Sideway Trend Looks To Continue

• The FBM KLCI kicked off the week on a more positive note, lifted by selective buying among the banking heavyweights. All the lower liners continued to climb, alongside the majority of the broader market, with the exception of the Property, Plantation, Healthcare, and Transportation & Logistics sub-sectors.

• Market breadth remained bullish as advancers outpaced the decliners on a ratio of 489-to-344 stocks. Traded volumes also grew 3.7% to 2.58 bln shares on renewed buying-interest in the lower liners.

• Axiata (+10.0 sen) led the heavyweight gainers, boosted by mild bargain-hunting activities as investors shrugged off its recent tax ordeal which resulted in a significant tax bill of about RM2.16 bln. Other winners were Public Bank (+16.0 sen), CIMB Bank (+9.0 sen), Petronas Chemicals (+9.0 sen) and Malaysia Airports (+3.0 sen). On the same note, lower liners constituents like Aeon Credit (+30.0 sen), KESM Industries (+26.0 sen), Ajinomoto (+24.0 sen), BAT (+20.0 sen) and Heineken Malaysia (+20.0 sen) gained ground yesterday.

• Key decliners were United Plantations (- 56.0 sen), Carlsberg (-42.0 sen), Batu Kawan (-20.0 sen), Time Dotcom (-13.0 sen) and Quality Concrete (-12.0 sen). Underperforming blue chips, meanwhile, include Nestle (-30.0 sen), Kuala Lumpur Kepong (-12.0 sen), Press Metal (-8.0 sen), Hong Leong Bank (-6.0 sen) and MISC (-6.0 sen).

• Most Asian equities pushed higher, mainly led by the positive sentiment in Chinese stockmarkets as trading activities resume after the week-long Lunar New Year break. The Hang Seng Index and the Shanghai Composite rallied 0.7% and 1.4% respectively, while Japanese stockmarkets closed for a public holiday. Most ASEAN bourses closed slightly positive on Monday.

• Tech-heavy benchmark indices eked-out gains as the S&P 500 (+0.1%) and Nasdaq (+0.1%) drifted higher, ahead of the high-level trade negotiations between Washington and Beijing. The Dow (-0.2%), however, continued on its downward trajectory amid an eight-day Dollar rally.

• Earlier, European equities rebounded on renewed optimism of a U.S. - China trade settlement and gains in notable banks. The FTSE rose 0.8% to close slightly above the 7,100.0 psychological level. Similarly, the CAC (+1.1%) and DAX (+1.2%) also gained after lingering in the positive territory for the entire session.

The Day Ahead

• While the key index managed to eke-out some gains after a largely indifferent trading session yesterday, the mixed market environment looks to dominate and the sideway trend is likely to persist. As it is, there are still few noteworthy leads to entice significant buying, leaving most market players on a cautionary tone, albeit bouts of market optimism is appearing.

• Therefore, we see index linked stocks continuing to drift over the near term, lingering within the 1680 and 1,693 levels for now. Most market players are awaiting for more corporate results to be announced that will also provide a gauge on the earnings prospects for 2019 in a more challenging economic environment.

• The lower liners and broader market shares, however, are still on a purple patch that looks to extend amid the continuing rotational play on some of the beaten down stocks in the FBM Small Cap, Fledgling and ACE market stocks.

COMPANY BRIEF

• Hock Seng Lee Bhd has won an open tender for a contract with Sarawak Energy Bhd for the Balingian coal-fired power plant project in Mukah, Sarawak, worth RM54.3 mln. The scope of works include pilling, earth works, infrastructure works, building works for staff accommodation and related amenities as well as the associated mechanical and electrical works.

• The contract will run for 19 months with physical construction work expected to commence in February 2019. (The Star Online)

• Kelington Group Bhd has received a S$31.0 mln (RM93.0 mln) contract in Singapore to provide turnkey construction and engineering services for one of the world’s largest gas companies. The contract entails the design and building of a ultra-high purity (UHP) electronics special gases plant. The contract is expected to be completed by end of 2019. (The Star Online)

• Eastern & Oriental Bhd (E&O) aims to raise as much as RM550.3 mln via a private placement and renounceable rights issue to fund its property development projects, which consists of Phase 2 of its Seri Tanjung Pinang reclamation and property development project as well as the upcoming residential property projects in Kuala Lumpur such as The Conlay and The Peak.

• The proposed private placement will involve the issuance of up to 10.0% of E&O’s issued share capital, which currently stands at 1.31 bln shares. Meanwhile, the renounceable rights issue will include free detachable warrants on an issue price and basis to be determined later. (The Edge Daily)

• Scientex Bhd is eyeing to launch RM1.00 bln worth of affordable properties during the current financial year (FY19), similar to last year's target. Its unbilled sales currently stand at RM500.0 mln as at 1QFY19.

• Separately, Scientex has obtained shareholders’ approval at its Extraordinary General Meeting for the acquisition of a 42.4% controlling stake in Daibochi Bhd for RM221.1 mln from certain shareholders of Daibochi.

• The purchase of 139.1 mln shares would be satisfied by the issuance of 25.1 mln Scientex shares, with a share exchange ratio of one new ordinary Scientex sharefor-every 5.535 Daibochi shares held. (The Edge Daily)

• UOA Development have been served with notices of additional assessment for additional income tax and penalties totalling RM39.6 mln. The notices were served for the year of assessment 2013 by the Inland Revenue Board. It is appealing the notices of additional assessment. (The Edge Daily)

• Globaltec Formation Bhd’s Australialisted unit, NuEnergy Gas Ltd has signed a gross split production sharing contract (PSC) for its Muralim PSC with the Indonesian Ministry of Energy and Mineral Resources. The gross split PSC replaces Indonesia’s previous cost recovery scheme for oil and gas contractors in favour of a higher contract share of revenues. (The Edge Daily)

• Berjaya Sports Toto Bhd (BToto) has inked an agreement to set up a jointventure company to explore business opportunities as well as to undertake projects in Sri Lanka. Its unit, FEAB Equities Sdn Bhd, entered into the shareholders agreement with PP Cylabs (M) Sdn Bhd (PPC) today on a 50:50 joint venture basis to set up the JV company. (The Edge Daily)

• Malaysia Airports Holdings Bhd (MAHB) has recorded a 3.1% Y.o.Y growth in total passenger movements to 11.1 mln in January 2019. This boosted passenger movements over a 12-month period by 3.7% Y.o.Y to a record high of 133.5 mln. (The Edge Daily)

• Tiger Synergy Bhd has entered into a binding term sheet for the proposed acquisition of the entire equity interest in MQ Holdings Limited for not less than HK$15.0 mln (RM7.8 mln). The sale consideration shall be satisfied with the combination of cash and issuance of new shares in the issued and paid-up capital of Tiger Synergy to the Quest Investments Limited, which is a whollyowned subsidiary of MQ Holdings. (The Edge Daily)  

Source: Mplus Research - 12 Feb 2019