Quiet Day Ahead

• The FBM KLCI (-0.03%) extended its losses for the fourth straight session, dragged down by the eleventh hour selling pressure in selected banking heavyweights last Thursday. Consequently, the key index fell 1.0% W.o.W, snapping a streak of three consecutive weekly winnings. The lower liners –the FBM Small Cap (+0.3%), FBM Fledgling (+0.2%) and FBM ACE (+0.6%), however, all advanced, while the broader market closed mixed.

• Market breadth turned positive as advancers edged decliners on a ratio of 425-to-384 stocks, while 350 stocks traded unchanged. Traded volumes rose 23.4% to 2.37 bln shares on bargain hunting activities among the lower liners.

• Nestle (-30.0 sen) led the local bourse decliners list, followed by Tenaga (-24.0 sen), Hong Leong Bank (-14.0 sen), Hartalega (-11.0 sen) and Maybank (-6.0 sen). Among the biggest decliners on the broader market include United Plantations (-RM1.10), Ayer Holdings (- 27.0 sen), Batu Kawan (-20.0 sen), Petron Malaysia (-17.0 sen) and Hap Seng Plantations (-15.0 sen).

• In contrast, consumer products stocks like Dutch Lady (+76.0 sen), Heineken (+46.0 sen), BAT (+24.0 sen) and GCB (+17.0 sen), advanced on the broader market. Amanah Harta added 1.0 sen after reporting a strong set of quarterly earnings. Key winners on the FBM KLCI were KLK (+30.0 sen), Petronas Gas (+18.0 sen), Petronas Chemicals (+12.0 sen), Press Metal (+11.0 sen) and Digi (+10.0 sen) advanced.

• Asian benchmark indices cheered on the positive developments from the on-going trade talks between U.S. and China as the Nikkei added 0.1%. The Shanghai Composite (+1.3%) extended its gains to close above the 2,600 psychological level, but the Hang Seng Index slipped 0.04% after erasing all its intraday gains. ASEAN stockmarket, meanwhile, closed mixed last Friday.

• U.S. stockmarkets closed mostly higher last Friday as the Dow gained 0.3%, boosted by stronger-than-expected jobs data, coupled with positive signs from the on-going trade talks between U.S and China. On the broader market, the S&P 500 added 0.1%, but the Nasdaq slipped 0.3% after Amazon guided a weak sales forecast.

• Earlier, European indices – the FTSE (+0.7%), CAC (+0.5%) and DAX (+0.1%), all advanced in tandem with the mostly positive performance across the Asian region. Notable gainers were banking stocks like Deutsche Bank AG (+0.3%), Danske Bank AS (+5.2%) and Metro Bank PLC (+10.4%).

The Day Ahead

• The lack of leads, coupled with a shortened trading session ahead of the Lunar New Year, is likely to see stocks on Bursa Malaysia on a drifting mode. This is also set to see the FBM KLCI making little headway as there will be little fresh buying interest.

• Under the prevailing environment, we think the key index is set for a rangebound trend, hovering within the 1,680 and 1,690 levels over the near term as it continues to hold steady, a trend that persisted over the past two weeks. This will allow the FBM KLCI to trend close to the 1,700 points level, which we continue to view as a formidable level to clear as valuations are already fair, while earnings growth prospects remains lessthan-stellar in 2019.  The lower liners and broader market shares will also continue to hold its ground even as most retail players already on their Chinese New Year break that is likely to see thin market participation.

COMPANY BRIEF

• Malaysia Airport Holdings Bhd (MAHB) has confirmed that it has received a lawsuit from AirAsia Bhd and AirAsia X Bhd for a compensation of RM479.8 mln. Both airlines has asserted that the poor condition at klia2 as well as poor service from MAHB has led to the airline group losing customers and revenue.

