Further Consolidation

• The FBM KLCI (-0.1%) was traded in a lackluster manner before edging marginally lower as gains from glove manufacturers heavyweights were offset by the weakness in selected banking and telco heavyweights. The lower liners also finished mostly lower FBM Small Cap and FBM ACE declined 0.1% and 0.4% respectively, while the broader market ended mostly lower.

• Market breadth stayed negative as decliners outnumbered the advancers on a ratio of 509-to-383 stocks. Traded volumes, however, rose 5.0% to 2.66 bln shares amid the rotational play.

• Hong Leong Financial Group (-36.0 sen) led the local bourse decliners list, followed by Axiata (-24.0 sen), Nestle (- 20.0 sen), Maxis (-7.0 sen) and Tenaga (- 6.0 sen). BAT (-72.0 sen) dived for the seventh straight session, while other broader market losers include Aeon Credit (-48.0 sen), Dutch Lady (-36.0 sen), Allianz (-26.0 sen) and Batu Kawan (-22.0 sen).

• Notable winners on the broader market were Pentamaster (+32.0 sen), Kossan (+24.0 sen), United Plantations (+24.0 sen), Supermax (+14.0 sen) and BIMB (+13.0 sen). Glove manufacturers like Top Glove (+29.0 sen) and Hartalega (+25.0 sen) rallied on the FBM KLCI following the confirmation of coronavirus outbreak in China, while Petronas Dagangan (+20.0 sen), Petronas Gas (+18.0 sen) and KLK (+14.0 sen) climbed higher.

• Asia benchmark indices took a dive on concern over the economic impact of the Coronavirus outbreak as the Shanghai Composite slipped 1.4%. The Hang Seng Index sank 2.8% following Moody’s move in downgrade of the country’s rating to Aa3 (from Aa2), while the Nikkei fell 0.9% after the Bank of Japan kept its’ benchmark interest rates unchanged. ASEAN stockmarkets, meanwhile, closed mostly lower yesterday.

• U.S. stockmarkets pullback from record high levels as the Dow fell 0.5% on reports over the first coronavirus outbreak in the country. On the broader market, the S&P 500 slipped 0.3%, while the Nasdaq fell 0.2% after briefly hit fresh record high level on intraday basis.

• Earlier, major European indices extended their losses as the FTSE and CAC declined 0.5% each, taking cue ness in Asia equities. The DAX (+0.1%), however, managed to extend its’ gains after recovering all its’ intraday losses after the Euro Currency weakened against the Greenback.

The Day Ahead

• The fresh weakness across the globe was emanated by the International Monetary Fund’s move to trim global economic growth for the year, while the coronavirus outbreak may pose a challenge to the global economic growth. The weakness in Ringgit also did no help, whilst the downbeat commodity prices (both crude palm oil and crude oil) also contributed to the weakness on the local bourse.

• The FBM KLCI looks to drift lower, potentially towards the 1,570 level and should that level fails to hold, the next support is located at the 1,550 level. Any gains arising from bargain hunting activities may keep gains at bay with upsides limited towards the 1,615 level.

• At the same time, profit taking activities were also evident on the lower liners and broader market shares as traders look to book their recent profits ahead of the extended Lunar New Year break. Meanwhile, gains remain evident from the technology shares with the healthcare sector turned sharply higher following the confirmation of coronavirus outbreak in Asia countries.

COMPANY BRIEF

• Pharmaniaga Bhd‘s Managing Director (MD) Datuk Farshila Emran will leave the company when her contract expires at the end of March 2020, confirming an earlier report by theedgemarkets.com. The former will complete her full nineyear term in March and will be replaced by acting MD Mohamed Iqbal Abdul Rahman, who currently serves as chief operating officer. The group also state that Datuk Farshila is currently pursuing her PhD. (The Edge Daily)

• Scomi Energy Services Bhd’s Practice Note 17 (PN17) status is confirmed, after its waiver application was rejected by Bursa Malaysia. To recap, the group initially triggered the PN17 status on 31st October, 2019. (The Edge Daily)

• Concurrently, its parent company Scomi Group Bhd was slapped with a letter of demand for loan repayments of RM21.9 mln each from businessman Tan Sri Wan Azmi Wan Hamzah and Gelombang Global Sdn Bhd (GGSB), after the group failed to repay both parties by 17th January, 2020. Prior to that, both parties said they would invest RM42.0 mln collectively in the ailing company by injecting the capital via a proposed rights issue. Subsequently, Scomi Group is expected to repay the loans within five days from the letter of demand. (The Edge Daily)

• Rohas Tecnic Bhd has secured a water supply system contract worth 332.0 bln dong (RM58.4 mln) in Vietnam, from Phu My Vinh Construction and Investment Corp. Contract works include the engineering, procurement, construction and commissioning of Hoa Khanh Tay Water Supply System Phase 2. (The Star Online)

• Marine & General Bhd (M&G) was awarded a RM16.0 mln contract from Petronas Carigali Sdn Bhd for the provision of an anchor handling tug and supply vessel. The 363-day contract has commenced on 3rd January, 2020. (The Edge Daily)

• Mudajaya Group Bhd has secured a RM31.2 mln contract to supply and maintain street lighting and traffic light system for the Sungai Besi–Ulu Kelang Elevated Expressway (SUKE) project. The project entails the supply, delivery, installation, testing, commissioning and maintenance of street lighting, high mast and traffic light system, and is expected to be completed by July 2020. With this contract award, Mudajaya’s outstanding order book now stands at RM1.4 bln. (The Edge Daily)

• Kelington Group Bhd has clinched a contract from a leading global semiconductor chip manufacturer to provide infrastructure works for a facility in Penang, for RM35.0 mln. The group however did not disclose the name of the chip manufacturer. The project has started on 15th January and is expected to be completed by end-September this year. (The Edge Daily)

• Reach Energy Bhd has obtained the production contracts for the North Kariman and Yessen fields in Kazakhstan, for 16 and 25 years respectively, starting 1st January this year. The production contracts were obtained by Emir-Oil LLP, in which Reach Energy holds a 60.0% equity stake via Palaeontol BV. Emir-Oil also holds the entire 100.0% working interest in the 850.3 sq km Emir-Oil Concession Block in Kazakhstan.

• The group has also announced a threeyear extension for Emir-Oil's exploration contract 482 until 31st December, 2022. The exploration contract's initial termination date was 9th January, 2020. (The Star Online)

• ATTA Global Group Bhd has confirmed that the suspension of the trading of its shares was due to a police raid at some part of its premises in Prai Industrial Estate in Penang that is being used by a third-party. The raid carried out on 16th January, 2020 was due to a drug probe and is expected to substantially affect the financial and operations of the group. (The Edge Daily)

• Prestariang Bhd - the sole Microsoft licensing solutions provider for the Malaysian government, is planning to undertake a private placement of not more than 10.0% of its issued share capital to raise up to RM19.3 mln. The proposed placement includes the issuance of up to 48.2 mln new shares. (The Edge Daily)  

Source: Mplus Research - 22 Jan 2020