Still Sideways

• The FBM KLCI (-0.3%) trended lower, dragged down by the complications over the Brexit deadlock, coupled with the weakness on Wall Street overnight. The lower liners – the FBM Small Cap (+0.1%), FBM Fledgling (+0.1%) and FBM ACE (+1.0%) rose, however, amid rotational plays. The broader market, meanwhile, closed mixed with the Energy sector (+3.1%) outperformed its’ peers.

• Market breadth remained negative as decliners overthrown advancers on a ratio of 442-to-363 stocks. Traded volumes fell 20.6% to 2.61 bln shares amid the increasingly negative market environment.

• More than two-thirds of the key index components fell, dragged down by Hong Leong Financial Group (-56.0 sen), Malaysia Airport Holdings (-20.0 sen), Petronas Gas (-16.0 sen), Sime Darby Plantations (-7.0 sen), Tenaga (-12.0 sen) and Nestle (-10.0 sen). Significant decliners on the broader market include Aeon Credit (-34.0 sen), Carlsberg (-26.0 sen), Malaysia Airport Holdings (-20.0 sen), Ayer Holdings (-20.0 sen) and KESM Industries (-20.0 sen).

• In contrast, key winners on the broader market were MPI (+52.0 sen), Dutch Lady (+22.0 sen), Petra Energy (+18.0 sen), Heineken (+16.0 sen) and United Plantations (+14.0 sen). Revenue added 4.0 sen after unveiling their plan for a two-for-three bonus issue. There were only five advancers on the local bourse – MISC (+5.0 sen), Sime Darby Plantations (+5.0 sen), Top Glove (+4.0 sen), DIGI (+2.0 sen) and Hap Seng Consolidated (+1.0 sen).

• Asian benchmark indices finished on a mixed note as the Nikkei (+0.3%) resumed trading. Both the Hang Seng Index (-0.8%) and Shanghai Composite (- 0.5%), however, retreated on reports that the Chinese government is drafting a plan to replace Hong Kong’s Carrie Lam with an interim Chief Executive. ASEAN equities, meanwhile, finished mixed on Wednesday.

• Wall Street eked out minor gains as the Dow rose 0.2% as investors digested a slew of corporate earnings. On the broader market, the S&P 500 (+0.3%) reclaimed the 3,000 psychological level with nine major sectors finishing higher, while the Nasdaq rose 0.2%.

• Earlier, major European equities trended mostly higher as both the FTSE (+0.7%) and DAX (+0.3%) extended their gains after the Brexit deal was voted in favour by the British Parliament but the proposed deadline was rejected. The CAC, however, fell 0.1% after the manufacturing sentiment index fell to 99 in October 2019 – the weakest reading since March 2015. THE DAY AHEAD

• Market conditions were much weakerthan-expected yesterday that saw the key index pulling back to the support level of our anticipated range. After yesterday’s weakness, sentiments on FBM KLCI listed stocks remains dicey due to the combination of lack of following and fresh catalysts to lift the market.

• Under the prevailing scenario, the immediate outlook among the key heavyweights still look mostly indifferent, but the downside bias remains and could still send the key index lower due to the lack of support. As it is, the buying support is still thin among the heavyweights with most institutional players perched on the sidelines on a wait-and-see attitude.

• While still largely on a rangebound trend, the lower band is now at around 1,564 level, while the upper band remains at the 1,576 level. The other support and resistance levels are at 1,558 and 1,580 respectively.

• The lower liners and broader market shares, meanwhile, are still on the climb due to the sustained rotational interest. With many of the sub-indices already overbought, however, we continue to think that the upsides will be marginal and a pullback is already due.
  
  COMPANY BRIEF
• Gadang Holdings Bhd’s 1QFY20 net profit lost 10.0% Y.o.Y to RM14.9 mln, from RM16.5 mln in the previous corresponding period, weighed down by lower property contribution, despite stronger revenue (+14.0% Y.o.Y) growth to RM147.6 mln, from RM129.2 mln.
   
• IGB Real Estate Investment Trust’s (IGB REIT) 3Q2019 distributable income inched 1.3% Y.o.Y higher to RM86.4 mln, from RM85.2 mln a year ago and it declared 2.31 sen for income distribution per unit. The REIT’s net property income (NPI) also rose 4.3% Y.o.Y to RM100.7 mln, compared to RM96.6 mln previously, due to higher rental income and lower property operating expenses.

• For cumulative 9M2019, IGB REIT’s distributable income grew 1.5% Y.o.Y to RM260.2 mln, from RM256.5 mln in the previous corresponding period, while NPI rose 4.5% Y.o.Y to RM302.7 mln, from RM289.8 mln previously. (The Edge Daily)

• Pestech International Bhd is partnering Port Klang Free Zone Sdn Bhd (PKFZ), with whom it signed a Memorandum of Understanding (MoU), to explore opportunities to provide roof top solar power solutions and establish a green renewable energy initiative programme in the free commercial and industrial zone in Port Klang. (The Edge Daily)

• The Export-Import Bank of Malaysia Bhd (EXIM Bank) has terminated its loan facility agreements with Barakah Offshore Bhd. Barakah’s unit, Kota Laksamana 101 Ltd (KL101) has received a notice of termination, recall, and demand from EXIM Bank, stating that it owes US$43.6 mln (RM182.5 mln) to EXIM Bank. (The Edge Daily)

• London Biscuits Bhd (LBB) has pledged to cooperate in the interim liquidation process after the High Court approved the appointment of an interim liquidator on 23rd October 2019. Subsequently, PricewaterhouseCoopers Advisory Services Sdn Bhd has been appointed as the interim liquidator. (The Edge Daily)

• IHH Healthcare Bhd is reportedly planning to dispose two of its major assets in India back to their original founder-promoters. The healthcare group has initiated discussions sell its 62.0% stake in Hyderabad-based Continental Hospitals and 74.0% in Global Hospitals, by selling them back to the promoter family. (The Star Online)

• Datasonic Group Bhd has entered into a shareholders agreement with South Korea’s Digent Co Ltd to form a jointventure company (JV Co) to jointly develop and market next generation biometric applications. Subsequently, both parties will jointly form a company named Datasonic Digent Sdn Bhd (DDSB) in which Datasonic will have 60.0% equity, while Digent will hold the remaining 40.0% stake. (The Edge Daily)

Source: Mplus Research - 24 Oct 2019