Market Awaits For Budget 2020

• Malaysian stocks went nowhere and were partly supported by mild quarterly window dressing activities that helped it to buck the region’s insipid market conditions. Still, the overall market conditions stayed broadly subdued with most sub-indices closing in the red, including the FBM small Cap, FBM Fledgling and FBM ACE indices. The construction sector was an outperformer, gaining 1.0% for the day.

• The lack of market interest is manifested in the thin traded volumes of 1.86 bln shares, unchanged from last Friday’s total. Market breadth was also negative with the losers thumping the winners on a ratio of 298-to-556 stocks as most market players continue to stay on the sidelines.

• Key index losers include Top Glove (- 12.0 sen) as its share price weakness prevails after it reported lower earnings, followed by Petronas Gas (-10.0 sen) and Maybank (-9.0 sen). In the broader market, Concrete Engineering Products’ share price plunged 18.0 sen even as there were no corporate announcement, while KESM slipped 17.0 sen, followed by PRG (-12.0 sen).

• The main movers for the day, meanwhile, include consumer bellwethers like Nestle (+40.0 sen), Carlsberg (+28.0 sen) and AEON Credit – the latter making a recovery after losing ground last week on lower quarterly earnings. The main winners on the FBM KLCI were Maxis (+16.0 sen), Hong Leong Financial Group (+16.0 sen) and Hong Leong Bank (+10.0 sen)

• There was no reprieve for Asian indices as they continue to lose ground, spooked by President Trump’s threat to delist China companies from U.S equity markets. This cause China stocks to retreat with the Shanghai Composite losing near 1.0% ahead of the long National Day holiday. The Nikkei also shed 0.6% as it implements higher consumption tax from today. Similarly, ASEAN indices lost ground, but the Hang Seng rose despite its escalating political crisis.

• U.S. stockmarkets advanced on the final trading day of 3Q2019 as the Dow gained 0.4% to mark its third winning quarterly streak (+1.2% Q.o.Q) after U.S. President Donald Trump refuted rumours that the U.S. administration is stopping Chinese companies to list on the U.S. stock exchanges. On the broader market, the S&P 500 added 0.5%, while the Nasdaq (+0.8%) finished a hair below the 8,000 psychological level.

• Elsewhere, major European indices finished mostly higher, boosted by solid economic data as the CAC and DAX added 0.7% and 0.4% respectively after Eurozone’s unemployment rate fell to 7.4% in August 2019 – the lowest level since May 2008. The FTSE (-0.2%), however, underperformed after British Prime Minister Boris Johnson reported that he would not step down even if he fails to secure a deal to leave the European Union.

The Day Ahead

• The broad market environment on Bursa Malaysia remains one of guardedness as most market players are unsure of its next course which is hampered by the lack of developments in the Malaysian equity market. As a consequence, the indifferent trend looks to persist for now as the market interest also continues to stay on the low side.

• We think that the tentativeness on the Malaysian market may persist over the next two weeks as market players await for the upcoming Budget to assess the country’s economic outlook and the corresponding effects on corporate earnings prospects going forward. In the interim, there could be some speculative interest on selective stocks, but overall market conditions could stay subdued as we see few giveaways in the upcoming Budget due to the government tight fiscal position.

• On the FBM KLCI, we expect it to continue lingering within the 1,580 and 1,590 levels over the near term. Apart from the above levels, the other support and resistance levels are at 1,572 and 1,600 respectively.

• The lack of fresh leads are also hampering the performance of the lower liners and broader market shares which we also think will persist as many retail players are staying on the sidelines. This could continue to see most of the stocks listed above remaining downtrodden for longer.

COMPANY BRIEF

• Handal Energy Bhd has received a contract for the provision of offshore crane operations and maintenance from Sarawak Shell Bhd and Sabah Shell Petroleum Co Ltd. The contract entailed the provision of operations, maintenance, repair services and manpower services for 29 offshore cranes off Sarawak and Sabah.
   
• There is no specific value to the contract as it is on call-out basis whereby work order will be awarded at the discretion of Sarawak Shell and Sabah Shell based on their activity, maintenance and repair schedule. The contract is for two years, starting 15th October 2019, with an option to extend for one year. (The Star Online)

• Media Prima Bhd has appointed Datuk Iskandar Mizal Mahmood as its Group Executive Director effective 1st October 2019. With over 30 years of corporate experience, he would assist the group in its transformation and turnaround initiatives. Datuk Iskandar Mizal currently serves on the boards of Theta Edge Bhd and Globetronics Technology Bhd.

• Separately, Media Prima has appointed Percetakan Nasional Malaysia Bhd’s Managing Director, Mohamad Abdullah as a Non-Independent Non-Executive Director. (Bernama)

• Sinotop Holdings Bhd has terminated its agreement with Executive Director and major shareholder, Datuk Justin Soo Sze Ching for the fabric manufacturer's planned acquisition of builder Asianmax Corp Sdn Bhd under a cash and share deal worth RM96.0 mln signed on 23rd April 2019. (The Edge Daily)

• CIMB Group Holdings Bhd’s unit, CIMB Bank Bhd is issuing a bond worth US$680.0 mln (RM2.85 bln) to fund projects related to the United Nations' sustainable development goals (SDGs).

• The bond — a five-year floating rate note priced at a spread of 78 basis points above the three-month US dollar London Interbank Offered Rate (Libor), will be issued on 9th October 2019 under CIMB Bank's existing US$5.00 bln Euro Medium Term Note Programme. (The Edge Daily)

• The High Court has decided in The Bank of Nova Scotia (Scotiabank)’s favour in its claim against London Biscuit Bhd for bank facilities of RM9.8 mln plus interest. The court allowed Scotiabank to claim the total sum of RM9.8 mln interest on the amount owing under the Bankers Acceptance facility of RM1.8 mln and interest on the amount owing under the Operating Credit Facility of RM8.0 mln. London Biscuit be filing for a stay and appealing the decision at the Court of Appeal. (The Edge Daily)

• AirAsia Group Bhd set to implement the new lowered passenger service charge (PSC) for passengers flying out to destinations beyond Asean from all other airports in Malaysia. This came after the Cabinet had agreed to cut the PSC from RM73 to RM50 for passengers flying out from klia2. (The Edge Daily)

• A-Rank Bhd's 4QFY19 net profit fell 24.0% Y.o.Y to RM3.3 mln, mainly on higher provision for income tax, due to the effect of certain expenses not deductible for tax purposes. Revenue for the period, however, grew marginally by 0.2% Y.o.Y to RM120.8 mln.

• For FY19, cumulative net profit declined 20.7% Y.o.Y to RM11.1 mln. Revenue for the year decreased 3.3% Y.o.Y to RM482.2 mln. (The Edge Daily)  

Source: Mplus Research - 1 Oct 2019