Tipping Higher

• The FBM KLCI inched higher due to lastminute buying-support in selected heavyweights, albeit capped by the continued weakness in Petronas-linked stocks. The majority of the lower liners regained its momentum and closed higher, with the exception of the FBM Fledgling (-0.1%). Meanwhile, on the broader market, nine-out of twelve sectors finished positively.

• Market breadth was positive with 413 winners against 347 losers, while traded volumes gained 9.9% to 2.40 bln amid rotational plays in the lower liners.

• Leading the key-index higher were Nestle (+RM1.60), Public Bank (+28.0 sen), Kuala Lumpur Kepong (+12.0 sen), MISC (+10.0 sen) and Hong Leong Financial Group (+8.0 sen). Other gainers, meanwhile, include Dutch Lady (+50.0 sen), Allianz Malaysia (+30.0 sen), Malaysian Pacific Industries (+22.0 sen) and United Malacca (+15.0 sen). Selangor Properties also rose 32.0 sen after its largest shareholder increased its takeover offer price for the second time.

• On the other hand, laggards on the broader market consists of United Plantations (-48.0 sen), Panasonic Manufacturing (-20.0 sen), Hai-O (-17.0 sen), Chin Teck Plantations (-10.0 sen) and Country View (-10.0 sen). Petronasaffiliated companies like Petronas Dagangan (-60.0 sen), Petronas Gas (- 22.0 sen) and Petronas Chemicals (-8.0 sen) were southbound, followed by Axiata (-5.0 sen) and Press Metal (-5.0 sen).

• Earlier, Asian stockmarkets reversed Monday’s losses and closed higher, following renewed hopes of increased stimulus from the Chinese government amid China’s economic slowdown. The Nikkei was 1.0% higher, together with the Shanghai Composite (+1.4%). The Hang Seng Index, meanwhile, jumped 2.0% to 26,830.3 points – led by strong gains in AAC Technologies. Similarly, most ASEAN stockmarkets also finished on an upbeat tone.

• Wall Street - the Dow (+0.7%), the S&P 500 (+1.1%) and the Nasdaq (+1.7%) advanced, boosted by strong gains in technology stocks after video streaming giant Netflix announced its decision to raise its subscription fees, opening the way for similar moves for other service providers. However, gains were slightly offset by softer-than-expected earnings report from banking behemoth JP Morgan.

• U.K. stockmarkets closed slightly higher as investors monitor the outcome of Prime Minister Theresa May’s withdrawal deal from the E.U. in Parliament. The FTSE (+0.6%) ended with meager gains – due to the depreciation in Pound, as well as the rally in mining and oil stocks after China pledged more tax cuts to boost its economy. The DAX and the CAC followed suit and closed higher by 0.3% and 0.5% respectively.

The Day Ahead

• Global markets were buoyed by China’s new stimulus measures yesterday aimed at providing some support to its flagging economy that is suffering the effects of the trade war with the U.S. We see this positivity persisting over the near term on Malaysian stocks as the move is seen to boost stockmarket sentiments further.

• Nevertheless, we think the upsides could still be measured as the buying interest is generally still tepid. In addition, the buying has been selective and this trend is likely to continue for now. On the upside, the key index should clear the 1,680 level and head towards the 1,685 level, before taking a stab at the 1,690 level. The supports are at 1,670 and 1,650 respectively.

• The FBM Small Cap, FBM Fledgling and FBM Ace listed stocks are also likely to head higher amid the renewed interest from retail players, albeit we still see the rotational plays tempering the upside.

COMPANY BRIEF

• Selangor Properties Bhd's Wen family has raised its offer to take the company private again by another 30 sen to RM6.30 per share. The Wen family made the offer via their investment vehicle, Kayin Holdings Sdn Bhd.

• This was the second revision from the earlier RM5.70 announced on 17th December 2018. The offer to privatise the property company was announced in October 2018. Consequent to the revision of the SCR offer price, the entitled shareholders will receive a total capital repayment of RM687.8 mln.

