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

 

Mplus Market Pulse - Staging A Mild Rebound

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Staging A Mild Rebound

  • The FBM KLCI eked out gains despite lingering mostly in the negative territory amid the ongoing U.S.-China trade negotiations. The majority of the lower liners – the FBM Fledgling (-0.1%) and FBM ACE (-0.1%) retreated, but the broader market finished mostly higher at Thursday’s close.
  • Market breadth was tepid as decliners slightly overpowered the winners on a ratio of 384-to-339 stocks. Traded volumes, however, jumped 14.7% to 2.18 bln shares amid the extended profit-taking in the lower liners due to lack of leads.
  • Main Board chart-toppers were Nestle (+50.0 sen), Kuala Lumpur Kepong (+14.0 sen), PPB Group (+10.0 sen), MISC (+6.0 sen) and Public Bank (+6.0 sen). Broader market advancers were led by Aeon Credit (+16.0 sen), New Hoong Fatt (+16.0 sen), Litrak (+15.0 sen), Carlsberg (+14.0 sen) and QL Resources (+14.0 sen).
  • Broader market decliners, meanwhile, were BAT (-34.0 sen), Guan Chong (- 19.0 sen), Heineken Malaysia (-18.0 sen), Unisem (-15.0 sen) and Allianz Malaysia (-12.0 sen). Meanwhile, the key-index constituents to close in the red were Petronas Dagangan (-20.0 sen), Petronas Gas (-10.0 sen), Top Glove (-6.0 sen), Ambank (-5.0 sen) and Sime Darby Plantation (-5.0 sen).
  • Key regional benchmark indices chalked up minor gains on hopes of a partial trade concession and the potential suspension of additional tariffs on Chinese imports next week. The Nikkei (+0.5%) ended higher, boosted by gains in Fast Retailing (+0.9%) after reporting upbeat earnings growth, alongside the Shanghai Composite (+0.8%) and the Hang Seng Index (+0.1%). ASEAN stockmarkets, meanwhile, ended mixed on Thursday’s close.
  • Major U.S. stockmarkets ended on a positive note, supported by trade optimism amid high-level U.S.-China trade negotiations in Washington. The Dow continued to climb, albeit slightly hindered by losses in Boeing amid the ongoing safety issues in selected plane models. Meanwhile, both the S&P 500 and the Nasdaq also closed up by 0.6% each on Thursday.
  • Earlier, U.K. equities rallied despite the stronger Pound, on hopes of a potential Brexit deal and better-than-expected economic data. The FTSE rose 0.3% - led by gains in luxury goods makers, while the DAX added 0.6% to 12,164.2 points. The CAC outperformed its benchmark peers and closed 1.3% higher, backed by gains in ArcelorMittal. THE DAY AHEAD
  • The conflicting news on the U.S-China trade negotiations left the key index to linger within a tight range yesterday. However, market conditions should show some improvements today as the foreign selling is showing signs of abating. At the same time, there seems to be progress in the trade negotiations that could provide some near term impetus to Malaysian stocks.
  • Market players will also keep a keen eye on the Budget announcement later in the day to gauge the country’s economic outlook for next year. The combination of the above factors could allow Malaysian stocks to end the week on a positive note and to break the prevailing downtrend which is already overdone.
  • In the interim, we think that the key index may have found a near term support at around the 1,550 level and the key index could recover to the 1,555 or 1,560 levels. Meanwhile, the other support is at the 1,548 level.
  • We also see the lower liners and broader market shares making a comeback as market players take the opportunity to bargain hunt on some sector leaders and this could allow the stocks listed on the FBM Small Cap, FBM Fledgling and FBM ACE indices to head higher. We also think that the technology stocks, some of which are undergoing a consolidation spell, could also stage a quick rebound.

    COMPANY BRIEF

  • MISC Bhd have signed two time charter parties (TCP) worth a total contract value of about US$711.0 mln (RM2.98 bln) with Exxon Mobil Corp's SeaRiver Maritime LLC for the charter of two newbuild liquefied natural gas carriers. MISC entered the contracts with US-based SeaRiver, which provides technical and commercial marine services to ExxonMobil affiliates.

  • The vessels will be chartered by SeaRiver for 15 years commencing in 1Q2023 while the vessels will be constructed by Samsung Heavy Industries of Korea. (The Star Online)
  • Cypark Resources Bhd is expanding its renewable energy business with plans to develop rooftop solar projects in Kedah and Negeri Sembilan, as well a potential waste-to-energy collaboration with Petronas Chemicals Group Bhd. In Kedah, Cypark has entered in memorandum of understanding (MoU) with Menteri Besar Kedah Inc to jointly develop 100MW solar photovoltaic projects under the net energy metering (NEM) scheme.
  • Cypark has also signed a similar MoU with state-owned NS Corp for the development of 50MW solar photovoltaic projects under the NEM scheme in Negeri Sembilan.
  • Meanwhile, Cypark has also entered into a preliminary agreement with Petronas Chemicals to evaluate and explore the possibility of setting up waste-to-energy plants. For Petronas Chemicals, this is their second partnership to address plastics pollution in Malaysia. (The Star Online)
  • Atlan Holdings Bhd’s 2QFY20 net profit sank 68.7% Y.o.Y to RM4.1 mln as the company struggled with higher cost amid flattish sales. Revenue for the quarter slipped 1.4% Y.o.Y to RM167.6 mln.
  • For 1HFY20, cumulative net profit slipped 45.3% Y.o.Y to RM11.2 mln. Revenue for the period, however, added 7.4% Y.o.Y to RM365.8 mln. (The Star Online)
  • Malaysia Airports Holdings Bhd (MAHB) has reported that the number of passengers passing through the 39 airports it manages in the country in September 2019 rose 7.6% Y.o.Y, thanks to an increase in the average load factor for both domestic and international sectors as the impact from the haze was minimal. The airport operator handled 8.4 mln passengers in September 2019 compared with 7.8 mln passengers a year earlier. (The Edge Daily)
  • Kejuruteraan Asastera Bhd plans to raise up to RM27.1 mln via a private placement to third-party investors to be identified later to fund the expansion plan of its customised energy efficiency solutions business and future acquisitions.
  • The proposed placement entails the issuance of up to 70.6 mln new shares, representing up to 20.0% of the total number of its issued shares. (The Edge Daily) Axiata Group Bhd will refrain from undertaking mergers and acquisitions in the near term as Malaysia’s biggest wireless carrier looks to improve its operations following the collapse of talks for a merger with Telenor ASA’s Asian business.
  • Axiata said it will not make any formal negotiations for any approach for its US$3.00 bln wireless tower business or its Indonesian telecommunications operations at least before end-2019. (The Edge Daily)
  • Careplus Group Bhd is spending RM24.0 mln to gain full control of its loss-making subsidiary, Careglove Global Sdn Bhd, which makes rubber gloves for the Brazilian market. It is buying the remaining 50.0% stake in Careglove from AJJ Holding Inc, whose ultimate shareholder is Renato Silveira Joiozo.
  • Under the sale agreement, Careglove must declare RM23.4 mln as dividends to its shareholders, of which the total dividend payable to AJJ will be RM11.7 mln. Careplus intends to finance the acquisition using internal funds. (The Edge Daily)
  • Plastrade Technology Bhd's shareholders removed Tee Yen Chong from his position as Managing Director at an extraordinary general meeting 10th October 2019.
  • On 16th August 2019, Plastrade announced its board has decided to suspend Tee from his executive role for two months, pending an internal investigation then. The outcome of the investigation is not disclosed. (The Edge Daily)

Source: Mplus Research - 11 Oct 2019

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