Continuing Recovery

• Tracking the positive sentiment on Wall Street overnight, the FBM KLCI (+0.8%) extended its gains yesterday, boosted by the potential easing of the U.S.-China trade tension. The lower liners – the FBM Small Cap (-0.3%), FBM Fledgling (-0.3%) and FBM ACE (-1.6%), however, extended their losses after erasing their intraday gains, while the broader market closed mostly higher.

• Market breadth turned negative as decliners edged advancers on a ratio of 397-to-371 stocks. Traded volumes slipped 24.2% to 1.57 bln shares as investors remain wary on the recent market volatility.

• More than two-thirds of the key index’s constituents advanced, led by Nestle (+90.0 sen), followed by Petronas Dagangan (+66.0 sen), Hong Leong Bank (+28.0 sen), Hong Leong Financial Group(+28.0 sen) and Malaysia Airport Holdings (+20.0 sen). Anchoring the advancers on the broader market were Fraser & Neave (+88.0 sen), Panasonic (+28.0 sen), Genting Plantations (+25.0 sen), Khind Holdings (+22.0 sen) and Heineken (+14. sen).

• Meanwhile, significant decliners on the broader market include Ajinomoto (-28.0 sen), BAT (-24.0 sen), Tasek Corporation (-15.0 sen), Heng Yuan (-13.0 sen) and Westports (-12.0 sen). There were only three decliners on the key index – Hartalega (-9.0 sen), Tenaga (-4.0 sen) and Dialog (-1.0 sen).

• Asia benchmark indices remain upbeat on the positive trade developments between U.S. and China as the Nikkei added 1.0%, while the Hang Seng rose 1.3%. The Shanghai Composite climbed 1.2% on expectations of further policymeasures to address the economic slowdown. ASEAN stockmarkets, meanwhile, closed mostly higher yesterday.

• U.S. stockmarkets finished mixed overnight with the Dow gaining 0.3% as investors digested the latest developments on U.S.-China trade spat. On the broader market, the S&P 500 and Nasdaq, however, fell 0.02% and 0.4% respectively after erasing all their intraday gains.

• Earlier, European equities – the FTSE (- 0.04%), CAC (-0.3%) and DAX (-0.04%), all retreated after enduring a choppy trading session. Meanwhile, the European Central Bank (ECB) formally ended Quantitative Easing program that pumped in €2.6 trn into the European economy over the past four years in order to stoke growth and inflation.

THE DAY AHEAD

• While selective stocks on Bursa Malaysia continue to make headway yesterday, the buying remained selective and on low volumes. As it is, investor interest has yet to return in full as most market players are still wary of the underlying market environment, judging by the lack of market following in the ongoing recovery.

• Although the uptrend looks to continue that will allow the key index to end the week on a positive note - in tandem with the sustained positivity in overseas markets, we think the buying will remain selective. Gains will still be concentrated on the big cap stocks, while the broader market stocks will continue to drift due to the lack of following. Hence, we see the key index re-challenging the 1,680 level, before heading to the 1,690 resistance. The supports are at 1,670 and 1,650 respectively
• Meanwhile, there remains little reprive for the lower liners and broader market shares as they continue to head south amid the thinning interest from retail players. Although the indices are oversold, there are still few signs of a rebound as yet and the downside bias remains for now.

COMPANY BRIEF

• RHB Bank Bhd has obtained Bank Negara Malaysia’s approval to establish a subsidiary in Vietnam, following its unit, RHB Investment Bank’s proposed acquisition of the remaining 51.0% equity interest in Vietnam Securities Corp that it does not already hold for 121.63 bln dong (RM21.7 mln) in cash. (The Edge Daily)
• Utusan Melayu (Malaysia) Bhd executive Chairman Datuk Abd Aziz Sheikh Fadzir has resigned just six months after being appointed to the post, due to personal reasons.

• To recap, the latter was appointed as executive Chairman on 7th June, 2018, replacing Tan Sri Mohamad Fatmi Che Salleh, who along with four other directors had resigned due to changes in the Umno leadership after Barisan Nasional’s loss in the 14th general election. (The Star Online)

• Can-One Bhd plans to buy another 2.2 mln shares (or 0.5% equity stake) in Kian Joo Can Factory Bhd and will subsequently extend a mandatory general offer to the minority shareholders of Kian Joo at an offer price of RM3.10 per share.

