Consolidation Remains In Play  

• The FBM KLCI reversed last Friday’s losses, boosted by strong gains in selected telco and banking heavyweights. The lower liners – the FBM Small Cap (+0.2%), the FBM Fledgling (+0.6%) and the FBM Ace (+0.6%) also tracked the key-index and churned out gains, while the broader market ended mostly positive.
• Market breadth was positive as advancers overturned the decliners on a ratio of 441-to-388. Traded volumes, however, dropped 12.1% to 2.99 bln shares as investors adopt a wait-andsee approach amid rising geopolitical tensions.

• Significant key-index movers include Nestle (+RM1.00), PPB Group (+50.0 sen), Public Bank (+22.0 sen), Axiata (+20.0 sen) and RHB Bank (+19.0 sen). Broader market winners, meanwhile, consists of Carlsberg (+28.0 sen), Kumpulan Powernet (+17.0 sen), GHL Systems (+12.0 sen), Knusford (+12.0 sen) and Panasonic Manufacturing (+12.0 sen).

• Amongst the underperformers weighing on the broader market were Allianz (- 38.0 sen), LPI Capital (-14.0 sen), MB World Group (-14.0 sen), Aeon Credit (- 10.0 sen) and Dutch Lady (-10.0 sen). Main bourse decliners, meanwhile, include Malaysia Airports (-30.0 sen), Hong Leong Financial Group (-24.0 sen), Kuala Lumpur Kepong (-4.0 sen), MISC (-4.0 sen) and Tenaga Nasional (-4.0 sen).

• Key regional finished mostly higher, shrugging off recent tensions from the Middle East amid renewed trade optimism. The Hang Seng Index snapped two straight sessions’ of losses and closed higher, buoyed by gains in healthcare and consumer discretionaryrelated shares. The Nikkei and the Shanghai Composite, meanwhile, added 1.6% and 0.7% respectively, alongside majority of the broader market stockmarkets.

• Major U.S. benchmarks retreated as rising tensions in the Middle East overshadowed upbeat services sector growth in December ahead of the earnings season. The Dow fell, weighed down by losses in energy blue chips, alongside the S&P 500 (-0.3%) and the Nasdaq.

• U.K. equities mostly declined, with the FTSE closing near the flat line after winding in and out of the negative territory. The CAC also closed with marginal losses, while the DAX outperformed its European counterparts and closed higher on Tuesday.

The Day Ahead

• Malaysian equities recovered stronger than expected yesterday. The absent of follow-though selling activities may prompt more nibbling that would lift stocks prices further, should the FBM KLCI continue to defend the 1,600 psychological level. However, we do caution that the negative market sentiment on Wall Street may permeate to the local equities.

• Despite the stronger-than expected recovery we maintained our view that the local bourse may continue to linger within the consolidation band between the 1,590-1,615 levels. Upon the breakout above 1,615 level, further recovery may spur the key index towards the 1,635- 1,640 levels. On the flipside, the immediate support remained unchanged at the 1,590 level. After a two-day sell down, bargain hunting activities emerged on the lower liners. However, the recent volatility has resulted in investors to adopt a quick hitand-run technique. With sentiment turning cautions, we see near term upsides to be capped over the near term.

COMPANY BRIEF

• Sunway Bhd is targeting sales of RM2.00 bln for 2020, with all of its launches to be located within integrated or transit-linked developments. Sunway will be launching RM3.50 bln worth of properties in 2020.

• Of this, RM1.00 bln of the properties will be in Malaysia and RM2.40 bln will be in Singapore, in line with the company’s geographical diversification. Last year, the group surpassed its sales target of RM1.30 bln to reach RM1.55 bln in sales. The company’s unbilled sales stand at RM2.80 bln.

• As at 31st December 2019, Sunway Property has 3,362-ac in land bank with gross development value of RM59.00 bln and total development period of up to 15 years. (The Star Online)

• Taliworks Corp Bhd has clarified that its receivables due from Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) was sold to special purpose vehicle (SPV) Starbright Capital Bhd, for RM660.0 mln. RM626.1 mln of the total sale consideration has been paid by Starbright to its wholly-owned unit Sungai Harmoni Sdn Bhd, from the proceeds of the assetbacked medium term notes the SPV had previously issued, to purchase the receivables. The remaining sale consideration will be paid to Sungai Harmoni annually, over the tenure of the medium term notes. (The Edge Daily)

• DRB-Hicom Bhd has inked two agreements which will see its involvement in the collaboration and development of automotive testing. The group indirect subsidiary Perusahaan Otomobil Nasional Sdn Bhd or PONSB (owned by Proton Holdings Bhd) had inked a memorandum of understanding (MoU) with China Automotive Technology and Research Centre Co Ltd (CATARC) to collaborate in the field of automotive testing, research and development, as well as to maximise resources of China and Malaysia’s automotive industry.

• DRB also inked a MoU with Malaysia Automotive, Robotics And IoT Institute (MARii), to develop academic programmes, as well as to establish an Autonomous, Automated and Connected Vehicle test bed in Cyberjaya. It will also develop a National Automotive Testing Centre in Tanjung Malim. (The Edge Daily)

• London Biscuits Bhd has been served with a writ of summons and a statement of claim from PAC Lease Bhd, for defaulting in payment obligations amounting to RM1.3 mln. PAC Lease's claim against London Biscuits include the total sum of RM1.3 mln, and interest on the said total sum of RM1.2 mln at the rate of 2.0% per month, additional to the daily base rate from 4th December 2019 until the date of full settlement. (The Edge Daily)

• GFM Services Bhd has proposed to raise up to RM19.8 mln via a private placement of up to 10.0% of its total issued shares to third party investors to be identified later. The placement would enable it to subscribe Highbase Strategic Sdn Bhd (HSSB)’s redeemable convertible preference shares (RCPS). The proposed subscription of HSSB’s RCPS will enable it to participate and be entitled to future recurring income and cash flow streams from the dividend of 6.0% per annum, over the tenure of the RCPS. (The Edge Daily)
   
• AirAsia Group Bhd will add special late-night flights at fixed one-way allin fares between Peninsular Malaysia and Sabah and Sarawak from 21st January 2020 to 31st January 2020, following feedback from the budget airline's guests for it to have fixed low fares for the upcoming Chinese New Year.

• In addition to the late-night flights at fixed fares to Sabah and Sarawak, AirAsia will also add flights to 20 routes across Malaysia and to Singapore. They include those from Kuala Lumpur to Langkawi, Penang, Sibu, Tawau and Singapore, as well as flights from Ipoh to Johor Baru and Singapore. (The Edge Daily)  

Source: Mplus Research - 8 Jan 2020