Highlights

PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 22 Oct 2019, 9:06 AM

 

Technical Buy - AAX (5238)

Author: PublicInvest   |  Publish date: Tue, 22 Oct 2019, 9:06 AM


  • Target Price: RM0.195, RM0.210
  • Last closing price: RM0.170
  • Potential return: 14.7%, 23.5%
  • Support: RM0.160
  • Stop Loss: RM0.145

Possible for bottom fishing. AAX is showing initial signs of recovery from its consolidation phase. Improving RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in near term. Should resistance level of RM0.180 be broken, it may continue to lift price higher to subsequent resistance levels of RM0.195 and RM0.210.

However, failure to hold on to support level of RM0.160 may indicate weakness in the share price and hence, a cut-loss signal.

Source: PublicInvest Research - 22 Oct 2019

Labels: AAX
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Technical Buy - BAHVEST-WA (0098WA)

Author: PublicInvest   |  Publish date: Tue, 22 Oct 2019, 9:03 AM


  • Target Price: RM0.365, RM0.385
  • Last closing price: RM0.330
  • Potential return: 10.6%, 16.6%
  • Support: RM0.310
  • Stop Loss: RM0.295

Possible for upside. BAHVEST-WA is attempting to establish a new uptrend. Improving RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in near term. Should resistance level of RM0.335 be broken, it may continue to lift price higher to subsequent resistance levels of RM0.365 and RM0.385. Note that the maturity date of BAHVEST-WA is on 20 Aug 2024.

However, failure to hold on to support level of RM0.310 may indicate weakness in the share price and hence, a cut-loss signal.

esearch - 22 Oct 2019

Labels: BAHVEST
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HEXTAR GLOBAL BERHAD - Non-Core Asset Disposal

Author: PublicInvest   |  Publish date: Tue, 22 Oct 2019, 9:01 AM


The Group announced overnight the proposed disposal of a freehold plot of land with associated buildings for a total cash consideration of RM30m. The move is in line with internal reorganization plans with regard to its production operations, with proceeds from the disposal used to retire loans of the Group. We are neutral on this development, though we welcome the resultant reduction in interest expenses from the paring down of debt. With no material impact to earnings aside from a marginal disposal loss of RM90,000, we leave our estimates unchanged. We continue to look forward to FY20 growth, underpinned by the Group’s current dominance of ~30% of the domestic agrochemical market space, and the immediate target of growing its market share to 40% in the next 3 to 4 years via organic means and mergers/acquisitions. With scope for growth still ample, we affirm our Outperform call with an unchanged PE-derived target price of RM0.95 (16x FY20 EPS).

  • The property in question is a 4.5-hectare plot of land located in Ulu Tiram, with a single-storey detached factory and an annexed double storey office building on it. Initially acquired for RM10.1m in 2006 by Halex Woolton (M) Sdn Bhd, the property was subsequently transferred to Halex Link Sdn Bhd at the price of RM31m in 2017. The property has however been left vacant following the consolidation and move of the company’s manufacturing operations to Taruka (Johor Bahru) in February this year. With neither immediate plans for the resumption of manufacturing at Ulu Tiram nor immediate and/or future plans to utilize the premise, a decision was taken by the Board to dispose of it.
  • Utilization of proceeds will first be for the repayment of term loans taken on the property, with the balance used for repayment of inter-company advances and/or working capital. Total borrowings are anticipated to fall by about RM22m (as per the Group’s illustrative guidance), and gearing levels halved. Expected loss arising from the disposal is a marginal RM90,000, after taking into consideration expenses in connection with this exercise and the reversal of deferred tax previously provided for the property.

Source: PublicInvest Research - 22 Oct 2019

Labels: HEXTAR
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PublicInvest Research Headlines - 22 Oct 2019

Author: PublicInvest   |  Publish date: Tue, 22 Oct 2019, 8:56 AM


Economy

US: Fed leaves Oct cut on table, and questions about what’s next. Federal Reserve officials have said little to take a third straight interest rate cut off the table when they meet this month. They also haven’t said much about what they’ll do after that. Fed Vice Chairman Richard Clarida saw lots to be happy about in the domestic economy. But there are also risks that weakness from abroad, which has already hit manufacturing, will seep into the wider US economy. Global growth estimates continue to be marked down, and global disinflationary pressures cloud the outlook for US inflation. Trade disputes have slammed global manufacturing and US growth is expected to slow in the second half of the year. Traders have almost entirely priced in a quarter percentage point cut at the upcoming Fed meeting, which would match its moves in July and Sept. (Bloomberg) 

