Still Toppish

• The FBM KLCI (-0.4%) trended lower for the third straight session after lingering the in the negative territory in tandem with the weakness across its regional peers. The lower liners also closed mostly lower as the FBM Fledgling and FBM ACE declined 0.02% and 0.6% respectively. The broader market, meanwhile, finished on a mixed note.

• Market breadth turned positive as advancers nudged decliners on a ratio of 397-to-379 stocks. Traded volumes rose 16.2% to 2.04 bln shares on rotational play amongst the lower liners.

• More than half of the key index components fell, dragged down by Tenaga (-22.0 sen), followed by Genting (-14.0 sen), Hap Seng Consolidated (- 13.0 sen), MISC (-7.0 sen) and Public Bank (-6.0 sen). Among the biggest decliners on the broader market were BAT (-20.0 sen), Heineken (-14.0 sen), Apollo Foods (-8.0 sen), Bursa Malaysia (-8.0 sen) and Oriental Holdings (-8.0 sen).

• On the flipside, notable gainers on the broader market include Lafarge (+56.0 sen), LPI Capital (+52.0 sen), Imaspro Corporation (+28.0 sen) and Hume Industries (+19.0 sen). Greatech Technology added 13.0 sen on its debut in Bursa Malaysia. Meanwhile, Nestle (+RM1.00), Petronas Dagangan (+28.0 sen), Sime Darby Plantation (+9.0 sen), Hong Leong Financial Group (+2.0 sen) and CIMB (+2.0 sen) advanced on the local bourse.

• Asian benchmark indices closed mostly lower yesterday as the Nikkei declined 0.5%, taking cue from the weakness on Wall Street overnight. The Hang Seng Index fell 0.2%, weighed down by the ongoing social unrest due to the extradition bill protest, but the Shanghai Composite (+0.1%) managed to shrug off its earlier losses. ASEAN stockmarkets, meanwhile, closed mostly lower on Thursday.

• Wall Street rebounded overnight as the Dow rose 0.4%, boosted by Walt Disney, coupled with gains in energy shares after crude oil prices staged a sharp recovery. Likewise, the S&P 500 rose 0.4% with only the healthcare sector (-0.1%) underperforming, while the Nasdaq finished 0.6% higher.

• Earlier, European benchmark indices – the FTSE (+0.01%), CAC (+0.01%) and DAX (+0.34) all closed in the positive territory after enduring a volatile trading session. Gains were driven by telecommunication companies on Germany’s 5G auction, coupled jump in energy shares stemming from the higher crude oil prices.

THE DAY AHEAD

• Yesterday’s market retreat was not surprising given the already overbought conditions that were a precursor to an impending pullback, coming on the back of the FBM KLCI’s over 4.0% gain in the past few weeks. At the same time, there were also fewer buying impetuses from domestic sources after the conclusion of the most recent corporate results reporting season.

• Going into the final trading day of the week, conditions remain toppish on the key index that may continue to dent market interest. At the same time, rising geopolitical concerns in the Middle East and the unresolved trade dispute between the U.S. and China will leave sentiments on the wary side.

• Therefore, we think the key index is likely to continue drifting over the near term with the downside bias still prevalent, possibly sending the FBM KLCI back to the 1,640 level. Further below, the support is at the 1,636 level, while the resistances are at the 1,650 and 1,657 levels.

• Elsewhere, conditions should remain mixed with fewer positive catalysts and the potential profit taking activities ahead of the weekend could dictate the lower liners and broader market shares’ direction.

COMPANY BRIEF

• Comintel Corp Bhd’s (Comcorp) external auditor Messrs RSM Malaysia has made a qualified opinion that the group has several uncertainties which may affect its ability to continue as a going concern.

• According to the auditors, Comcorp’s ability to continue as going concern is dependent on the timely and successful implementation of its regularisation plan — which it is submitting to Bursa Malaysia on 10th July as well as its ability to achieve sustainable and viable operations with adequate cash flows generated from its operating activities.

• Daya Materials Bhd's 58.5%-owned subsidiary, Daya Proffscorp Sdn Bhd is disposing 22 mobile cranes and two forklifts worth RM11.5 mln to Key Prospect Sdn Bhd. Subsequently, an SPA will be signed within 15 days from 13th June 2019 to effect the agreement. (The Edge Daily)

• Hap Seng Consolidated Bhd’s property development unit is selling a 20-acre vacant plot of land in Tawau for RM27.1 mln to Goldencoin Ventures Sdn Bhd – a unit of Hong Kong-based Lei Shing Hong Ltd. Hap Seng Consolidated is expected to make a net gain of RM20.3 mln.

• The disposal consideration will be used to repay borrowings and/or fund working capital upon the completion of the sale. If completed in 2019, earnings per share will increase 0.81 sen and net assets per share will improve by 1.0 sen, while gearing will decrease to 0.53x, from 0.54x. (The Edge Daily)

• TH Heavy Engineering Bhd (THHE) won a US$11.4 mln (RM47.4 mln) contract from Afcons Infrastructure Ltd of India for an offshore process platform project (CPP & LQUP) for the development of KG-DWN- 98/2 NEP Block offshore India.

• Contract works includes the fabrication of piles for offshore jackets, with the scheduled to commence in August and be completed on 31st December 2020. (The Edge Daily)

• Berjaya Food Bhd (BFood) registered a 1QFY19 net profit of RM4.1 mln, from RM837,000 last year, mainly due to higher Starbucks revenue and lower finance costs. Revenue, meanwhile, rose to RM169.9 mln vs. RM160.0 mln a year ago. The group, which changed its financial year end to 30th June, has also declared a fourth interim dividend of one sen, payable on 26th July this year.

• For the 12-month period from May 2018 to April 2019, the group registered a net profit of RM26.3 mln, from RM1.2 mln in the previous corresponding financial period. (The Edge Daily)

• Media Prima Bhd is appointing Datuk Syed Hussain Syed Junid as its Chairman from 1st July 2019 replacing Datuk Mohd Nasir Ahmad, whose tenure ends on 30th June 2019. Datuk Syed Hussain will also be appointed to the group’s board as an Independent Non-Executive director and group Chairman-designate effective immediately. (The Edge Daily)

• Telekom Malaysia Bhd (TM) has appointed Datuk Noor Kamarul Anuar Nuruddin as its Managing Director and Chief Executive Officer (CEO) effective 13th June, 2019. He will replace acting CEO Imri Mokhtar, who will be returning to his role as TM’s Chief Operating Officer. Previously, Datuk Noor was also part of Celcom Axiata Bhd's senior management team from 2003 until March 2018. (The Star Online)

• YTL Corp Bhd’s 98.0%-owned subsidiary YTL Cement, has upped its shareholding in Lafarge Malaysia Bhd to 77.0% following the conclusion of the mandatory general offer (MGO). The MG resulted in YTL Cement acquiring an additional 220.7 mln shares (or 26.0%) of Lafarge. YTL Cement previously said that it will maintain Lafarge Malaysia’s listing. (The Star Online)

Source: Mplus Research - 14 Jun 2019