Turning Point

• Tracking the upbeat performance across regional peers, the FBM KLCI (+0.8%) advanced but sentiment remained cautious on the political uncertainties. The lower liners were traded in an opposite direction as the FBM Small Cap (-0.1%), FBM Fledgling (-0.2%) and FBM (-0.1%) all fell, while the broader market was mixed with energy sector (-1.2%) taking in the heaviest beating.

• Expectedly, market breadth still in negative as decliners overcame advancers on a ratio of 464-to-431 stocks. Traded volumes also dropped 3.1% to 2.99 bln shares as selling activities accelerated.

• More than half of the FBM KLCI components were in the green, led by Hong Leong Financial Group (+60.0 sen), followed by Nestle (+60.0 sen), Hap Seng Consolidated (+45.0 sen), Hong Leong Bank (+26.0 sen) and Petronas Gas (+24.0 sen). Advancers on the broader market on Wednesday were Fraser & Neave (+38.0 sen). KESM Industries (+34.0 sen), Bintulu Port Holdings (+18.0 sen), Gamuda (+16.0 sen) and Aeon Credit (+16.0 sen).

• In contrast, Carlsberg (-30.0 sen) led the fall in the broader market, alongside with Allianz (-24.0 sen), Hong Leong Industries (-21.0 sen), Vitrox Corporation (-16.0 sen) and Dayang (- 12.0 sen). There were only four decliners on the key-index, namely KLK (-16.0 sen), Genting (13.0 sen), Genting Malaysia (-4.0 sen) and Axiata (-3.0 sen).

• Asia benchmark indices – the Nikkei (+0.1%) turn to positive albeit, the number of Covid-19 infected cases increased on Wednesday. The Shanghai Composite gained (+0.6%) but the Hang Seng Index (-0.3%) remain downbeat. ASEAN equities, meanwhile, ended mostly higher yesterday excluding the Stock Exchange of Thailand that fell 0.2%

• Wall Street finished off the day on a good vibes as the Dow surged 4.5% following the Federal Reserve move to cut halfpoint interest rates, coupled with the upbeat outcome from the U.S. presidential primary election results that saw Joe Biden taking the lead in the Democrats. The positive sentiment bumped the S&P 500 (+4.2%) to rebound to close the 3,130.12 level, while the Nasdaq jumped 3.9%.

• European benchmark indices finished as the FTSE (+1.5%), CAC (+1.3%) and DAX (+1.2%), all rallied. Gains were led by reports that the World Bank will step in to inject US$12.0 bln to support the countries impacted by Covid-19.

The Day Ahead

• Unexpectedly, the FBM KLCI defy the weakness from the rout on Wall Street overnight as the key index continue to build onto the previous session’s gains. Market sentiment took a boost after U.S. Vice President Joe Biden recorded big wins in the contest for the Democratic presidential nomination. On the local front, the upbeat commodity price (crude oil and crude palm oil), coupled with the stronger Ringgit against the Greenback also added to the positive sentiment.

• After a period of lull, we see the key index attempting to build a base around the 1,455 level as investors nibble on beaten down stocks. At the same time, valuations on the local bourse also turned slightly appealing as the FBM KLCI trades at forward PERs of 15.5x and 14.5x for 2020 and 2021 respectively – below the five-year historical average of 18.0x. Further recovery may see the key index marching towards the 1,495 and 1,510 levels. On the flipside, the 1,455 level will continue to serve as a major support level.

• Although the lower liners finished on the negative territory, most losses incurred on intraday basis were quickly minimised as we see bargain hunting activities return to the fore. However, gains could be limited and we think that a consolidation spell is likely to come by with the market following continues to be mostly indifferent.

COMPANY BRIEF

• Tenaga Nasional Bhd (TNB) has completed the acquisition of the remaining 20.0% stake in two renewable energy companies, GVO Wind Ltd and Bluemerang Capital Ltd in the UK for £18.6 mln (RM99.7 mln). The stakes were acquired from Georg von Opel and Tanzanite B.V. & Catalin Breaban.

• The combined platform make up the largest feed-in tariff (FiT) wind portfolio in the UK, comprising 53 operational onshore medium wind turbines with a total combined capacity of 26.1MW. To recap, in March 2018, TNB made its foray into renewable energy with the purchase of an 80.0% stake in the two UK companies involved in generating electricity from wind for £77.4 mln. (The Star)

• Malayan United Industries Bhd's (MUI) indirect unit in the UK has renewed its term loan facility and also accepted a new term loan totalling £100.0 mln (RM539.3 mln). MUI had renewed its’ term-loan facility of £79.6 mln (RM429.4 mln) and accepted a new term-loan facility of £20.4 mln (RM109.9 mln) granted by United Overseas Bank Ltd London branch. The second loan would result in the group incurring additiona interest expense, translating into an additional loss per share of 13 sen. (The Star)
• Singapore-based Vodoke Pte Ltd, an IPTV solution provider, is seeking to claim from Telekom Malaysia Bhd (TM) a tota of US$34.5 mln (RM144.4 mln) arising from a dispute in relation to IPTV Package orders in 2015. Vodoke has referred its dispute with TM to arbitration under the Singapore Internationa Arbitration Centre. (The Edge)
• Eden Inc Bhd had received compensation amounting to RM16.7 mln from the Government following the compulsory disposal of Eden's 6.4-ha land in Kuantan Pahang for the proposed East Coast Rai Link (ECRL) project. The proceeds will be used to pare down the remaining balance of its Ijarah loan facility. (The Edge)
• After three consecutive loss-making years, China-based edible oil producer Xinghe Holdings Bhd is upbeat over its prospects of a turnaround in financia year ending 31st December 2020 supported by its new aquaculture food business. The company acquired a prawn farm and related facilities and assets from Pegagau Aquaculture Sdn Bhd for RM100.0 mln in December 2019. (The Edge)
• Metallurgical coke manufacturer Sino Hua-An International Bhd, which recently ventured into the digital space, has partnered with two companies to develop a smart modelling farming project for agriculture markets. Through its unit Wavetree Technologies Sdn Bhd, it has inked a Memorandum of Understanding (MoU) with agricultural company Top Fruits Sdn Bhd (TFSB) and anti counterfeit solutions provider Mybeecop Sdn Bhd for the development. (The Edge)
• Priceworth International Bhd has terminated a sales and purchase agreement to acquire timber extraction and replanting rights for a forest reserve area in Sabah known as Forest Management Unit 5 (FMU5). The termination is with immediate effect. (The Edge)

• Practice Note 17 company APFT Bhd will be delisted from the Main Market of Bursa Malaysia on 16th March 2020 unless an appeal is made, following the bourse regulator’s dismissal of the company's request for more time to submit its regularisation plan. Prior to the delisting, trading of APFT's shares will be suspended from 12th March 2020. Should the company appeal against the delisting, it should be made on or before 11th March 2020. (The Edge)  

Source: Mplus Research - 5 Mar 2020