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Author: MalaccaSecurities   |   Latest post: Thu, 12 Dec 2019, 9:17 AM

 

Mplus Market Pulse - 8 Aug 2019

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Sentiments Remain Dour

  • The FBM KLCI (-0.4%) unable to build on to its previous session’s gains, dragged down by Genting-related shares as the key index lingered in the negative territory for the entire trading session on Wednesday. The lower liners – the FBM Small Cap (-0.6%), FBM Fledgling (- 0.4%) and FBM ACE (-0.9%) all fell, while the broader market ended mostly lower.
  • Market breadth remains negative as losers outpaced winners on a ratio of 5- to-3 stocks, while 400 stocks traded unchanged. Traded volumes declined 17.7% to 2.57 bln shares, clouded by the lingering weak market sentiments.
  • Genting-related shares were the main culprit of the FBM KLCI’s decline as Genting and Genting Malaysia sank 47.0 sen and 43.0 sen respectively on earnings risk from acquisition of lossmaking Nasdaq listed Empire Resorts Inc, while Public Bank (-32.0 sen), Petronas Chemicals (-8.0 sen) and Malaysia Airport Holdings (-5.0 sen) further contributed to the sustained weakness. Broader market underperformers include Ayer Holdings (-28.0 sen), Shangri-La (-22.0 sen), Ideal (-11.0 sen), MPI (-10.0 sen) and Sungei Bagan Rubber (-10.0 sen).
  • Fraser & Neave jumped 60.0 sen after delivering a strong set of quarterly earnings, while other notable gainers on the broader market were Carlsberg (+18.0 sen), Yinson (+14.0 sen), BAT (+12.0 sen) and Genting Plantations (+11.0 sen). Meanwhile, Nestle (+70.0 sen), KLK (+26.0 sen), Hong Leong Bank (+8.0 sen), IHH (+7.0 sen) and Sime Darby Plantation (+7.0 sen) topped the FBM KLCI winners list.
  • Asian benchmark indices trended mostly lower as the Nikkei and Shanghai Composite continues to fall. The Hang Seng Index, however, rose 0.1% to snap a five-day losing streak after rising into the positive territory at the eleventh hour of trading. ASEAN stockmarkets, meanwhile, closed mixed yesterday.
  • U.S. stockmarkets finished mixed overnight as the Dow declined 0.1% on weakness in banking shares amid the recent U.S. Federal Reserve easing monetary stance. On the broader market, the S&P 500 gained 0.1% after recovering all its intraday losses, while the Nasdaq added 0.4%.
  • Earlier, European benchmark indices – the FTSE (+0.4%), CAC (+0.6%) and DAX (+0.7%) all advanced after enduring a volatile trading session. Market sentiment was also boosted by merger & acquisition activities revolving around the US$3.90 bln deal that will see German chemical groups Bayer and Lanxess sell a chemical park operator to infrastructure investor Mira.

THE DAY AHEAD

  • It was not to be as most Malaysian stocks failed to follow through with their recovery a day earlier as it appears that the market’s undertone is more cautiousthan-expected.
  • Under the prevailing environment, it appears that stronger impetusses are required for Malaysian equities to mount a meaningful recovery as wariness over the U.S-China trade talks are still gripping market sentiments. The results reporting season, currently at the start, will also be followed closely over the near term as it provides an inkling on corporate Malaysia’s performance for the rest of the year.
  • With the FBM KLCI continuing to ease and the volatility set to continue, the 1,600 points support remains in play which we think should provide some measure of support as market conditions are already oversold. Below that, the support is at the 1,592 level. The resistances, on the other hand, are at 1,610 and 1,620 respectively.
  • We also see the lower liners and broader remaining mostly on the wayside amid a still uncertain market environment that is likely to keep market players mostly on the sidelines for now.

COMPANY BRIEF

  • Amcorp Properties Bhd's (AMPROP) is planning to buy a 40.0% equity stake in Daning Partners Ltd for US$23.0 mln (about RM96.2 mln). The deal is for AMPROP to undertake the planned purchase of four office blocks in Shanghai's Daning International Commercial Plaza, within Shanghai’s Jing'an district for RMB1.5 bln (about RM865.0 mln).
  • The group had signed a co-investment agreement on 7th August 2019 with Chelsfield Asia Fund 1, Ltd Partnership, KHI Overseas Ltd and JRN Holdings Ltd for the 40.0% stake in joint-venture company Daning Partners, which will be established with a capital commitment of US$57.4 mln. (The Star Online)
  • Eita Resources Bhd’s contract to supply lifts and escalators for the Light Rail Transit Line 3 (LRT3) project has been revised down by 65.4% to RM67.5 mln, from RM195.1 mln previously. The group has received a new letter of appointment and notices of termination from MRCB George Kent Sdn Bhd, which is LRT3's project delivery partner (PDP). (The Star Online)
  • Acme Holdings Bhd is planning to acquire a mixed property development project in Penang for RM22.0 mln cash. The project involved the acquisition of a company called Medan Tropika Sdn Bhd – the owner of two pieces of freehold adjoining land collectively spanning 4.1 ac. in Penang for RM20.0 mln and the acquisition of Focal Products Sdn Bhd for RM2.0 mln cash.
  • To recap, Medan Tropika had in January 2016 entered into a JV agreement with Focal Products, as the developer, to develop these lands into mixed residential and commercial development.
  • At the same time, Acme is proposing to raise up to RM21.7 mln through a private placement at 24.3 sen per share, involving the issuance of up to 89.5 mln shares, representing 30% of the group’s enlarged issued shares, to third party investors to be identified later.
  • The group also proposed to undertake a bonus issue of up to 59.7 mln free warrants on the basis of one warrant-forevery four existing shares. The exercise price of the warrants has been fixed at 25.0 sen apiece. (The Edge Daily)
  • Bina Puri Holdings Bhd has proposed to raise up to RM39.5 mln through a rights issue, sweetened by one free three-year warrant-for-every rights share. The proposal will see the issuance of 439.4 mln new shares together with up to 439.4 mln free warrants. Shareholders are entitled to subscribe to one rights sharefor-every existing share they hold. (The Edge Daily)
  • Bioalpha Holdings Bhd has been contracted to manufacture food-based products to be sold in China. The group has entered into an agreement with Jinrui Yandetang Co Ltd to develop a formulation and manufacture eight foodbased products for Jinrui.
  • Jinrui, on the other hand, will be responsible to ensure the requested manufactured products, raw materials and packaging, are compliant with China’s laws. Jinrui will carry out the relevant needful processes with the Chinese Customs, in order for the products to be commercialized. (The Edge Daily)
  • Metronic Global Bhd is collaborating with China's Zhuhai Singyes New Materials Technology Co Ltd (Singyes) to jointly develop smart city solutions in Malaysia. The JV represents part of its initiative to seek out for value accretive investments while leveraging on its existing engineering capabilities. (The Edge Daily)
  • Pestech International Bhd is teaming up with China’s Huainan Sungrow Floating Module SCI & Tech Co Ltd to explore floating solar system solutions. Both parties has inked a Memorandum of Understanding (MoU) to collaborate on floating solar system solutions, localisation of parts and other possible co-operation in Southeast Asia.

Source: Mplus Research - 8 Aug 2019

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