Milder Upsides As Profit Taking Returns

• The FBM KLCI finished with meagre gains, buoyed by the positive sentiment spilled over from global equities. On a weekly basis, the key-index also inched higher by 0.8% W.o.W to 1,683.2 points. The lower liners - the FBM Small Cap (+1.0%), the FBM Fledgling (+0.9%) and the FBM Ace (+0.7%) also advanced, together with majority of the broader market constituents. The technology (- 0.3%) sector, however, bucked the generally positive trend and closed in the red, ending a streak of four-straight winning sessions.

• Market breadth was positive as advancers beat the decliners on a ratio of 569-to-294 stocks. Traded volumes, however, fell 16.2% to 2.17 bln shares as investors retreated to the sidelines after several days of gains.

• Blue chip outperformers were mainly Nestle (+30.0 sen), PPB Group (+16.0 sen), Kuala Lumpur Kepong (+14.0 sen), Petronas Dagangan (+14.0 sen) and RHB Bank (-11.0 sen). KESM Industries (+60.0 sen) extended its gains for the second consecutive day, followed by Fraser & Neave (+54.0 sen), Time Dotcom (+48.0 sen), Dutch Lady (+40.0 sen) and Malaysian Pacific Industries (+26.0 sen).

• On the other hand, Allianz Malaysia (-26.0 sen), Lysaght Galvanized Steel (-22.0 sen), Shangri-La (-19.0 sen), Panasonic Manufacturing (-14.0 sen), United Malacca (-12.0 sen) were among the top broader market decliners. Notable Main Board losers, meanwhile, were Malaysia Airports (-21.0 sen), Public Bank (-4.0 sen) and IHH Healthcare (-2.0 sen).

• Major Asian stockmarkets ended on a positive note on Friday, tracking the extended rally on Wall Street overnight. The Nikkei added 1.0% to close at 20, 359.7 points. The Shanghai Composite and the Hang Seng Index also traded higher by 0.7% and 0.6% respectively. Similarly, the majority of ASEAN stockmarkets also rallied at Friday’s close.

• Wall Street closed almost unchanged as the upside took a breather, following a five-day winning record. The Dow climbed higher but fell short of closing in the black ahead of major banks earnings announcement next week. On the broader market, the S&P 500 flatlined, while the Nasdaq closed 0.2% lower.

• U.K. equities retreated, dragged down by the stronger Pound on news of a potential Brexit delay as well as weaker crude oil prices. The FTSE ended lower by 0.4% alongside other key European markets – the DAX (-0.3%) and the CAC (- 0.5%), mainly due to losses in the auto sector amid Ford Motor’s major restructuring plans.

The Day Ahead

• With Malaysian stocks continuing to gain ground last Friday amid the improved sentiments that were spilled over from overseas bourses, the generally positive market undertone looks to prevail for longer. However, we think the near term upsides will also start to taper on profit taking activities.

• The recent gains on Bursa Malaysia are welcomed to break the dour trend that lingered from 4Q2018 and while the gains were moderate, valuations have reached fair value again that could limit further upsides, in our view. Hence, we see further near term gains to be punctuated by profit taking moves.

• We also continue to think that the 1,690 level to serve as the intermediate resistance that is followed by the major hurdle at 1,700 level. The supports are at 1,680 and 1,670 respectively.

• While the FBM KLCI is likely to dither, the lower liners and broader market shares could continue to see rotational plays that is also likely to lift the FBM Small Cap, Fledgling and ACE Market indices further. However, we also think that the further upsides could become choppier amid the increased profit taking activities after their recent strong upsides.

COMPANY BRIEF

• Bursa Malaysia Securities Bhd has commenced the delisting exercise against Perisai Petroleum Teknologi Bhd after it rejected the company’s financial regularisation plan that was submitted in August 2017. Perisai will be de-listed on 13th February 2019 unless an appeal against the rejection of the regularisation plan and de-listing is submitted to Bursa Securities on or before 10th February 10.

• To recap, Perisai was classified as a Practice Note 17 affected issuer in October 2016 after its wholly owned Perisai Capital (L) Inc defaulted in payment of the principal and interest for S$125.0 mln multi-currency mediumterm notes. (The Star Online)

• Scomi Energy Bhd has formed a committee to investigate certain related party transactions (RPT) and advances made without prior authorisation pertaining to the transactions. These RPTs relate to sums that have been advanced to its holding company, Scomi Group Bhd and its subsidiaries (Scomi Group of Companies) over a period of two years from June 2016 to June 2018.

• The total sum advanced is RM64.3 mln of which RM19.4 mln is related to a shared service agreement between the company and Scomi Group and is not regarded as a related party transaction pursuant. (The Star Online)

• Poh Kong Holdings Bhd has allocated between RM9.0 mln and RM15.0 mln capital expenditure (capex) to open three new stores in 2019. Of the total capex, about RM3.0 mln to RM5.0 mln will be used for each of the store. With these new stores, Poh Kong will have 95 outlets nationwide under various brands including retail concept stores. (Bernama)

• Genting Bhd has argued that its upcoming hotel and casino resort in Las Vegas will look “dramatically different” from Wynn Resorts Holdings LLC’s property when it opens for business in late 2020. Wynn Resorts’ claim has been predicated on speculative extrapolation regarding the appearance of its unfinished resort and casino, which it said is still in an early stage of construction with nearly two years left to go before the opening.

• It also claimed that Wynn Resorts has failed to demonstrate the threat of imminent and irreparable harm, which is a key requirement for the granting of any order of temporary or preliminary injunctive relief. The U.S. District Court of Nevada has granted an extension of time for it to file its response to the complaint and any material development of the legal suit will be announced. (The Edge Daily)

• Tatt Giap Group Bhd has seen Dynaciate Engineering Sdn Bhd emerging as its largest shareholder after the latter increased its stake to 29.7% from 13.0% previously. Tatt Giap’s recently-appointed Executive Director Khoo Song Heng, who jointly owns Dynaciate, has reported that the group has solid plans and strategies which will give a boost to the group’s growth momentum. (The Edge Daily)

• APFT Bhd, which appointed two new directors about three months ago, has received a fresh requisition from shareholders for an extraordinary general meeting to remove the new appointees and three other directors. The directors named for removal are recently appointed Tengku Shamsulbhari Tengku Azman Shah and Datuk Tan Choon Hwa, as well as Edwin Silvester Das, Tan Sri Zaini Omar and Saiful Azhar Mohd Yusoff.

• The shareholders, who hold an aggregate of more than 10.0% of APFT’s issued share capital, also proposed the appointment of Jeya Kumar Jegathison, Chan Tiam Hin and Tan Chee Koon as new directors. APFT is seeking legal advice on the matter. (The Edge Daily)

• Spring Gallery Bhd saw some 19.7 mln of its shares, representing a 9.9% stake, traded off-market at a discount today, for a total of RM12.8 mln. The transaction could be linked to the principal private secretary of Sarawak Chief Minister, Wan Khalik Wan Muhammad, who emerged as a shareholder in Spring Gallery with a 10.0% stake after acquiring 19.9 mln of the company's shares via a private vehicle Total Sejati Sdn Bhd. (The Edge Daily)

• Green Packet Bhd saw some 37.4 mln of its shares, representing a 5.0% stake, traded off-market at a premium on 11th January 2019. The shares were transacted in six tranches for an aggregate sum of RM13.1 mln, or at 35 sen apiece. This represents an 11.1% premium to the stock’s last traded price of 31.5 sen in the open market, where only 64,200 shares crossed. Parties involved in the transaction, however, were not known. (The Edge Daily)  

Source: Mplus Research - 14 Jan 2019