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Author: MalaccaSecurities   |   Latest post: Mon, 14 Oct 2019, 10:33 AM

 

Mplus Market Pulse - 21 Jun 2019

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Still Toppish, Limited Upsides Seen

  • The FBM KLCI remained on the uptrend for the third consecutive session, boosted by higher crude oil prices and stronger Ringgit after several key central banks indicated potential monetary easing later this year. The lower liners – the FBM Small Cap (+0.6%) and the FBM Ace (+0.9%) ended higher, while the FBM Fledgling posted minor losses. Most of the broader market constituents also stayed firmly in the positive territory.
  • Market breadth remained positive as winners outweigh the losers on a ratio of 468-to-353 stocks. Traded volumes, however, lost 6.4% to 2.27 bln shares as investors take a breather from the recent rally.
  • The majority of the key index constituents advanced, led by Tenaga Nasional (+60.0 sen), Nestle (+30.0 sen), Genting (+23.0 sen), Maxis (+13.0 sen) and IHH Healthcare (+12.0 sen). Notable gainers on the broader market were sin stocks like Heineken (+64.0 sen) and Carlsberg (+52.0 sen), alongside Yinson (+60.0 sen), Malaysian Pacific Industries (+39.0 sen) and Genting Plantations (+24.0 sen).
  • Among the biggest losers on the broader market include Shangri-La (- 36.0 sen), Dutch Lady (-16.0 sen), Fraser & Neave (-12.0 sen), Pintaras Jaya (-9.0 sen) and Lafarge Malaysia (-8.0 sen). The key decliners on the FBM KCLI were Sime Darby Plantation (-22.0 sen), Hong Leong Financial Group (-10.0 sen), PPB (-6.0 sen), IOI Corporation (-4.0 sen) and CIMB (-3.0 sen).
  • Japanese stockmarkets traded higher on Thursday on expectations of potential monetary stimulus from the Bank of Japan amid increasing concerns over global growth. The Nikkei closed up for the second-straight day, although gains were limited by the Yen’s appreciation. The Hang Seng index (+1.2%) and the Shanghai Composite (+2.4%) also posted strong gains, while ASEAN stockmarkets were mostly positive.
  • Wall Street posted solid gains as energy and defense-related companies tacked gains amid rising tensions in the Middle East after Iran allegedly shot down a U.S. military drone. The S&P 500 rose 1.0%, aided by Oracle after the software maker’s earnings beat estimates. The Dow added 0.9% to near its all-time high, alongside the Nasdaq (+0.8%).
  • U.K. stocks finished higher, backed by a weaker Sterling, albeit slower economic growth forecasts capped gains on the FTSE (+0.3%). Meanwhile, the DAX added 0.4%, together with the CAC (+0.3%) on hopes of a U.S.-Sino trade settlement at the G-20 meeting next week.

THE DAY AHEAD

  • Although market conditions are becoming increasingly toppish, there appears to be more near term upsides as we see Malaysian stocks following the positive trend on most global indices overnight to extend its present uptrend. As it is, there continues to be positivity, brought about by speculation over a U.S. interest rate cut in the near term as well as the likely resumption of the U.S-China trade negotiations.
  • However, the FBM KLCI’s condition is becoming increasingly toppish after the recent gains; hence we think that further upsides will be milder with bouts of profit taking activities ahead of the weekend. At the same time, valuations are also nearer to the upper range of its historical forward averages, thus we think that further gains will be measured after the key index has recovered more than 80 points from its low in May. Further on, the resistances are located at the 1,680 level, followed by the 1,687 level. The supports are at 1,666 and 1,660 levels respectively.
  • Even with the key index stocks making headway, FBM Small Cap, FBM Fledgling and FBM ACE stocks are still showing dithering signs. As it is, the market’s undertone is still on the cautious side and this is seeing little increase in retail participation. Therefore, we think that the mostly sideway trend is likely to remain a feature among the stocks in the above indices.

