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Author: MalaccaSecurities   |   Latest post: Fri, 6 Dec 2019, 8:54 AM


Mplus Market Pulse - 3 Jun 2019

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Set For A Pullback

  • The FBM KLCI (+0.9%) advanced for the fifth straight session as the key index recorded a 3.3% W.o.W gain. Consequently, the local bourse recovered all its monthly losses, rising 0.5% M.o.M in May 2019. The lower liners, however, edged lower as the FBM Small Cap (-0.5%), the FBM Ace (-0.5%), the FBM Fledgling (-0.5%) all fell, while the broader market finished higher with only the energy sector (-1.0%) closed in the red.
  • Market breadth turned negative as decliners overturned advancers on a ratio of 464-to-395 stocks. Traded volumes fell 9.5% to 2.22 bln shares amid the more subdued market sentiment.
  • More than two thirds of the key index constituents advanced, led by KLK (+48.0 sen), followed by Petronas Dagangan (+44.0 sen), Tenaga (+30.0 sen), Hong Leong Bank (+28.0 sen) and Malaysia Airport Holdings (+22.0 sen). Notable gainers on the broader market were consumer products stocks like Heineken (+RM1.08), Dutch Lady (+RM1.00) and BAT (+72.0 sen), while Bursa and Genting Plantations rose 46.0 sen and 28.0 sen respectively.
  • Among the biggest losers on the broader market include United Plantations (-30.0 sen), Ajinomoto (- 14.0 sen), Vitrox (-13.0 sen), Riverview Rubber (-12.0 sen) and Shangri-La (- 11.0 sen). There were only four decliners on the local bourse – Nestle (- 30.0 sen), Ambank (-5.0 sen), Maxis (- 4.0 sen) and PPB Group (-2.0 sen).
  • Asian benchmark indices extended their losses as global trade tension escalated after U.S. President Donald Trump announced a new 5.0% tariff on all Mexican imports starting from 10th June 2019. The Nikkei sank 1.6% on the sluggish retail sales data that rose 0.5% Y.o.Y in April 2019 – below economists’ estimates of a 0.8% Y.o.Y rise. The Hang Seng Index declined 0.8%, while the Shanghai Composite (-0.2%) closed in the red after erasing all its intraday gains. ASEAN stockmarkets, meanwhile, closed mostly lower to end the month.
  • U.S. stockmarkets endured another round of selloff as the Dow (-1.4%) closed at a four-month low, re-ignited by the escalating global trade tension after U.S. President Donald Trump is set to imposed 5.0% tariff on Mexico goods. On the broader market, the S&P 500 slipped 1.3%, while the Nasdaq finished 1.5% lower.
  • Earlier, European benchmark indices – the FTSE (-0.8%), CAC (-0.8%) and DAX (- 0.5%), all wipe out their previous sessions’ gains, taking cue from the weakness in major Asian equities. The weakness was compounded by Bank of Italy’s caution that Italy’s 2019 public debt could rise more than forecast.

The Day Ahead

  • After its streak of upsides, the key index is already near its technical overbought zone and a retreat is in store. As it is, the recent gains were not accompanied by significant improvements in the country’s fundamental outlook and valuations are still fair. Also, the gains were selective and further gains will be dependent on sustained following, which we think is still insipid as it is largely confined to buying from local funds.
  • Therefore, we think that the key index is ripe for a pullback after its recent gains as conditions are looking toppish. The continuing weakness in overseas indices is also providing little improvement to global market sentiments as the trade dispute deepens after the U.S. imposed tariffs on Mexican goods. The pullback may see the key index retreating to the 1,644 and 1,640 levels. The resistances are at 1,658-1,660 levels.
  • While the index linked stocks saw stronger local following, the broader market and small caps were left to drift. With the holiday-shortened week ahead, we see the tepid following persisting as the recent round of corporate results reporting did little to alleviate concerns of slowing corporate earnings growth for 2019.


