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Author: MalaccaSecurities   |   Latest post: Thu, 19 Sep 2019, 9:42 AM

 

Mplus Market Pulse - 16 Aug 2019

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Mild Upsides Possible

  • The FBM KLCI managed to close unchanged, recovering from its steep intraday fall on worries over the U.S. bond market that saw Petronas Chemicals and selected banking heavyweights taking a tumble. All the lower liners retreated as the FBM Ace (- 1.1%) took the worst beating, while broader market constituents ended mostly lower, with the exception of the Construction (+0.2%), Plantation (+1.2%) and Telecommunications & Media (+0.1%) sectors.
  • Market breadth turned negative as decliners almost tripled the gainers, while traded volumes narrowed by 19.4% 1.94 bln shares as investors retreated to the sidelines amid increased negative sentiments in global stockmarkets.
  • Notable financial institutions like Hong Leong Bank (-38.0 sen), Hong Leong Financial Group (-20.0 sen) and CIMB Bank (-4.0 sen) dragged down the Main Board, alongside Petronas Chemicals (- 11.0 sen) and MISC (-7.0 sen). Meanwhile, the list of broader market losers include Carlsberg (-48.0 sen), Hong Leong Industries (-40.0 sen), Aeon Credit (-32.0 sen), Heineken Malaysia (- 28.0 sen) and BAT (-26.0 sen).
  • Broader market winners, meanwhile, constitute Genting Plantations (+42.0 sen), Advanced Packaging (+14.0 sen), Eita Resources (+10.0 sen), DRB-Hicom (+9.0 sen) and Kluang Rubber (+9.0 sen). Nestle (+40.0 sen), Kuala Lumpur Kepong (+28.0 sen), Sime Darby Plantation (+14.0 sen), Tenaga Nasional (+10.0 sen) and Maxis (+7.0 sen) outperformed in an otherwise downbeat session.
  • Key regional equities were mixed after a Treasury yield-curve inversion sparked a rush into safe-haven assets amid heighten recession fears. The Shanghai Composite (+0.3%) and the Hang Seng Index (+0.8%) reversed earlier losses as the PBOC step up its efforts to steady the Yuan. The Nikkei, however, fell 1.2% with all of its sectors in the red, with the exception of the utilities sector. The majority of ASEAN stockmarkets also finished lower on Thursday’s closing.
  • Wall Street clawed back earlier losses and closed with minor gains, supported by positive retail growth and mild bargain-hunting activities after the severe selldown previously. The Dow ended 0.4% higher - led by gains in Walmart after the retail giant posted better-than-expected quarterly earnings. The S&P 500 also added 0.3%, although the Nasdaq underperformed its peers with a 0.1% loss. • UK stocks were downward pressured as the FTSE closed lower, weighed down by the weakness in energy-related companies. The DAX and the CAC also erased 0.7% and 0.3% respectively amid rising trade escalation risks.

THE DAY AHEAD

  • Even as the key index was able to claw back its steep losses yesterday, there is no change to the market’s undertone as widespread cautiousness remains. The slowing global economic environment, coupled with the prospects of an impending U.S. recession, will continue to keep market conditions guarded.
  • We also think that local stocks’ direction will be partly determined by the announcement of the country’s 2Q2019 GDP performance that will be announced today. However, the ongoing results reporting season is seeing mixed-tolower results that will still keep market conditions mostly guarded, in our view.
  • Despite the still insipid market conditions, we think that mild bouts of bargain hunting activities could help to prop-up the FBM KLCI and possibly allow it to end the week on a more positive note. This follows the firmer performance of key global indices overnight. With the key index holding on to the psychological 1,600 points level, the resistances remain at the 1,610 and 1,620 levels. The supports, meanwhile, are at 1,580-1,590 levels.
  • We see the mild positivity extending to the lower liners and broader market shares that could allow indices like the FBM Small Cap and FBM ACE to also end the week on a more positive note, albeit we continue to think that participation is likely to remain on the thin side due to the continuing cautiousness.

COMPANY BRIEF

  • Damansara Realty Bhd's 2Q2019 net profit stood at RM3.7 mln, rising from a net loss of RM0.3 mln recorded in the previous corresponding quarter, helped by contributions from a joint venture in Central Park, Johor Bahru. Revenue for the quarter, however, slipped 7.1% Y.o.Y to RM68.9 mln.
  • For 1H2019, cumulative net profit surged 387.2% Y.o.Y to RM5.5 mln. Revenue for the period, however, contracted 3.7% Y.o.Y to RM140.2 mln. (The Star Online)
  • Datuk Mohd Abdul Karim Abdullah, the Non-Independent and Non-Executive Director of Sarawak Consolidated Industries Bhd (SCIB) has made a conditional mandatory takeover offer for the remaining 44.1 mln shares or 51.4% equity interest in the company he does own at RM1.10 a share.
  • The offer price of RM1.10 represents a 2.8% premium over the last transacted price of SCIB shares and a 42.8% premium over the 12-month volume weighted average price. Back on 27th May 2019, Karim had emerged as the largest shareholder in SCIB when he acquired 19.4 mln shares or a 22.5% stake in the company, but he intends to maintain the listing status of SCIB on the Main Market of Bursa Malaysia. (The Star Online)
  • Genting Malaysia Bhd has defended its plan to acquire financially troubled Empire Resorts Inc, saying that the move will benefit all stakeholders. The proposed corporate exercise would give the US casino operator an opportunity to resolve its liquidity challenges.
  • On 7th August 2019, Genting Malaysia announced that it was buying a 46.0% stake in the loss-making Empire Resorts for RM539.0 mln. It is further proposing a joint venture to gain full control of Empire Resorts. (The Star Online)
  • IOI Corporation Bhd’s 4QFY19 net profit rose 30.1% Y.o.Y to RM46.6 mln, on lower net foreign currency translation loss on foreign currency denominated borrowings and deposits. Revenue for the quarter, however, fell 3.5% Y.o.Y to RM1.74 bln.
  • For FY19, cumulative net profit sank 79.4% Y.o.Y to RM631.7 mln. Revenue for the year declined marginally by 0.4% Y.o.Y to RM7.39 bln. A dividend of 4.5 sen a share was proposed. (The Star Online)
  • HSS Engineers Bhd’s 2Q2019 net loss stood at RM2.8 mln vs. a net profit of RM6.9 mln recorded in the previous corresponding quarter on reduced scope of works on rail projects. Revenue for the quarter fell 35.5% Y.o.Y to RM35.5 mln.
  • For 1H2019, cumulative net loss stood at RM2.5 mln vs. a net profit of RM7.8 mln. Revenue for the period declined 19.2% Y.o.Y to RM72.0 mln. (The Star Online)
  • Carlsberg Brewery Malaysia Bhd’s 2Q2019 net profit rose 2.1% Y.o.Y to RM65.3 mln, driven by higher sales across all major product segments that was fuelled by continuous marketing investments on consumer-facing activities. Revenue for the quarter improved 15.6% Y.o.Y to RM480.5 mln.
  • For 1H2019, cumulative net profit increased 5.6% Y.o.Y to RM152.9 mln. Revenue for the period climbed 18.3% Y.o.Y to RM1.14 bln. An interim dividend of 16.10 sen per share was declared. (The Star Online)
  • HeiTech Padu Bhd’s 80.0% unit is looking for up to RM20.0 mln to fund technology developments and marketing activities for its e-government service payment platform MyPay. The platform is looking to onboard 300,000 users in the short term and a million users in the midterm, eventually aiming to garner 30 to 40 government agencies on its system in the longer term. (The Edge Daily)

Source: Mplus Research - 16 Aug 2019

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