composite sank 4.4% to close below the 3,000 psychological level on the weaker-than-expected trade data that fell 20.7% Y.o.Y in February 2019. ASEAN stockmarkets, meanwhile, were painted in red last Friday.
  • U.S. stockmarkets remain in the red as the Dow fell 0.1%, dragged down by the downbeat jobs data. On the broader market, the S&P 500 (-0.2%) extended its losses on weakness in the energy sector (-2.0%), while the Nasdaq finished 0.2% lower.
  • Earlier, European equities - the FTSE (- 0.7%), CAC (-0.7%) and DAX (-0.5%), all fell, spooked by the weak Chinese trade data. Market sentiment was also cautious on whether Europe and U.K. could reach a deal on the Brexit deadlock.

The Day Ahead

  • With the key index tracking further down, there remain no signs of a recovery as yet with sentiments still indifferent. As a consequence, we envision further weakness ahead with the key index continuing to drift below the 1,680 level for now.
  • The key index’s sustained weakness is due in part to the recently announced weak corporate results that may prolong amid the slowing global and domestic economic environment. Furthermore, there is also little catalyst from overseas bourses as they are also on a consolidating spell after strong gains since the start of the year.
  • With the directionless trading permeating and the 1,680 already challenged, the downside could see the key index dip back to the 1,670 level before retesting the 1,660 level. The resistances are at the 1,690-1,700 points levels.
  • The FBM Small Cap, FBM Fledgling and FBM ACE indices are on their respective sideway consolidation and we see this trend continuing as there are fewer compelling buys after many stocks in the above indices made strong headway recently.

Company Update

  • Econpile Holdings Bhd has bagged an 18- month contract worth RM68.8 mln involving piling, pilecap and basement works for the Terra Putrajaya Project in Precinct 3, Putrajaya. The group secured the project 6th March 2019 from Niaz Enterprises (M) Sdn Bhd. (The Edge Daily)

Comments

  • This new contract brings Econpile’s total new wins to RM575.5 mln for FY19, representing 95.9% of our orderbook replenishment assumption of RM600.0 mln for FY19. This has also slightly exceeded Econpile’s total orderbook replenishment achieved in FY18 at RM473.4mln. Moving forward, Econpile’s unbilled orderbook of approximately RM950.0 mln will provide earnings visibility over the next two years.
  • With the contract coming within our assumption, we made no changes to our earnings forecast and we maintain our HOLD recommendation on Econpile with an unchanged target price at RM0.48. Our target price is derived by ascribing a target PER of 13.0x to its FY20 EPS of 3.7 sen.

COMPANY BRIEF

  • CIMB Group Holdings Bhd announced its next five-year blueprint known as “Forward23” to accelerate growth and future-proof its business. This comes on after the completion of its Target 18 (T18) transformation programme, a fouryear recalibration plan launched in 2014.
  • Under the new blueprint, CIMB has outlined three financial targets to be achieved by 2023, that is, a return on equity (ROE) of more than 12.0%, a common equity tier 1 (CET1) ratio of over 13.0% and a cost to income ratio of below 45.0%. (The Edge Daily)
  • Comintel Corp Bhd (Comcorp) has decided to pay U Television Sdn Bhd (UTV) a counterclaim sum of RM20.8 mln after the Federal Court yesterday dismissed Comcorp's application to review the court's earlier order dated 18th August 2017. Tan Sri Vincent Tan Chee Yioun owns pay television operator UTV. (The Edge Daily)
  • New LEAP Market entrant Uni Wall APS Bhd, which provides building façade services to property developers, has secured its second contract win in a week, being a RM32.1 mln sub-contract from Ahmad Zaki Resources Bhd (AZRB).
  • The contract includes the supply and installation of aluminium and glazing works for the Mass Rapid Transit 2 project on at Serdang Raya (South), Seri Kembangan and UPM station.
  • Earlier, Uni Wall was awarded a RM21.3 mln subcontract from Crest Builder Sdn Bhd to supply and install aluminium, glazing and second skin external façade for a six-storey office building in Section 19, Petaling Jaya. (The Edge Daily)
  • Practice Note 17 (PN17) company Amtek Holdings Bhd may be delisted from Bursa Malaysia by the end of the month after Bursa Malaysia rejected the group’s application for more time to submit its regularisation plan.
  • Subsequently, its shares will be suspended on 18th March and subsequently delisted on 29th March — unless an appeal against the delisting is submitted on or before 15th March, 2019.
  • To recap, Amtek fell into the PN17 in January last year after its shareholders’ equity on a consolidated basis fell to below RM40.0 mln and was not more than 25.0% of its issued and paid up capital then. In the same month, the group also sold off its entire Crocodile Brand inventory. (The Edge Daily)
  • Yong Tai Bhd is planning to raise up to RM17.1 mln via a private placement to third-party investors to be identified later. The funds will be used to partly finance some of its projects. The proposed private placement will involve the issuance of up to 51.8 mln shares and is expected to be completed by 2Q2019. (The Edge Daily)
  • Axiata Group Bhd's unit, Celcom Axiata Bhd registered a full-year revenue growth of 1.1% Y.o.Y to RM6.67 bln in 2018. Service revenue has also expanded at a similar pace to RM6.12 bln against RM6.06 bln in 2017, attributing the improvements to growth in Celcom's post-paid and prepaid segments. Despite the weak performance in past year, Celcom targets to achieve a single-digit growth in total revenue in 2019. (The Star Online)
  • Seacera Group Bhd is selling off 60.0% equity stake in its 80.0%-owned construction outfit, Spaz Sdn Bhd for RM12.0 mln cash in a bid to streamline and restructure its operation in order to focus on businesses that are viable and profitable in the mid to long term.
  • The expected gain on the disposal is approximately RM8.0 mln based on Seacera's original investment cost in SPAZ of RM16.0 mln. (The Edge Daily)  

Source: Mplus Research - 11 Mar 2019

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