Pullback Beckons

• The FBM KLCI (+0.1%) ended the week on a positive note, mainly boosted by the eleventh hour buying support in selected index heavyweights as the key index advanced for the fourth straight session. Consequently, the FBM KLCI added 1.5% W.o.W. The lower liners – the FBM Small Cap (+0.1%), FBM Fledgling (+0.1%) and FBM ACE (+0.8%), all advanced, while the broader market closed mixed.

• Market breadth turned negative loser overtook the gainers on a ratio of 457- to-377 stocks. Traded volumes, however, fell 10.9% to 2.74 bln shares, on the cautious market sentiment.

• Banking giants like CIMB (+13.0 sen) and Maybank (+6.0 sen) advanced, while Maxis (+5.0 sen), Top Glove (+4.0 sen) and Sime Darby Plantation (+3.0 sen) rose on the local bourse. Notable gainers on the broader market include Hong Leong Financial Group (+RM1.12), BAT (+54.0 sen), G3 Global (+52.0 sen), Dufu Technology (+23.0 sen) and MyNews (+14.5 sen).

• On the flipside, Dutch Lady (-62.0 sen), United Plantations (-28.0 sen), KESM Industries (-20.0 sen), Carlsberg (-18.0 sen) and Panasonic (-18.0 sen) fell on the broader market. Key losers on the FBM KLCI were Nestle (-60.0 sen), Tenaga (-14.0 sen), Petronas Dagangan (-10.0 sen), MISC (-8.0 sen) and Public Bank (-8.0 sen).

• Major Asian equities trended lower as the Nikkei and Hang Seng Index slipped 0.2% and 0.3% respectively amid concern over the rising casualties from the corona virus outbreak. The Shanghai Composite, however, rose 0.3% following Beijing’s move to halve tariffs on U.S. goods. ASEAN stockmarkets, meanwhile, finished mostly lower on last Friday.

• Wall Street retraced from their all-time high levels as the Dow fell 0.9%, impacted by concern over the coronavirus outbreak developments. On the broader market, both the S&P 500 and Nasdaq fell 0.5% each with the former dragged down by the weakness in the basic materials sector (-1.5%).

• European equities also trended lower as the FTSE (-0.5%), CAC (-0.1%) and DAX (- 0.5%), all fell. Market sentiment also turned weak amid the sluggish economic data from Germany’s industrial production and France’s industrial output that came below consensus estimates.

THE DAY AHEAD

• As expected, the FBM KLCI tipped higher last Friday, boosted by gains on Wall Street. Moving forward, we however, reckon that gains will likely to subside as investors will be quick to lock in recent gains amid the rising casualties from the coronavirus outbreak that may remain a key factor to dictate the market sentiment.

• Although the key index managed to trend higher, we reckon that the aforementioned gains that were superficial due to the eleventh hour buying may not be sustainable. A pullback may see the key index to be supported above the 1,535 level. On the upside, further gains are located at the 1,570 level over the foreseeable future.

• Elsewhere, market sentiment has turned indifferent and this may prompt quick profit taking over the near term as investors turned wary of the negative market sentiment. For now, mild retracement could take precedence, while market sentiment will be dictated by the earnings season.

COMPANY BRIEF

• The estimated gross development value (GDV) of Berjaya Land Bhd (BLand)'s public housing and mixed development project in Yangon, Myanmar has been revised to US$746.1 mln (about RM3.05 bln), from US$624.0 mln (about RM2.63 bln) in September last year.

• Its 80.0%-owned BDS Smart City Co Ltd (BDS) has signed a concession agreement with the Yangon Region Government (YRG) to formalise their collaboration to undertake the project. The agreement grants BDS the exclusive rights over the land for 50 years — extendable for 20 more years — for which BDS will pay YRG US$185.8 mln (about RM759.8 mln), mainly in the form of affordable housing units that BDS will develop under the project. (The Edge Daily)

• Malaysia Smelting Corp Bhd is positive of its relocation to its new smelting facility in Pulau Indah, Port Klang as it is progressing well and full smelting operations are expected to commence in the near term. Subsequently, the new factory will increase production capacity by 50.0%, from 40,000 tonnes per year currently. (The Star Online)

• 7-Eleven Malaysia Holdings Bhd, which is acquiring Caring Pharmacy Group Bhd, does not plan to merge operations of its convenience stores with the latter's pharmacy outlets, as there has been no successful business model for such an operation in Asia. (The Edge Daily)

• Westports Holdings Bhd's is acquiring a 146.4ha land adjacent to its port in Klang for about RM394.0 mln cash, from its 42.4% shareholder Pembinaan Redzai Sdn Bhd, to expand its port with eight additional container terminal (CT) facilities.

• Separately, Westports‘s 4Q2019 net profit fell 13.8% Y.o.Y to RM125.4 mln, from RM145.5 mln a year ago although revenue grew 8.3% Y.o.Y to RM452.8 mln vs RM418.0 mln. The underperforming earnings were mainly due to a write-off arising from a vessel incident. Even so, the group declared a second interim dividend of 6.26 sen per share, bringing 2019's total payout to 13.0 sen per share.

• Full-year 2019 net profit, meanwhile, rose 10.8% Y.o.Y to RM590.9 mln, from RM533.5 mln, in-tandem with revenue growth of.10.4% Y.o.Y to RM1.78 bln, from RM1.61 bln. (The Star Online)

• Willowglen MSC Bhd has secured a threeyear wireless network infrastructure contract worth RM35.2 mln by the Public Utilities Board in Singapore. The contract includes the supply and installation of network cameras in various waterworks and water reclamation plants and will commence on 21st February, 2020. (The Edge Daily)

Source: Mplus Research - 10 Feb 2020