• The FBM KLCI traded in a choppy manner before closing 0.2% higher yesterday, taking cue from the positive sentiment on Wall Street overnight. The lower liners, however, closed mostly lower as the FBM Fledgling and FBM ACE shed 0.3% and 0.7% respectively on profit taking activities after the recent rally, while the broader market, ended mixed.

• Market breadth stayed negative as decliners outnumbered advancers on a ratio of 438-to-371 stocks. Traded volumes declined 19.1% to 2.11 bln shares as we approach the extended weekend break.

• Anchoring the gainers on the local bourse were Nestle (+20.0 sen), Tenaga (+18.0 sen), Hong Leong Bank (+10.0 sen), Malaysia Airport Holdings (+9.0 sen) and Genting (+6.0 sen). Notable gainers on the broader market were Carlsberg (+42.0 sen), Aeon Credit (+38.0 sen), Sarawak Oil Palms (+26.0 sen), Hong Leong Industries (+20.0 sen) and Heineken (+16.0 sen). IGB REIT added 1.0 sen after delivering strong quarterly financial results.

• On the flipside, among the biggest decliners on the broader market include BAT (-28.0 sen), Telekom (-17.0 sen), APM Automotive (-15.0 sen), MCE Holdings (-9.5 sen) and Gamuda (-9.0 sen). Meanwhile, Petronas Gas (-24.0 sen), KLK (-10.0 sen), Sime Darby Plantations (-8.0 sen), AmBank (-4.0 sen) and Public Bank (-4.0 sen) were the main losers on the FBM KLCI.

• Asian benchmark indices closed mixed as the Nikkei (+0.6%) extended its gains, taking cue from the positive performance on Wall Street overnight. The Hang Seng Index (+0.9%) rebounded, but the Shanghai Composite (-0.02%) extended its losses after hovering mostly in the negative territory. ASEAN stockmarkets, meanwhile, closed mixed yesterday.

• U.S. stockmarkets closed on a mixed note as the Dow (-0.1%) retreated after hovering in the negative territory for the entire trading session on a mixed bag of corporate earnings. On the broader market, the S&P 500 (+0.2%) extended its’ gains, led by gains in the technology sector (+1.5%), while the Nasdaq finished 0.8% higher.

• Major European equities – the FTSE (+0.9%), CAC (+0.6%) and DAX (+0.6%), all advanced after the European Central Bank kept benchmark interest rates unchanged, as anticipated. Gains were also supported by the weaker Euro currency after the Eurozone’s Purchasing Manager’s Index (PMI) for October 2019 stood at seven-year low at 45.7.
  
  THE DAY AHEAD

• Even though the key index managed to end the day with minute gains, the underlying market strength of FBM KLCI stocks are still one of indifference as the buying interest remains tepid. This is leaving the key index to drift and in the absence of fresh catalysts, we maintain our view that the FBM KLCI will stay sideways for now.

• Meanwhile, hopes for a change in the market’s direction remains dim as the wariness is still clouding sentiments that could curtail the upside potential, in our view. As it is, market players are still unsure of the corporate Malaysia’s earnings growth potential going into 2020, while the country’s economic outlook is also less-than-rosy that is keeping many institutional players on the sidelines. Therefore, we still think that the rangebound trend is likely to persist with the key index remaining within the 1,564 and 1,576 levels for now. The other support is at 1,558, while the 1,580 level is the other resistance.

• The lower liners and broader market shares have been tipping higher amid the continuing rotational plays and remain overbought. There are some early signs of a pullback and we think the profit taking activities could pick up pace ahead of the long weekend that could also increase the volatility of the lower liners and broader market shares over the near term.
  
  COMPANY BRIEF

• ViTrox Corp Bhd's 3Q2019 net profit halved to RM13.9 mln, from RM28.0 mln in the previous corresponding period, intandem with lower sales volume, unfavourable product mix, and continuous research and development (R&D) investment. Revenue for the quarter also slumped to RM66.5 mln (- 34.6% Y.o.Y), from RM101.8 mln last year.

• Consequently, the weak 3Q brought cumulative 9M2019 net profit down to RM61.9 mln (-18.6% Y.o.Y), from RM76.0 mln a year earlier, while revenue fell about 14.0% Y.o.Y to RM244.5 mln, compared with RM284.1 mln in 9M2018.

• Moving forward, the group plans to focus on market expansion activities, customer relationship building and product innovation to grow its business further. (The Star Online)

• Malaysia Marine And Heavy Engineering Holdings Bhd‘s (MHB) 3Q2019 net loss narrowed to RM4.7 mln, from RM22.7 mln a year earlier, supported by positive contribution from its marine segment. Revenue, however, weakened to RM254.4 mln (-12.0% Y.o.Y), from RM289.8 mln a year earlier.

