Downtrend To Continue

• The FBM KLCI ended lower after lingering in the negative territory for the entire session today amid rotational plays in the lower liners. On a weekly basis, the key-index also declined for the second-straight week, weighed down by exacerbating fears of the coronavirus. Majority of the lower liners – the FBM Small Cap (+0.7%), and FBM ACE (+1.7%) rebounded, but the broader market remained sluggish and closed mostly in the red.

• Market breadth also negative as decliners beat the advancers on a ratio of 439-to-391 stocks, while traded volumes fell 7.8% to 2.73 bln shares amid renewed concerns of the coronavirus weighing on global economic growth.

• Underperforming key-index members include Nestle (-60.0 sen), Malaysian Airport (-13.0 sen), MISC (-11.0 sen), Petronas Chemicals (-10.0 sen) and Press Metal (-9.0 sen). Similarly, Fraser & Neave (-RM1.16), Aeon Credit (-36.0 sen), Shangri-La Hotels (-22.0 sen) and Scientex (-14.0 sen) also recorded losses, alongside Pharmaniaga (-14.0 sen) after the health giant turned in its first full-year loss since going public 21 years ago.

• Broader market winners, meanwhile, include Panasonic Manufacturing (+RM2.20), Dutch Lady (+RM1.16), Carlsberg (+90.0 sen) and Heineken Malaysia (+70.0 sen). BAT (+RM1.64) also extended its winning streak, after recording sequential improvements in its quarterly earnings. Significant gainers on the Main Board were Kuala Lumpur Kepong (+36.0 sen), PPB (+18.0 sen), Genting (+7.0 sen), Maxis (+4.0 sen) and RHB Bank (+4.0 sen).

• Japanese stockmarkets mostly retreated as the Nikkei lost 0.4%, albeit cushioned by the recent recovery in energy prices. The Hang Seng Index also makes its way towards a weekly loss, on the back of renewed coronavirus worries although the Shanghai Composite rose 0.3% on stimulus optimism and gains in semiconrelated stocks. The broader ASEAN markets, however, were mostly in the red on Friday.

• The Dow erased more than 200.0 points on renewed coronavirus fears as the number of cases and death toll spikes. On the broader market, the S&P 500 and the Nasdaq also closed lower by 1.1% and 1.8% respectively on Friday, in-addition to posting its weekly losses.

• Key benchmark European stockmarkets finished on a downbeat note, taking cue from the prevailing negative sentiment in Wall Street. Consequently, the FTSE (- 0.4%), CAC (-0.5%) and DAX (-0.6%) continued to be downward pressured as investors digested fresh economic data.

THE DAY AHEAD

• There was no reprieve on the local bourse as the key index ended another day on a negative note. The weakness stemmed from the concern over slower economic growth due to the Covid-19 continues to remain unabated amid the rising number of cases reported outside China. At the same time, weakness in Ringgit, coupled with the dour sentiment in commodity prices (both crude oil and crude palm oil) may see foreign funds continue to shy away from Malaysian equities for longer.

• In wake of the weakness on Wall Street last Friday, we opine that Bursa Malaysia is likely to kick start the final week of February 2020 on a sluggish note. Further pullback may see the local bourse to be supported towards the 1,520 or even the 1,515 levels. On the upside, gains are expected to be mild with resistance located towards the 1,550 level in the interim.

• The lower liners and broader market shares continues to trade in a two way street against the key index, supported by rotational play amongst the group. However, we reckon that a pullback is due as investors look to lock in recent gains, whilst continue to monitor and assess the barrage of corporate earnings releases.

COMPANY BRIEF

• Carlsberg Brewery Malaysia Bhd’s 4Q2019 net profit grew 2.3% Y.o.Y to RM69.0 mln, driven by higher sales in Malaysia and Singapore market. Revenue for the quarter climbed 7.2% Y.o.Y to RM405.5 mln.

• For 2019, cumulative net profit added 5.0% Y.o.Y to RM291.0 mln. Revenue for the year rose 13.8% Y.o.Y to RM2.26 bln. A total dividend payment of 100 sen per ordinary share for 2019 was declared. (The Star Online)

• Axiata Group Bhd’s 4Q2019 net profit stood at RM332.6 mln, compared to a net loss of RM1.46 bln, on the back of operational performance and lower depreciation and amortisation due to one-off assets written off in 4Q2018. Revenue for the quarter, however, was was flat at RM6.26 bln.

