Still Gaining Ground

• Tracking the gains on Wall Street overnight, the FBM KLCI (+0.4%) recovered most of its previous session’s losses after hovering in the positive territory for the entire trading session. The lower liners also finished mostly higher as the FBM Small and FBM ACE added 0.7% and 0.6% respectively, while the Industrial sector (-0.1%) underperformed the positive broader market.

• Market breadth turned positive as advancers outnumbered decliners on a ratio of 502-to-368 stocks. Traded volumes rose 12.2% to 2.01 bln shares amid the improved market sentiments.

• Banking stocks like Hong Leong Bank (+46.0 sen), Hong Leong Financial Group (+20.0 sen), Public Bank (+16.0 sen) anchored the gains on the key index, while IHH and Press Metal added 13.0 sen each. Significant advancers on the broader market were UMW Holdings (+27.0 sen), Heineken (+22.0 sen), Padini (+20.0 sen), Top Glove (+20.0 sen) and Batu Kawan (+18.0 sen).

• In contrast, BAT (-50.0 sen), Dutch Lady (- 30.0 sen), Tasek Corporation (-20.0 sen), Hong Leong Industries (-16.0 sen) and MPI (-12.0 sen) were among the biggest losers on the broader market. Meanwhile, Hartalega (-15.0 sen), Genting Malaysia (- 5.0 sen), Tenaga (-4.0 sen), MISC (-3.0 sen) and Sime Darby (-2.0 sen) topped the big board decliners list.

• Asian benchmark indices extended their gains as concerns over the Sino-U.S. trade spat eased. The Nikkei (+1.1%) hit an 8-month high, powered by banking and insurance stocks. The Hang Seng Index added 1.2%, while the Shanghai Composite (+1.1%) after Chinese premier Li Keqiang unveiled pro-business pledges, including equal treatment for foreign investors and tax cuts. ASEAN stockmarkets, meanwhile, closed mostly higher yesterday.

• U.S. stockmarkets closed mostly higher overnight as the Dow added 0.6%, after the Greenback fell against a basket of currencies on expectations that a new NAFTA deal will not be agreed with Canada later this week. On the broader market, the S&P 500 (+0.1%) saw gains (+1.8%), but the Nasdaq closed 0.1% lower.

• Earlier, major European indices – the FTSE (+0.4%), CAC (+0.6%) and DAX (+0.5%) all trended higher after investors shrugged off the escalating trade tension between the U.S. and China. The rally in zinc and nickel prices boosted mining stocks like Antofagasta PLC (+5.9%), Anglo American PLC (+5.1%) and Glencore PLC (+3.5%).

The Day Ahead

• The key index closed at the psychological 1,800 points level in yesterday’s rebound and there appears to be further near term upsides after global indices maintained their positive trend and to cast aside the uncertainties of the U.S-China trade dispute, which should also permeate to Malaysian stocks.

• However, we still see measured upsides as there is still cautiousness among market players that could curtail the gains. As it is, the trade issue remains unresolved and it is likely to escalate in due course as neither side looks to give way. Therefore, we see the buying interest remaining tentative for now with the near term upsides likely to be capped at the 1,810 level. The other resistance is at the 1,820 level. The supports, meanwhile, remain at 1,790 and 1,780 respectively.

• The lower liners and broader market shares should also see their recovery continuing amid the calmer market conditions that could also promote some trading activities on some beaten down shares

COMPANY BRIEF

• Axiata Group Bhd's 69.9%-owned edotco Group Sdn Bhd has announced that edotco Bangladesh (edotco BD) has become a wholly-owned subsidiary of edotco Group after transferring its 20.0% edotco BD stake to edotco Group from Robi Axiata Ltd. The transfer is in-tandem with the conditions set by the Bangladesh Telecommunication Regulatory Commission (BTRC).

• To recap, edotco had announced that it has been selected by the BTRC to obtain a conditional tower sharing licence in August. Subsequent to the fulfillment of the conditions, the license will allow edotco to build and manage telecommunications towers for multiple mobile network operators in the country.

