M+ Online Research Articles

Author: MalaccaSecurities   |   Latest post: Fri, 23 Oct 2020, 9:24 AM


Mplus Market Pulse - 26 Nov 2019

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Staying Subdued

  • The FBM KLCI (-0.3%) retreated after lingering in the negative territory for the entire trading session as the key index underperformed its’ regional peers. The lower liners also followed suit – the FBM Small Cap (-1.0%), FBM Fledgling (- 0.1%) and FBM (-0.8%), all fell, while the REIT (+0.2%) and utilities (+0.4%) sector outperformed the negative sectorial peers.
  • Market breadth stayed negative as decliners trounced advancers on a ratio of 549-to-337 stocks, while 363 stocks traded unchanged. Traded volumes fell 1.5% to 2.52 bln shares as investors turned cautious amid the more negative market sentiment.
  • Leading the FBM KLCI decliners list was Petronas Dagangan (-20.0 sen), followed by Genting (-10.0 sen), Petronas Gas (- 10.0 sen), Axiata (-6.0 sen) and Maxis (- 6.0 sen). Meanwhile, Carlsberg (-52.0 sen), Ajinomoto (-20.0 sen), BAT (-16.0 sen), Dayang Enterprise (-14.0 sen) and Heineken (-12.0 sen) declined on the broader market.
  • Notable advancers on the broader market include Hong Leong Industries (+41.0 sen), Chin Teck Plantations (+33.0 sen), Master-Pack Group (+29.0 sen), Dutch lady (+26.0 sen) and KESM Industries (+16.0 sen). Key winners on the FBM KLCI were Nestle (+20.0 sen), Hong Leong Financial Group (+14.0 sen), RHB Bank (+8.0 sen), Press Metal (+5.0 sen) and Hartalega (+4.0 sen).
  • Regional equity indices extended their gains as the Nikkei added 0.8%, taking cue from the gains on Wall Street last week. The Hang Seng Index jumped 1.5% after the pro-democratic parties won a landslide victory in the district council election, while the Shanghai Composite (+0.7%) recovered all its’ previous session’s losses. ASEAN stockmarkets, meanwhile, closed mostly higher on Monday.
  • U.S. stockmarkets rallied again to record high levels as the Dow gained 0.7% on optimism over the U.S.-China trade progress after China is reported to tighten intellectual property rules. Likewise, the S&P 500 added 0.7% with ten of the eleven major sectors in green, while the Nasdaq jumped 1.3%.
  • Earlier, European benchmark indices – the FTSE (+1.0%), CAC (+0.5%) and DAX (+0.6%) all extended their gains, mirroring the positive sentiment across Asia equities. Meanwhile, Germany’s Ifo business climate index improved in November 2019, coming in at 95.0 compared to an upwardly revised 94.7 in October 2019.

The Day Ahead

  • The follow through buying was not to be yesterday as profit taking activities quickly set in to take the shine of the performance of the Malaysian equity market yesterday. The pullback also cast aside the continuing positivity over a potential trade deal between the U.S and China that has buoyed most regional stock indices of late.
  • With the indifference still a feature, we see Malaysian equities maintaining their mostly sideway trend for longer as the buying interest is still on the modest side with market players awaiting for more catalysts. At the same time, the ongoing results reporting season continues to see mixed earnings performance that is failing to instill confidence for a sustained runup.  With the sideway trend poised to continue, we see the key index lingering within the 1,590 and 1,610 levels for now, as potentially part of its base building process for window dressing actions next month. The other support and resistance levels are at 1,580 and 1,620 respectively.
  • The lower liners and broader market shares also succumbed to profit taking activities yesterday after holding steady for the past few weeks. With fewer leads, we think that the bouts of profit taking activities could continue as more retail players trim their positions ahead of the end-year holidays. The profit taking activities also comes on the heels of the FBM Small Cap index’s gains of over 8.0% over the past three months.

Company Update

  • Serba Dinamik Holding Bhd’s 3Q2019 net profit gained 36.0% Y.o.Y to RM113.2 mln, lifted by improved contribution from the stronger execution of orderbook across both its operational & maintenance (O&M) and engineering, procurement, construction and commissioning (EPCC) segments. Revenue for the quarter climbed 35.7% Y.o.Y to RM1.05 bln.
  • For 9M2019, cumulative net profit rose 27.7% Y.o.Y to RM355.8 mln. Revenue for the period grew 37.4% Y.o.Y to RM3.17 bln.


