Ending On Positives

• The FBM KLCI closed out Thursday on a stronger footing, helped by higher commodity prices and gains in selected banking heavyweights. Tracking the key-index, the lower liners also delivered gains, while the broader market closed mostly positive, with the exception of Healthcare and Telecommunication & Media-related shares.

• Market breadth was positive as gainers maintained the upper-hand against the losers on a ratio of 673-to-292 stocks, while traded volumes rose by 0.4% to 3.08 bln shares, on easing concerns of the coronavirus outbreak.

• Leading the key-index higher were banking majors like Public Bank (+RM40.0 sen) and Hong Leong Bank (+12.0 sen), followed by Nestle (+RM1.40), MISC (+29.0 sen) and Kuala Lumpur Kepong (+18.0 sen). Broader market gainers, meanwhile, were KESM Industries (+90.0 sen), Dutch Lady (+72.0 sen), Carlsberg (+48.0 sen), Takaful (+44.0 sen) and Aeon Credit (+40.0 sen).

• In contrast, laggards were Heineken Malaysia (-14.0 sen), Genting Plantations (-10.0 sen), Negeri Sembilan Oil Palms (-10.0 sen), Cycle & Carriage Bintang (-9.0 sen) and Hong Leong Industries (-9.0 sen). Meanwhile, the only five decliners on the Main bourse include Hong Leong Financial Group (- 16.0 sen), Petronas Gas (-8.0 sen), PPB (-6.0 sen), Maxis (-4.0 sen) and Top Glove (-3.0 sen) as fears of the coronavirus ebbs.

• Key regional benchmark indices finished on a strong note on hopes of a potential treatment for coronavirus. The Hang Seng Index rose 2.6% and closed above the 27,200 psychological level, while the Shanghai Composite added 1.7%. The Nikkei also extended its winning streak for the third-straight session, alongside most of the ASEAN equities.

• Wall Street scaled fresh records after China announced that it would halve its tariffs on $75.0 bln worth of U.S. imports. Both the Dow and the S&P 500 gained 0.3%, while the Nasdaq rose 0.7% as investors digested upbeat companies’ earnings releases.

• U.K. equities posted modest gains for the fourth straight session on trade optimism even as energy majors remained downward pressured amid weaker crude oil prices. The FTSE rose 0.3% to 7,504.8 points, while the DAX and the CAC added 0.7% and 0.9% respectively.

THE DAY AHEAD

• The upbeat sentiment on Wall Street sent the FBM KLCI higher yesterday as gains were also supported by the stronger commodity prices. The gains look to sustain into the end of the trading week as there is now some measure of calmness over coronavirus issue, coupled with the de-escalation over U.S.-China trade progress.

• With calmness gradually returning, coupled with the positivity in global equities, we think there is room for further near term upsides. For now, we see bargain hunting activities sustaining over the near term that will help to provide the lift for the FBM KLCI to retest the 1,570 resistance level. However, we also think there could be bouts of profit taking beyond the aforementioned level with key supports pegged at 1,530 and 1,515 levels respectively.

• Meanwhile, bargain hunting activities are also likely to escalate among the lower liners and broader market shares amid their strong value proposition following the sell down over the past week. Moving forward, we still think that further gains could be more measured as we approach the earnings reporting season.

COMPANY BRIEF

• Kossan Rubber Industries Bhd will provide 5.0 mln pieces of medical gloves and 500,000 pieces of face masks to China following the outbreak of the 2019 novel coronavirus (2019-nCoV). The company was working and coordinating with MARGMA, ACCIM, MTCC and other organisations to transport 2.0 mln out of the 5.0 mln pieces of medical gloves to Hubei, Guangdong and other provinces in China, while the rest of the gloves would be transported in batches.

• Kossan would also make available in stages, 20 mln pieces of medical gloves (10 mln pairs) specifically for the public in the China region beginning 24th February 2020. (The Star Online)

• ARB Bhd’s 4Q2019 net profit jumped 157.2% Y.o.Y to RM12.8 mln, driven by its mainstay information technology business. Revenue for the quarter surged 550.2% Y.o.Y to RM45.0 mln.

• For 2019, cumulative net profit soared 722.0% Y.o.Y to RM34.8 mln. Revenue for the year leap 572.6% Y.o.Y to RM102.6 mln. (The Edge Daily)

• Atrium Real Estate Investment Trust’s (Atrium REIT) 4Q2019 net rental income rose 69.8% Y.o.Y to RM8.1 mln, on the back of lower property operating expenses. Gross revenue climbed 55.3% Y.o.Y to RM7.6 mln.

• For 2019, cumulative net rental income grew 24.0% Y.o.Y to RM21.4 mln. Gross revenue for the year expanded 19.1% Y.o.Y to RM22.6 mln. A dividend of 2.23 sen per unit, was declared. (The Edge Daily)

• Ekovest Bhd and a subsidiary are being sued by a former joint venture partner, Samling Resources Sdn Bhd, in relation to a RM2.11 bln work package under the Sarawak portion of the Pan Borneo Highway project. Samling and Ekovest had formed a JV for a sub-contract, with scope equivalent to 30% of the total subcontracted packages of the project. It was reported that Lebuhraya Borneo Utara Sdn Bhd (LBU), which awarded the project, did not consent to the project to be subcontracted to the JV.

• Samling is claiming general damages with interests, costs, and further relief deemed fit by the court. In July 2019, Ekovest had initiated arbitration proceedings against Samling for the wrongful termination of the JV. (The Edge Daily)

• FGV Holdings Bhd could be the winner if palm oil supply to Pakistan rises following Islamabad's expression of interest to import more palm oil from Malaysia. The plantation company has a large presence in Pakistan and recently announced to Bursa Malaysia that it is exploring a new investment there. Recently, Pakistan's Prime Minister Imran Khan pledged to buy more Malaysian palm oil to compensate for top buyer India's move to restrict imports from Malaysia. (The Edge Daily)

• PPB Group Bhd’s indirect wholly-owned unit Golden Screen Cinemas Sdn Bhd (GSC) is shutting down its GSC outlet in Pavilion Kuala Lumpur on 17th February 2020. This marks an end to GSC’s over 12-year run in Pavilion since its launch as a 13-screen multiplex on 28th November 2007. (The Edge Daily)

Source: Mplus Research - 7 Feb 2020