Taking Another Dip

• Although the FBM KLCI gapped up at the opening bell, selling pressure on banking heavyweights sent the FBM KLCI (-1.0%) to close at its intraday low at 1,678.10 pts on Monday. The lower liners – the FBM Small Cap (-0.7%), the FBM Fledgling (-0.3%) and the FBM Ace (- 2.0%) also erased their previous session gains, while only the Plantations (+0.6%), Properties (+0.4%) and Technology (+0.3%) sector outperformed the negative broader market.

• Market breadth returned to negative as decliners outpaced advancers on a ratio of 520-to-298 stocks. Traded volumes, however, gained 1.5% to 2.04 bln shares as investor were quick to book-in recent gains.

• Banking giants like CIMB (-41.0 sen), Public Bank (-20.0 sen), RHB Bank (-12.0 sen) and Maybank (-11.0 sen) dominate the big board decliners list, while Petronas Gas closed 22.0 sen lower. Consumer products stocks like BAT (- RM1.02), Magni-Tech Industries (-65.0 sen), Heineken (-38.0 sen) and Panasonic (-20.0 sen) fell, while SCGM sank 34.0 sen after delivering a weak set of quarterly earnings.

• On the other side of the trade, Fraser & Neave (+30.0 sen), Batu Kawan (+24.0 sen), Ajinomoto (+22.0 sen), Scientex (+21.0 sen) and Southern Acids (+19.0 sen) topped the border market winners list. Key winners on the local bourse were KLK (+34.0 sen), PPB Group (+28.0 sen), Petronas Dagangan (+12.0 sen), Sime Darby Plantations (+7.0 sen) and Maxis (+6.0 sen).

• Asia benchmark indices retreated as the Nikkei fell 0.8% after the Japanese Yen appreciated against the U.S. Dollar. The Hang Seng Index (-1.3%) hit a six-month’s low, while the Shanghai Composite sank 1.3% to close at a two-year low after the People’s Bank of China lowered the reserve requirement ratio by 0.5% to provide support to its economy that is threatened by a trade war with the U.S. ASEAN stockmarkets, meanwhile, closed mostly lower yesterday.

• The recovery on Wall Street was unsustainable with the Dow (-1.3%) erasing all its previous session gains after President Donald Trump’s tariff imposition were met with retaliation from Chinese and European counterparts. On the broader market, the S&P 500 ended 1.4% lower, while the Nasdaq sank 2.1%.

• Earlier, European benchmark indices – the FTSE (-2.2%), CAC (-1.9%) and DAX (- 2.5%), all gave up their previous session gains as sentiments were rattled by escalating trade tension with the U.S. The negative sentiment was also compounded with Italy’s political concerns after the nationalist League party won municipal elections.

The Day Ahead

• The market’s weakness is still overbearing that resulted in the key index taking another dive to below the 1,680 level yesterday. As it is, there is no change to the immediate market environment that will remain wary and cautious as the global trade war takes another step closer to fruition that could leave the global economy in a state of flux and stockmarkets will continue to react negatively to the events.

• The Malaysian economy is seen as among the most vulnerable to the trade war due to the country’s strong reliance on exports with suggestions that the country’s GDP could be trimmed by more than 1.0% in the event of an outbreak of a trade war. Therefore, the near term market sentiments will stay fragile and stocks on Bursa Malaysia will similarly be affected. With the 1,680 level giving way, the next supports are at 1,670-1,672 levels, followed by the 1,665 level. The 1,680 level is the immediate resistance, followed by the 1,710 level.

• We also think the broader market environment will stay fragile and the lower liners are likely to endure another difficult session amid the lack of buying interest.

COMPANY BRIEF

• Serba Dinamik Holdings Bhd has secured about RM465.1 mln worth of new contracts involving operations and maintenance (O&M) besides engineering, procurement, construction and commissioning (EPCC) projects via its units Serba Dinamik Sdn Bhd (SDSB) and PT Serba Dinamik Indonesia.