EU: Union revises up German 2018 budget surplus, next year's easing seen small. The European Union’s statistics agency revised up Germany’s budget surplus for 2018, following a trend that could signal Berlin’s plan to spend more next year may end up delivering less than expected. The data may not bode well for euro zone’s economic growth prospects, as the bloc is facing risks of a protracted slowdown, which many economists say could be countered only with a significant increase in governments’ spending - especially by Germany, the euro area’s largest economy. Eurostat said Germany’s revenues last year exceeded expenses by more than previously estimated, allowing Berlin to post a budget surplus of 1.9% of its output, above the 1.7% that Eurostat had calculated in April. (Reuters)

UK: Inflation gauge plunges on hopes brexit gridlock nears its end. The five-year breakeven inflation rate fell to its lowest level since April 2018, showing easing concern at rising consumer prices eroding the returns on offer from bonds in real terms. The move came as sterling re took the USD1.30 level for the first time in five months. That helped reduce the extent to which inflation is imported into the country by a weak currency, limiting the contribution it makes to higher costs for businesses and households. The UK has been one of the few major economies where inflation expectations have been on the rise, running counter to the plunge in those of its global peers on the back of faltering world growth. That has come as the risk of a no-deal Brexit drove the pound to its weakest levels since 2016 last month against the dollar, increasing imported inflation. (Bloomberg)

China: Central Bank keeps loan prime rates unchanged. China's central bank retained its interest rate for new corporate loan despite economic growth easing to the lowest level in nearly three decades. The People's Bank of China left the one-year loan prime rate unchanged at 4.20%. The five-year lending rate was also maintained at 4.85%. The loan prime rate is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate-setting. This new lending rate replaced PBoC's traditional benchmark lending rate in Aug. Markets were expecting a rate cut this month as the economy grew only 6% in the 3Q, the weakest since 1992. The prolonged trade disputes with the US weighed heavily on foreign demand and investment. The IMF forecast China's growth to slow to 6.1% this year and to 5.8% next year. (RTT)

China: House prices increase in Sept. House prices in majority of the Chinese cities increased in September, data from the National Bureau of Statistics showed on Monday. On a monthly basis, house prices increased in 53 cities out of 70. In August, house prices had increased in 55 cities. Data showed that house prices in four first-tier cities grew 0.4% from the previous month. At the same time, prices in 31 second tier cities gained 0.6% on month and that in 35 third-tier cities climbed 0.8%. Data released last week showed that real estate investment increased 10.5% in January to September, the same pace of growth as seen in the first eight months of the year. (RTT)

Japan: All industry activity stable in Aug. Japan's all industry activity remained unchanged in August, figures from the Ministry of Economy, Trade and Industry showed on Monday. The all industry activity index remained unchanged month-on-month in August, after a 0.2% rise in July. Economists had forecast a modest 0.1% fall. Among components, industrial production dropped 1.2% annually in August, reversing a 1.3% rise in July. Construction activity fell 0.6% in August, following a 1.3% decline in the preceding month. Meanwhile, the tertiary industry activity rose 0.4% in August, following a 0.1% increase in the previous month. On a yearly basis, the all industry activity index declined 0.5% in August, after a 1.3% increase in the prior month. (RTT)

Markets

KKB Engineering (Neutral, TP: RM1.15): Bags contracts worth RM60.9m. KKB Engineering has secured jobs totalling RM60.9m comprising water supply contracts and pipes in Sarawak. It said it had received two letters of award from the Sarawak Rural Water Department for the water supply from Kota Samarahan to Sebuyau under the Sarawak water supply grid programme, stressed areas. The contract period for the construction under the first package was 14 months, starting from end Oct and scheduled to be completed by Dec 2020. As for the second package, the contract is for 16 months, starting end-Oct. (StarBiz)

TRC Synergy: To build new Prasarana HQ. TRC Synergy’s wholly owned subsidiary Trans Resources Corp SB has received a RM99.5m contract from Prasarana Malaysia for the construction of its new headquarters. The contract is for the proposed design, construction and completion of the new headquarters in Lembah Subang, Selangor. (SunBiz)

MGB: Completes first batch of IBS-built homes ahead of schedule. MGB, a subsidiary of LBS Bina Group, has completed its first batch of Industrialised Building System (IBS)-built homes in LBS Alam Perdana in 12 months instead of 18 months. Group MD Tan Sri Lim Hock San said LBS Alam Perdana is MGB’s first IBS precast concrete development. (SunBiz)