• Consequently, Can-One has inked a conditional share sale agreement with Tan Kim Seng for the remaining stake in Kian Joo, which will increase the group’s ownership in Kian Joo to 33.4%, from32.9% presently. (The Star Online)

• Pasukhas Group Bhd has proposed to establish an Islamic Medium Term Note Programme of RM200.0 mln in nominal value to fund its acquisitions and capex needs.

• The programme will be established under the syariah principle of Wakalah Bi AlIstithmar together with Murabahah, will have a tenure of 20 years from the date of its first issuance, while proceeds will be used to finance Pasukan Green’s acquisitions of projects, which may include a company, and to fund its working capital needs. (The Edge Daily)

• Petronas Dagangan Bhd (PDB) has appointed its head of retail business, Aadrin Azly, as the group’s new Chief Operating Officer, effective 1st January, 2019. (The Edge Daily)

• Malayan United Industries Bhd (MUI) has announced the resignation of Tan Sri Khoo Kay Peng as the group’s executive Chairman after more than four decades of helming the company, and will be replaced by his son Andrew Khoo Boo Yeow.

• Andrew had been appointed by its board of directors as their executive Chairman after assuming the role of group Chief Executive Officer on 1st January, 2019. (The Star Online)

• Vertice Bhd is planning to dispose 60.0% stockholding in its fashion retail business to its founder and executive deputy Chairman Seow Khim Soon for RM32.6 mln.

• Following an agreement signed on 13th December, 2018, Seow will be relinquishing his directorship in the group to concentrate his efforts on managing the fashion retailing business parked under Kumpulan Voir Sdn Bhd, and toavoid any potential conflict of interests.

• Upon completion of the disposal, which will see Kumpulan Voir becoming Vertice’s 40.0% associated company, Vertice will also continue to provide corporate guarantee to the banking facilities procured by Kumpulan Voir. (The Edge Daily)

• SCGM Bhd‘s 2QFY19 net profit plunged 68.6% Y.o.Y to RM1.7 mln, from RM5.3 mln a year ago, due to higher resin prices, finance cost as well as increased operating expenditure incurred by both its old and new plants in Johor. Quarterly revenue, however, rose 10.2% Y.o.Y to RM57.4 mln, from RM52.1 mln a year ago and the group declared a second interim dividend of 0.5 sen per share, payable on 18th January, 2019.

• Consequently, cumulative 1HFY19, net profit also narrowed 75.0% Y.o.Y to RM2.7 mln, compared to RM10.9 mln previously, although revenue climbed 7.1% Y.o.Y to RM113.2 mln, from RM105.8 in 1HFY18. (The Edge Daily)

• AirAsia Group Bhd has received "no less than 13 expressions of interest and also offers" from prospective buyers, including US private investment firm Castlelake LP, for its aircraft leasing unit and a number of its remaining aircraft assets.

• The group, however, has not entered into any legally binding contract with any of the parties involving the sale of the leasing unit or a significant number of aircraft, "with values over and above the prescribed thresholds under the Main Market Listing Requirements of Bursa Malaysia Securities Bhd". (The Edge Daily)

• Eco World Development Group Bhd's (EcoWorld) 4QFY18 net profit doubled to RM68.5 mln, from RM33.7 mln, despite a 32.8% Y.o.Y drop in quarterly revenue toRM607.6 mln, from RM904.1 mln last year. The improved bottomline was mainly due to completion of some major projects and delivery of a significant number of completed property units to customers by subsidiaries.

• Full year net profit also fell 21.0% Y.o.Y to RM165.6 mln, from RM209.7 mln in the last corresponding period, while its revenue lost 26.0% Y.o.Y to RM2.17 bln, from RM2.94 bln in FY17. (The Edge Daily)

• Eco World International Bhd (EWI) aims to acquire land in London to build an additional 5,000 built-to-rent (BtR) homes over the next five years. This comes on top of 12 existing sites in London with the potential to deliver some 4,000 units. (The Edge Daily)

• Perdana Petroleum Bhd is planning to abort its previously proposed private placement to raise up to RM109.0 mln, which was first announced in May 2017.

• The decision to scrap the plan comes after taking into consideration its ongoing corporate debt restructuring exercise under Bank Negara Malaysia, as well as the prevailing weak market conditions of the past six months. (The Edge Daily)

• JAKS Resources Bhd saw its rights issue of warrants undersubscribed by 62.5%, although it still managed to meet its minimum subscription level and raised gross proceeds of RM25.6 mln. That means a take-up rate of only 37.5% or 102.4 mln of the total 273.0 mln rights warrants available for subscription. (The Edge Daily)

Source: Mplus Research - 14 Dec 2018