More Of The Same

• The FBM KLCI (-0.3%) started off the week on a dour note as the key index lingered in the negative territory for the entire trading session, mirroring the weakness across its regional peers yesterday. The lower liners also finished mostly lower as the FBM Small Cap and FBM ACE declined 0.4% and 0.02% respectively, while the consumer products & services (+0.2%) and utilities (+0.7%) sectors outperformed the negative broader market.

• Market breadth stayed negative as losers outnumbered advancers on a ratio of 502-to-333 stocks. Traded volumes fell 34.6% to 2.03 bln shares as activities normalised from the previous session’s institutional players’ portfolio re-balancing.

• Petronas-related companies like Petronas Gas (-20.0 sen), Petronas Chemicals (-15.0 sen) and Petronas Dagangan (-10.0 sen) fell, while other big board decliners were Malaysia Airport Holdings (-14.0 sen) and Sime Darby Plantations (-14.0 sen). Notable decliners on the broader market were BAT (-26.0 sen), Carlsberg (-18.0 sen), Lafarge (-18.0 sen), Scientex (-14.0 sen) and Heng Yuan (-12.0 sen).

• In contrast, Dutch Lady (+70.0 sen), Mega First Corporation (+25.0 sen), Shangri-La (+17.0 sen), Bintulu Port (+14.0 sen) and Chemical Company of Malaysia (+11.0 sen) advanced on the broader market. Chart-toppers on the key index were Nestle (+20.0 sen), Genting (+14.0 sen), DIGI (+5.0 sen), Genting Malaysia (+5.0 sen) and KLK (+4.0 sen).

• Asian benchmark indices closed mostly lower, dragged down by the unabated Sino-U.S. trade dispute as the Shanghai Composite and Hang Seng Index fell 1.0% and 0.8% respectively. Japanese equities were closed for the Autumnal Equinox public holiday. ASEAN stockmarkets, meanwhile, closed mostly lower yesterday.

• U.S. stockmarkets closed mixed overnight as the Dow gained 0.1% as investors remain cautious ahead of the U.S. and China trade talks. On the broader market, the S&P 500 (-0.01%) finished marginally lower after reversing all its intraday gains, while the Nasdaq ended 0.2% lower.

• Earlier, major European indices – the FTSE (-0.3%), CAC (-1.1%) and DAX (- 1.0%) all sank, dragged down by the sluggish German data that saw manufacturing data contracted to 41.4 – the worst reading since June 2009.

The Day Ahead

• With stocks finding it hard to get ahead, sentiments are turning increasingly frail and morbid with little inkling of upsides to reverse the indifferent trend as yet. As a result, we continue to think that the sideway-to-lower trend is set to continue over the near term.

• As it is, there are still few noteworthy leads for market players to follow and also the wariness over the state of the country’s economy, corporate earnings growth, rising geopolitical concerns and Malaysian government bond’s position in the World Bond Index is keeping most market players on the sidelines.

• At the same time, the FBM KLCI’s valuations remain fair and with the lack of compelling buys, we see the key index remaining on a drifting mode for longer. This also means that the 1,590 support is under threat again and if it is breached, the next support of 1,580 will come into play. The resistances remain at the 1,600 and 1,610 levels.

• The lower liners and broader market shares are also stuck sideways and this trend looks to prolong as fresh buying interest is also absent. As such, we see fresh bouts of profit taking activities to also temper their near term performances as well.

COMPANY BRIEF

• Minority shareholders of Lafarge Malaysia Bhd has voted down a resolution that would have made it mandatory for the group to undertake recurrent related party transactions (RPTs) worth an aggregate RM3.51 bln with its new controlling shareholder YTL Cement Bhd and its subsidiaries.

• The proposed new mandate would have allowed Lafarge to deal with YTL Cement on the sale and purchase of materials such as clinker, cement, pulverised fly ash, slag, drymix, aggregates and manufacturing sand. (The Edge Daily)

• Independent adviser, Mercury Securities Sdn Bhd has recommended Lien Hoe Corp Bhd‘s shareholders to reject Christine Holding Sdn Bhd's proposal to buy the remaining shares in Lien Hoe at 25.5 sen each, as the takeover offer is "not fair" and "not reasonable".

• The offer is not fair as the offer price of 25.5 sen is lower than the estimated value — which it derived at RM1.50 each — and historical market price of Lien Hoe shares. The offer is also not reasonable, as the group’s shares will remain tradable on the Main Market of Bursa Securities. (The Edge Daily)

• Karambunai Corp Bhd’s largest shareholder, Tan Sri Dr Chen Lip Keong who owns a 73.4% equity stake in Karambunai, intends to take the group private in a deal worth an estimated RM184.7 mln.

• The group has received an unconditional voluntary takeover offer from UOB Kay Hian Securities (M) Sdn Bhd on behalf of Chen to acquire the remaining 1.54 bln shares or 26.6% stake in the company not already held by him, at a cash price of 11.0 sen per share. He is also offering 3.0 sen apiece for the remaining 523.5 mln warrants, representing 51.6% of the outstanding warrants he does not hold.

• The gaming tycoon also has another indirect stake of 339.2 mln or 5.9% in Karambunai held via FACB Industries Incorporated Bhd (FACBII), by virtue of him being a major shareholder of FACBII, who is the person acting in concert (PAC) with him in the offer. (The Edge Daily)

• UEM Sunrise Bhd has clarified that the group has not made nor received any corporate proposal from any party for its stake. This comes after the New Straits Times newspaper reported that the group may acquire smaller rival Eco World Development Group Bhd in a share swap deal. (The Edge Daily)

• Property developer Bertam Alliance Bhd is seeking the assistance of a white knight to help lift it from the Practice Note 17 (PN17) status. The loss-making company has inked a Memorandum of Understanding (MoU) with Chinese national, Liu Sheng Hui to facilitate a regularisation plan which would involve a proposed private placement.

• The plan would also include the proposed development of parcels of land owned by Bertam, specifically the 1.1 ha Taman Luyang development in Kota Kinabalu, Sabah and the 1.71 ha of leasehold land in Kepayan, Penampang, Sabah. Liu is also an independent and nonexecutive director of NWP Holdings Bhd. (The Edge Daily)

• Pestech International Bhd has entered into a Memorandum of Understanding (MoU) with TASCO Cu Chi Environmental Ltd (TCC) to explore the possibility of participating in waste-to-energy (WTE) development projects in Cu Chi, Vietnam. The MoU will pave the way for Pestech to acquire a 40.0% stake in TCC for no more than US$3.0mln. Meanwhile, the remaining interest in TCC will be held by WeSaigon Co Ltd.

• Both Pestech and TCC are looking to implement a two mln-watt alternating current (2MW AC) photovoltaic solar plant at the project site, to establish a hybrid system for more effective and efficient energy deployment. (The Edge Daily)  

Source: Mplus Research - 24 Sept 2019