• As the issued share capital to be reduced is higher than the existing issued share capital of RM545.4 mln, Selangor Properties will undertake a bonus issue of up to 382.1 mln shares. This will involve the capitalising up to RM382.1 mln from its retained earnings to increase the share capital of up to a level sufficient for the capital reduction. (The Star Online)

• Aeon Credit Service (M) Bhd has been granted a money lending license under the Moneylenders Act 1951 and Moneylenders (Control and Licensing) Regulations 2003 by the Ministry of Housing and Local Government. The license will be valid for a period of two years, effective from 15th January 2019, allowing AEON Credit to undertake any business of those relating to the money lending activities which complements its existing business. (The Edge Daily)

• Deleum Bhd has won a three-year contract to provide slickline equipment and services for Petronas Carigali Sdn Bhd. However, no contract value was stated by the company. (The Edge Daily)

• Prinsiptek Corp Bhd is developing an oil palm plantation plus a palm oil mill and other facilities in a RM2.13 bln joint venture with AA Strategic Marketing Sdn Bhd and TTSJ Trading Sdn Bhd. The partnership will see the companies pool their expertise to develop an oil palm plantation and palm oil mill in Lawas, Sarawak as well as build a port, jetty, bulking tank for palm oil, refinery and green energy plant in Sipitang Port, Sabah. (The Edge Daily)

• Wellcall Holdings Bhd, Malaysia’s largest manufacturer of low to medium pressure industrial rubber hoses, is teaming up with Sweden-based Trelleborg Group to manufacture and sell composite hoses and fittings. Both parties will jointly establish a composite hose production site in Malaysia. Under the JV, Trelleborg and Wellcall will hold 51.0% and 49.0% respectively of the shares. (The Edge Daily)

• Barakah Offshore Bhd still negotiating a debt settlement proposal with its lenders and creditors to achieve an amicable debt settlement proposal. This follows a Kuala Lumpur High Court order to restraint any proceedings and actions by lenders against Barakah and its unit PBJV Group Sdn Bhd that had expired on 14th January 2019. (The Edge Daily)

• Tune Protect Group Bhd has appointed Khoo Ai Lin as Group CEO, replacing Razman Abu Hafidz who stepped into an advisory role at the group at endDecember 2018. Khoo joined the group in 2017 as CEO of Tune Protect Malaysia. She is currently also a director of Tune Protect Re Ltd and will continue to lead Tune Protect Malaysia until further notice. (The Edge Daily)

• YFG Bhd has announced that two of its directors have resigned to save the lossmaking company some money. Independent and Non-Executive Director Tan Boon Chai @ Lee Boon Chuan and Non-Independent and Non-Executive Director Teh Yee Joo both cited a desire to reduce the company’s costs via their resignations. Tan’s resignation is effective 15th January 2019 while Teh's resignation is effective on 30th January 2019. (The Edge Daily)

• Vizione Holdings Bhd’s 2QFY19 net profit soared 196.8% Y.o.Y to RM19.4 mln due to the higher construction works undertaken during the period by its subsidiary. Revenue for the quarter grew 12.5% Y.o.Y to RM165.8 mln.

• For 1HFY19, cumulative net profit surged 386.7% Y.o.Y to RM34.5 mln. Revenue for the period jumped rose 92.9% Y.o.Y to RM325.3 mln. (The Edge Daily)

• KIP Real Estate Investment Trust (REIT)’s 2QFY19 net property income fell 3.4% Y.o.Y to RM10.5 mln, on lower rental fees and higher property operating expenses despite higher occupancy rate of 87.9%. Revenue for the quarter declined marginally by 0.3% Y.o.Y to RM15.6 mln.

• For 1HFY19, cumulative net property income declined marginally by 0.3% Y.o.Y to RM20.4 mln. Revenue for the period, however, added 0.8% Y.o.Y to RM31.2 mln.

• Separately, KIP REIT is exploring the possibility of injecting its KIP Mall Kota Warisan into the fund by 2020. (The Edge Daily)  

Source: Mplus Research - 16 Jan 2019