• Subsequently, cumulative 9M2019 net loss shrank to RM43.5 mln, from RM97.5 mln in the previous year’s corresponding period, while revenue grew 5.0% Y.o.Y to RM733.9 mln, from RM701.1 mln last year. (The Edge Daily)

• MNC Wireless Bhd has aborted the Memorandum of Understanding (MoU) it signed with Urban Setup Sdn Bhd to provide a mobile physical gold retail platform in Malaysia, without providing any reasons for the termination.

• To recap, Urban is the licensee of the rights to the physical gold retail platform of SGPMX (M) Sdn Bhd, while MNC Wireless was expecting to launch the gold e-commerce retail platform by end- 2019 to allow consumers to buy physical gold via the mobile application with a minimum fraction value of one sen. (The Edge Daily)

• Hextar Global Bhd has entered into a distributor agreement with Sumitomo Chemical Vietnam Co Ltd (SCV) for the latter to exclusively distribute Hextar’s Hallmark 150 SL herbicide; a product used to control weeds in rubber plantations, in Vietnam.

• The five-year contract commenced from 24th October 2019, with an optional extension for another one year, with an estimated value of RM15.0 mln over the period. (The Edge Daily)

• CapitaLand Malaysia Mall Trust's (CMMT) 3Q2019 net property income was down by 4.9% Y.o.Y to RM49.2 mln, from RM51.7 mln in the previous corresponding year, together with revenue at RM83.7 mln (-2.8% Y.o.Y) vs. RM86.2 mln a year ago, on lower rental and car park income, while expenses climbed. Even so, the trust has declared an income distribution per unit (DPU) of 1.51 sen for the quarter under review, about 20.5% less than the 1.90 sen it distributed in 3Q2018.

• For 9M2019, the REIT’s NPI lost 6.1% Y.o.Y to RM152.3 mln, from RM161.1 mln in the same period last year, while revenue fell marginally by 2.6% Y.o.Y to RM256.5 mln, from RM263.2 mln previously.

• Cumulative 9MFY1) NPI came in at RM283.9 mln, compared with RM273.8 mln in 9MFY18 as revenue grew 7.7% to RM439.4 mln from RM407.9 mln. (The Edge Daily)

• Syarikat Takaful Malaysia Keluarga Bhd posted a stronger 3Q2019 net profit of RM112.3 mln (+33.8% Y.o.Y), compared to RM84.0 mln in the same quarter a year ago, on higher net wakalah fee income. Quarterly revenue also rose 16.1% Y.o.Y to RM753.5 mln, from RM649.0 mln before.

• Consequently, cumulative 9M2019 net profit jumped 41.8% Y.o.Y to RM289.7 mln, from RM204.4 mln in the same period a year ago, while revenue grew 21.0% Y.o.Y to RM2.34 bln, from RM1.94 bln earlier. Despite the cautious business sentiments in 2019, the group expects the takaful industry to outperform the conventional insurers in view of the strong demand for Takaful products. (The Star Online)

• Luxchem Corp Bhd’s 3Q2019 net profit lost 12.8% Y.o.Y to RM8.6 mln, from RM9.8 mln in the same quarter last year, owing to lower sales in its trading segment. Revenue also narrowed by 11.7% Y.o.Y to RM187.5 mln, from RM212.3 mln earlier.

• Cumulative 9M2019 net profit, meanwhile, slipped 3.9% Y.o.Y to RM28.1 mln against RM29.2 mln previously, while revenue fell 4.9% Y.o.Y to RM578.3 mln, from RM607.8 mln last year.

• Going forward, Luxchem will continue to improve its own productivity and efficiency to face external headwinds, like forex fluctuations, competition, as well as changes in raw material prices and their demand and supply situations. (The Edge Daily)

• Kejuruteraan Asastera Bhd (KAB) is planning to expand its market presence in Asean via the acquisition of Thai firm Energy Optimization (Thailand) Co Ltd (EOT). The group has inked a shares purchase and sale agreement with Chanchai Kitprotpisuth to acquire 24,000 shares or an 80.0% equity stake in EOT for 4.6 mln baht (RM642,176).

• EOT is principally engaged in the design and implementation of energy saving equipment. Concurrently, KAB is also exploring other Asean markets for regional expansion. (The Star Online)

• Despite posting a 1H2019 net loss of RM74.3 mln, MSM Malaysia Holdings Bhd expects a better year ahead on the back of a global sugar deficit. Subsequently, MSM will reinforce its growth for exports, uplift its utilisation rate and ensure continuous cost optimisation and overall efficiency and productivity of its new refinery.

• MSM also intends to penetrate into the corn syrup market mainly in Asia with an estimated demand of four mln tonnes a year, besides actively exploring the Singapore market to directly supply more sugar to the city state. (The Star Online)

Source: Mplus Research - 25 Oct 2019