  • The reported earnings came slightly below our expectations, accounting to 73.5% of our full year net profit forecast of RM483.9 mln for 2019. The reported revenue, however, came slightly above our expectations, accounting to 78.4% of our full year estimate of RM4.04 bln. The variance in bottomline is due to the higher effective tax rate of 11.8% vis-avis our forecast of 10.0%.
  • Although the reported earnings came below our expectations, we made no changes to our earnings forecast amid the seasonally stronger earnings in the final quarter of the financial year, as traditionally displayed over the years. Therefore, we maintained our BUY recommendation on Serba Dinamik with an unchanged target price of RM5.52. We arrive at our target price by ascribing a PER of 15.0x to its’ forecast 2020 EPS of 36.8 sen. The ascribed target PER is similar to mid-large cap oil & gas peers’ average of 16.0x.


  • Bursa Malaysia Bhd has sold off 85,000 shares in Nasdaq-listed CME Group Inc on the open market for US$17.6 mln (or RM73.5 mln) last week. (The Edge Daily)
  • Favelle Favco Bhd has secured eight supply contracts worth a total of RM68.8 mln. (The Edge Daily)
  • WZ Satu Bhd was awarded an earthworks and infrastructure works contract for the Kedah Rubber City (KRC) Phase 1 (Package 1) in Padang Terap, Kedah for the Northern Corridor Implementation Authority worth RM121.5 mln. (The Edge Daily)
  • Scicom (MSC) Bhd Chief Executive Officer (CEO), Datuk Seri Leo Ariyanayakam foresees the group to do better in FY20 due to new projects secured. The group has secured between five and ten projects during FY19, which will be reflected in the performance of FY20. (The Edge Daily)
  • RHB Bank Bhd's 3Q2019 net profit gained 6.4% Y.o.Y to RM615.8 mln compared to RM578.7 mln last year, backed by higher non-fund based income and lower expected credit losses for loans. Revenue also grew to RM3.34 bln, from RM3.2 bln a year ago. Subsequently, cumulative 9M2019 net profit was stronger at RM1.86 bln (+6.9% Y.o.Y), from RM1.74 bln in the same period in 2018, while revenue rose to RM10.1 bln against RM9.38 bln previously. (The Star Online)
  • MRCB-Quill REIT's (MQREIT) 3Q2019 net profit trimmed by 14.3% Y.o.Y to RM17.6 mln, from RM20.6 mln a year ago as revenue dipped to RM39.5 mln, from RM43.6 mln previously, on lower revenue generated from Platinum Sentral, QB5 and Wisma Technip. For its nine-month period, cumulative net profit slipped to RM53.5 mln, from RM65.1 mln in the last corresponding year. Revenue was also lower at RM120.4 mln, from RM131.6 mln earlier. (The Edge Daily)
  • IOI Properties Group Bhd posted a 1QFY20 net profit of RM136.6 mln (+22.0% Y.o.Y), from RM112.0 mln last year, on higher operating profit contributed from development projects in China and the Klang Valley and higher share of profit in joint-ventures. Revenue, however, inched lower by 2.3% Y.o.Y to RM540.3 mln, from RM552.8 mln in 1QFY19. (The Edge Daily)
  • TSH Resources Bhd‘s 3Q2019 net profit dived 25.7% Y.o.Y to RM6.0 mln, from RM8.1 mln last year, weighed down by lower revenue contribution, which fell 9.7% Y.o.Y to RM203.8 mln, from RM225.8 mln last year.
  • On a cumulative basis, 9M2019 net profit fell 14.7% Y.o.Y to RM25.6 mln vs. RM30.1 mln last year as revenue lost 12.8% Y.o.Y to RM597.5 mln, from RM684.8 mln previously. (The Edge Daily)
  • 7-Eleven Malaysia Holdings Bhd's 3Q2019 net profit was marginally higher at RM17.0 mln (+1.32% Y.o.Y), from RM16.8 mln last year, in-tandem with revenue growth as turnover rose 4.5% Y.o.Y to RM594.2 mln, from RM568.5 mln in the previous corresponding period.
  • Cumulative 9M2019 net profit also grew 10.0% Y.o.Y to RM42.7 mln, from RM38.8 mln earlier, while revenue gained 6.3% Y.o.Y to RM1.77 bln, from RM1.66 bln in the same period in 2018. (The Edge Daily)
  • Panasonic Manufacturing Malaysia Bhd’s 2QFY20 net profit worsened by 9.8% Y.o.Y to RM30.8 mln compared to RM34.1 mln last year, while quarterly revenue fell 6.6% Y.o.Y to RM288.6 mln, from RM308.8 mln previously. Even so, the group declared an interim dividend of 15.0 sen per share, payable on 22th January 2020. (The Edge Daily)  

Source: Mplus Research - 26 Nov 2019

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