OCR: To launch RM268m GDV Vertex Kuantan project in 1H20. OCR Group is targeting to launch its second Kuantan project, named Vertex Kuantan, in the 1HCY20. The RM268m GDV mixed development will be the tallest development in Kuantan and is planned for completion by the 1HCY23, MD Billy Ong Kah Hoe said. This launch follows the healthy take-up rate of 85% that the company has secured for the current phase of the PRIYA Scheme Kuantan to date, reflecting the strong demand for affordable housing. (StarBiz)

Kejuruteraan Asastera: Partners Resource Data Management Asia to provide technological solutions. Kejuruteraan Asastera (KAB) is partnering Resource Data Management Asia SB (RDMA) in identifying opportunities in the provision of end-to-end solutions related to energy efficiency, automation engineering as well as Internet of Things (IoT) integration. KAB said its wholly-owned subsidiary KAB Technologies SB (KABT) has inked a JV and shareholders' agreement with RDMA, following the MoU entered into by the parties on Sept 3. (The Edge)

iDimension: Director quits, cites lack of transparency in board. An independent and non-executive director of iDimension Consolidated, Collin Goonting, has resigned from his post, citing a lack of transparency in the company’s board. Goonting indicated there has been a lack of transparency within the members of the board and he is very concerned that the interest of the shareholders are not considered when certain decisions are made. “His only option is either to condone the decisions or to resign and he chose the latter,” the company said. (The Edge)

Consumer (Neutral): MRCA expects retail growth to slow this year. The Malaysia Retail Chain Association (MRCA) expects the retail sector’s growth this year to be less than the 3.9% recorded last year. This is in view of the subdued performance of the retail market amid a slowing economy, said MRCA president Datuk Seri Garry Chua. "The sector has been sluggish, which reflects the economy. Last year, there was about a 4% growth. This year, it will be less," Chua said. (The Edge)

Market Update

The FBM KLCI might open stronger today as U.S. stock benchmarks closed higher Monday, amid optimism over tariff talks and better-than-expected corporate earnings, but a decline in shares of Boeing capped gains for the blue-chip Dow Jones Industrial Average. The Dow ended the day 57.44 points, or 0.2%, higher at 26,827.64. The S&P 500 index, meanwhile, advanced 20.52 points, or 0.7%, to end at 3,006.72, leaving it 0.6% away from its record closing high of 3,025.86 set on July 26. The Nasdaq Composite Index climbed 73.44 points, or 0.9%, to finish at 8,162.99. The Stoxx Europe 600 closed up 0.6% to 394.22.

Back home, the FBM KLCI index lost 0.22 point or 0.01% to 1,570.93 points on Monday. Trading volume decreased to 2.58bn worth RM1.48bn. Market breadth was negative with 380 gainers as compared to 438 losers. In the region, Japan’s Topix index gained 0.4% and China’s CSI 300 index finished up 0.3%.

Source: PublicInvest Research - 22 Oct 2019

Labels: KKB, TRC, MGB, OCR, KAB, IDMENSN
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Digi.Com - Dragged By Lower Prepaid Revenue & Higher Cost

Author: PublicInvest   |  Publish date: Mon, 21 Oct 2019, 9:38 AM


DiGi reported a lower 3QFY19 net profit, down 9.3% YoY mainly due to lower revenue and higher cost as a result of the adoption of MFRS 16. Revenue was 2.3% lower while expenses rose 15.4%. The decline in revenue was mainly due to an 11% decline in prepaid revenue, particularly the non-internet prepaid. Meanwhile, the increase in cost was due to higher depreciation and interest costs. The 9MFY19 results were in line with expectations, accounting for 72% and 75% of consensus and our full-year estimates respectively. Our earnings forecasts remain unchanged. We reiterate our Neutral rating on DiGi. A third interim dividend of 4.5sen per share was declared (3QFY18: 5.0sen).