• Separately, MAHB also announced that it does not have to provide more announcements concerning the RM61.0 mln suit filed against the group by Syarikat Pembinaan Anggerik Sdn Bhd, as the amendments to the case do not count as material amendments. (The Star Online)

• Vizione Holdings Bhd and Vertice Bhd‘s joint-venture (JV) company has been awarded an RM815.0 mln contract by Consortium Zenith to undertake construction works for Package 2 of the Penang Mega Infrastructure project. (The Edge Daily)

• AmanahRaya REIT’s CEO, Zalila Mohd Toon has left the group just after three months on the job. She took over on 1st November 2018 after the post was left vacant for eight months after Noorbaizura Hermeyney quit the REIT in March 2018. (The Edge Daily)

• Bina Darulaman Bhd has appointed Faris Najhan Hashim as the group’s Chief Executive Officer, while the group’s Chairman, Datuk Paduka Rasli Basir is retiring following the expiry of his contract on 31st December 2018. The group is currently managed by a threeman executive committee headed by Rasli after the passing of former Managing Director, Datuk Izham Yusoff on 12th March 2018. (The Edge Daily)

• RHB Banking Group has appointed Danny Quah Boon Leng as the country head and CEO of RHB Bank Singapore and Thoo Kim Seng as CEO of RHB Indochina Bank, Cambodia.

• Concurrently, its investment arm, RHB Investment Bank has announced a proposed streamlining of its equity and economic research operations and to shutdown RHB Research Institute Sdn Bhd to rationalise costs. Its equity and economic research operations will be moved into a division within the investment bank, while the fixed income and currencies research function will be absorbed by RHB Bank. (The Star Online)

• Prestariang Bhd has re-designated its Senior Independent Non-Executive Director Datuk Maznah Abdul Jalil as the group’s new Non-Executive Chairman, replacing Datuk Mohamed Yunus Ramli Abbas who has resigned. (The Edge Daily)

• Eduspec Holdings Bhd is undertaking a capital reduction to cancel RM107.3 mln of its paid-up share capital to offset accumulated losses. The group hopes to transform its financial position from an unaudited accumulated loss of RM54.4 mln as at 30th September 2018, to RM62.8 mln in retained earnings. (The Edge Daily)

• Berjaya Foods Bhd (BFood) has earmarked more than 50.0% of its RM100.0 mln capex in FY19 for the expansion of Starbucks. The group has indicated that Starbucks would continue to be the focus of its expansion as the outlets had delivered stable same-store sales growth of about 6%-8% per year. (The Edge Daily)

• Heitech Padu Bhd has secured a two-year contract worth RM14.4 mln from the Inland Revenue Board to renew the software licence for the board’s mainframe systems. The contract is effective 2nd February 2019. (The Edge Daily)

• CIMB Group Holdings Bhd has appointed Time dotCom Bhd‘s CEO Afzal Abdul Rahim as its Independent and NonExecutive Director, effective 1st February 2019. Afzal also sits on the boards of CIMB Bank Bhd. (The Edge Daily)

• Fraser & Neave Holdings Bhd (F&N) 1QFY19’s net profit gained 15.0% Y.o.Y to RM122.9 mln, from RM106.8 mln a year ago, mainly due to higher contribution from its operations in Malaysia and Thailand. Revenue, however, only inched higher by 0.8% Y.o.Y to RM1.01 bln, from RM1.0 bln a year earlier. (The Star Online)

• Dolomite Corp Bhd has appointed its Director Datuk Mangsor Ismail as its Independent and Non-Executive Chairman, replacing Tan Sri Mohd Jamil Johari who has stepped down. (The Edge Daily)

• Astro Malaysia Holdings Bhd is appointing Henry Tan as the Group CEO, following the resignation of Datuk Rohana Rozhan. (The Edge Daily)

• Crest Builder Holdings Bhd has secured a 27-month contract worth RM99.6 mln from Techvance Properties Management Sdn Bhd to construct a 26-storey hotel at Jalan P Ramlee, Kuala Lumpur. (The Star Online)  

Source: Mplus Research - 4 Feb 2019