• As part of the conditions, edotco BD cannot retain a mobile network operator as its shareholder. With the transfer, edotco BD moves one step closer to fulfilling the conditions for tower licence eligibility. (The Edge Online)

• Bursa Securities has reprimanded Chinabased frozen food manufacturer, HB Global Ltd for failing to ensure its 4Q2016 took into account adjustments announced on 28th April 2017. Although, Bursa opined that HB Global’s directors have not caused or permitted the breach by the company, it is their duty to maintain appropriate standards of responsibility and accountability so as to ensure compliance with the Main Market listing requirements.

• To recap, HB Global had reported an unaudited 4Q2016 net loss of RMB29.9 mln on 28th February 2017, as opposed to an audited net loss of RMB24.9 mln in the audited 2016 financial statements announced on 28th April 2017. (The Edge Online)

• Glomac Bhd's 1QFY19 net profit shrunk 31.6% Y.o.Y to RM1.0 mln compared to RM1.5 mln a year ago, mainly due to the completion of certain phases of Saujana KLIA in Sepang, Selangor in the previous financial year and lower construction activities in 1QFY19. Quarterly revenue also fell 40.1% Y.o.Y to RM57.6 mln, from RM96.2 mln previously. (The Star Online)

• Berjaya Sports Toto Bhd‘s (BToto) 1QFY19 net profit jumped 16.9% Y.o.Y to RM86.9 mln, from RM47.9 mln in the last corresponding year on the improved performance of Sports Toto Malaysia Sdn Bhd (Sports Toto) and H.R. Owen Plc, while revenue was marginally higher by 2.0% Y.o.Y at RM1.5 bln, from RM1.47 bln last year. (The Star Online)

• Eduspec Holdings Bhd is partnering KidZania owner and operator, Rakan Riang Sdn Bhd to jointly-provide Science, Technology, Engineering and Mathematics (STEM) related initiatives. The parties have signed a Memorandum of Understanding (MoU) yesterday to set the framework in exploring opportunities to create a strategic business partnership.

• Under the MoU, the parties agreed to enter negotiations to set up an Eduspecbranded establishment in KidZania Kuala Lumpur as well an Eduspec-branded attraction at The Curve Mall. (The Edge Online)
• PanPages Bhd has re-appointed Tengku Farith Rithauddeen as its Independent and Non-Executive Chairman, effective immediately despite the latter failing to garner sufficient shareholder support to keep his role at the group’s Annual General Meeting (AGM) on 13th September 2018.

• PanPages has also re-appointed Fong Wai Leong as its Chief Executive Officer (CEO), shortly after his voluntary resignation from the board at the AGM, while Yap Kien Ming has also been reinstated as an Independent and NonExecutive Director after being voted out previously.

• Additionally, the company also appointed Wong Mun Wai as an Independent and Non-Executive director. (The Edge Online)

• Kim Teck Cheong Consolidated Bhd (KTC) has clarified that the dispute which led to the resignation of Wee Hock Kee, the Chairman of its audit and risk management committee recently comes after majority of the board of directors had agreed not to impair the trade receivables as the management was confident that they were recoverable.

• In reply to Bursa Securities’ query on the aforementioned resignation, KTC's board has also dismissed concerns from Wee and the audit and risk management committee, maintaining that the board and management are confident that these trade receivables are recoverable. (The Edge Online)

• Salcon Bhd is planning to dispose its financially distressed 50.5%-owned Norwegian subsidiary, Rayvn AS to the latter's existing shareholders for one Norwegian Krone (50.0 sen) as Rayvn was under several financial distress with negative shareholders’ funds.

• The sale to Total Safety AS and Enovate AS with both companies each owns a 22.0% stake in Rayvn.

• Salcon has also inked a software acquisition agreement with Rayvn and the buyers to buy back all the rights, title and interest in and to the intellectual property rights and know-how in relation to Rayvn's software called RAYVN Daily Operation for 6.5 mln Norwegian Krone (RM3.3 mln). (The Edge Online)  

Source: Mplus Research - 20 Sept 2018