  • 3QFY19 revenue dropped 2.3% due to an 11% and 3% decline in prepaid revenue and device revenue respectively. The fall in prepaid revenue (mainly due to lower non-internet prepaid revenue) was driven by lower subscriber base (-8.1% YoY) as well as lower ARPU (-6.5% YoY). Stronger postpaid revenue has helped to cushion the impact of lower prepaid contribution, delivering a growth of 10.4% YoY. Although postpaid ARPU has declined by 6.6% to RM71, its customer base expanded by about 10% to 3m, attributable to its focus on customers’ demand through the offering of easy device ownership programs and family plans. Note that the split between prepaid and postpaid revenue stood at 53:47, compared to 58:42 in 3QFY18.
  • 3QFY19 net profit fell 9.3% YoY, mainly due lower revenue and higher cost. The bulk of the increase in cost was due to the adoption of MFRS 16, which led to a 51% jump in depreciation and amortization charges as well as doubling of net finance cost. As a result, net margin dropped from 27% in 3QFY18 to 25% in the current quarter.
  • Collaboration to improve internet connectivity. Despite the failed merger plan with Axiata Group, DiGi remains committed to collaborate with other telco players in areas like 5G and nationwide connectivity. Recently, DiGi and Telekom Malaysia (TM) have agreed to work together to improve internet accessibility, as part of the National Fiberisation and Connectivity Plan (NFCP). This agreement involves the utilization of submarine cables (SKRM) that was jointly developed by TM and MCMC as well as TM’s >7,000 hotspots nationwide in providing WiFi connectivity. Nevertheless, this is not likely to be high-margin project as it is catering to the less profitable and low traffic underserved areas. Any potential earnings contribution is expected to be small relative to its existing businesses.

Source: PublicInvest Research - 21 Oct 2019

Labels: DIGI
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PublicInvest Research Headlines - 21 Oct 2019

Author: PublicInvest   |  Publish date: Mon, 21 Oct 2019, 9:35 AM


Economy

US: Leading economic index unexpectedly edges lower in Sept. Partly reflecting weakness in the manufacturing sector, the Conference Board released a report on Friday showing an unexpected drop in its reading on leading US economic indicators in the month of Sept. The Conference Board said its leading economic index edged down by 0.1% in Sept after dipping by a revised 0.2% in Aug. Economists had expected the index to rise by 0.2% compared to the unchanged reading originally reported for the previous month. Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, said the drop by the index reflected weaknesses in the manufacturing sector and the interest rate spread, which were only partially offset by rising stock prices and a positive contribution from the Leading Credit Index. (Reuters)

EU: European council confirms Christine Lagarde as next ECB chief. European leaders on Friday confirmed the appointment of Christine Lagarde as the next president of the ECB. Lagarde, who is the  former MD of the IMF, will take office on Nov 1, after the incumbent Mario Draghi steps down on Oct 31. She is the first woman to become the ECB chief. The former French finance minister is set to inherit a fractured Governing Council as several hawkish policymakers, especially those from Germany, have voiced opposition to the latest round of stimulus measures announced in Sept. (RTT)

EU: Incoming economy chief calls for less restrictive budget policies. The EU needs looser budgetary policies and an overhaul of its fiscal rulebook, the bloc’s designated economics commissioner said. Paolo Gentiloni said that while the EU’s deficit and debt rules must not be ignored, they needed to be “reviewed and updated”. “It’s time for countries which have fiscal space to use it, in an overall context of less restrictive budgetary policies,” Gentiloni, due to replace Pierre Moscovici as economic and financial affairs commissioner on Nov 1, said. The former Italian prime minister warned that with the EU economy slowing, “the risks of a prolonged period of low growth must not be overlooked” and the task of stimulating the economy “cannot be left to monetary policy alone”. (Reuters)

EU: Current account surplus rises in Aug. The euro area current account surplus increased in Aug reflecting higher primary income and trade in services, the European Central Bank reported Friday. The current account surplus increased to EUR27bn from EUR22bn in July. The surplus on trade in goods remained unchanged at EUR28bn and the surplus on services rose to EUR5bn from EUR2bn a month ago. Primary income totaled EUR7bn versus EUR5bn in Aug. At the same time, the deficit on secondary income held steady at EUR14bn. In the 12-month period to August, the current account registered a surplus of EUR312bn or 2.7% of euro area GDP. (RTT)

China: Central banker says yuan level 'appropriate', trade tensions risk to global economy. China’s top central banker said on Saturday that potential escalation of trade tensions and policy uncertainty were the major risk factors facing the world economy, and market forces were keeping China’s yuan at an appropriate level. Yi Gang, the governor of the PBOC said that Beijing is “deeply disappointed” in the IMF’s failure to realign its shareholding structure to recognize the rising influence of China and other fast-growing economies. His statement said that the depreciation in the yuan since the beginning of Aug has been driven by market forces. (Reuters)

Hong Kong: Jobless rate steady in Sept. Hong Kong's jobless rate remained stable during the July to Sept period, data from the Census and Statistics Department showed. The unemployment rate was 2.9% during the July to Sept period, the same rate as seen during the June to Aug period. The number of unemployed persons was 120,300 during the July to Sept period, broadly the same as seen in the previous three months. Employment decreased by around 8,200 persons to 3.85m. Weak local consumption and plunging visitor arrivals caused by local social incidents continued to weigh on the labor market. The unemployment rate of the consumption- and tourism-related segment increased further to 4.9% the highest in more than two years. (RTT)

