• The eleventh hour surge sent the FBM KLCI (+0.6%) higher as the key index extended its gains, mirroring the mostly positive sentiment across regional peers after trading in a choppy manner on Monday. The lower liners – the FBM Small Cap, FBM Fledgling and FBM ACE all added 0.4%, while the broader market closed mostly higher, led by the technology sector (+1.1%).

• Market breadth, however, remained negative as decliners overpowered the advancers on a ratio of 414-to-392 stocks, while 409 stocks traded unchanged. Traded volumes fell 12.8% to 2.34 bln shares amid the still broadly negative sentiments

• More than half of the key index components advanced, led by Petronas Dagangan (+54.0 sen), followed by Nestle (+40.0 sen), Petronas Gas (+26.0 sen), PPB Group (+24.0 sen) an IHH (+21.0 sen). Key winners on the broader market were United Plantations (+32.0 sen), Master-Pack Group (+21.0 sen), Guan Chong (+16.0 sen), Telekom Malaysia (+12.0 sen) and Vitrox (+12.0 sen).

• G3 Global sank 96.0 sen, while other notable decliners were BAT (-50.0 sen), Dutch Lady (-28.0 sen), Hong Leong Industries (-14.0 sen) and Amway (-10.0 sen). Laggards on the local bourse were Hong Leong Bank (-20.0 sen), Petronas Chemicals (-8.0 sen), Maxis (-2.0 sen), Public Bank (-2.0 sen) and Dialog (-1.0 sen).

• Asia’s benchmark indices trended higher as investors continue to search for leads on the U.S.-China trade progress as the Nikkei added 0.5%. The Hang Seng Index (+1.4%) closed sharply higher, while the Shanghai Composite (+0.6%) rebounded after the People Bank of China cuts short-term interest rate for the first time since 2015 to combat the slowing economy. ASEAN stockmarkets, meanwhile, started off the week mostly on a firm footing.

• U.S. stockmarkets ended at fresh record high levels after chalking mild gains with the Dow rising 0.1% as investors digested mixed signals from the U.S.-China trade progress. On the broader market, the S&P 500 climbed 0.1%, but gains were capped by the weakness in the energy sector (- 1.3%), while the Nasdaq added 0.1%.

• European benchmark indices closed mostly lower as the CAC and DAX fell 0.2% and 0.3% respectively on reports that U.S. President Donald Trump is reluctant to roll-back tariffs. The FTSE, however, gained 0.1% after lingering mostly in the positive territory.
  
  THE DAY AHEAD

• Despite the FBM KLCI’s gains yesterday, which was due to selected pickup at the end of the trading session, the overall market condition remains one of indifference as both market breadth and depth are still on the insipid side, highlighting the largely low following on Malaysian equities.

• We now think that the choppiness could increase as bouts of profit taking activities could set in after yesterday’s last minute haul and we think that the FBM KLCI is set for a minor pullback over the near term. As it is, we still think that follow through buying interest is still weak and unlikely to support the key index higher amid reservations over a U.S.-China trade deal.

• At the same time, the mixed corporate results released thus far, are providing few fresh buying impetuses, in our view. On the downside, the supports are at the 1,600 and 1,590 levels respectively, while the resistances remain at the 1,610 and 1,620 levels.

• The lower liners and broader market shares remain largely sideways and the trend is set to continue as market players continue to assess the state of Malaysia’s corporate results. The results will set the tone for the performance of some of the stocks, while the rest could see limited following due to the lack of catalysts.
  
  COMPANY BRIEF

• IHH Healthcare Bhd remains committed to its proposed sale of up to a 44.0% equity stake in SRL Ltd, the diagnostics arm of Fortis Healthcare Ltd. Private equity firms TA Associates, Warburg Pincus and ChrysCapital have been shortlisted to acquire the stake. Incoming investors will have to fork out at least Rs 1,750 crore or US$250.0 mln, but the final deal size will depend on how much stake they eventually acquire. To recap, IHH has about 31.1% in Fortis. (The Star Online)

• Pharmaniaga Bhd has confirmed that it has secured a five-year extension for the provision of logistics and distribution services to the Ministry of Health that ends on 31st December 2024. The group has also gained a 25-month interim extension for the provision of medicines and medical supplies to MoH facilities, starting 1st December 2019 until 31st December, 2021. (The Edge Daily)

