May See Delayed Recovery

• The Malaysian key-index lingered in the negative territory for the entire intraday session, weighed down telcoheavyweights like Axiata and Digi, following the fallout in the AxiataTelenor merger. The majority of the lower liners tracked the FBM KLCI, except for the FBM Ace (+0.5%). The broader market, meanwhile, finished mostly higher – led by the Energy (+1.6%) sector.

• Market breadth turned negative with 458 advancers vs. 345 decliners, while 356 stocks flatlined. Traded volumes, however, rebounded strongly by 31.6% to 2.19 bln shares as investors return from the long holiday weekend.

• Axiata (-77.0 sen) and Digi (-29.0 sen) gapped down on Tuesday, following the termination of the proposed merger between Axiata and Telenor, alongside other key-index losers like Petronas Dagangan (-24.0 sen), Hap Seng Consolidated (-5.0 sen) and Public Bank (-4.0 sen). Broader market bottom list, meanwhile, include BAT (-40.0 sen) affected by the increasing illicit cigarette trade, followed by Batu Kawan (-32.0 sen), Dutch Lady (-30.0 sen), Carlsberg (-28.0 sen) and Panasonic Manufacturing (-28.0 sen).

• On the flipside, Genting Plantations (+24.0 sen), MBM Resources (+24.0 sen), Heineken Manufacturing (+22.0 sen), Malaysian Pacific Industries (+18.0 sen) and Aeon Credit (+16.0 sen) closed higher. Meanwhile, outperforming heavyweights included Nestle (+20.0 sen), Petronas Gas (+20.0 sen), Tenaga Nasional (+18.0 sen), Hartalega (+15.0 sen) and Maybank (+11.0 sen).

• Notable regional stockmarkets closed slightly lower on Tuesday, albeit cushioned by stronger energy prices after Saudi Arabia promised to cut production. Weaker manufacturing profitability in China kept the Shanghai Composite swimming in the red before ending 0.1% lower, while the Hang Seng Index ended mostly unchanged. In contrast, the Nikkei (+0.4%) finished the session higher, while ASEAN markets ended mixed.

• Notable U.S. indices finished mostly unchanged on Tuesday despite making a last minute comeback, supported by gains in energy and materials-related counters. Even so, the Dow remained on its upward trajectory; booking its fifth consecutive day of win. However, both the S&P 500 and the Nasdaq moved less than 0.1%.

• Key benchmark European stockmarkets eked-out gains ahead of the ECB’s meeting tomorrow on expectations of more stimulus package. The FTSE (+0.4%), the CAC (+0.1%) and the DAX (+0.4%) all closed higher at Tuesday’s closing bell.

The Day Ahead

• Not only did the follow through uptick failed to materialise, the weakness on Axiata and Digi also pushed the key index back below the 1,600 level to leave market conditions in an insipid mood again.

• However, we think that the reaction to the failed Axiata and Telenor Asia’s assets should have been done and dusted and we think that the key index could mount a rebound over the near term - a delayed one, as stocks on Bursa Malaysia will once again play catch-up to the recent gains in most global indices.

• As it is, sentiments on global indices are calmer as the U.S-China trade war is showing some signs of ebbing that is also giving some leeway for equities to head higher. We think that the FBM KLCI could recapture the 1,600 level, but further gains could remain elusive for now due to prevailing wariness over the market’s direction. The other resistance is at the 1,610 level, while the supports are at the 1,590 and 1,580 levels respectively.

• The lower liners and broader market shares are also continuing to dither as there are still few noteworthy leads for the retail players to follow. As a consequence, we think that the mostly sideway trend is likely to persist as the market following also continues to be mostly indifferent.

COMPANY BRIEF

• Eversendai Corporation Bhd has secured seven contracts for structural steel works worth RM288.0 mln across various markets. It has secured three new jobs comprising commercial building towers in Hyerabad, and an airport main terminal building and ITC boiler structure in Chennai.

• In the Middle East, it is undertaking structural steel works for the Saudi Pavilion for the Dubai Expo 2020 and a suspension bridge project in the King Abdullah financial district in Saudi Arabia. Among the latest batch of contract wins, it will also engineer and fabricate jacket and piles in the Netherlands as well as undertake a data centre project in Singapore. (The Star Online)

• Kejuruteraan Asastera Bhd (KAB) has bagged a RM146.7 mln energy performance contract from Energy Optimization (Thailand) Co Ltd (EOT) to provide chiller optimisation system for Robinson Department Stores and Robinson Lifestyle Prachinburi.

• Under the agreement, KAB will be entitled to a share of 70% on the payments of revenue received by EOT. However, KAB must ensure that savings achievable from the installation of chiller optimisation system will not be less than 10.0%, failing which it will indemnify EOT against all costs. (The Edge Daily)

• Aviation regulator, Malaysian Aviation Commission (Mavcom) slapped low cost carrier AirAsia Group Bhd and its associate AirAsia X Bhd (AAX), of RM200,000 each for charging credit and debit card and online banking processing fees separate from their base fares between 1st June 2019 and 9th August 2019.

• Malaysia Airports Holdings Bhd (MAHB) was also not spared, as its subsidiary Malaysia Airports (Sepang) Sdn Bhd (MA Sepang) was slapped with a RM1.2 mln fine for not complying with the Airports Quality of Service (QoS) Framework at Kuala Lumpur International Airport (KLIA) and klia2 in Sepang.

• Separately, MAHB has reported that a total of 9.2 mln passengers travelled through the airports in Malaysia in August 2019, up from 8.5 mln recorded in the previous corresponding month. The Kuala Lumpur International Airport (KLIA) handled 5.4 mln passengers in August 2019, a growth of 6.7% Y.o.Y. (The Edge Daily)

• Metronic Global Bhd has won an audio visual and information technology system subcontract worth RM18.7 mln for Permodalan Nasional Bhd's (PNB) 118-storey Warisan Merdeka skyscraper project. The subcontract was awarded by Samsung C&T Corporation UEM Construction JV Sdn Bhd. (The Edge Daily)
• Carimin Petroleum Bhd has bagged a contract to undertake hook-up, commissioning and topside major maintenance services for Petronas Carigali Sdn Bhd at the Angsi oil and gas field offshore Peninsular Malaysia. It, however, did not disclose the value of the contract. The contract will be for 15 months with completion on 15th November 2020. (The Edge Daily)

• Pintaras Jaya Bhd has bagged three piling contracts, worth a combined RM80.0 mln. This brings the total new contracts secured to 13, collectively worth RM327.0 mln. The contracts were secured via its indirect wholly-owned subsidiary in Singapore, Pintary Foundations Pte Ltd are to commence in October 2019, with contract periods ranging from four months to seven months. (The Edge Daily)

• Tan Chong Motor Holdings Bhd has reported that the joint venture (JV) agreement between its wholly-owned subsidiary ETCM (V) Pte Ltd (ETCMV) and Nissan Motor Co Ltd (NML) to import and distribute Nissan vehicles and parts in Vietnam, has been extended to 30th September 2020. The JV agreement dated 22nd September 2010 was supposed to end on 10th September 2019. (The Edge Daily)  

Source: Mplus Research - 11 Sept 2019