• For 2019, cumulative net profit stood at RM1.46 bln against a net loss of RM4.76 bln recorded in 2018. Revenue for the year rose 2.9% Y.o.Y to RM24.58 bln. A dividend of 4 sen and a special dividend of 0.5 sen per share was proposed.

• Separately, Axiata has proposed the listing of its Bangladesh outfit Robi Axiata Ltd on two stock exchanges in the South Asian country. It is also in talks with as many as 11 parties for a possible tie-up to bid for a digital banking licence. Axiata is also planning to spend RM6.60 bln as capital expenditure, the bulk of which will be used for the expansion of its Indonesian business, XL Axiata. (The Edge Daily)

• Dayang Enterprise Holdings Bhd’s 4Q2019 net profit slipped 19.9% Y.o.Y to RM78.2 mln, dragged down by lower profit margin as a result of lower productivity and efficiency in work orders performed under the topside maintenance contracts. Revenue for the quarter declined marginally by 0.2% Y.o.Y to RM285.0 mln.

• For 2019, however, cumulative net profit rose 43.9% Y.o.Y to RM236.3 mln. Revenue for the year grew 11.6% Y.o.Y to RM1.05 bln. (The Edge Daily)

• GDB Holdings Bhd expects to transfer its listing to the Main Market of Bursa Malaysia by 1H2020 after receiving the nod from shareholders. Its group managing director Cheah Ham Cheia announced the plan to graduate to the Main Market within just two years of its ACE Market listing reflects its larger scale of operations now. (The Edge Daily)

• Heineken (M) Bhd’s 4Q2019 net profit fell 8.8% Y.o.Y to RM91.2 mln, due to higher commercial spending in the period. Revenue for the quarter, however, rose 2.7% Y.o.Y to RM680.0 mln.

• For 2019, cumulative net profit grew 10.8% Y.o.Y to RM313.0 mln. Revenue for the year added 14.3% Y.o.Y to RM2.32 bln. A dividend of 66 sen per share for the quarter, bringing the full-year dividend to RM1.08 per share was declared. (The Edge Daily)

• Kossan Rubber Industries Bhd’s 4Q2019 net profit increased 2.5% Y.o.Y to RM61.0 mln on higher volume sold. Revenue for the quarter, however, fell 1.9% Y.o.Y to RM578.3 mln.

• For 2019, cumulative net profit grew 13.4% Y.o.Y to RM224.8 mln. Revenue for the year climbed 3.7% Y.o.Y to RM2.22 bln. (The Edge Daily)

• Kumpulan Powernet Bhd’s 2QFY20 net profit stood at RM1.9 mln, compared to a net loss of RM1.1 mln recorded in the previous corresponding quarter, lifted by its property development segment and its new construction business. Revenue for the quarter surged 15.7x Y.o.Y to RM13.6 mln.

• For 1HFY20, cumulative net profit jumped 95.1% Y.o.Y to RM2.8 mln. Revenue for the period soared 10.7x Y.o.Y to RM24.8 mln. (The Edge Daily)

• Malaysia Steel Works (KL) Bhd’s 4Q2019 stood at RM688,000, compared to a net loss of RM24.9 mln recorded in the previous corresponding quarter, helped by a better margin as a result of the company’s technology-driven costcutting measures. Revenue for the quarter increased marginally by 0.3% Y.o.Y to RM349.9 mln.

• For 2019, cumulative net loss stood at RM8.3 mln vs. a net profit of RM6.7 mln recorded in 2018. Revenue for the year fell 20% Y.o.Y to RM1.2 bln. (The Edge Daily)

• PLB Engineering Bhd has signed a conditional joint development agreement (JDA) with the Penang State Government and its development arm to undertake rehabilitation works for the Jelutong dumpsite along Lebuhraya Tun Dr Li Chong Eu in Penang in exchange for three-fourths of the rehabilitated land. PLB Engineering will be undertaking rehabilitation works of the existing dumpsite that is currently used for the disposal of various types of waste. (The Edge Daily)

• Pestech International Bhd’s 2QFY20 net profit fell 43.8% Y.o.Y to RM8.1 mln, on higher finance costs and taxes paid. Revenue for the quarter, however, added 6.8% Y.o.Y to RM190.9 mln.

• For 1HFY20, cumulative net profit rose 12.4% Y.o.Y to RM27.5 mln. Revenue for the period gained 24.9% Y.o.Y to RM378.2 mln. (The Edge Daily)

Source: Mplus Research - 24 Feb 2020