Still In Consolidation

• Although the local bourse (-0.4%) started off the day on a strong footing, gains were quickly dismissed bogged down by quick profit taking activities in selected heavyweights on Monday. The lower liners – the FBM Small Cap (+0.8%), FBM Fledgling (+0.4%) and FBM ACE (+0.4%), however, continue to outperform, while the broader market closed mostly higher.

• Market breadth turned negative decliners outmuscled the advancers on a ratio of 429-to-419 stocks. Traded volumes fell 5.0% to 2.61 bln shares amid the lack of fresh leads.

• The key index’s biggest losers were banking and oil & gas heavyweights like Hong Leong Bank (-36.0 sen), Public Bank (-32.0 sen), Petronas Gas (-24.0 sen), Petronas Chemicals (-14.0 sen) and Hong Leong Financial Group (-12.0 sen). Consumer products giants like Carlsberg (-48.0 sen), Dutch Lady (-42.0 sen) and Fraser & Neave (-28.0 sen) sank on the broader market, while Aeon Credit and TimedotCom shed 30.0 sen and 13.0 sen respectively.

• One again, KESM Industries (+36.0 sen) topped the broader market winners list, followed by Allianz (+34.0 sen), Dayang (+22.0 sen), Vitrox (+21.0 sen) and Dufu Technology (+20.0 sen). Key winners on the local bourse were Nestle (+20.0 sen), KLK (+8.0 sen), Genting Malaysia (+5.0 sen), Am Bank (+2.0 sen) and Digi (+2.0 sen).

• Asia benchmark indices trended higher as investors turned their focus towards the impending Sino-U.S. trade agreement as the Nikkei gained 0.5%. The Shanghai Composite rose 0.8%, while the Hang Seng Index jumped 1.1% to close marginally below the 29,000 psychological level. ASEAN stockmarkets, meanwhile, closed mostly higher yesterday.

• U.S. stockmarkets started the week on a firm footing as the Dow (+0.3%) rebounded after the government reported that they will remove China’s label as a currency manipulator. On the broader market, both the S&P 500 and Nasdaq closed at fresh record high levels after rising 0.7% and 1.0% respectively.

• Earlier, European benchmark equities finished mostly lower after enduring a choppy trading session as the CAC and DAX extended their losses by 0.02% and 0.2% respectively on the cautiousness from the new developments in Iran. The FTSE, however, rose 0.4% on the gains in banking shares.

The Day Ahead

• The FBM KLCI underperformed its’ regional peers yesterday on the back of the weakness across the banking and oil & gas heavyweights. However, we think that a mild rebound will take place as investors bargain hunt on recent beaten down stocks, whilst the impending SinoU.S. trade agreement signoff may cushion further weakness.

• Although the key index is tethering near four-week low and the near term outlook still frail, we reckon the consolidation may continue to take shape as the key index may recover towards the resistances located at 1,600 and 1,615 respectively. In the meantime, the 1,575 level will serve as the immediate support, followed by the 1,550 level.

• In contrast, the lower liners continue to demonstrate resilience on the back of rotational play. Therefore, we think that trading interest could remain firm as traders continue to capitalise on the recent uptrend and the aforementioned condition may prolonged till the coming Lunar New Year when investors may start to lock in their gains.

COMPANY BRIEF

• Amverton Bhd’s founder cum Chairman and controlling shareholder Tan Sri Ng Boon, is planning to privatise the company. Tan Sri Ng Boon’s holding company Dalta Industries Sdn Bhd has offered to acquire the remaining 80.8 mln shares (or 22.1% equity stake) in the company at RM2.10 per share. Consequently, Amverton has also aborted its proposed private placement following its plans to take the company private. (The Edge Daily)

• Chin Hin Group Property Bhd (CHGP)’s non-independent and non-executive Chairman Datuk Seri Chiau Beng Teik and his family have launched a mandatory general offer (MGO) for the remaining shares and warrants that they do not own. The Chiau family had purchased CHGP shares yesterday on the open market and via direct business transactions, bringing their stake to 37.6%, from 31.4% previously.

• The MGO includes a 30.0 sen offer price per CHGP share and 10.0 sen offer price per CHGP warrant. The Chiau family intends to main CHGP’s listing on Bursa Malaysia. (The Edge Daily)

• Dayang Enterprise Holdings Bhd has secured two contracts for the provision of integrated hook-up and commissioning from Petronas Carigali Sdn Bhd. The fouryear contracts are valid from 1st January, 2020 to 31st December, 2023. (The Edge Daily) Kerjaya Prospek Group Bhd has also bagged a contract worth RM617.0 mln to construct flats for Aspen Vision City Sdn Bhd in Penang, representing almost half the RM1.3 bln new job wins in 2019. The contract involved two phases, which are VIVO and VIIO located in the 245-acre mixed development project Aspen Vision City. (The Star Online)

• My EG Services Bhd (MyEG)’s Indonesian associate PT Catenz Inti Utama has secured additional mandates from the Indonesian government to roll out its tax monitoring system to 30 more cities, expanding beyond the system’s current implementation in Jakarta. However, it did not provide a value for the additional mandates awarded. These 30 additional cities are located in seven other Indonesian provinces. Pilot installations have since commenced across these seven provinces. (The Edge Daily)

• Sapura Energy Bhd’s partnership with Austrian OMV Aktiengesellschaft, SapuraOMV Upstream Sdn Bhd’s Larak gas field under the SK408 production sharing contract (PSC), has posted its first production. The fields are tied back into an existing processing facility and gas is transported through existing pipelines for onward gas processing at the Petronas LNG complex in Bintulu. (The Edge Daily)

• T7 Global Bhd has signed a contract from Repsol Oil & Gas Malaysia Bhd to provide maintenance, construction and modification services for Block PM3-CAA between Malaysia and Vietnam and Block PM-305 located offshore Terengganu. The five-year contract’s value will be decided by work order requests made by Repsol. (The Star Online)  

Source: Mplus Research - 14 Jan 2020