Still On The Slide

• Gains on the FBM KLCI were short-lived after the key index gave back all of the gains by the end of the session, following bearish sentiments spilled over from Wall Street at the end of week. All the lower liners – the FBM Small Cap (-2.2%), the FBM Fledgling (-2.1%) and FBM ACE (- 2.9%) were badly beaten down, alongside the broader market.

• Market breadth was also negative as losers more than tripled the winners, while traded volumes eased slightly by 1.9% to 1.47 bln shares, dragged down by the sharp selling pressure across the board.

• Significant decliners at Monday’s close include Nestle (-60.0 sen), Public Bank (- 52.0 sen), Tenaga Nasional (-34.0 sen), Hong Leong Financial Group (-22.0 sen) and RHB Bank (-21.0 sen). Broader market underperformers, meanwhile, were Fraser & Neave (-RM2.70), BAT (- RM1.32), Aeon Credit (-30.0 sen) and Vitrox (-28.0 sen). V.S. Industry also lost 35.0 sen on expectations of softer sales and net profit outlook for the next few quarters.

• Ayer Holdings (+41.0 sen), BLD Plantation (+27.0 sen), Selangor Properties (+19.0 sen), Heineken Malaysia (+14.0 sen) and Transocean (+12.5 sen), meanwhile, bucked the otherwise bearish sentiment and closed higher. The only four Main Board gainers on Monday were Petronas Gas (+60.0 sen), Petronas Chemicals (+6.0 sen), Hartalega (+2.0 sen) and Genting Malaysia (+1.0 sen).

• Key Asian benchmark stockmarkets finished with meager gains ahead of the U.S. Central Bank’s policy meeting this week. The Shanghai Composite added 0.2%, while the Nikkei rose 0.6% to 21,506.9 points, albeit slightly capped by the weakness in energy stocks. The Hang Seng, however, flatlined, while the ASEAN stockmarkets ended mixed.

• U.S. equities continued to slide, following a widespread selldown which include usually defensive stocks like healthcare companies and insurers amid uncertainties surrounding the Obamacare healthcare law. The Dow (-2.1%) remained on a downward bias, alongside the S&P 500 (-2.1%) and the Nasdaq (- 2.3%), while crude oil prices broke its major support level and closed below US$50 for the first time since October last year.

• Earlier, European stockmarkets were also splash in red with the FTSE falling 0.9% as investors digested new corporate developments, while Germany’s DAX and France’s CAC also ended lower by 0.9% and 1.1% respectively.

The Day Ahead

• Although Malaysian stocks were expected to decline yesterday, the selldown was more severe-than-expected amid the escalating selling towards the end of the session, taking the FBM KLCI to its lowest level in nearly two years.

• With global stocks taking another beating overnight, the near term outlook of Malaysian stocks remain dour with more downside likely. As it is, market sentiments remain weak with most global equity markets retreating amid the unresolved U.S-China trade dispute, peaked corporate earnings and high likelihood of slower global economic growth in 2019. All these concerns will continue to weigh on sentiments to send equities lower over the near term. In addition, market participation remains thin and this will exacerbate the already dour market condition. With the 1,650 level support level giving way, the supports are now at 1,638 and 1,630 respectively. Apart from the 1,650 resistance, the other resistance is at 1,660.

• There is no change to the immediate outlook of the lower liners and broader market shares as they will continue to head lower and extending their oversold streak as sentiments remain weak. Retail players are still avoiding the market and this will sustain the dour trend for now.

COMPANY BRIEF

• Earlier, European stockmarkets were also Kayin Holdings Sdn Bhd, the major shareholder of Selangor Properties Bhd, has increased the takeover offer price from RM5.70 to RM6.00 per share through a Selective Capital Reduction (SCR) and repayment exercise. Back on 25th October 2018, Kayin, which holds a 68.2% stake in SPB, has reported that a glut in the property market is expected to limit the group’s development activities over the near-to-medium term.

• Kayin had then decided to privatise the group via the capital reduction and repayment exercise that provide the group with greater flexibility to manage and develop its businesses and undertake corporate exercises which may otherwise require lengthy shareholder and regulatory approvals. (The Star Online)

• Top Glove Corporations Bhd‘s 1QFY19 net profit grew 4.4% Y.o.Y to RM110.1 mln, as revenue jumped on strong demand growth in both developed and emerging markets. Revenue for the quarter rose 34.5% Y.o.Y to a record high of RM1.26 bln. (The Star Online)

• IHH Healthcare Bhd will not be able to proceed with the open offer for Fortis Healthcare Ltd for the time being until further orders, clarifications, and directions are issued by the Supreme Court of India or the Securities and Exchange Board of India. IHH is in the process of evaluating the order and seeking appropriate legal advice on this matter and will subsequently decide on the future course of action. (The Edge Daily)

• WZ Satu Bhd has bagged a RM133.5 mln sub-contract job to construct bridges from Genuang to Paloh for the Gemas Johor Baru electrified double track project. The company accepted the letter of award from SIPP-YTL JV for the project that is expected to be completed by 17th May 2020. (The Edge Daily)

• Destini Bhd has won a three-year contract for the provision of tubular handling, conductor installation and slot recovery equipment and services under the Pan Malaysia Petroleum Arrangement Contractors (PAC) Operators’ Drilling Programme by Petronas Carigali Sdn Bhd. Under the contract, Destini will be the primary contractor for the said services in shallow waters of East and West Malaysia, and for deep water tubular handling in East Malaysia. (The Edge Daily)

• CIMB Group Holdings Bhd has filed and served a notice of arbitration against PLUS Malaysia Bhd, claiming the latter had breached its obligations under a joint venture agreement in relation to Touch 'N Go Sdn Bhd, by launching its own toll collection system. CIMB claimed that PLUS breached its obligations under the 1998 JVA by commencing and launching its own PLUS Radio Frequency Identification (RFID) System. Under the JVA, CIMB has a 52.0% stake in Touch ‘N Go, while PLUS and MTD Equity Sdn Bhd hold 28.0% and 20.0% respectively. (The Edge Daily)

• Hai-O Enterprise Bhd’s 2QFY19 net profit fell 36.6% Y.o.Y to RM13.6 mln, dragged down by lower sales from its multilevel marketing (MLM) segment. Revenue for the quarter declined 25.3% Y.o.Y to RM92.2 mln.

• For 1HFY19, cumulative net profit slipped 37.4% Y.o.Y to RM24.6 mln. Revenue for the period dropped 30.6% Y.o.Y to RM172.3 mln. An interim dividend of four sen per share was declared. (The Edge Daily)

• Scomi Group Bhd has confirmed that the Mumbai Metropolitan Region Development Authority (MMRDA) has terminated the monorail contract awarded to Scomi and its Indian partner 10 years ago. Scomi’s unit Scomi Engineering Bhd, and Larsen & Toubro Ltd (L&T), are the two members of a consortium that operates India’s first monorail network.

• The consortium was awarded the contract for the design, development, construction, operation and maintenance of the 19.5 km monorail network in the Mumbai Metropolitan Region in November 2008. Indian media reports said the termination was because the consortium had failed to fulfill its contract obligations, despite getting several extensions. (The Edge Daily)

• Tune Protect Group Bhd’s group Chief Executive Officer, Razman Hafidz Abu Zarim will be retiring from his position on 31st December 2018, as he has decided not to seek a re-appointment upon expiry of his regulatory tenure with the group. Razman joined the group as chairman in 2012 and was redesignated as group CEO on 15th July 2016. He is also an independent director at Hartalega Holdings Bhd. (The Edge Daily)  

Source: Mplus Research - 18 Dec 2018