Tentative Start To The Week

• The FBM KLCI ended the week on a stronger footing in-tandem with the positive sentiment spilled over from Wall Street overnight and from the stronger energy prices as well as the Ringgit’s appreciation. Meanwhile, the key-index also rose 0.5% W.o.W to 1,692.2 points, boosted by the broad rebound in equities. The lower liners rallied – led by the FBM Small Cap (+0.4%), while the broader market ended mostly higher on Friday.

• Market breadth remained positive as winners outrun the losers a ratio of 486- to-369 stocks. Traded volumes jumped 26.9% higher to 3.05 bln – led by strong buying-interests in O&G-linked companies.

• Significant key-index movers were Petronas Chemicals (+20.0 sen), Maybank (+14.0 sen), Top Glove (+13.0 sen), Public Bank (+12.0 sen) and Dialog (+8.0 sen). Other advancers also include Heineken Malaysia (+42.0 sen), Carlsberg (+40.0 sen), United Plantations (+32.0 sen), Heitech Padu (+30.0 sen) and BAT (+28.0 sen).

• Notable losers, meanwhile, include Chin Teck Plantations (-25.0 sen), Lysaght Galvanised Steel (-20.0 sen), Muhibbah Engineering (-19.0 sen), Aturmaju (-13.0 sen) and DRB-Hicom (-12.0 sen). Bursa Malaysia heavyweight laggards were Genting-affiliated companies, namely Genting Malaysia (-7.0 sen) and Genting (-3.0 sen), alongside Sime Darby (-4.0 sen), Ambank (-3.0 sen) and IOI Corporation (-3.0 sen).

• Key regional benchmark bourses closed mostly higher yesterday despite downbeat economic data from China. The Nikkei (+0.3%) rallied to its one-month high, lifted by gains in exporters, intandem with a weaker Yen, while shippers also rallied on increased freight charges. The Shanghai Composite index and the Hang Seng Index also gained 0.6% and 0.4% respectively. Most of the ASEAN equity indices also advanced on Monday’s closing bell.

• U.S. stockmarkets were closed for the Martin Lurther King’s holiday.

• U.K. equities also rallied as U.K. blue-chip gauge, the FTSE eked-out gains in the final hour, albeit capped by the appreciation in Pound and weakness in miners, following weaker-than-expected Chinese growth in 2018. Other key European stockmarkets – the DAX and the CAC, however, closed lower by 0.6% and 0.2% respectively.

The Day Ahead

• The gains at the end of last week was again the result of a last minute haul on selective index linked stocks that pushed the key index above the 1,690 level. Despite that, we think the gains were superficial and not representative of the undercurrent of a more gradual uptrend.

• Going into the start of the holiday shortened week, we see volatility taking hold again as profit taking activities could take the shine off some of last Friday’s gains amid fresh concerns over the state of global economy that is likely to dampen investor sentiments. Under the prevailing market mood, we see increased cautiousness that could curtail the market’s upside potential over the near term. On the upside, the main resistance is at the 1,700 level, followed by the 1,702 level. The supports are at 1,690 and 1,680 respectively.

• Although the lower liners and broader market are continuing to make headway, the upsides are starting to display signs of strain after the FBM Small Cap has risen more than 12% in the past month. Therefore, we think that volatility will also come into play among the lower liners and broader market shares on bouts of profit taking actions.

COMPANY BRIEF

• Mesiniaga Bhd has secured a RM1.90 bln contract from Xiddig Cellular Communications Sdn Bhd for the commissioning of the core, metro distribution and access network for the Malaysia International Internet Gateway (EM-IIG) project. The contract will be effective immediately and end on 31st March 2020. (The Star Online)

• Businessman Brahmal Vasudevan has ceased to be a substantial shareholder of e-government service provider Prestariang Bhd after disposing 22.0 mln shares in the company, reducing his stake to 1.7% (from 4.6%) on 16th January 2019. Brahmal first emerged as a substantial shareholder in Prestariang back in November 2016. Since then, the stock has plunged 85.0% after the new government had in December 2018, terminated the company’s RM3.50 bil Sistem Kawalan Imigresen Nasional (SKIN) border control concession. (The Star Online)

