Renewed Selling Pressure

• The FBM KLCI (+0.6%) extended its gains after recovering all its intraday losses to close above the 1,800 psychological level ahead of the extended weekend break. The positive sentiment also echoed to the lower liners – the FBM Small (+1.1%), FBM Fledgling (+0.5%) and FBM ACE (+1.5%) all advanced, while the Properties sector (-0.04%) was the sole decliner on the broader market.

• Market breadth stayed positive as advancers outpaced decliners on a ratio of 589-to-302 stocks. Traded volumes climbed 12.8% to 2.68 bln share, lifted by renewed buying interest in beaten down stocks.

• More than half of the key index constituents advanced, powered by RHB Bank (+15.0 sen), CIMB Bank (+14.0 sen), DiGi (+14.0 sen), KLK (+12.0 sen) and Genting Malaysia (+9.0 sen). Among the biggest winners on the broader market were MPI (+50.0 sen), Dutch Lady (+36.0 sen), Padini (+31.0 sen), MI Equipment (+20.0 sen) and QL Resources (+19.0 sen).

• On the other side of the trade, notable decliners on the broader market were BAT (-46.0 sen), Vitrox (-15.0 sen), Ayer Holdings (-11.0 sen), UMW Holdings (- 11.0 sen) and Tasek Corporation (-10.0 sen). There were five decliners on the FBM KLCI – Hong Leong Financial Group (-8.0 sen), Malaysia Airport Holdings (-4.0 sen), Hap Seng (-3.0 sen), Hartalega (-2.0 sen) and Petronas Dagangan (-2.0 sen).

• Asian benchmark indices retreated on renewed concern over trade war after U.S. proceed to impose tariffs on US$200.0 bln worth of Chinese products. The Shanghai Composite slipped 1.1%, while the Hang Seng Index sank 1.3% to close below the 27,000 psychological level Japanese stockmarkets were close for the Respect of the Aged Day public holiday. ASEAN stockmarkets, meanwhile, closed mostly lower yesterday.

• U.S. stockmarkets endured their worst session in a month as the Dow fell 0.4% after U.S. President Donald Trump is poised to announce additional tariffs on Chinese goods. On the broader market, the S&P 500 (-0.6%) halted a five-day winning streak to close below the 2,900 psychological level, while the Nasdaq finished 1.4% lower.

• Likewise, major European indices – the FTSE (-0.03%), CAC (-0.1%) and DAX (- 0.2%), all closed in the red after enduring a choppy trading session as gains were offset by the renewed concern over a trade war. Meanwhile, Eurozone’s inflation rate in August 2018 rose 2.0% Y.o.Y – cooled from 2.1% Y.o.Y recorded in July 2018.

The Day Ahead

• After the push to above the 1,800 points level at the end of last week, we see quick profit taking activities setting in again over the near term amid the escalating threat of a trade war between the U.S. and China that had already affected global stocks when Bursa Malaysia was closed yesterday.

• The renewed weakness is likely to push the key index below the 1,800 points level again as we expect a new wave of profit taking to take the shine off Malaysian stocks for the time being. The selldown could send the key index back to the 1,790 support level, but if it fails to hold, the next support is located at the 1,780 level. The resistances, meanwhile, are at 1,810 and 1,820 respectively.
• After a decent recovery last week, we also expect the lower liners and broader market shares to succumb to quick profit taking activities as market sentiments are roiled by the trade issues that looks to linger as China is likely to retaliate against the U.S.’ tariff impositions.