Japan: BOJ's Kuroda calls for mix of steps to boost economic growth. BOJ Governor Haruhiko Kuroda said on Sunday a mix of monetary easing, flexible fiscal spending and structural reforms to raise the country’s long-term growth potential could be effective in stimulating the economy. Kuroda said central banks of advanced nations still have sufficient tools to boost growth, countering the view that years of low growth, low-inflation environment have left them with little ammunition to fight an economic downturn. But he said fiscal spending and structural reforms to boost an economy’s potential growth will help enhance the effect of monetary easing. (Reuters)

Markets

Econpile: Bags RM44m contract for Tropicana Gardens. Econpile Holdings has been awarded a RM44m contract for demolition, earthworks, piling and substructure works for the Tropicana Gardens mixed development. The overall duration of the contract is estimated to be 16 months, and is expected to contribute positively to the group in the FYE June 30, 2020 till FY2021. (The Edge)

MMAG: Buys Penang land from Dynaciate for RM41m to expand logistics business. MMAG Holdings is buying a piece of land together with buildings in Penang from Dynaciate Group, formerly known as Tatt Giap Group, for RM41m to expand its logistics business. MMAG said its wholly-owned unit Line Clear Express and Logistics SB will re-develop the land as part of plans to set up a regional hub and warehouse in Penang. “Currently, Line Clear only has two branches/depots in Penang which are located in rented shoplots in Bayan Lepas and Bukit Mertajam. (The Edge)

PetChem: Associate executes final phase of RM1bn project financing. Petronas Chemicals Group (PetChem) said that its 50%- owned associate Pengerang Petrochemical Co SB (PPC) had executed the second and final phase of its RM1bn project financing to repay PPC’s bridge loan. PetChem said PPC had obtained the first phase of the project financing amounting to USD400m on April 1, 2019, followed by the execution of the second and final phase involving USD600m, from various export credit agencies (ECA) and commercial banks. (The Edge)

KNM: Unit gets USD12.3m purchase order from Petrofac Emirates. KNM Group (KNM)’s indirect unit has accepted a USD12.31m (RM51.5m) purchase order from Petrofac Emirates LLC to supply pressure vessels and columns. The unit, FBM-KNM FZCO (FZCO), will supply the vessels and columns for the Ain Tsila development project in the southeast of Algiers, Algeria. The purchase order is expected to contribute positively to KNM’s earnings for the FYE Dec 31, 2019 (FY19) and Dec 31, 2020 (FY20). (The Edge)

MMC: Northport, POIC seal sister port relationship. Northport (Malaysia) and POIC Sabah SB have signed a strategic collaboration agreement (SCA) for the establishment of a sister port relationship with the aim of boosting trade links and increasing the cargo flow through their respective ports. The signing of the agreement sealed both parties’ commitment to cooperate in port management and facilitate trade between West Malaysia and East Malaysia as well as the neighboring region with special focus on the BIMP-EAGA (Brunei Indonesia Malaysia Philippines East Asean Growth Area) trade route. (SunBiz)

Auto (Neutral): Sept vehicle sales 43% higher. Vehicle sales in Sept 2019 increased 43% to 44,666 units from 31,240 units a year ago, according to the Malaysian Automotive Association (MAA). For the first nine months period, vehicle sales fell 3% to 442,991 units from 454,855 units in the previous year’s corresponding period. On a MoM basis, vehicle sales in Sept was 13% or 6,482 units lower than Aug 2019 due to a shorter working month, and people adopting a “wait-and-see” attitude ahead of the Budget 2020 announcement. Looking ahead, MAA expects vehicle sales for Oct to be better compared with Sept, due to a longer working month. (SunBiz)

Market Update

US markets tumbled last Friday as weakness in some industry bellwethers weighed on the overall market. Boeing’s shares fell 6.8% on revelation it may have misled regulators on the safety systems of the 737 Max. Johnson & Johnson fell 6.2% after the company recalled some of its baby powder products upon finding traces of asbestos. The Dow Jones Industrial Average slumped 1.0% as a result, as both stocks are key component members. The S&P 500 fell 0.4% while the Nasdaq Composite ended 0.8% lower. Sentiment was also not helped by China’s 3Q GDP growth unexpectedly weakening to 6.0%, its slowest since 1992. European markets ended lower as investors looked toward the weekend where U.K. lawmakers were supposed to vote on the draft Brexit deal agreed between the government and the European Union. Prime Minister Boris Johnson was however forced to ask for another deadline extension, one which he grudgingly acceded to. France’s CAC 40 led major markets lower with a 0.7% decline. UK’s FTSE 100 and Germany’s DAX fell 0.4% and 0.2% meanwhile. Asian markets were mostly lower following China’s release of worse-than-expected gross domestic product figures, impacted by Beijing's protracted trade conflict with the US. Saudi Aramco is said to be delaying its planned listing, as it wants to update investors with its latest earnings following the Sept. 14 attacks which knocked out half its crude output, according to a Reuters report. The Shanghai Composite and Hang Seng indices fell 1.3% and 0.5% while the Straits Times Index and FBM KLCI slipped 0.4% and 0.2%.