  • DBE Gurney Bhd is collaborating with Silver Homes Development Sdn Bhd (which is controlled by Datuk Doh Jee Ming and Datuk Doh Tee Leong) to develop 482 residences on 499 pieces of leasehold land, measuring 17.2 ac. in Perak.
  • The housing project will include 268 units of single-storey terrace houses, 117 units of double-storey terrace houses and 37 units of double-storey houses with a gross development value (GDV) of RM100.0 mln. The partnership will be on a 75:25 basis shared between DBE Gurney and Silver Homes respectively. (The Edge Daily)
  • Opcom Holdings Bhd’s Executive Chairman, Tan Sri Mokhzani Mahathir has resigned due to personal reasons. He joined the group about ten years ago. Separately, Kedah Menteri Besar and brother to Mokhzani, Datuk Seri Mukhriz Mahathir has also sold about 2.6 mln shares, trimming his stake in the group to 21.7%. (The Edge Daily)
  • Press Metal Aluminium Holdings Bhd has inked an Memorandum of Agreement (MoU) with PT Bintan Alumina Indonesia (PT BAI), alongside the latter's direct and indirect shareholders Shandong Nanshan Aluminium Co Ltd, Redstone Alumina International Pte and PT Makhota Karya Utama, to negotiate a proposed acquisition of a 25.0% stake in PT BAI.
  • This proposed acquisition will allow the group a secure long-term alumina supply, as PT BAI is currently building a 1 mlntonne alumina refinery plant and accompanying facilities in Galang Batang in the Riau Islands, Indonesia, with plans for a second phase. (The Edge Daily)
  • SKP Resources Bhd’s 4QFY19 net profit fell 27.8% Y.o.Y to RM20.4 mln, from RM28.3 mln last year, in-tandem with weaker revenue, which also dropped 21.9% Y.o.Y to RM357.1 mln, from RM457.3 mln previously.
  • Cumulative FY19 net profit also narrowed 23.1% Y.o.Y to RM97.61 mln, from RM126.8 mln a year ago, while full-year revenue contracted 20.5% Y.o.Y to RM1.66 bln, from RM2.09 bln last year. The lower net profit was also attributed to unfavourable product mix, in addition to the weaker revenue. (The Edge Daily)
  • Destini Bhd’s 1Q2019 net profit tanked 91.8% Y.o.Y to RM636,000, from RM7.8 mln, due to lower revenue from its aviation manufacturing services. Quarterly revenue also dropped 37.6% Y.o.Y to RM84.5 mln, from RM137.6 mln in the previous corresponding period. (The Edge Daily)
  • YTL Power International Bhd’s 1Q2019 net profit lost 23.4% Y.o.Y to RM111.3 mln vs. RM145.4 mln last year, due to weaker performance from its multiutilities business and water and sewerage divisions. Revenue, however, grew 11.5% Y.o.Y to RM2.89 bln, from RM2.59 bln a year earlier. (The Edge Daily)
  • Malaysia Airports Holdings Bhd‘s (MAHB) 1Q2019 net profit declined 66.4% Y.o.Y to RM149.6 mln, compared to RM444.6 mln a year ago, due to one-off gains last year in relation to the fair valuation of the group's investment in GMR Hyderabad International Airport Ltd (GHIAL) and a gain on disposal of its investment in GMR Male Private Ltd (GMIAL) of RM28.2 mln, as well as higher expenditure. Revenue also rose to RM1.25 bln, from RM1.22 bln seen previously. (The Star Online)
  • KPJ Healthcare Bhd’s 1Q2019 net profit was down by 7.9% Y.o.Y to RM39.1 mln, from RM42.5 mln, weighed down by a RM2.1 mln loss from its discontinued Australian aged care business. Revenue for the quarter, meanwhile, increased 5.0% Y.o.Y to RM868.1 mln, from RM822.9 mln in 1Q2018. The group has also declared an interim dividend of 0.5 sen per share, payable on 28th June 2019. (The Star Online)
  • Sime Darby Plantation Bhd’s 1Q2019 net profit plunged 70.3% Y.o.Y to RM74.0 mln, from RM249.0 mln last year, following the sharp fall in crude palm oil prices (CPO) and palm kernel (PK) prices, as well as higher finance costs, albeit slightly offset by a one-off net gain of RM26.0 mln. Revenue lost 17.8% Y.o.Y to RM3.01 bln, from RM3.66 bln previously.
  • The group also changed its financial year end to 31st December, from June 30.
  • Separately, the group’s Executive Deputy Chairman and Managing Director, Tan Sri Mohd Bakke Salleh is planning to retire and will be replaced with Mohamad Helmy Othman Basham as Managing Director. Mohamad Helmy is set to take office on 1st July 2019. (The Star Online)  

Source: Mplus Research - 3 Jun 2019

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