Likely Dull End To The Week

• The key index closed 0.3% higher after a volatile session, tracking the performance of other regional peers. Among the lower liners, only the FBM Fledging (+0.1%) managed to realise gains as both the FBM Small Cap (-0.5%) and the FBM ACE (-0.01%) closed in the red. There were mixed results in the broader market with 7 out of 12 subsectors closing in the green.

• Market breadth turned negative as 500 loser stocks traded against 301 positive stocks, while 435 stocks traded unchanged. Traded volume dipped 14.2% to 2.6 bln as investors turn cautious.

• On the key Index, notable gainers include Nestle (+20.0 sen) Petronas Metal (+20.0 sen), Kuala Lumpur Kepong (+18.0 sen), Petronas Chemical (+15.0 sen) and Hong Leong Financial Group (+14.0 sen). On the broader market, stocks with most gains included Fraser & Neave (+30.0 sen), Global Berhad (+28.0 sen), United Plantation (+24.0 sen), Kuchai Development (+16.0 sen) and AEON Credit (+12.0 sen).

• Among stocks that underperformed on the broader market were BAT (-48.0 sen), Telekom Malaysia (-35.0 sen), Atlan Holdings (-17.0 sen), Manulife (- 16.0 sen) and Carlsberg (-14.0 sen). Notable underperformers on the key index yesterday were Petronas Dagangan (-8.0 sen), Hartalega (-6.0 sen), Petronas Gas (-6.0 sen), Axiata (- 3.0 sen) and Genting Malaysia (-3.0 sen).

• Most major Asia Pacific stock markets closed higher on Thursday as semiconductor stocks in Japan and South Korea rose. The Nikkei rose 0.2%, while the Shanghai composite jumped 0.5%. The Hang Seng Index also saw gains in the previous session, closing 0.3% in the green. The positive sentiment also spilled into the ASEAN region as all bourses closed positively.

• Wall Street were sent careening as both the Dow and the S&P 500 closed 0.5% lower after earnings reports from highprofile companies like Ford and Tesla came up short of expectations. The Nasdaq was the worst performer after losing 1.0% on Thursday.

• German stocks were mostly in the red, as the DAX (-1.4%) took a beating following weakening business sentiment and uncertainties in the European Central Bank’s monetary policies after the latter failed to trim interest rates as widely expected. The CAC (-0.5%) and the FTSE (-0.2%) also declined, albeit losses on the U.K. main bourse were capped by gains in pharma giants like AstraZeneca after it raised its 2019 sales target.

THE DAY AHEAD

• Despite the key index firming up at the end of the day, the underlying market environment is still morbid as market following remains largely indifferent with only the selective institutional support providing the lift. Hence, we continue to think that there the broad market environment is still one of caution as investor interest remains on the thin side.

• With the wariness on Bursa Malaysia persisting, we think that the downside risk will also continue to be a feature over the near term, potentially nullifying yesterday’s gains to end the week on a dour note. The weaker performance on Wall Street and Europe overnight will also place a lid on the FBM KLCI’s performance over the near term. The meek environment could also send the key index back to the 1,650 support level and if it gives way, the FBM KLCI could retrace back to the 1,644 level. The resistances, meanwhile, are at 1,660 and 1,667 respectively.

• In the broader market, the FBM Small Cap index is looking to consolidate after it failed to top its year high level that was formed in April. Its overbought technical indicators also suggest that it will continue to adjust from overbought. We also think the downside bias could also extend to the broader market.

COMPANY BRIEF

• Genting Malaysia Bhd has fully resolved its dispute with Twentieth Century Fox and The Walt Disney Company over the development of an outdoor theme park in Genting Highlands, Pahang. The parties have entered into a restated memorandum of agreement granting Genting a license to use certain Fox intellectual properties. (The Star Online)

• Syarikat Takaful Malaysia Keluarga Bhd’s 2Q2019 net profit jumped 61.0% Y.o.Y to RM80.9 mln on higher net wakalah fee income. Revenue for the quarter rose 24.2% Y.o.Y to RM673.0 mln.

• For 1H2019, cumulative net profit climbed 47.3% Y.o.Y to RM177.4 mln. Revenue for the period added 23.5% Y.o.Y to RM1.59 bln. (The Star Online)

• Vitrox Corp Bhd’s 2Q2019 net profit fell 12.1% Y.o.Y to RM24.4 mln, due to the drop in demand for its chip testing machines. Revenue for the quarter declined 15.2% Y.o.Y to RM89.0 mln.

• For 1H2019, cumulative net profit was flat at RM48.0 mln. Revenue for the period, however, decreased 2.4% Y.o.Y to RM178.0 mln. (The Star Online)

• Caring Pharmacy Group Bhd’s 4QFY19 net profit slipped 10.9% Y.o.Y to RM5.2 mln on higher operating expenese arising from the opening of new outlets. Revenue for the quarter, however, rose 18.4% Y.o.Y to RM153.0 mln.

• For FY19, cumulative net profit increased 12.0% Y.o.Y to RM20.7 mln. Revenue for the year added 17.9% Y.o.Y to RM599.2 mln. A final single tier tax-exempt dividend of 6.0 sen per share was announced. (The Edge Daily)

• British American Tobacco (Malaysia) Bhd’s 2Q2019 net profit fell 32.0% Y.o.Y to RM77.2 mln, reflecting an overall decline in legal volumes as well as higher company expenses. Revenue for the quarter contracted 5.6% Y.o.Y to RM640.8 mln.

• For 1H2019, cumulative net profit fell 21.2% Y.o.Y to RM165.2 mln. Revenue for the period fell 4.5% Y.o.Y to RM1.26 bln. A second interim dividend of 26.0 sen per share was declared. (The Edge Daily)

• AirAsia Group Bhd has proposed a joint venture in Thailand for its indirect whollyowned subsidiary, Teleport Everywhere Pte Ltd to provide logistics services to its associate companies, Thai AirAsia Co Ltd and Thai AirAsia X Co Ltd. Teleport plans to establish the joint venture with Triple i to integrate cargo capacity in Thailand for AirAsia Thailand and AirAsia X Thailand by 1st January 2020. (The Edge Daily)

• CapitaLand Malaysia Mall Trust’s 2Q2019 net property income (NPI) fell 5.7% Y.o.Y to RM50.3 mln, on lower occupancy at The Mines and Sungei Wang properties. Gross rental income declined 3.5% Y.o.Y to RM66.1 mln.

• For 1H2019, cumulative NPI decreased 6.6% Y.o.Y to RM103.1 mln. Gross rental income for the period fell 2.2% Y.o.Y to RM134.8 mln. A distribution per unit (DPU) of 3.2 sen, payable on 3rd September 2019, was declared. (The Edge Daily)

Source: Mplus Research - 26 Jul 2019