Rebound In Sight

• The FBM KLCI (-1.0%) prolonged its’ previous streak of losses, even though the political turmoil had been solved after the King had appointed Malaysia’s eighth Prime Minister. The lower liners – the FBM Small Cap (-0.4%) and the FBM Fledgling (-0.7%) also fell. Meanwhile, FBM ACE (+0.4%) reported gains, alongside with two sector on the broader market – technology (+2.0%) and utilities (+0.3%)

• Market breadth was stayed negative as losers defeat the gainers by more than three times. Thus, traded volumes also sank 14.7% to 4.34 bln shares on the negative market sentiment.

• Nestle (-RM2.80) led the local bourse decliners list, followed by Petronas Dagangan (-90.0 sen), Hong Leong Bank (-28.0 sen), Malaysia Airport Holdings (- 24.0 sen) and Sime Darby Plantations (+23.0 sen). Otherwise, on the market broader losers was Carlsberg (-RM2.96), Heineken (-RM2.50), Panasonic (-88.0 sen) and Dutch Lady (-74.0 sen). Master-Pack Group sank 81.0 sen after the management has guided potentially weaker earnings in the latest quarterly report.

• In contrast, Batu Kawan (+38.0 sen), Fraser & Neave (+28.0 sen), Aeon Credit (+20.0 sen), SAM Engineering & Equipment (+19.0 sen) and UWC (+17.0 sen) advanced on the broader market. Outperformers on the main board were Tenaga (+40.0 sen), PPB (+18.0 sen) Hap Seng Consolidated (+4.0 sen), IOI Corporation (+2.0 sen) and Maxis (+2.0 sen)

• Asia benchmark indices were mostly positive due the global policy stimulus hopes as the Nikkei gained 1.0%. The Hang Seng Index increased 0.6%, while the Shanghai Composite (+3.1%) surged. ASEAN stockmarkets, meanwhile, closed mostly higher on Monday.

• U.S. stock markets turn positive, as the Dow (+5.1%) snapped a seven day losing streak, albeit the number of casualties from Covid-19 continue to rise. The S&P 500 surged 4.6% with all eleven major sectors rose, while the Nasdaq soared 4.5% after lingering in the positive territory for the entire trading session.

• European benchmark indices ticked mostly higher as the FTSE (+1.1%) and the CAC (+0.5%) advanced after recovering all their intraday losses. The DAX, however, ended 0.3% lower yesterday.

The Day Ahead

• Expectedly, stocks on Bursa Malaysia continue with their downward momentum, taking cue from the unrelenting selloff from Wall Street overnight. Despite majority of the regional peers staged a recovery owing to expectations that central banks may step in to inject further liquidity into the financial markets, the FBM KLCI lagged behind its’ peers as investors digested on the news of the appointment of new Prime Minister.

• Nevertheless, selling activities appears to have abated with mild signs of bargain hunting activities emerged as demonstrated in the second half of the trading session yesterday. Tracking the sharp upturn on Wall Street, coupled with the positive performance across global markets, we reckon that a recovery may come into play amid the oversold position on the local bourse.

• Hence, the key index may stage a technical rebound, targeting the 1,495 and 1,510 levels. At the same time, the immediate support will be located at the 1,425 level.

• The lower liners and broader market that endured a volatile spell last week may also stage a recovery as investors bargain hunt on beaten down stocks. As it is, we expect the recovery to be mild as investors will continue to monitor on developments over Covid-19.

COMPANY BRIEF

• Tower Real Estate Investment Trust (REIT) has entered into a conditional sale and purchase agreement with Guocoland (Malaysia) Bhd's indirect subsidiary DC Offices Sdn Bhd for the proposed acquisition of an office building for RM242.1 mln cash. The acquisition target, Menara Guoco, is a 19-storey office building that forms part of the Damansara City integrated commercial development in Damansara Heights, Kuala Lumpur.

• The building has an occupancy rate of about 97.1% and is expected to increase Tower REIT's pro forma occupancy rate for its portfolio to 59.8% from 48.1%. Upon completion of the proposed acquisition, Tower REIT's consolidated asset base is expected to increase about 42.3% to RM814.3 mln and the average building age of its property portfolio is expected to decrease to 18 years from 23. (The Star)

• Uzma Bhd’s subsidiary Uzma Engineering Sdn Bhd has secured a RM100.0 mln contract for the provision of platform wells plug and abandonment campaign for Sarawak 2020 from Sarawak Shell Bhd and Sabah Shell Petroleum Co Ltd. The works are expected to commence in April 2020 and completed by November 20. The group also secured another contract worth RM36.0 mln from Petronas Carigali Sdn Bhd for the provision of well testing and tubing conveyed perforating for petroleum arrangement contractors. (The Edge)

• Top Glove Corp Bhd has resolved disputes involving its two subsidiaries — Top Care Sdn Bhd and Aspion Sdn Bhd and four other parties, through a settlement agreement. Top Care will receive a total of RM245.0 mln as full and final settlement of the disputes. (The Edge)

• Highway concessionaire WCE Holdings Bhd has reported that toll collection has started at Section 5 of the West Coast Expressway, operated by its 80.0%- owned unit West Coast Expressway Sdn Bhd. The tolling at the New North Klang Straits Bypass Interchange – Kapar Interchange, began after midnight on 1st March 2020. (The Edge)

• Pintaras Jaya Bhd, via its wholly-owned Singapore-based subsidiary Pintary Foundations Pte Ltd, has secured several piling contracts worth a combined RM116.0 mln, with contract periods spanning between three and eight months between January 2020 and April 2020. (The Edge)

• Malaysia Building Society Bhd's (MBSB) 4Q2019 net profit surged 202.4% Y.o.Y to RM356.7 mln, helped by the financial services provider's financial asset impairment writeback. Revenue for the quarter rose 15.3% Y.o.Y to RM784.1 mln.

• For 2019, cumulative net profit increased 11.6% Y.o.Y to RM716.9 mln. Revenue for the year gained 5.2% Y.o.Y to RM3.01 bln. (The Edge)

• Bumi Armada Bhd, via its wholly-owned subsidiary, Armada TGT Ltd, has secured a loan facility of US$64.3 mln (RM270.9 mln), with a final maturity date on 31st December 2021 from ING Bank NV, Singapore, to fund the repayment of its existing loan, transaction expenses and financing costs. (The Edge)

• Perusahaan Sadur Timah Malaysia Bhd (Perstima) is planning to undertake a one-for-five rights issue to raise RM59.6 mln to partly finance its electrolytic tinning and tin free steel production line for the manufacturing plant in the Philippines as well as raw materials purchase. The company has also attached a one-for-two bonus issue to the rights issue. (The Edge)  

Source: Mplus Research - 3 Mar 2020