Still Gaining Ground

• The FBM KLCI rallied on Wednesday - helped by the positive sentiments in the global stockmarkets and bargain-hunting in selected blue-chips. All the lower liners -the FBM Small Cap (+2.6%), the FBM Fledgling (+0.9%) and the FBM Ace (+3.0%) powered higher amid the positive broader market.

• Market breadth was also strong as advancers maintained its upper-hand against the decliners on a ratio of 716-to- 196 stocks. Traded volumes also jumped by 19.1% to 2.33 bln shares, driven by renewed buying-interest from foreign investors.

• Among the key-index movers were Tenaga Nasional (+40.0 sen), Petronas Gas (+32.0 sen), Nestle (+30.0 sen), Telekom Malaysia (+22.0 sen) and Press Metal (+21.0 sen). Other broader market outperformers, meanwhile, includeAjinomoto (+60.0 sen), Dutch Lady (+58.0 sen), Vitrox (+36.0 sen), Sam Engineering (+35.0 sen) and KESM Industries (+34.0 sen).

• Meanwhile, on the downside, BAT (-20.0 sen), Kotra Industries (-13.0 sen), Panasonic Manufacturing (-10.0 sen), Shangri-La Hotels (-10.0 sen) and C.I. Holdings (-9.0 sen) were the big losers. Only three of the thirty stocks on the Main Board closed in the red, namely KLCC (-3.0 sen), Kuala Lumpur Kepong (- 2.0 sen) and PPB Group (-2.0 sen).

• Key Asian equities shrugged off softerthan-expected Chinese manufacturing date and rose on the back of easing trade tensions and upbeat corporate earnings. The Nikkei (+2.2%) remained on an upward trajectory with nine out-of-eleven sub-sectors closing in the positive. The Shanghai Composite (+1.4%) and theHang Seng (+1.6%) also ended higher on the last day of the month, boosted by the positive sentiment spilled-over from Wall Street, alongside the majority of the ASEAN stockmarkets.

• Wall Street climbed higher, spurred by renewed buying-interest in tech stocks following Facebook’s better-thanexpected corporate results. The S&P 500 (+1.1%) and the Nasdaq (+2.0%) surged higher, while the Dow also added 1.0% to close above the 25,000 psychological level. However, all three indices posted losses in October amid the rising global uncertainties.

• The main European benchmarks rallied – largely on the strength of energy and pharma companies. The FTSE rose 1.3%, boosted by BP and Royal Dutch Shell as well as gains in mining giants like Glencore. The DAX and the CAC also rose by 1.4% and 2.3% respectively.

THE DAY AHEAD

• Expectedly, stocks on Bursa Malaysia rebounded in line with the recovery of global indices after their steep declines over the past month. However, the gains were much stronger-than-expected as bargain hunting activities picked up pace to send the key index back above the 1,700 points with relative ease.

• We think the gains will persist over the near term as global stocks continue to show strength overnight that will buoy Malaysian stocks as well. This could allow Malaysian stocks to continue making amends from the recent bout of oversold and to temporarily cast aside the still cautious undertone brought about by the trade dispute between the U.S. and China that remains unresolved, as well as the prognosis of slower corporate earnings and economic growthin 2019. With the gloomy spell lifted for now, we think the key index could rechallenge the 1,720 level and if it is cleared, the next resistance is at 1,730. The supports remain at 1,680-1,700 levels.

• The lower liners and broader market shares are also making a long overdue rebound from oversold which should persist over the near term as we see bargain hunting activities coming to the fore after many FBM Small Cap, FBM ACE and Fledgling listed stocks took a beating, which we believe is overdone and value has emerged.

COMPANY BRIEF

• Lotte Chemical Titan Holding Bhd’s 3Q2018 net profit fell 5.8% Y.o.Y RM216.9 mln as leaner margins cut into earnings. Revenue for the quarter, however, grew 19.9% Y.o.Y to RM2.42 bln.

• For 9M2018, cumulative net profit rose 13.1% Y.o.Y to RM776.1 mln. Revenue for the period expanded 21.0% Y.o.Y to RM6.91 bln. (The Star Online)

• PRG Holdings Bhd's 63.0% owned Furniweb Holdings Ltd, which is listed on the Stock Exchange of Hong Kong Ltd, has issued a profit warning over a steep decline in its net profit for 9M2018. The profit warning was based on the preliminary review of the unaudited consolidated management accounts that was affected by a decline in revenue. Meanwhile, cost of sales had increased, mainly raw material prices resulted from the rise in crude oil prices, which was not been passed on to customers and lower production volume. (The Star Online)

• UMW Holdings Bhd is no longer pursuing the proposed acquisition of a 50.1% stakein MBM Resources Bhd (MBMR) and the resultant proposed mandatory takeover

• Taliworks Corp Bhd has bagged a RM42.4 mln contract from Setia Haruman Sdn Bhd to build a reservoir called 76ML R.C. Reservoir R4 and undertake related ancillary works at Cyberjaya, Selangor. Works will commence on 15th November 2018, with completion on 14th November 2021. (The Edge Daily)

• Serba Dinamik Holdings Bhd is acquiring a 42.3% stake in loss-making E&E Gas Sdn Bhd (EGSB), together with 10.5 mln Redeemable Convertible Preference Shares (RCPS), for a combined RM26.4 mln. Separately, it was awarded an engineering, procurement, construction and commissioning (EPCC) contract worth RM332.8 mln by EGSB for onshore LNG distribution infrastructure facilities in Lumut, Perak. (The Edge Daily)

• TMC Life Sciences Bhd has awarded a RM48.7 mln contract to Putra Perdana Construction Sdn Bhd to undertake piling works for construction of the 33-storey Thomson Iskandar Medical Hub in Johor Baru. The contract, which is for a period of 40 weeks, is expected to be completed by 2nd September 2019. (The Edge Daily)

• Tatt Giap Group Bhd has bagged four contracts worth a combined RM67.0 mln from Dynaciate Engineering Sdn Bhd to undertake various sub-contracting works. The awards are for works which range from civil and main mechanical, to piping fabrication and installation works. (The Edge Daily)

• Petronas Dagangan Bhd has cancelled the implemented price hike on its Gas Petronas Home Delivery (GPHD) service, after acknowledging the public's concerns. The company's U-turn came after it released a clarification earlier today that the home delivery charges had been revised in line with the market rate, from RM3.20 for 12kg and 14kg cylinders previously, to RM8.20 for 12kg cylindersand RM8.40 for 14kg cylinders. (The Edge Daily)

• Perusahaan Sadur Timah Malaysia (Perstima) plans to set up a new plant for the manufacturing of tinplate and tin-free steel in the Philippines, subject to approval of local authorities in the Philippines. Perstima noted that there is currently no existing tinplate and tin-free steel manufacturer there. (The Edge Daily)

• Datuk Mohd Fauzi Yaakub has ceased to be the Chief Executive Officer of Excel Force MSC Bhd effective 31st October 2018. This was due to the early end of his service contract. (The Edge Daily)

• Talks have fallen through for Kenanga Investment Bank Bhd to acquire InterPacific Securities Sdn Bhd (Interpac), as both firms mutually agreed to terminate the proposed acquisition. Kenanga IB has announced its intention to acquire Interpac which is part of Berjaya Corp Bhd in May 2018, after receiving approval from Bank Negara Malaysia to engage in discussions. (The Edge Daily)

Source: Mplus Research - 1 Nov 2018