• Yinson Holdings Bhd is planning to raise US$800.0 mln through the refinancing of its floating production, storage and offloading (FPSO) vessel John AgyekumKufuor, which is currently operating offshore Ghana, from 13 banks. (The Edge Daily)

• Reach Energy Bhd has achieved positive results from testing the exploration well K-16 in its Emir Oil Concession Block onshore Kazakhstan. Currently, the well is in extended well testing to further ascertain its commercial viability. (The Edge Daily)

• Shareholders of Apex Equity Holdings Bhd have approved the proposed merger of its stockbroking unit, JF Apex Securities Bhd and Mercury Securities Sdn Bhd, after an earlier vote had previously been invalidated. (The Edge Daily)

• Serba Dinamik Holdings Bhd’s Managing Director and Chief Executive Officer, Datuk Dr Mohd Abdul Karim Abdullah is feeling upbeat about the prospects of the group in 2020, following better-thanexpected order book performance, as well as favourable growth catalysts from improved trade war sentiments. The company, which is maintaining its annual growth target of about 15.0% to 20.0% in top line and bottom line, aims to achieve an order book of about RM15.0 bln. (The Edge Daily)

• Guan Chong Bhd expects to hit a record high in earnings in 2019, after its 3Q2019 net profit surged 38.0% Y.o.Y to RM60.5 mln, from RM43.9 mln, while revenue expanded 24.0% Y.o.Y to RM744.6 mln, from RM598.9 mln a year ago. It also declared a third interim dividend of one sen per share, payable on 3rd January 2020.

• Cumulative 9M2019 net profit also rose 38.4% Y.o.Y to RM174.7 mln, from RM126.2 mln, in-tandem with stronger revenue at RM2.15 bln (+33.0% Y.o.Y), from RM1.61 bln in the same period last year. (The Edge Daily)

• Dagang Nexchange Bhd’s (DNeX) 3Q2019 net profit grew 42.6% Y.o.Y to RM9.5 mln, from RM6.7 mln in 3Q2018, on the back of lower income tax, despite a marginally decline in quarterly revenue to RM62.0 mln (-2.1% Y.o.Y), from RM63.3 mln.

• Cumulative 9M2019 net profit, however, fell 3.7% Y.o.Y to RM33.8 mln, from RM35.0 mln last year, although revenue was 9.5% Y.o.Y higher at RM203.2 mln, from RM185.6 mln earlier. (The Edge Daily)

• Widad Group Bhd and a subcontractor appointed by Bumi Segar Indah Sdn Bhd (BSI) to undertake a RM120.0 mln solid waste transfer station in Taman Beringin, Jinjang Utara, are both being sued by the project’s owner, KNM Group Bhd.

• KNM has filed legal charges against Widad and BSI seeking a declaration that Widad’s transaction with BSI is void. The former is also claiming special damages inclusive loss of profit of RM35.8 mln from both parties.

• Widad is of the view that it is a third party to the project and it does not have any connection with KNM or BSI and thus, has filed an application to strike out the claim on the basis that there is no cause of action against the group. (The Edge Daily)

• WZ Satu Bhd has proposed to raise up to RM72.3 mln from a renounceable rights issue of Irredeemable Convertible Preference Shares (ICPS) that comes with free detachable warrants. The ICPS will be issued to shareholders on the basis of three ICPS-for-every four shares held and one free detachable warrant (Warrant B) for every four ICPS subscribed for.

• Of the proceeds to be raised, up to RM71.0 mln will be used to finance future construction and/or project financing activities. (The Edge Daily)

• Mega First Corp Bhd’s 3Q2019 net profit plunged 61.7% Y.o.Y to RM14.6 mln, from RM38.2 mln a year earlier, weighed down by lower earnings in its power and property segments. Quarterly revenue was also down by 42.7% Y.o.Y to RM125.5 mln, from RM219.1 mln a year ago.

• Consequently, cumulative 9M2019 net profit fell 28.1% Y.o.Y to RM70.5 mln, from RM98.1 mln last year, while revenue narrowed 22.5% Y.o.Y to RM506.4 mln, from RM653.2 mln earlier. (The Edge Daily)

Source: Mplus Research - 19 Nov 2019