COMPANY BRIEF

  • Genting Malaysia Bhd has decided to withdraw its judicial review application against the Ministry of Finance's (MoF) decision to amend the 2014 tax incentive approval in December 2017. The High Court had earlier granted Genting Malaysia leave to commence the judicial review and a stay of the MoF decision pending disposal of the judicial review application. (The Edge Daily)
  • Kerjaya Prospek Group Bhd has secured an RM227.3 mln contract to construct the main building for a project within the Bukit Bintang area in Kuala Lumpur. Kerjaya Prospek said accepted the letter of award on 20th June 2019 from Enduring Power Sdn Bhd. (The Edge Daily)
  • Boustead Holdings Bhd has secured a vessel refit works contract worth RM96.0 mln from the Defence Ministry. The group will undertake the works for the patrol vessel KD Terengganu. It said that a formal contract between the Government and Boustead Naval Shipyard will be signed at a later date. (The Edge Daily)
  • KKB Engineering Bhd has scored three contracts worth a total of RM29.0 mln. The group said it received a subcontract from MISC Offshore Floating Terminals Dua (L) Ltd for the provision of engineering, procurement, construction and commissioning of a new electric submersible pump module in relation to upgrade and modification works on MAMPU-1 and AJK Platform for Vestigo Petroleum Sdn Bhd.
  • The group also secured a supply order from Mirecont Sdn Bhd to supply mildsteel cement lining (MSCL) pipes for the Sarawak Water Supply Grid Programme. The last award is a purchase order from SKE Alliance Sdn Bhd to supply MSCL pipes to the Sarawak Water Supply Grid Programme. (The Edge Daily)
  • Seacera Group Bhd has been served a letter of demand from AmBank Islamic Bhd for RM18.3 mln including future profit over the loan facilities taken by its unit. The PN17 firm said it received the letter as the guarantor for facilities taken by its subsidiary Seacera Ceramics Sdn Bhd in respect of total amount outstanding and due payable under the Murabahah Tawarruq Term Financing-I and Cashline-I.
  • Seacera is required to settle full settlement within seven days from June 19. (The Star Online)
  • WCT Holdings Bhd and Hyatt Hotels Corp (Hyatt) have entered into a management agreement to develop a 200-room hotel in an integrated development that includes the largest regional mall in Paradigm Mall Johor Bahru. To be named Hyatt Place Johor Bahru, the hotel is set to open in 2020. (The Edge Daily)
  • Poh Kong Holdings Bhd’s 3QFY19 net profit climbed 25.1% Y.o.Y to RM5.4 mln, on the back of an uptrend in gold prices. Revenue for the quarter, however, fell marginally by 1.7% Y.o.Y to RM236.4 mln, due to softer demand for gold jewellery products.
  • For 9MFY19, cumulative net profit gained 5.7% Y.o.Y to RM15.3 mln. Revenue for the quarter grew 5.1% Y.o.Y to RM768.7 mln. (The Edge Daily)
  • Permodalan Nasional Bhd (PNB) has acquired a 30.0% stake in Strategic Sonata Sdn Bhd (SSSB) from Singapore's Mapletree Dextra Pte Ltd, leading to a proposed sale of land by UMW Holdings Bhd to SSSB becoming a related party transaction. SSSB had on 13th June 2019 entered into a share subscription agreement with PNB for the stake acquisition in the former. (The Edge Daily)
  • Berjaya Media Bhd’s (BMedia) 4QFY19 net loss narrowed to RM3.7 mln vs. a net loss of RM6.0 mln recorded in the previous corresponding quarter, as the previous corresponding period included a RM2.0 mln impairment loss on quoted investments. Revenue for the quarter, however, fell 25.9% Y.o.Y to RM4.8 mln.
  • For FY19, cumulative net loss widened to RM17.0 mln, from net loss of RM12.5 mln recorded in FY18. Revenue for the year dropped 22.9% Y.o.Y to RM25.7 mln. (The Edge Daily)

Source: Mplus Research - 21 Jun 2019

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