COMPANY BRIEF

• Tan Sri Danny Tan Chee Sing, the founder and major shareholder of Tropicana Corp Bhd is planning to inject into the group two plots of land in Johor Bahru which will be turned into a mixed development. The group has entered into a conditional share sale agreement with Tan and his children to acquire a 50.1%-ownership in Peluang Duta Sdn Bhd, whose 70.0%- owned subsidiary, T Sanctuary Development Sdn Bhd owns two plots of leasehold land totalling 329.1 ac.in Johor for RM49.1 mln. The proposed development is expected to generate an estimated gross development value of RM4.3 bln. (The Edge Daily)

• Latitude Tree Holdings Bhd is leasing a parcel of land measuring 44,193 sq.m.in Binh Duong province, Vietnam, in-line with its expansion plans. The group has inked an agreement with Investment and Industrial Development Joint Stock Corporation for leasing the land, which is located next to its existing factory that will allow the group to increase its production or warehouse facilities expediently and efficiently. The new facilities will enable the group to improve its operations and may also enhance its investment income in the long run with capital appreciation potential. (The Edge Daily)

• Shares of Versatile Creative Bhd are set to resume trading on 18th September, 2018 after the group submitted its FY18 annual report to Bursa Malaysia. The annual report had been due by 31st Jul, 2018, but was delayed pending a forensic audit into financial irregularities in the group involving payments totalling RM2.3 mln which resulted in the suspension of the group’s shares on 8th August 2018. (The Star Online)

• Vertice Bhd has lost a RM339.9 mln subcontract to construct the mainline and other associated works of the proposed Sungai Besi-Ulu Kelang Elevated Highway (SUKE) project as the main contractor following the termination of the project.

• The costs and expenses incurred so far for the project are less than RM1.5 mln and Vertice Construction expects to submit the relevant claims for all outstanding amounts. (The Edge Daily)

• Euro Holdings Bhd has been served with a demand for RM5.3 mln following a court order dated 18th July 2018. The group’s unit, Euroland & Development Sdn Bhd was served the demand by Tack Yap Construction (M) Sdn Bhd on 12th September, 2018. (The Edge Daily)

• Genting Malaysia Bhd, which had subscribed to promissory notes issued by the Mashpee Wampanoag Tribe in the US in 2016 for an integrated gaming resort development in the U.S., is still deliberating the appropriate course of action for its investment in the promissory notes as well as its recoverability. The group also noted that legislation is being introduced in the US Congress which, if passed, will entail the U.S. Department of Interior to reaffirm the land in trust for the benefit of the tribe.

• The group’s total investment (including accrued interest) in the promissory notes amounted to US$426.3 mln (RM1.77 bln) as at 30th June, 2018. (The Star Online)

• Gamuda Bhd's wholly-owned unit, Gamuda (Singapore) Pte Ltd and Evia Real Estate (8) Pte Ltd is partnering become the highest bidder for a new Executive Condominium site at Anchorvale Crescent in Sengkang, Singapore at S$318.9 mln or S$576.2 per sq. ft. per plot ratio.

• The new site is under Singapore's 2018 Government Land Sales Programme. It is a 99-year leasehold site on 1.7 ha. of land and is located next to Cheng Lim LRT and close to shopping, dining, entertainment and leisure, schools and healthcare.

• In the same time, Gamuda Bhd will also be launching its latest township development with a GDV of RM20.0 bln in two months. The development, also known as Gamuda Cove, is a 1,530 ac. leasehold township located in southern Klang Valley along the Elite Highway and opposite Cyberjaya. (The Edge Daily)

• Pintaras Jaya Bhd expects half of its FY19 revenue to be contributed by its Singapore unit after venturing into the island nation by acquiring a piling company there from the family of the group’s Managing Director Dr Chiu Hong Keong for RM16.7 mln.

• The Singapore operation is likely to report up to RM200.0 mln revenue in FY19, while the Malaysian business, which recorded revenue of RM95.9 mln in FY18, is expected to be challenging due to the broad decline in local construction sector.

• The group fell short of its FY18 orderbook replenishment at RM150.0 mln, despite targeting RM250.0 mln worth of job wins.

• For FY19, the group is looking at RM150.0 mln worth of new contracts for Malaysia, while its outstanding orderbook currently stood at RM110.0 mln and RM150.0 mln, for Malaysia and Singapore respectively. (The Edge Daily)  

Source: Mplus Research - 18 Sept 2018