Gains Building Up

• Buying support in selected telco and banking heavyweights boosted the FBM KLCI (+0.4%) higher as the key index closed at an intraday high of 1,678.24 level yesterday. The lower liners – the FBM Small Cap (+0.4%), FBM Fledgling (+1.0%) and FBM ACE (+0.6%) all extended their rebound, while the broader market ended mostly higher with the energy sector (+2.6%) anchoring the gains.

• Market breadth turned slightly negative as losers edged winners on a ratio of 459-to-421 stocks. Traded volumes, however, rose 32.2% to 4.00 bln shares.

• Axiata (+16.0 sen) led the FBM KLCI winners list, followed by banking giants like RHB Bank (+16.0 sen), Hong Leong Bank (+10.0 sen), CIMB (+8.0 sen) and Public Bank (+8.0 sen). Notable advancers on the broader market were Naim (+30.0 sen), Fraser & Neave (+28.0 sen), Chin Teck Plantations (+18.0 sen), Mentiga Corporation (+16.5 sen) and MBM Resources (+16.0 sen).

• KESM Industries sank 75.0 sen after reporting a weak set of quarterly earnings, while other significant decliners on the broader market were United Plantations (-38.0 sen), BAT (- 22.0 sen), Heineken (-20.0 sen) and Padini (-14.0 sen). On the local bourse, Petronas Dagangan (-40.0 sen), Nestle (-30.0 sen), Top Glove (-14.0 sen), Hartalega (-14.0 sen) and Hong Leong Financial Group (-2.0 sen) fell.

• Uncertainties over Brexit drove Asia’s benchmark indices lower as the Nikkei fell 1.0%. The Shanghai Composite slipped 1.1% after erasing all its intraday gains, while the Hang Seng Index closed 0.4% lower. ASEAN stockmarkets, meanwhile, closed mixed on Wednesday.

• U.S. stockmarkets advanced overnight as the Dow added 0.6% to recover all its previous session losses, boosted by the strong construction spending that increased 1.3% Y.o.Y in January 2019 – the largest expansion since April 2018. On the broader market, the S&P 500 and rose 0.7% to re-capture the 2,800 psychological level, while the Nasdaq finished 0.7% higher.

• Major European equities closed higher as the CAC and DAX added 0.7% and 0.4% respectively, taking cue from the positive sentiment in Wall Street. The FTSE (+0.1%) trended higher but gains were limited after the U.K. Parliament voted against Prime Minister Theresa May’s revised Brexit deal.

The Day Ahead

• The FBM KLCI performed better-thananticipated yesterday after renewed buying on selective index linked stocks saw the key index outperforming its regional peers. We expect the buying momentum on Bursa Malaysia stocks to extend towards end of the week, supported by the rising crude oil prices that close at their highest level in four months.

• Following the recent volatility since endFebruary 2019, bargain hunting activities will dominate on the FBM KLCI as the key index looks to steer its way above the oversold region. We see the FBM KLCI heading to the next hurdles around the 1,680 and 1,686 levels. On the downside, the supports are pegged at 1,670 and 1,664 levels respectively.

• The stabilising market sentiment over the past two days resulted in trading activities on Bursa Malaysia hitting ninemonth high yesterday. Consequently, we expect further rotational play as trading interest are centered towards the lower liners and the broader market.

COMPANY BRIEF

• Cahya Mata Sarawak Bhd’s (CMS’) indirectly-owned joint-venture (JV) unit has secured a contract worth RM466.7 mln, to construct a bridge crossing with a connecting road in Bintulu, Sarawak.

• The contract was awarded by the Sarawak government to PPES Works CCCC JV Sdn Bhd, a JV between PPES Works (Sarawak) Sdn Bhd and China Communications Construction Company (M) Sdn Bhd. CMS owns a 51.0% equity stake in PPES Works.

• The contract includes the proposed construction and completion of the proposed Bintulu-Jepak bridge crossing Kuala Kemena. The cable-stayed bridge will be 1,048 metres long, with a four-lane double carriageway. The works also involved a flyover with a four km-long connecting road. The four-year contract will run until 2nd April 2023. (The Star Online)

• Lafarge Malaysia Bhd’s Chief Financial Officer (CFO) Yeoh Khoon Cheng has been re-designated Chief Executive Officer (CEO) effective 13th March, 2019, while Edward James Coultrup will replace the former as CFO. (The Edge Daily)

• Destini Bhd has clinched a contract for the provision of tubular handling, conductor installation and slot recovery equipment and services by Sarawak Shell Bhd under the Pan Malaysia Petroleum Arrangement Contractors’ (PAC Operators Drilling programme). The total value of the contract will be dependent on work orders to be issued. (The Edge Daily)

• Bermaz Auto Bhd‘s (BAuto) 3QFY19 net profit doubled to RM81.0 mln – a record high, from RM40.5 mln in 3QFY18, on the back of higher revenue from domestic operations and higher share of profit contribution from its associate company Mazda Malaysia Sdn Bhd (MMSB), intandem with increased production volume for its new CX-5 model. Revenue for the quarter rose 39.1% Y.o.Y to RM778.1 mln, from RM559.4 mln.

• For 9MFY19, cumulative net profit jumped 147.6% Y.o.Y to RM205.2 mln. Revenue for the period gained 37.4% Y.o.Y to RM1.95 bln. A third interim dividend of 4.5 sen per share, payable on 29th April 2019 was declared. (The Star Online)

• Lambo Group Bhd, formerly known as Accsoft Technology Bhd, has proposed a bonus issue of up to 1.27 bln warrants (Warrants B) on the basis of one Warrant B-for-every two existing shares held at an entitlement date to be determined later. The group expects to raise gross proceeds of approximately RM203.3 mln, which will be used as working capital. (The Edge Daily)  

Source: Mplus Research - 14 Mar 2019