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

 

Mplus Market Pulse - 27 May 2020

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Playing Catch Up

  • The FBM KLCI (-1.1%) finished lower for the first time in eight trading days prior to the extended weekend festive break, in line with the weakness across regional peers. Still, the key index rose 2.4% W.o.W. The lower liners - the FBM Small Cap (-1.7%), FBM Fledgling (- 1.2%) and FBM ACE (-2.2%), all fell, while the transportation & logistics sector (+1.4%) outperformed the negative broader market.
  • Market breadth turned negative as decliners thumped the advancers on a ratio of 800-to-289. Traded volumes fell 6.5% to 6.69 bln shares amid negative market sentiment.
  • Asia stockmarkets edged higher as the Nikkei jumped 2.6% after Japanese Prime Minister Shinzo Abe announced that the state of emergency will be lifted in the last five prefectures. The Hang Seng Index rose 1.9%, while the Shanghai Composite climbed 1.0% on the optimism over the developments of the Covid-19 vaccine. Asia stockmarkets, meanwhile, closed mostly higher yesterday.
  • U.S. stockmarkets rallied overnight as the Dow jumped 2.2% amid growing optimism over the reopening of economic activities, coupled with the positive signs over the development of Covid-19 vaccine. On the broader market, the S&P 500 grew 1.2%, while the Nasdaq added 0.2%.
  • Major European stockmarkets - the FTSE (+1.2%), CAC (+1.5%) and DAX (+1.1%), all rebounded taking cue from the positive sentiment across global equities. Meanwhile, Germany plans to lift travel restrictions in 31 European countries after 15th June 2020, while England will lift restriction on markets outdoor and dealers as of 1st June 2020.

The Day Ahead

  • Expectedly, the FBM KLCI’s streak of recovery took a pause as selling activities took precedence. The weakness was mainly induced by the escalating trade tension between U.S. and China after the latter has proposed to impose a new national security law on Hong Kong. The fresh political uncertainty in one of the major city in Asia has subsequently triggered renewed volatility after a period of calmness.
  • Despite that, we reckon that the local bourse may resume the recovery as the key index looks to play catch-up on the gains across global equities after the extended weekend festive break. For now, upsides will be located towards the 1,460 level for the time being. In contrast, the 1,430 remain as the key support and should the aforementioned level fails to hold, the 1,420 level will come to play.
  • Similarly, many of the lower liners and broader market shares are on the pullback phase after an extended overbought streak. We think that some nibbling may take place, but the meteoric trading interest in healthcare-related stocks may soon take a breather.