• SDSB was awarded seven O&M contracts and one EPCC contract, while Serba Dinamik Indonesia had clinched three O&M contracts and two EPCC projects.

• The contracts involve projects in Malaysia, Indonesia, Bahrain, Kazakhstan and the United Arab Emirates, with clients like Petronas Dagangan Bhd, Petronas Carigali Sdn Bhd and Pertamina Balikpapan Hospital. (The Star Online)

• Euro Holdings Bhd foresees up to 15.0% revenue growth in 2018, which will be mainly driven by its property development segment. About 75.0% of its ongoing RM180.0 mln property project, Damai Vista will be ready and handed over to buyers by 1Q2019 and an estimated 60.0% of sales will be realised in 2018. (The Edge Daily)

• Malaysia Building Society Bhd (MBSB) plans to convert its conventional assets (i.e.: home mortgage loans) worth about RM1.0 bln (about 10.0% of its assets), to Islamic assets over the next two years, in-line with its plans to becoming an Islamic bank. The group is currently in the integration stage to further boost its operation by putting in place a single platform for internet banking.

• As part of its digital transformation journey, MBSB has approved about RM250.0 mln investment over the next 15 to 24 months to build up its digital capabilities and it plans to launch fintech capabilities in partnership with third parties providing better customer banking experience. (The Star Online)

• MB World Group Bhd plans to develop a 6.3 ac. land in Johor, a project which include 406 units of apartments worth RM176.0 mln in gross development value (GDV), after securing the developmental rights to the land from its owner.

• The group has signed a development rights agreement (DRA) with Shiya Sdn Bhd, the landowner which owns the freehold land that is made up of 76 plots in Sierra Perdana, Johor Bahru.

• The group had opted for the DRA as opposed to an outright land bank purchase as the latter will need significant cash capital. In granting MB World developmental rights and all claims to the land, Shiya will get a RM24.0 mln entitlement from the deal. (The Edge Daily)

• D&O Green Technologies Bhd is expanding into Japan as it seeks to increase its market share in the country’s light-emitting diode component markets after it was granted approval to incorporate Dominant Opto Technologies Japan K.K, a wholly-owned subsidiary of its 89.8%-owned Dominant Opto Technologies Sdn Bhd.

• D&O said that its Japanese unit will have an initial issued and paid-up capital of one mln yen (RM36,155), funded via internal funds.

• The subsidiary will carry out activities that include the merchandising of semiconductor components such as wholesale and retail of semiconductor devices, electronic components, electrical equipment for lighting, electronic display screen and lighting fittings. (The Edge Daily)

• Kelington Group Bhd has clinched new orders worth RM104.0 mln, bringing the group’s accumulated value of new orders secured year-to-date to RM181.0 mln.

• The new orders were primarily from the Ultra High Purity (UHP) segment for Kelington to provide specialised engineering services for the semiconductor and electronics companies. Most of the new contract wins were from Malaysia followed by Singapore, China and Taiwan.

• Including the projects carried forward from the previous year, the group's total outstanding order book now stands at RM285.0 mln. (The Edge Daily)

• Gabungan AQRS Bhd is planning to undertake a bonus issue of Warrants B on the basis of one Warrant B-for-every four existing shares held to reward existing shareholders and to raise additional working capital.

• Assuming full exercise of Warrants B at the illustrative exercise price of RM1.00 per Warrant B, and up to 142.3 mln new Gabungan AQRS shares issued, the company could potentially raise maximum gross proceeds of RM142.3 mln. (The Edge Daily)

• NTPM Holdings Bhd continued to suffer from higher raw material costs, which resulted in a 86.8% Y.o.Y plunge in its 4QFY18 net profit of to RM1.2 mln, from RM9.0 mln a year ago, despite a 3.3% Y.o.Y increase in revenue to RM164.5 mln (vs RM159.3 mln in 4QFY17).

• Nevertheless, the group has proposed a final dividend of 0.8 sen per share. (The Edge Daily)  

Source: Mplus Research - 26 Jun 2018