• Tracking the regional gains, the FBM KLCI added 0.2%, on the back of mild bargain-hunting activities in selected heavyweights, together with all the lower liners; FBM Small Cap (+0.9%), FBM Fledgling (+1.0%) and the FBM ACE (+0.8%). Majority of the broader market constituents also finished stronger, with the exception of the Property, Telecommunications & Media and Utilities sector.

• Market breadth turned positive as advancers outweighed the decliners on a ratio of 529-to-305 stocks, while traded volumes gained 11.8% to 2.39 bln shares on renewed buying-interests in riskier assets.

• Significant advancers on the key-index included O&G and plantation-linked heavyweights like Petronas Gas (+22.0 sen), Kuala Lumpur Kepong (+20.0 sen), Sime Darby Plantation (+8.0 sen), MISC (+5.0 sen) – led by expectations of stronger crude oil and palm oil prices. Nestle (+80.0 sen) also marked its second-straight day of gains, alongside other broader market winners like United Plantations (+46.0 sen), Genting Plantations (+30.0 sen), Chin Teck Plantations (+15.0 sen), KESM Industries (+15.0 sen) and Unisem (+13.0 sen).

• Amongst the broader market underperformers, meanwhile were Dutch Lady (-30.0 sen), Aeon Credit (-28.0 sen), IGB Bhd (-24.0 sen), Litrak (-15.0 sen) and LPI Capital (-12.0 sen). Top five Main Board decliners were Petronas Dagangan (-20.0 sen), Tenaga Nasional (-14.0 sen), Malaysia Airports (-11.0 sen), Hong Leong Bank (-10.0 sen) and Hap Seng Consolidated (-9.0 sen).

• Key regional benchmark indices staged a mild recovery on Thursday’s close, as investors digested the recent U.S.-Sino trade developments. The Nikkei (+0.7%) gapped up and close 23,300.1 points, alongside the Hang Seng Index (+0.6%). The Shanghai Composite also gained 0.7%, despite coming off its intra-day high in the final hour, while the ASEAN shares were mostly mixed.

• Major U.S. bourses eked out gains on last minute buying support, ahead of a key employment report on Friday. The Dow closed 0.1% higher, although gains were limited by losses in the Materials and Industrials sectors. Meanwhile, the S&P 500 and the Nasdaq also added 0.2% and 0.1% respectively.

• Key European indices slipped on Thursday, weighed down by a stronger Pound and ongoing geopolitical uncertainties. Both the FTSE and the DAX fell 0.7%, although the CAC bucked the general downtrend and inched higher.
  
  THE DAY AHEAD

• The optimism surrounding the trade dispute between the U.S. and China will continue to anchor the rebound across global equities. On the local front, we think the key index will continue to build a base around the 1,560 level as we expect further near term recovery after its recent slump. However, the absence of fresh catalyst may keep gains in check as the FBM KLCI’s gains continue to lag behind its’ regional peers, whilst quick profit taking activities remains on the table.

• With the gains likely to be contained, the upsides could be capped at around the 1,570-1,580 levels. Meanwhile, the 1,560 level will serve as the main support, followed by 1,550 level, which is also the key index’s recent low on October 2019.

• The lower liners appear to see firmer trading interest as traders bargain hunt the recent beaten down stocks. We expect the recovery to remain in place, but gains may capped by quick profit taking activities in light of the lack of sustainable leads.
  
  COMPANY BRIEF

• Sapura Energy Bhd’s 3QFY20 net loss widened to RM100.9 mln, as compared to a net loss of RM31.1 mln recorded in the previous corresponding quarter, due to lower profit margins and a lower share of profit from associate and joint ventures. Revenue for the quarter, however, rose 47.4% Y.o.Y to RM1.78 bln.

• For 9MFY20, cumulative net loss stood at RM326.3 mln vs. a net loss of RM292.9 mln recorded in the previous corresponding period. Revenue for the period, however, rose 73.1% Y.o.Y to RM5.34 bln.

• Separately, Sapura has secured about RM615.0 mln mil in new contracts for its engineering and construction, and drilling segments, bringing its year-to-date order book to RM15.1 bln. Sapura Fabrication Sdn Bhd has won a contract from Hess Exploration and Production Malaysia BV under the Petronas Frame Agreement for the full field development (FFV) phase 3 facilities in the North Malay Basin.

• Sapura Energy has also secured a contract for the provision of a subsea installation vessel for the transport and installation of oil well from Mozambique Rovuma Venture SpA in Area 4, Rovuma Basin, offshore Mazambique. In Brazil, Sapura Navegacao Marítima SA has won a contract extension from Petroleo Brasileiro SA to charter and operate a dynamic positioning (DP) 2 self-propelled pipelaying vessel.

• Lastly, Sapura Drilling Asia Sdn Bhd has been awarded a contract extension for the provision of its semi-submersible tender assist drilling rig, Sapura Esperanza, by Sarawak Shell Bhd/ Sabah Shell Petroleum Company Ltd. (The Star Online)

• RHB Bank Bhd is exiting Hong Kong due to the increasingly challenging brokering environment there. It’s wholly-owned investment bank, RHB Investment Bank Bhd, will be shuttering its operations in the special administrative region that are being undertaken by wholly-owned RHB Hong Kong Ltd and its subsidiaries. Hong Kong presented an increasingly challenging broking environment that has resulted in losses being recorded for RHB Hong Kong Group. (The Edge Daily)

• Paragon Globe Bhd is acquiring 31.1-ac. of freehold land in Pulai, Johor, which it plans to develop into a wellconceptualised commercial area. The group is buying the land for RM61.0 mln from Iskandar Capital Sdn Bhd. EPF owns a direct 29.3% stake in Iskandar Capital, while Khazanah Nasional Bhd has a 15.3% direct stake. The two, together with Kumpulan Prasarana Rakyat Johor, also have a 55.5% indirect interest in Iskandar Capital — held via Iskandar Investment Bhd. (The Edge Daily)

• TH Plantations Bhd is disposing of its 100.0% equity interests in Bumi Suria Ventures Sdn Bhd (BSV) and Maju Warisan Sdn Bhd to Tamaco Plantation Sdn Bhd for RM170.0 mln. The company has reported that the two non-performing companies own 6,513.8-ha. of oil palm plantations in Bintulu and Sibu, Sarawak. The disposal of the assets, which was done via a tender exercise, is a part of THP’s rationalisation plan to revive its financial performance through the divestment of its assets to reduce borrowings and improve operational efficiency. (The Edge Daily)

• Westports Holdings Bhd will undertake a prudent impairment of provision in the coming financial quarter with regards to the cost and damages arising from a vessel berthing incident in November 2019. The detailed procedures and processes involving external and internal parties in determining the cost, recovery or reversal of provision, would unlikely be completed by 31st December 2019. Westports reported an incident at Westports Malaysia Sdn Bhd (WMSB) on 8th November 2019 that a berthing container vessel made contact with WMSB’s two ship-to-shore cranes. (The Edge Daily)

• Nexgram Holdings Bhd’s external auditor Styl Associates PLT has expressed an unqualified opinion on the group’s accounts, and raised concerns over its ability to continue as a going concern. Styl Associates has noted that the group had incurred a net loss of RM20.9 mln for FY19 and had at that point of time not complied with the repayment terms of its bank borrowings. (The Edge Daily)

Source: Mplus Research - 6 Dec 2019