M+ Online Research Articles

Author: MalaccaSecurities   |   Latest post: Wed, 5 Aug 2020, 11:14 AM


Mplus Market Pulse - 13 Aug 2018

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Unsustainable Gains

  • The FBM KLCI managed to inch higher, despite erasing most of its intraday gains as the key index recorded its fourth day winning streak last Friday. Consequently, the FBM KLCI rose 1.4% W.o.W, marking its fifth consecutive weekly winning streak. The lower liners – FBM Small Cap (+0.1%), FBM Fledgling (+0.1%) and FBM ACE (+0.9%), all extended their gains, but the broader market closed mostly lower.
  • Market breadth turned negative as decliners pipped advancers on a ratio of 487-to-402 stocks. Traded volumes fell 5.1% to 2.19 bln shares as profit taking activities among the broader market took precedence.
  • Malaysia Airport Holdings (+28.0 sen), Hartalega (+22.0 sen), IHH (+5.0 sen), Maxis (+3.0 sen) and RHB Bank (+3.0 sen) anchored the gains on the local bourse. Meanwhile, significant gainers on the broader market were BAT (+50.0 sen), United Plantations (+48.0 sen), CMSB (+19.0 sen), Muda Holdings (+17.0 sen) and MPI (+14.0 sen).
  • On the contrary, notable losers on the broader market include Far East Holdings (-48.0 sen), Scientex (-20.0 sen), Panasonic (-14.0 sen), Heineken (-12.0 sen) and KESM Industries (-10.0 sen). Key losers on the FBM KLCI were Nestle (-20.0 sen) and MISC (-10.0 sen), while Hong Leong Bank, Hong Leong Financial Group and KL Kepong all fell 6.0 sen each.
  • Asia benchmak indices ended mostly lower, dragged down by the escalating trade tension between the U.S. and China. The Nikkei sank 1.3%, while the Hang Seng Index slipped 0.8% after erasing all its intraday gains. The Shanghai Composite, however, extended its gains by 0.03%, as market players digested the stronger-than-expected inflation rate in July 2018 that rose 2.1% Y.o.Y – the highest since March 2018. ASEAN stockmarkets, meanwhile, closed mostly lower on last Friday.
  • The geopolitical concerns in Turkey that pushed the Turkish Lira to a record low against the U.S. Dollar sent U.S. stockmarkets lower as the Dow fell 0.8%. On the broader market, the S&P 500 slipped 0.8%, dragged down by the weakness in basic materials sector (- 1.4%), while the Nasdaq (-0.8%) snapped an eight-day winning streak.
  • Earlier, European stockmarkets ended in the red after the European Central Bank has voiced its concern over political uncertainty in Turkey that could negatively weighed in the banking sector. The FTSE (-1.0%), CAC (-1.6%) and DAX (- 2.0%), all closed sharply lower on weakness across the region’s banking stocks like Deutsche Bank AG (-4.7%), UniCedit SpA (-4.7%) and BNP Paribas (- 3.0%).

The Day Ahead

  • There remains no change to our view that the Malaysian stockmarket is overbought and that a consolidation is already overdue. Last week’s gains are largely superficial, in our view, as they were attained on low volumes as the buying interest remains thin in general. As it is, there are few noteworthy leads for the market to make the substantial gains and as a consequence, the market’s valuation are also toppish.
  • Although we do not discount the continuing institutional support on some of the index heavyweights, we think the toppish valuations could not support further gains and that a consolidation is required for the recent gains to be digested. Therefore, we maintain our view that the Malaysian stockmarket is set for a pullback with the supports pegged at the 1,800 and 1780 levels. The resistances, meanwhile, are at 1,810 and 1,820 respectively.
  • The lower liners and broader market shares are also overbought and a pullback is also due. As with the index linked stocks, we also see a consolidation due on many of the above listed shares.