KNM Group has accepted a USD12.3m (RM51.5m) purchase order from Petrofac Emirates LLC to supply pressure vessels and columns for the development project in the southeast of Algeria. Econpile Holdings has inked an RM44m contract to undertake demolition, earthworks, piling and substructure works for the Tropicana Gardens mixed development in Kota Damansara. Digi.Com’s net profit for 9MFY19 fell 6.2% YoY to RM1.1bn on account of lower revenue.

Source: PublicInvest Research - 21 Oct 2019

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Technical Buy - EDARAN (5036)

Author: PublicInvest   |  Publish date: Mon, 21 Oct 2019, 9:28 AM


  • Target Price: RM0.490, RM0.520
  • Last closing price: RM0.445
  • Potential return: 10.1%, 16.8%
  • Support: RM0.430
  • Stop Loss: RM0.410

Possible for upside. EDARAN is showing initial signs of potential recovery from its consolidation phase. Improving RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in near term. Should resistance level of RM0.465 be broken, it may continue to lift price higher to subsequent resistance levels of RM0.490 and RM0.520.

However, failure to hold on to support level of RM0.430 may indicate weakness in the share price and hence, a cut-loss signal.

Source: PublicInvest Research - 21 Oct 2019

Labels: EDARAN
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Technical Buy - HOMERIZ-WB (5160WB)

Author: PublicInvest   |  Publish date: Mon, 21 Oct 2019, 9:26 AM


  • Target Price: RM0.260, RM0.280
  • Last closing price: RM0.225
  • Potential return: 15.5%, 24.4%
  • Support: RM0.200
  • Stop Loss: RM0.190

Possible for bottom fishing. Remaining resilient above its support level, HOMERIZ-WB is breaking out of its sideways trending channel. Improving RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in near term. Should resistance level of RM0.240 be broken, it may continue to lift price higher to subsequent resistance levels of RM0.260 and RM0.280. Note that the maturity date of HOMERIZ-WB is on 3 July 2022.

However, failure to hold on to support level of RM0.200 may indicate weakness in the share price and hence, a cut-loss signal.

 

Source: PublicInvest Research - 21 Oct 2019

Labels: HOMERIZ
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Technical Buy - ZECON (7028)

Author: PublicInvest   |  Publish date: Fri, 18 Oct 2019, 9:14 AM


  • Target Price: RM0.330, RM0.355
  • Last closing price: RM0.315
  • Potential return: 4.7%, 12.6%
  • Support: RM0.305
  • Stop Loss: RM0.290

Possible for upside. Without creating new low after prior retracement, ZECON is establishing a new uptrend. Improving RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in near term. Should resistance level of RM0.330 be broken, it may continue to lift price higher to subsequent resistance level of RM0.355.

However, failure to hold on to support level of RM0.305 may indicate weakness in the share price and hence, a cut-loss signal.

Source: PublicInvest Research - 18 Oct 2019

Labels: ZECON
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PublicInvest Research Headlines - 18 Oct 2019

Author: PublicInvest   |  Publish date: Fri, 18 Oct 2019, 9:12 AM


Economy

US: Homebuilding retreats, manufacturing still struggling. US homebuilding tumbled from more than a 12-year high in Sept, but single-family home construction rose for a fourth straight month, suggesting the housing market remains supported by lower mortgage rates even as the economy is slowing. The moderation in economic growth was underscored by other data on Thursday showing manufacturing output falling last month and factory activity in the mid Atlantic region decelerating in Oct. (Reuters)

US: Industrial production drops more than expected amid GM strike . With the strike at General Motors (GM) contributing to a drop in manufacturing output, the Federal Reserve released a report on Thursday showing a bigger than expected drop in industrial production in the month of Sept. The Fed said industrial production fell by 0.4% in Sept after climbing by an upwardly revised 0.8% in August. Economists had expected production to edge down by 0.1% compared to the 0.6% increase originally reported for the previous month. Manufacturing output dropped by 0.5% in Sept after rising by 0.6% in August, with the production of motor vehicles and parts plunging by 4.2%. (RTT)

