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Author: MalaccaSecurities   |   Latest post: Fri, 10 Jul 2020, 9:40 AM

 

Mplus Market Pulse - 16 Mar 2020

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More Stability Ensured

  • The sharp dive on Wall Street sent global equities into jitters as the FBM KLCI (-5.3%) endured another rout. Consequently, the local bourse sank 9.3% W.o.W. The lower liners – the FBM Small Cap (-5.9%), FBM Fledgling (- 3.7%) and FBM ACE (-5.0%), all extended their losses, while the broader market were splashed in red with the construction sector (-8.8%) taking the heaviest loss.
  • Market breadth was negative as losers overwhelmed gainers on a ratio of 986- to-158 stocks. Traded volumes, however, jumped 49.7% to 5.68 bln shares as selling activities escalated, but was accompanied by mild bargain hunting in the second half of the trading session.
  • All 30 components of the local bourse were in the red with Nestle (-RM4.10), PBB Group (-RM1.48), Hong Leong Bank (-RM1.32), KLK (-RM1.30) and Hap Seng Consolidated (-90.0 sen) took the biggest fall. On the broader market, Carlsberg (-RM1.82), Heineken (- RM1.34), Fraser & Neave (-RM1.00), Panasonic (-RM1.16), Aeon Credit (-86.0 sen) and United Plantations (-68.0 sen).
  • Outperformers on the broader market include Dutch Lady (+10.0 sen), Harn Len Corporation (+8.0 sen), YNH Property (+7.0 sen), Muar Ban Lee (+6.0 sen) and Advance Packaging (+5.0 sen). There were no advancers on the FBM KLCI on last Friday.
  • Asia benchmark indices took another beating as the Nikkei sank 6.1% following U.S. President Donald Trump remarks over the possibility delay of Tokyo Olympics. The Shanghai Composite dipped 1.2%, while the Hang Seng Index finished 1.0% after recovering most of its’ intraday losses. ASEAN equities, meanwhile, closed mostly lower yesterday.
  • U.S. stockmarkets staged a strong recovery as the Dow jumped 9.4% after U.S. President Donald Trump’s declaration of a national emergency and announced a stimulus package valued at US$50.0 bln to tackle the novel coronavirus pandemic. On the broader market, the S&P 500 surged 9.3%, while the Nasdaq rallied 9.4% higher.
  • Major European indices - the FTSE (+2.5%), CAC (+1.7%) and DAX (+0.8%), all advanced, taking cue from the recovery on Wall Street at the opening bell. Gains were also supported by the rising Greenback against the British Pound and the Euro Currency.

The Day Ahead

  • It was a nightmare on Friday the 13th last week that saw Asia equities endured their worst sell down since the previous global financial crisis. Nevertheless, the calmer market conditions on Wall Street with the U.S. Federal Reserve move to cut interest rates to near zero levels and launched US$700.0 bln worth of quantitative easing may entice fresh bouts of bargain hunting again. Technical indicators are also suggesting that the oversold position may be due for a recovery, at least for the start of the week and this would also allow the key index to cast aside last Friday’s market weakness.
  • Following the sharp downturn that saw the FBM KLCI erased close to 140 points over the week, we think that a rebound is due for investors to recoup some of their recent losses. For now, the 1,360-1,370 levels will serve as the immediate resistance. On the flipside, supports are located at the 1,320 and 1,300 levels.
  • The lower liners and broader market shares, meanwhile, should see bargain hunting activities emerging after their rout over the past two months as retail players will capitalise on the oversold market conditions to undertake trading activities. Already, we are seeing the lower liners - the FBM Small Cap, FBM Fledgling and FBM ACE, all making a move, forming a hammer candles on last Friday, suggesting a rebound is within reach.

COMPANY BRIEF

  • Supermax Corporation Bhd's unit has proposed to purchase a piece of industrial land in Kapar, Klang for RM20. mln. It’s unit Maxter Glove Manufacturing Sdn Bhd had signed a sale and purchase agreement with Nishimen Industries (M) Sdn Bhd to acquire the industrial land measuring 16,654 sqm. The proposed purchase was for the future expansion of the group’s manufacturing capacity in a strategic location near its existing cluster of manufacturing plants. (The Star)
  • WCT Holdings Bhd has been ordered to pay a total of 132.5 mln riyals (RM152.7 mln) following an unfavourable final award ruling in an arbitration case ordered by the Court of Arbitration of the International Chamber of Commerce (ICC). As a result of the final award, an additional provision of RM116.0 mln will be made by WCT for the financial year ended 31st December 2019. For 2019, it will see WCT posting a net loss of RM27.6 mln compared to a net profit of RM88.8 mln announced earlier. (The Edge)
  • Tan Chong Motor Holdings Bhd (TCMH) announced that its indirect wholly-owned subsidiary Tan Chong Construction (Labuan) Pte Ltd (TCC Labuan) had entered into a Joint Venture Agreement (JV) with An Tam Construction and Trading Co Ltd (Antaco Vietnam) to form a JV company to explore engineering and construction projects in Vietnam. With its expansion into Indochina and Myanmar, particularly Vietnam, there are a series of projects, which include assembly plant, body shop, trim and chassis and new warehouses, that need to be constructed to cater to the business expansion. (The Edge)
  • Superlon Holdings Bhd's 3QFY20 net profit increased 39.3% Y.o.Y to RM2.2 mln on lower cost of production and increase in sales of copper pipes to local customers. Revenue for the quarter improved 3.6% Y.o.Y to RM26.4 mln.
  • For 9MFY20, cumulative net profit fell 15.3% Y.o.Y to RM7.3 mln. Revenue for the period, however, added 5.8% Y.o.Y to RM82.8 mln. A third interim dividend of 1.15 sen per share was declared. (The Edge)
  • PN17 company TH Heavy Engineering Bhd (THHE) has signed a non-binding Memorandum of Understanding (MOU) with ICE Petroleum Ventures Sdn Bhd in relation to the acquisition of its engineering unit ICE Petroleum Engineering Sdn Bhd (ICE). The proposed acquisition is part of its regularisation plan to revive its financial health in order to maintain its listing status on the Main Market of Bursa Malaysia. (The Edge)
  • Tadmax Resources Bhd's wholly-owned subsidiary Pulau Indah Power Plant Sdn Bhd, which is developing a 1,200 MW combined-cycle gas turbine power plant on Pulau Indah, Selangor had execute the engineering, procurement, construction and commissioning (EPCC) contract with the project’s contractor.
  • Separately, Tadmax had entered into a share sale agreement with Worldwide Holdings Bhd to sell a 35.0% stake comprising 17.5 mln shares in Pulau Indah Power Plant to Worldwide for RM58.5 mln cash. The proposed disposal is in line with the Heads of Agreement (HOA) entered into by the company with Worldwide and Korea Electric Power Corp (Kepco) on 14th September 2018. (The Edge)
  • Mah Sing Group Bhd has announced that its’ RM600.0 mln Sukuk Murabahah issuance has been oversubscribed. The sukuk has tenure of five years and carries a fixed profit rate of 4.4% per year, payable semiannually. Proceeds raised from the sukuk will be utilised for the group's landbanking, investments and working capital, as well as the refinancing of its existing borrowings and/or redemption of unrated perpetual securities. (The Edge)  

Source: Mplus Research - 16 Mar 2020

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