  • Malaysia Smelting Corp Bhd‘s (MSC) 2Q2018 net profit plunged 73.0% Y.o.Y to RM2.5 mln, from RM9.0 mln in the previous corresponding period as its tin smelting operations continues to be impacted by inefficiencies at its aged plant in Butterworth, Penang, although revenue was up by 6.0% Y.o.Y to RM326.8 mln, from RM307.9 mln last year.
  • Cumulative 1H2018 net profit also narrowed by 68.0% Y.o.Y to RM7.0 mln, from RM21.6 mln due to the aforementioned reasons as well as weaker revenue contribution, which was 4.0% Y.o.Y lower to RM683.8 mln vs. RM714.5 mln in the same period last year. (The Edge Daily)
  • Transport Minister, Anthony Loke has announced that the second phase of the increase in container tariff will be deferred six months to 1st March 2019 from 1st September this year.
  • Consequently, Westports Holdings Bhd has also received the letter on the deferment from the Port Klang Authority. The group maintains that the second phase of the increase in Port Klang's container tariff is crucial to the financial viability of its proposed container terminal expansion as the latter has always been a supply-expansion-driven container port. (The Edge Daily)
  • YFG Bhd has secured an RM40.0 mln contract to construct a 23-storey building, which includes 62 apartment units and 38 office units for Atta Global Group Bhd's subsidiary, Tetap Gembira Development Sdn Bhd, in Penang. The project will commence on 1st October 2018 and is scheduled to be completed within 24 months. (The Edge Daily)
  • Marine & General Bhd was awarded a three-year contract worth RM48.0 mln to provide two 60 tonne anchor handling tug supply (AHTS) vessels from Murphy Sarawak Oil Co Ltd to support Murphy's operations.
  • The deal also comes with two options for Murphy to extend for an additional one year under each option, valued collectively at RM30.0 mln. (The Edge Daily)
  • NWP Holdings Bhd has decided to call off its RM745.0 mln contract to construct affordable housing on six projects for SPNB Aspirasi Sdn Bhd and Perbadanan PRIMA Malaysia, due to the lack of progress made in negotiations.
  • The turnkey construction Heads of Agreement (HoD) that was inked for the project has lapsed as there was no further extension and/or execution of any definitive turnkey agreement. (The Edge Daily)
  • Minetech Resources Bhd entered into a Memorandum of Understanding (MoU) with Hong Kong Marine Construction Ltd (HKMC) to explore business opportunities for land reclamation, industrial property development and port construction in Perak. HKMC is a subsidiary group of CCCC Dredging (Group) Co Ltd.
  • The proposed project has been approved by the Perak State government and involves the reclamation and the development of 3,400 acres into a heavy industrial development with a sea port to provide logistic facilities.
  • Under the MoU, both parties are expected to construct a sea port, whereby Minetech would undertake the reclamation of 300-500 ac. of land to be developed into a free trade zone industrial park.
  • Meanwhile, HKMC is the lead party seeking and recommending competent investors including the port operator to fund the construction and operation of the proposed port. (The Edge Daily)
  • Green Packet Bhd’s joint-venture (JV) company, Funsea Interactive Entertainment (M) Sdn Bhd is partnering with Apigate, a subsidiary of Axiata Digital Services Sdn Bhd, to enable direct carrier billing (DCB) for Celcom's customers.
  • Funsea Interactive is expected to facilitate payments for their over-the-top (OTT) content related games, music and video-based apps to more than 9.6 mln Celcom subscribers in Malaysia through the DCB payment facility offered by Apigate. (The Edge Daily)
  • Malaysia Airports Holdings Bhd (MAHB) said the number of passengers who passed through the 39 airports it operates in Malaysia grew 2.2% Y.o.Y to 8.6 mln last month, from 8.4 mln in July 2017.
  • International passenger volume rose 5.1% Y.o.Y to 4.6 mln, but was offset by a 1.0% Y.o.Y fall in domestic traffic to 4.0 mln passengers.
  • Overall aircraft movements, meanwhile rose marginally by 0.2% Y.o.Y with international movements up 2.6% Y.o.Y while domestic movements fell 1.4% Y.o.Y over July 2017.
  • The group concurred that both international and domestic sectors achieved record passenger movements for a month in July 2018, surpassing peak December passenger movements of previous years. (The Edge Daily)
  • PRG Holdings Bhd’s 75.0%-owned Hong Kong-listed subsidiary, Furniweb Holdings Ltd, saw its 1H2018 net profit tanked 76.1% Y.o.Y to RM612,000, from RM2.6 mln a year ago, mainly due to lower gross profit margins – hampered by higher material prices of crude oilbased raw materials, weaker U.S. dollar and lower sales volume. Revenue for the quarter also fell 23.9% Y.o.Y to RM44.5 mln, from RM58.5 mln a year ago. (The Edge Daily)
  • CIMB Group Holdings Bhd has received Bank Negara Malaysia's approval to incorporate a Malaysia-based JV company as the holding company of Jupiter Securities Sdn Bhd — the platform that will be used for the Malaysia stockbroking business of CIMB and China Galaxy Securities Co Ltd.
  • Both parties will own equal stakes in the Malaysia JV company through their respective wholly-owned subsidiaries CIMB Group Sdn Bhd and China Galaxy International Financial Holdings Ltd. (The Star Online)
  • Utusan Melayu (Malaysia) Bhd has defaulted in its principal payment to Bank Muamalat Malaysia Bhd and Maybank Islamic Bhd due to financial constraints, and intends to submit a proposal to restructure the loan facilities with the banks.
  • The facility with Bank Muamalat includes a revolving finance totalling up to RM530,121, while the facility with Maybank is a bankers acceptance worth RM654,750.
  • Utusan has also proposed to undertake a private placement of up to 10.0% or 11.1 mln of its shares, to raise gross proceeds of RM2.1 mln for the repayment of bank borrowings and expenses for the corporate exercise. The proposed private placement is expected to be completed by 3Q2018. (The Star Online)
  • Versatile Creative Bhd has confirmed there were irregularities involving payments worth RM2.3 mln following the completion of a forensic audit that was ordered by its board last month.
  • The payments were approved by the company's Managing Director and Chief Financial Officer, whereby both persons could not account for the RM2.3 mln and failed to provide evidence as to who the money was paid to. (The Edge Daily)
  • Petrol One Resources Bhd, a Practice Note 17 (PN17) company, is unable to implement the proposed regularisation plan by 11th August 2018 despite numerous extensions granted by Bursa Securities.
  • Petrol One said the regulator has the right to suspend trading of its securities and delist the company if it fails to implement the plan within the time frame or extended time frame stipulated by any one of the regulatory authorities. (The Edge Daily)  

Source: Mplus Research - 13 Aug 2018

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