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Author: MalaccaSecurities   |   Latest post: Thu, 14 Nov 2019, 9:36 AM

 

Mplus Market Pulse - 16 Oct 2019

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To Tip Higher

  • The FBM KLCI ended its winning streak and closed with minor losses, weighed down by a weaker Ringgit and lower energy prices. The majority of the lower liners bucked the downtrend on the keyindex, with the exception of the FBM Ace (-0.2%), while the broader market closed mostly higher.
  • Market breadth was positive as advancers outweighed the losers on a ratio of 410-to-391 stocks. Traded volumes, however, fell 12.5% to 2.62 bln shares due to the lack of fresh trading catalysts.
  • Significant key-index decliners were Nestle (-30.0 sen), IHH Healthcare (-14.0 sen), Petronas Gas (-10.0 sen), Tenaga Nasional (-10.0 sen) and Digi (-9.0 sen). Consumer-products related shares like Ajinomoto (-26.0 sen) and Carlsberg (- 14.0 sen) were among the laggards on the broader market, followed by Shangri-La Hotels (-12.0 sen), Oriental Interest (-10.0 sen) and Amverton (-8.0 sen).
  • On the flipside, notable broader market gainers were BAT (+RM1.20), Dutch Lady (+82.0 sen), Heineken Malaysia (+58.0 sen), Southern Acids (+26.0 sen) and Vitrox (+22.0 sen). Significant FBM KLCI movers, meanwhile, include Public Bank (+10.0 sen), Press Metal (+9.0 sen), Kuala Lumpur Kepong (+8.0 sen), Genting (+7.0 sen) and Malaysia Airports (+5.0 sen).
  • Key regional benchmark indices were mostly lower on Tuesday as investors await further details on the future trade outlook between the U.S. and China. The Nikkei rose strongly as investors return from the holiday on Monday, boosted by shippers and semiconductors, as well as gains in Softbank. In contrast, the Shanghai Composite snapped its fifth straight day of gains and closed in the red, alongside the Hang Seng index and the majority of the ASEAN equity markets.
  • U.S. equities finished on an upbeat tone on the back of stronger-than-expected earnings performance of JP Morgan Chase as well as gains in previously undervalued stocks. The Dow gained 0.9%, while on the broader market, the S&P 500 and the Nasdaq rose 1.0% and 1.2% respectively.
  • Meanwhile, key European equities rallied as investors digested fresh development on the Brexit front. The FTSE, however, underperformed its benchmark peers, weighed down by a stronger Pound. Gains in banking heavyweights lifted the CAC (+1.0%) and the DAX (+1.2%) respectively, although the latter was slightly capped by losses in Wirecard, following allegations of accounting malpractices.

The Day Ahead

  • Despite the improving positivity, there were no follow through buying interest yesterday to leave the key index is a dithering mode again. However, the profit taking activities were mild as pockets of buying interest elsewhere were prevalent that we see as encouraging to sustain the Malaysian equity market’s near term positivity.
  • The gains on most major global indices overnight will help to shore up sentiments on Malaysian stocks further and this will also help to reverse yesterday’s mild pullback, in our view. As it is, we think that there are still buying opportunities on some of the beaten down sector leaders and this will help to provide the near term impetus for the key index to regain some of its lost ground over the near term.
  • On the upside, the resistances are at the 1,572 and 1580 levels, while the supports are pegged at the 1,562 and 1,550 levels.
  • The broader FBM Small Cap index has also been making headway of late and we think that runup still has legs amid the gradual return of retail players that is seeing the overall traded volumes on the rise again. Therefore, we still see more near term upsides as retail players are likely to use this opportunity to undertake more trading activities on previously beaten down lower liners and broader market shares.