US: Weekly jobless claims show modest increase . First-time claims for US unemployment benefits saw a modest increase in the week ended Oct 12th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims edged up to 214,000, an increase of 4,000 from the previous week's unrevised level of 210,000. Economists had expected jobless claims to inch up to 215,000. The Labor Department said the less volatile four-week moving average also crept up to 214,750, an increase of 1,000 from the previous week's unrevised average of 213,750. Meanwhile, the report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, fell by 10,000 to 1.7m in the week ended Oct 5th. (RTT)

US, China: China says it hopes to reach phased trade pact with US as soon as possible. China hopes to reach a phased agreement in a protracted trade dispute with the United States and cancel tariffs as soon as possible, the Commerce Ministry said on Thursday, adding that trade wars had no winners. A phased agreement would help restore market confidence and reduce uncertainty, ministry spokesman Gao Feng said, adding that both sides were maintaining close communication. “The final goal of both sides’ negotiations is to end the trade war and cancel all additional tariffs,” Gao said. “This would benefit  China, the US and the whole world. We hope that both sides will continue to work together, advance negotiations, and reach a phased agreement as soon as possible.” Chinese premier Li Keqiang said both China and the United States need to resolve the issues through dialogue. (Reuters)

EU: ECB must be careful about further interest rate cuts - Visco . The ECB must be careful in lowering interest rates further given the rising risk of unintended side-effects, Italian central bank chief Ignazio Visco said on Thursday. The ECB cut its key rate to a record low of minus 0.5% last month, and markets priced further cuts for the coming year in the face of exceptionally weak inflation pressures. But Visco, considered a dove on the ECB’s rate-setting Governing Council, noted that negative rates hurt banks, which ultimately transmit monetary policy to the real economy, so lower rates could prove counterproductive. (Reuters)

EU: Eurozone construction output declines for second month. Eurozone construction output declined for the second straight month in Aug, data from Eurostat showed Thursday. Construction output decreased 0.5% MoM, following a 0.2% drop in July. Building and civil engineering work decreased 0.2% and 1.3%, respectively. On a yearly basis, construction output grew 1.2% but slower than the 1.8% increase seen in July. In the EU28, construction output dropped 0.2% on month in August and increased 1.9% from the previous year. (RTT)

UK: Retail sales stagnate in Sept. UK retail sales stagnated in Sept as consumers were cautious about spending amid uncertainties surrounding Brexit, data from the Office for National Statistics revealed Thursday. Retail sales volume, including auto fuel, was unchanged from the previous month, following a 0.3% drop in August. Sales were forecast to fall 0.2%. The ONS said slight growth in food and non-food is offset by declines in non-store and fuel. Excluding auto fuel, retail sales volume climbed 0.2%, in contrast to a 0.3% fall a month ago. Economists had expected a 0.1% decrease. Food store sales gained 0.6% and non-food store sales grew 0.4%. Meanwhile, auto fuel sales declined 2%. On a yearly basis, the retail sales volume growth accelerated to 3.1% in Sept, in line with expectations, from 2.6% in August, driven by expansion across all sectors except department stores and household goods. (RTT)

Japan: BOJ's Kuroda says global growth rebound seen delayed, signals easy bias. BOJ Governor Haruhiko Kuroda said any pickup in global economic growth will likely be delayed due to the widening fallout from the US-China trade tensions, signaling the bank’s readiness to ease monetary policy as early as this month. But he added the central bank will scrutinise various data “without any preconception” at its Oct 30-31 rate review, suggesting that additional monetary easing this month was hardly a done deal. “As we have been saying, we will ease policy without hesitation if there are heightened risks the economy will lose momentum for achieving our 2% inflation target,” Kuroda said. (Reuters)

Singapore: Exports continue to fall in Sept. Singapore's non-oil domestic exports continued to decline in Sept albeit at a slower pace, data from Enterprise Singapore showed Thursday. Non-oil domestic exports decreased 8.1% YoY in Sept, following a 9% fall in August. This was also slower than the expected 7.2% drop. Electronic NODX plunged 24.8%, while non-electronic NODX fell moderately by 2.3%. On a monthly basis, NODX decreased 3.3% after the previous month's 6.7% increase. NODX to the majority of the top marketsdecreased in Sept, except China and Taiwan. The largest contributors to the annual decline were the EU 28 and the US. (RTT)