• OSK Ventures International Bhd (OSKVI) has announced that it will be investing in Singapore-based Blue Planet Environmental Solutions. Blue Planet is a regional waste management company focusing on technology-driven end-toend waste solutions. Blue Planet has vertically integrated offerings across the waste management value chain and with the investment from OSKVI, it would continue to acquire innovative technologies to manage both organic and inorganic waste streams tailored to the region's specific requirements. (The Star Online)

• AE Multi Holdings Bhd has proposed to raise up to RM3.3 mln in a private placement to repay bank borrowings and for working capital. The private placement will involve the issuance of up to 29.9 mln new shares, representing 10.0% of the group's issued share capital with an indicative price of 11.0 sen each. Of the total sum raised, RM2.5 mln will be used to party repay its borrowings of RM34.2 mln, while RM0.6 mln will be used for working capital. (The Edge Daily)

• Berjaya Corp Bhd (BCorp) wants to manufacture, assemble and sell British car marque Morris Garages (MG) in Malaysia as well as to provide after-sale services for the brand. To this end, BCorp has entered into a Memorandum of Understanding with SAIC Motor Passenger Vehicle Co (SMPV), a unit of China’s SAIC Motor Corp Ltd, to collaborate on the proposed business. SAIC is also a seller of MG vehicles. (The Edge Daily)

• Daya Materials Bhd has proposed to set off RM32.5 mln of debt owed to Perfect Propel Sdn Bhd (PPSB). This comprises issuance of 534.0 mln new Daya shares at 2.5 sen apiece for RM13.4 mln to PPSB, while another RM18.7 mln will be set-off against the subscription monies payable by PPSB for its entitlement under a proposed rights issue. A further RM0.4 mln will be satisfied in cash, using the net proceeds to be raised from the rights issue. (The Edge Daily)

• Eastland Equity Bhd has aborted its 6-for- 5 rights issue with warrants after the approval expired on 9th January 2019. The plan was to raise funds to fund a proposed land acquisition worth RM23.3 mln in Sabah. The land, measuring 2,181 sqm, had a planning approval for the development of two blocks of 28-storey hotels with a total gross development value (GDV) of RM639.0 mln. (The Edge Daily)

• Shareholders owning 11.2% in internet domain reseller Inix Technologies Holdings Bhd — Zhang Yang, Wai Ai Loo Suncity Entertainment Ltd has sought to remove recently-appointed directors and appoint three new ones, two of which were ex-directors in the web domain seller company.

• The three directors who may be axed are Chief Executive Officer (CEO) Azman Hussin, Wong Jeh Syan and Norisam Bin Tukiman. Wong and Norisam were appointed in end-2018 after former executive director Datuk Zhang Li and Director Lee Yueh Shien retired on the same day. The above shareholders want Datuk Zhang Li and Lee to be appointed directors again, alongside Edwin Silvester Das. Zhang Li owns 6.7% in Inix via Zhang Yang’s shareholding in the company as at 9th January 2019. (The Edge Daily)

• Light Rail Transit Line 3 Bandar UtamaJohan Setia’s (LRT3) turnkey contractor, a 50:50 joint venture between Malaysian Resources Corp Bhd and George Kent (M) Bhd will not be seeking any compensation from either Prasarana Malaysia Bhd or the government. This follows the "remodelling" of the project delivery partner (PDP) contract into a fixed price contract for the LRT3 project, which the consortium expects to be signed by end-January 2019.

• The project's work package contractors will be paid by end-January 2019. There are 19 main subcontractors involved in the LRT3 project, including WCT Holdings Bhd, Sunway Construction Group Bhd, Gabungan AQRS Bhd and Mudajaya Corp Bhd. (The Edge Daily)

• India's Axis Bank Ltd has filed a lawsuit against Scomi Group Bhd's two subsidiaries, claiming 624.6 mln rupees (RM36.2 mln) for defaulting the amount due to the bank. Scomi’s units Scomi Engineering Bhd (SEB) had guaranteed the loan to its wholly-owned unit Urban Transit Pte Ltd (UTPL). UTPL failed to make the scheduled payment, resulting in both SEB and UTPL receiving a notice of demand on 15th January 2019. (The Edge Daily)  

Source: Mplus Research - 22 Jan 2019