Still Climbing

• The FBM KLCI (+0.4%) marched higher to re-claim the 1,700 psychological level after lingering in the positive territory for the entire trading session last Friday. Consequently, the key index recorded its third straight weekly gain, rising 0.5% W.o.W. The lower liners – the FBM Small Cap (+0.5%), FBM Fledgling (+0.1%) and FBM ACE (+0.3%) all extended their gains, while the REITS sector (-0.4%) underperformed the positive broader market.

• Market breadth stayed positive as gainers outnumbered decliners on a ratio of 472- to-356 stocks, while 368 stocks closed unchanged. Traded volumes added 1.9% to 2.48 bln shares, lifted by the positive market sentiment.

• More than two-thirds of the key index components advanced, led by Nestle (+50.0 sen), followed by Petronas Chemicals (+17.0 sen), Genting (+16.0 sen), Press Metal (+13.0 sen) and Hartalega (+12.0 sen). Notable gainers on the broader market were Ajinomoto (+28.0 sen), BAT (+26.0 sen), Allianz (+16.0 sen) and Hong Leong Industries (+16.0 sen). Muhibbah Engineering added 18.0 sen after bagging two contracts worth RM165.0 mln.

• Meanwhile, Carlsberg (-10.0 sen), Gabungan AQRS (-8.0 sen), Rapid Synergy (-8.0 sen), Sungei Bagan Rubber (-8.0 sen) and Analabs Resources (-7.0 sen) topped the broader market losers list. There were only five decliners on the local bourse – IHH (-10.0 sen), Hong Leong Financial Group (-8.0 sen), Am Bank (-4.0 sen) and Hong Leong Bank (- 2.0 sen) and Public Bank (-2.0 sen).

• Asian benchmark indices trended positively as the Nikkei (+1.0%) closed at a five-week high on gains in chip-related shares. The Shanghai Composite climbed 0.4% after regulators announced new measures to beef up China’s banks capital strength, while the Hang Seng Index jumped 1.7%. ASEAN stockmarkets finished mostly higher last Friday.

• U.S. stockmarkets trended higher last Friday as the Dow gained 0.8%, buoyed by a string of strong corporate earnings, coupled U.S. President Donald Trump and Democratic congressional leaders’ agreement to re-open the government until 15th February 2019. On the broader market, the S&P 500 added 0.9%, while the Nasdaq finished 1.3% higher.

• Major European indices closed on a mixed note as both the CAC and DAX jumped 1.1% and 1.4% higher respectively, taking cue from the positive sentiment in Asia stockmarkets. The FTSE, however, fell 0.1% after erasing all its intraday gains after the British Pound appreciated against the Greenback.

The Day Ahead

• We think the key index could continue to make headway over the near term in tandem with the positivity on Wall Street last Friday. The gains will be despite a still largely cautious market undertone that is still rife with uncertainties over the state of the global economy and the status of the U.S.–China trade negotiations.

• Back home, there is also still some measure of tentativeness, but selective end-of-day buying has helped to lift the market past the 1,700 psychological level last Friday. Although we think the gains were superficial, we think there will be continued near term upsides as market players capitalise on the improved sentiments to pick-up some of the industry leaders that could send the FBM KLCI to the 1,710 resistance level. Further above, the resistance is at the 1,718 level, while the supports are at 1,700 and 1,695 respectively.

• Although the lower liners and broader market shares are also still making headway, we think the following could be thinning ahead of the Lunar New Year break next week. This has resulted in a more subdued tread of late that we see continuing over the near term. Therefore, any gains could be capped by selling into strength actions.

COMPANY BRIEF

• Rohas Tecnic Bhd has entered into a share purchase agreement (SPA) with shareholders of Phu My Vinh Construction And Investment Corp (PMV) to buy a 40.0% stake in PMV for Vietnamese Dong 232.0 mln (RM41.3 mln), following the non-binding term sheet signed in August 2018. The proposed acquisition will be funded via internally-generated funds. (The Edge Daily)

• Suiwah Corp Bhd announced that its major shareholder, Suiwah Holdings Sdn Bhd (SHSB) has requested for the group to undertake a proposed selective capital reduction and repayment exercise (SCR). The Hwang family is reportedly looking to take the company private at RM2.80 per share and holds a collective stake of 30.9% in Suiwah. SHSB is the private investment vehicle of Suiwah’s founder and Managing Director (MD), Datuk Hwang Thean Long.

• The corporate exercise involves the SCR and a corresponding capital repayment of a proposed cash amount of RM2.80 per share to entitled shareholders on an entitlement date to be determined later. (The Star Online)  EcoFirst Consolidated Bhd’s 2QFY19 net profit plunged 86.3% Y.o.Y to RM4.1 mln, from RM29.6 mln a year ago despite a 41.7% Y.o.Y growth in revenue at RM57.3 mln vs. RM40.3 mln in the previous corresponding quarter. The previous corresponding period’s stronger performance was attributed to the inclusion of a one-off gain from a land disposal in 2QFY18.

• Cumulative 1HFY19 net profit also declined 75.2% Y.o.Y to RM8.8 mln, from RM35.3 mln during the previous corresponding period, although revenue was up by 19.7% Y.o.Y to RM102.0 mln, from RM85.2 mln a year earlier. (The Edge Daily)

• Vortex Consolidated Bhd (formerly known as SKH Consortium Bhd) has terminated the plans to buy a 70.0% equity stake in property developer Rimbun Gabungan Sdn Bhd (RGSB) for RM12.0 mln in cash.

• The previous share sale agreement was mutually terminated as Vortex and the vendors, namely Bijak Fajar Sdn Bhd and Newston Development Sdn Bhd, were unable to reach a consensus over the terms for the post completion business arrangement between the parties pursuant to the proposed acquisition.

• MNRB Holdings Bhd is looking to raise up to RM320.0 mln by establishing a Sukuk Murabahah Programme to refinance its existing and future financing/borrowings. The funds raised will also be used for investment into MNRB's subsidiaries and permitted investments. (The Star Online)

• Perusahaan Sadur Timah Malaysia (Perstima) Bhd's 3QFY19 net profit tripled to RM10.1 mln, from RM3.4 mln in the year-ago quarter, helped by higher margins which alleviated the impact of a lower sales volume resulting from the expiration of anti-dumping duties. Revenue, however, only inched 1.5% Y.o.Y to RM237.5 mln, from RM233.9 mln previously.

• Meanwhile, cumulative 9MFY19 net profit almost quadrupled to RM34.5 mln, from RM9.8 mln last year, while revenue grew 6.0% Y.o.Y to RM747.8 mln, from RM705.7 mln in the same period in 2018. (The Edge Daily)

• Malaysia Airports Holdings Bhd (MAHB) has announced that there is no counterclaim made by AirAsia Bhd and its long-haul sister airline, AirAsia X Bhd (AAX) for the alleged sum of over RM400.0 mln or details relating to the same in response to a suit filed by the airport operator last month over airport taxes.

• The above is due to the two airlines availing themselves for dispute resolution within the Malaysian Aviation Commission Act 2015 (Mavcom Act) to claim for the amount. (The Edge Daily)  

Source: Mplus Research - 28 Jan 2019