Markets

Widad: Buys into company with RM861m concession for UiTM campus. Widad Group is buying Serendah Heights SB ho has a concession with the government and ÜiTM to develop the facilities and maintain the UiTM campus in Jasin, Melaka. According to Widad, Serendah Heights has a remaining concession of 14 years ending 2034, totalling RM861.6m. Widad has signed a heads of agreement with the shareholders of Serendah Heights to acquire their entire 90% stake. The purchase consideration of RM95.9m would be satisfied via cash of RM86.3m, and issuance of new shares in Widad with value of RM9.59m. “The proposed acquisition is in line with Widad’s principal activities of construction and integrated facilities management. (StarBiz)

KIP REIT: NPI rises 36%, declares 1.37sen distribution. KIP REIT’s net property income for 1QFY20 jumped 36% YoY to RM13.5m, helped by unrealised gain on an acquisition. KIP REIT had acquired AEON Mall Kinta City, which resulted in an unrealised fair value gain of RM13.2m that was partially offset by expenses incidental to the acquisition of RM3.5m. The trust’s gross revenue grew 19% YoY to RM18.49m, which was attributed to the new acquisition, on top of the improvement from existing assets. It noted that occupancy rate was almost flat at 86.5% from 86.3% a year earlier. “The investment properties in the Southern region, Central region and Northern region contributed 54.3%, 30.9% and 14.8% of KIP REIT’s total revenue respectively,” it said. The REIT declared distribution 1.37 sen per unit. (The Edge)

Perdana Petroleum: On track for turnaround in FY20. Perdana Petroleum (PPB) is on track to return to the black in FY20, since its shareholders have given their nod for the group’s proposed rights issue exercise, which forms a part of its debt restructuring plan. “Definitely next year, we will be able to turnaround, we will return to the black. We are cautiously confident nevertheless, given that we have gone through very difficult times in the last few years “We see better times ahead, as we have seen better utilisation and charter rates this year, which would go on to next year as well. Vessels are in high demand right now, as there is a shortage of vessels in Malaysian waters,” said Perdana Petroleum ED Bailey Kho. He added that offshore activities were seen to be picking up, noting that Dayang have seen an increase in drilling activities, which translates to better jobs outlook for PPB, given that the drilling companies require the services of the anchor handling tug supply (AHTS) vessels. (The Edge)

Agriculture: Go into vegetable and fruit farming – Dr M. In a bid to address the country's huge food import bill, Tun Dr Mahathir Mohamad said farmers should diversify and venture into vegetable and fruit farming as well using modern technology. The PM said this is why the government has advocated mixed farming to ensure a stable and better income for them. "They shouldn't rely on one particular crop alone for example because when the price drops, the farmer concerned will be affected," he said. Dr Mahathir said many of the vegetables and fruits now being imported can be cultivated in the country, similar to what the Arab nations are doing, with the use of vertical farming technology. This means they can produce the crops on a small piece of land but generate a huge income, he said. “The government hopes that farmers will be able to earn as much as the people working in the cities so that there is little difference in the income gap between the urban and rural communities,” he said. (The Edge)

Market Update

The FBM KLCI might end the week with a positive note after US stocks rose Thursday, stoked by solid earnings reports from Netflix, Morgan Stanley and others, as well as a preliminary Brexit deal that has the potential to remove a major obstacle facing investors. More than a tenth of the companies in the S&P 500 have reported results so far and numbers are mostly coming in ahead of analysts’ expectations. That gave the stock market some support a day after weak retail sales data raised concerns that a major component of the economy, American consumers, were slowing their spending. That combination pushed up two-thirds of the stocks in the S&P 500, which advanced 8.26 points, or 0.3%, to 2997.95 on Thursday. The broad index is now within 1% of its July 26 record. The Nasdaq Composite also rose, adding 32.67 points, or 0.4% to 8156.85. The Dow Jones Industrial Average, meanwhile, hung onto a small gain, rising 23.90 points, or 0.1%, to 27025.88. In Europe, the UK.’s FTSE 250 index, a gauge that includes local companies with significant domestic operations, pared back gains to 0.2%. The broader Stoxx 600 closed down 0.1%.

Back home, the FBM KLCI index lost 0.40 point or 0.03% to 1,574.50 points on Thursday. Trading volume decreased to 2.33bn worth RM1.88bn. Market breadth was negative with 393 gainers as compared to 413 losers. The regional markets finished mixed. The Hang Seng gained 0.69%, while the Nikkei 225 led the Shanghai Composite lower. They fell 0.09% and 0.05% respectively.

Source: PublicInvest Research - 18 Oct 2019

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