COMPANY BRIEF

  • Crest Builder Holdings Bhd has secured a RM155.1 mln contract from Glomac Segar Sdn Bhd for the proposed Plaza@ Kelana Jaya mixed commercial development in Petaling Jaya. The project comprises two blocks of serviced apartments of 348 units each and a 25- storey SoHo.
  • The contract awarded to Crest Builder Sdn Bhd is for a period of 24 months from 15th November 2019 to 14th November 2021. This contract win boosts Crest Builder's outstanding order book to about RM1.10 bln, which will provide earnings visibility for the next three years. (The Star Online)
  • LPI Capital Bhd’s 3Q2019 net profit declined 4.3% Y.o.Y to RM87.8 mln due to an increase in claims reported and a slower growth in gross premium income. Revenue for the quarter, however, climbed 8.5% Y.o.Y to RM423.8 mln.
  • For 9M2019, cumulative net profit rose 2.5% Y.o.Y to RM235.8 mln. Revenue for the period gained 7.1% Y.o.Y to RM1.20 bln. (The Star Online)
  • Advancecon Holdings Bhd has secured two jobs worth RM50.5 mln comprising a RM38.7 mln contract for Upper Rajang Development Agency (URDA) in Sarawak and a RM11.8 mln works contract for Sime Darby in Negri Sembilan.
  • The Sarawak contract encompasses earthworks and ancillaries work for the proposed new road in Rh. Undi/ Rh. Seli/ Rh. Mamut/ Rh. Ai in Antawau, Sg. Bena (Phase 1). The contract period will be for about two years commencing from 22nd October 2019 and is expected to be completed by 7th October 2021.
  • Advancecon’s Sime Darby contract is to carry out earthworks and ancillary works for the SME Business Park development in Negri Sembilan. The scope of works includes the proposed construction and completion of earthworks, ESCP, main drain, retaining wall and other ancillary works. The contract will run over a period of 12 months starting from 15th October 2019 until 24th October 2020. (The Sun Daily)
  • Tan Sri Lee Kim Yew, the largest shareholder of Metronic Global Bhd with 29.0% equity interest, has requested the company to appoint an independent auditor to conduct a special audit on the corporate activities exercised this year, which comprises an executives' share option scheme (Esos), a joint venture and a proposed private placement, as well as the company's cash flow position. (The Edge Daily)
  • Puncak Niaga Holdings Bhd has appointed Datuk Abdul Jalil Abdul Karim as its new Managing Director, effectively immediately, taking over from Datuk Zainal Abidin Salleh, who resigned due to health reasons. Abdul Jalil was previously the chief executive officer of Merge Energy Bhd. (The Edge Daily) 
     
  • Seremban Engineering Bhd’s (SEB) new controlling shareholder, MIE Industrial Sdn Bhd has raised its stake in the company by 2.4 mln or 3.0% shares at 50 sen per share to 72.7% or 57.9 mln shares, after the close of a mandatory general offer (MGO). It has also received acceptances for 0.02% or 14,600 shares under the same offer.
  • Separately, SEB announced a slew of resignations from its board. Its Chief Executive Officer, See Boon Chun has resigned with immediate effect, citing other business commitments. The company's non-independent and NonExecutive Director, Tan Ah Bah @ Tan Ah Ping, has also stepped down from his position, citing a similar reason. Executive director Wong Wai Hung has also quit the board. (The Edge Daily)
  • GD Express Carrier Bhd (GDEx), which has been on the hunt for a last-mile delivery partner in Vietnam for the past three years, is taking up a 50.0% stake in Vietnamese courier and logistics service provider, Noi Bai Express and Trading Joint Stock company (Netco) for VND76.73 bln (RM13.9 mln). The proposed acquisition, to be funded with internal funds, is in line with its regional ambition to build a sustainable Southeast Asia delivery network. (The Edge Daily)
  • Telekom Malaysia Bhd (TM)’s business solutions arm, TM ONE and UMW Holdings Bhd’s unit UMW Corp Sdn Bhd signed a Memorandum of Intent (MoI) for the development of digital solutions yesterday to enhance and empower Industrial Revolution 4.0 (IR4.0) requirements for industries in Malaysia.
  • Through the partnership, both TM ONE and UMW Corp would embark on joint research activities to enable the development of a home-grown Industrial IoT (Internet of Things) platform via the integration of UMW's IoT solution on industrial machines with TM ONE's IoT software platform. (The Edge Daily)  

Source: Mplus Research - 16 Oct 2019

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