Still Looking Frail Despite Institutional Support

• The FBM KLCI finished in the positive territory at Thursday’s close on bargainhunting activities in selected heavyweights, albeit capped by losses in Petronas Gas and Genting-linked counters. The lower liners – the FBM Small Cap (-0.7%), FBM Fledgling (-0.4%) and FBM Ace (-0.5%), however remained in the red ahead of the long weekend holidays. The broader market, meanwhile, closed mixed.

• Market breadth was negative as losers outpaced the winners on a ratio of 553- to-297 stocks. Traded volumes also plunged 32.0% to 1.98 bln stocks due to the holiday-thinned trading.

• Main Board gainers include Kuala Lumpur Kepong (+14.0 sen), Nestle (+10.0 sen), KLCC (+8.0 sen), Sime Darby (+8.0 sen) and Axiata (+7.0 sen). Meanwhile, leading the broader market winners were BAT (+72.0 sen), Panasonic Manufacturing (+66.0 sen), Malaysian Pacific Industries (+40.0 sen), KESM Industries (+18.0 sen), MI Equipment (+15.0 sen).

• On the downside, consumer products counters like Dutch Lady (-38.0 sen), Carlsberg (-34.0 sen) and Heineken Malaysia (-26.0 sen) retreated following the re-introduction of the SST, alongside Petron Malaysia (-26.0 sen) and UMS Holdings (-20.0 sen). Petronas-linked stocks like Petronas Gas (-16.0 sen) and Petronas Dagangan (-8.0 sen) led the key-index lower, followed by Genting (-8.0 sen), Telekom Malaysia (-7.0 sen) and Genting Malaysia (-4.0 sen).

• Key regional benchmark indices were splashed in red, amid rising borrowing costs and heightened trade protectionism. The Nikkei (-0.4%) withdrew for the fifth-straight session, weighed down by the strengthening of the Yen as investors rush into safe-haven assets amid global uncertainties. The Shanghai Composite and the Hang Seng Index also ended lower by 0.5% and 1.0% respectively, while most ASEAN stockmarkets in the closed red.

• Wall Street continued to trade lower on an extended selling pressure in technology-linked stocks like Amazon and Apple. Consequently, tech-heavy indices like the Nasdaq and the S&P500 lost 0.9% and 0.4% respectively. The Dow, however, eked out gains, lifted by Boeing and Visa Inc.

• Trading on the majority of European indices were subdued on Thursday, ahead of the release of U.S. employment data and unabated uncertainties in the global trade front. The FTSE (-0.9%) closed in the red as losses worsened in the eleventh hour. The CAC (-0.3%) and the DAX (-0.7%) also followed suit.

The Day Ahead

• Although the key index managed to buck the region’s downtrend, the general market outlook remains dour amid the ongoing selldown of Emerging Market stocks and the concerns of the trade spat between the U.S. and China with another round of tariffs on China-made products likely to be imposed, possibly by the end week.

• As it is, local institutions provided the support on the index heavyweights yesterday amid the fresh wave of foreign selling to cast aside the contagion effects on Malaysian stock. However, we think the foreign selling will still persist and the selling pressure of FBM KLCI stocks will continue ahead of the upcoming public holidays. We also think that local institutions will continue to provide support and this will provide some cushioning effects. On the downside, there is support at the 1,790-1,795 levels, while the 1,800 and 1,810 levels are the resistances.

• We see little reprieve for FBM Small Cap, FBM Fledgling and Ace Market listed stocks as the weak market sentiments will again sent most stocks listed in the above indices lower to end the week in a dour note.

COMPANY BRIEF

• Tenaga Nasional Bhd (TNB) has initiated a pilot project in Jasin, Melaka to assess the technical, safety and commercial viability of using TNB’s electrical infrastructure for the government’s National Connectivity Plan (NCP) that will allow faster, cheaper and wider Internet accessibility. The pilot project, to be completed by the end of 2018, and will cover 1,100 out of 4,300 houses in three areas, namely Taman Merbau, Taman Maju and Felda Kemendor, in Jasin..

• Households would gain access to high speed broadband (HSBB) network that will be made available through TNB’s owned fibre optics which forms part of the company’s existing telecommunication network. (The Star Online)

• Alam Maritim Resources Bhd has entered into supplemental agreements (bilateral agreements) with its financiers to restructure existing debts in accordance to a proposed restructuring scheme. General salient terms of the proposed restructuring scheme included repayment terms ranging from a one to a seven years tenure facility commencing from the date of the bilateral agreements.

• Profit charged shall be as at the last accepted rate of the existing loan facilities, subject to a maximum of 5.0%, whichever is lower. (Bernama)

• Priceworth International Bhd’s 4QFY18 net profit grew 15.7% Y.o.Y to RM3.5 mln, on increases in other income. Revenue for the quarter, however, dropped 27.4% Y.o.Y to RM43.0 mln.

• For FY18, cumulative net profit surged 194.5% Y.o.Y to RM13.8 mln. Revenue for the year, gained 1.9% Y.o.Y to RM173.4 mln. (The Edge Daily)

• TFP Solutions Bhd has proposed to undertake a reduction of its issued share capital, which will give rise to a credit of RM17.5 mln, to reduce its accumulated losses and enhance its credibility with customers, suppliers and investors. As at 31st December 2017, TFP’s accumulated losses stood at RM16.0 mln. TFP has 97.7 mln outstanding five-year warrants expiring on 16th February 2019, which can be exercised into 97.7 mln new TFP shares at an exercise price of 10 sen each. (The Edge Daily)

• FGV Holdings Bhd has appointed former Bursa Malaysia Bhd Chief Executive Officer, Datuk Yusli Mohamed Yusoff and Datin Hoi Lai Ping to its board. At the same time, FGV has re-designated Datuk Yahaya Abdul Jabar as an Independent Non-Executive Director, from Senior Independent Non-Executive Director. (The Edge Daily)

• Penang Port Sdn Bhd (PPSB), an indirect wholly-owned subsidiary of MMC Corporation Bhd, has acquired a 60.0% stake in Swettenham Pier Cruise Terminal Sdn Bhd (SPCTSB) for RM6.0 cash, while the remaining 40.0% is held by RCL Development Holdings (Penang) Sdn Bhd, an indirect wholly-owned unit of Royal Caribbean Cruises Ltd. SPCTSB was incorporated on 17th July 2018 to develop and operate the Swettenham Pier Cruise Terminal in Penang. (The Edge Daily)

• iDimension Consolidated Bhd has been sued by online software player, Online EClub Management Sdn Bhd for alleged breach of distributorship agreement. iDemension does not foresee the legal action to have any material financial and operational impact on the group. (The Edge Daily)

• Eduspec Holdings Bhd has proposed to raise up to RM6.9 mln via a private placement to third party investors to be identified later, which will be used for working capital and to repay bank borrowings. As of 24th August 2018, Eduspec's total bank borrowings stood at RM32.0 mln.

• The proposed private placement will involve the issuance of up to 138.5 mln new shares, representing not more than 10.0% of its issued shares and the placement shares will be priced at not more than 10.0% discount to the five-day volume weighted average market price of Eduspec shares. (The Edge Daily)

• RCE Capital Bhd is benchmarking its loan growth 2018 against that set by other banks, which the banks’ average loan growth is at about 5.0%. Last year, the group recorded loan growth of 8.0%. As at 1QFY19 (30th June 2018), the average loan size stood at RM18,000 per application. (The Edge Daily)  

Source: Mplus Research - 7 Sept 2018