COMPANY BRIEF

  • Digi.com Bhd (Digi) will invest in the leading network solutions to enable future technologies such as the fifthgeneration (5G), artificial intelligence (AI) and internet of things (IoT). The group has re-farmed its spectrum to deliver stronger indoor and outdoor coverage and improved network capacity. Public Bank Bhd’s 1Q2020 net profit fell 5.7% Y.o.Y to RM1.33 bln due to the market slowdown and the Covid- 19 pandemic and cuts in the overnight policy rate (OPR) by Bank Negara. Revenue for the quarter dipped 1.0% Y.o.Y to RM5.52 bln. (The Star)
  • Hong Leong Industries Bhd’s 3QFY20 net profit dropped 36.4% Y.o.Y to RM57.5 mln as the movement control order negatively impacted sales across its business segments. Revenue for the quarter dropped 10.3% Y.o.Y to RM621.9 mln.
  • For 9MFY20, cumulative net profit declined 19.5% Y.o.Y to RM199.0 mln. Revenue for the period, however, gained 3.7% Y.o.Y to RM2.15 bln. (The Star)
  • Magnum Bhd’s 1Q2020 slid 7.0% Y.o.Y to RM55.6 mln on the back of lower revenue from gaming sales. Revenue for the quarter fell 19.4% Y.o.Y to RM609.6 mln. A first interim dividend of 2.5 sen per share payable on 26th June 2020 was declared. (The Star)
  • Uzma Bhd's subsidiary Uzma Energy Ventures (Sarawak) Sdn Bhd and EQ Petroleum Developments Malaysia Sdn Bhd (EnQuest) have mutually terminated the Tanjong Baram small field risk service contract (SFRSC) with Petronas following the economic cut-off as agreed in the terms of the contract. Petronas will reimburse the balance of the reimbursable capital and operational expenditures to Uzma and Enquest over the coming nine months.
  • Uzma and Enquest had a 30% and 70% equity interest in the partnership respectively. The contract’s objective was to develop and produce petroleum from the Tanjong Baram field. Tanjong Baram SFRSC was signed six years ago when the oil price was about US$90 per barrel and opportunity was given by Petronas for local service companies to participate in field development and operations. (The Star)
  • CIMB Group Holdings Bhd’s 1Q2020 net profit declined 57.4% Y.o.Y to RM507.9 mln, due to lower non-interest income (NOII) and higher provisions across selected markets. Revenue for the quarter decreased marginally by 0.7% Y.o.Y to RM4.14 bln. (The Edge)
  • DeGem Bhd’s shares will be suspended from 9th June 2020, until its delisting. As 8th June 2020 is a public holiday, the last day for trading of the jewellery manufacturer will be Friday, 5th June 2020. (The Edge)
  • Hengyuan Refining Company Bhd saw a fire break out at 4.20pm at a crude tank located in its Port Dickson refinery. The damage is restricted to the one crude tank affected. (The Edge)
  • Genting Malaysia Bhd (GenM) will be undertaking a restructuring exercise inclusive of voluntary pay cuts and workforce rightsizing. The management team has volunteered to have a 20.0% cut to their salaries. (The Edge)
  • Key Alliance Group Bhd plans to import South Korean reverse transcriptionpolymerase chain reaction (RT PCR) test kits to meet Malaysia’s demand for Covid-19 testing. It’s subsidiary Key Alliance Sdn Bhd has been given full power of attorney and made a local representative of ITDF Co, Ltd, to register, promote, market, sell and distribute Wells Bio Inc’s Care Gene COVID-19 RT PCR Test Kit. (The Edge)
  • Malaysia Airports Holdings Bhd’s (MAHB) 1Q2020 net loss stood at RM20.4 mln vs. a net profit of RM149.6 mln recorded in the previous correspondin quarteras passenger movements contracted by 23.9% Y.o.Y due to travel restrictions enforced to contain the spread of Covid-19. Revenue for the quarter fell 25.4% Y.o.Y to RM933.8 mln. (The Edge)
  • My E.G Services Bhd has been told by the government to continue to provide e-government services pertaining to vehicle registration, licensing and summons payment, for another month until 30th June 2020. It has also received notification to continue, until further notice, the provision of online renewal of temporary employment pass for foreign workers (PLKS) for the Immigration Department.
  • The concession agreement for the egovernment services which it first secured in 2000 for a period of 15 years — was extended in 2014 for six years. As for the online renewal of PLKS, the group secured the contract for the job in January 2017. (The Edge)
  • FGV Holdings Bhd and its listed subsidiary MSM Malaysia Holdings Bhd are expediting their plan to develop a new agricultural growth area, FGV Agro-Food Valley in Chuping, Perlis, on the heels of the cancellation of the deal between MSM and Fraser & Neave Holdings Bhd to sell the former’s sugar plantation in Chuping for RM156.0 mln. FGV and MSM plan to cultivate cassava, MD2 premium pineapple, harum manis mangoes and animal feed production based on cassava by-products of starch and biomass on the land. (The Edge)
  • Sarawak Oil Palms Bhd’s 1Q2020 net profit surged 752.7% Y.o.Y to RM71.2 mln on a fair value gain on derivatives and higher palm oil product prices. Revenue for the quarter, however, declined 30.2% Y.o.Y to RM518.1 mln. (The Edge)
  • Sime Darby Plantation Bhd’s 1Q2020 net profit rose soared 337.8% Y.o.Y to RM394.0 mln on higher earnings from both its upstream division and downstream division Sime Darby Oils. Revenue for the quarter grew 1.8% Y.o.Y to RM3.04 bln. (The Edge)
  • Sunsuria Bhd’s 2QFY20 net profit plunged 90.2% Y.o.Y to RM9.0 mln as revenue shrank with the completion of the group’s Jasper Square commercial development at Sunsuria City, Sepang. Revenue for the quarter shrank 72.7% Y.o.Y to RM68.1 mln.  

Source: Mplus Research - 27 May 2020

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