Rebound, But Sentiment Still Frail

• The FBM KLCI (+0.4%) ended on a higher note after Malaysia’s Prime Minister announced its new cabinet on Monday. The bullish sentiment on global stimulus hopes also prompted buying-support on the FBM Small Cap (+0.9%), FBM Fledgling (+0.2% and the FBM ACE (+3.0%). Similarly, the broader market also rallied, with the gainers led by Technology and Energy sector.

• Market breadth turned positive as gainers overturned losers on a ratio of 491-to-477 stocks. Meanwhile, traded volumes declined 33.7% to 4.41 bln shares normalising the sharply higher trading volumes a day earlier.

• MISC (+37.0 sen) rallied on expectations of a stronger growth outlook. Other gainers on the blue chip gauge include Public Bank (+28.0 sen), Nestle (+20.0 sen), CIMB (+15.0 sen) and Maybank (+13.0 sen). Broader market advancers were Dutch Lady (+36.0 sen), HengYuan Refining (+33.0 sen), MI Technovation (+32.0 sen), YinSon (+30.0 sen) and Kumpulan Powernet (+29.0 sen)

• Consumer stocks like Fraser & Neave (- RM1.10) and Carlsberg (-76.0 sen) led the fall in the broader market, alongside Vertice (-17.0 sen), Southern Acids (- 15.0 sen) and Malaysian Pacific Industries (-14.0 sen). There were five decliners on the key-index, namely KLK (-64.0 sen), PPB Group (-62.0 sen), Hong Leong Financial Group (-40.0 sen), Petronas Dagangan (-38.0 sen) and Petronas Gas (-20.0 sen).

• Major Asian bourses finished higher amid the global stimulus hopes. The Shanghai Composite (+1.8%) outperformed its regional peers on the back of buying-support in the eleventh hour, while the Nikkei (+0.9%) recovered some of its’ previous session losses. The Hang Seng Index (+1.4%) also rallied, boosted by gains in information technology, energy and consumer discretionary related stocks. Similarly, ASEAN equities ended mostly higher despite Covid-19 cases increase over the world.

• Key U.S benchmark indices – the Dow and S&P 500 both finished 4.9% on expectations over further stimulus package rollout that potentially includes cut on payroll tax. Likewise, the Nasdaq surged 5.0%

• Major European equities were lower after erasing all their intraday gains as the FTSE (-0.1%) were the red, weighed down by the weakness in commodities prices. The CAC and DAX also fell 1.5% and 1.4% respectively as concern over Covid-19 return to the fore.

The Day Ahead

• The much anticipated recovery on the FBM KLCI kicked in yesterday following the previous session’s sharp slump that saw the key index endured its’ worst intraday decline. The recovery was merely seen as bargain hunting activities from the recent downward sentiment. As markets condition appears to lookout for stability, we think that the investors may continue their quest on nibbling beaten down stocks. However, we remain cautious on the potential rebound over a longer period as market sentiment is still choppy at current stage.

• Following the generally positive market sentiment, we reckon that the FBM KLCI will continue to form a base above the 1,400 psychological level. The anticipated recovery, however, may be measured as the concern over the economic impact of Covid-19 outbreak continues to linger. Nevertheless, further bargain hunting activities could potentially power the key index heading towards the 1,445 and 1,455 levels resistances level respectively. On the flipside, the supports are at the 1,415 and 1,400 levels.

• Likewise, the lower liners and broader market shares are on course for their rebound from the recent steep decline that sent majority of the stocks into the oversold territory. The recovery may also prompt quick profit taking activities as markets are still finding their bottom.

COMPANY BRIEF

• IJM Corp Bhd has accepted a RM530.0 mln contract from LQ Residential 1 Sdn Bhd for the building of two blocks of service apartments at Tun Razak Exchange. The completion period of the project was 36 months and it was expected to be completed by May 2023.

• The project comprises Tower A of 53- storey (443 units) and Tower B of 57- storey (453 units), including residential facilities, seven levels of podium and elevated car park, one level of mezzanine floor, one level of commercial space at ground floor and two levels of basement car park. (The Star)

• Hibiscus Petroleum Bhd may delay investment in some projects following the slump in the price of crude oil in the international market with only projects showing viability and a reasonable payback period will be pursued.

• Capital projects to enhance production scheduled for calendar year 2020 execution will be revisited and oilfield service contractors will be requested to further optimise their pricing levels. Hibiscus also guided for a lower production in the coming months. The company was set to deliver between 3.3 and 3.5 mln barrels of oil in financial year ending 30th June 2020. (The Star)

• Eversendai Corp Bhd has agreed to buy its executive chairman and managing director Tan Sri AK Nathan’s private liftboat company. However, the value of the related party transaction was not revealed in the group's announcement to the stock exchange. The group would be acquiring Nathan’s Vahana Offshore (M) Sdn Bhd, which owns the Vahana Aryan liftboat and Vahana Arjun — the construction of which will be completed in 2021. (The Edge)

• KESM Industries Bhd’s 2QFY20 net profit surged 292.4% Y.o.Y to RM1.9 mln. Revenue for the quarter, however, fell 16.1% Y.o.Y to RM68.1 mln on lower demand for burn-in and testing services, as well as electronic manufacturing service.

• For 1HFY20, cumulative net profit jumped 104.8% Y.o.Y to RM6.4 mln. Revenue for the period fell 13.6% Y.o.Y to RM140.5 mln. (The Edge)

• APFT Bhd has signed a memorandum of understanding (MoU) with HELP International Corporation Bhd (HIC) to negotiate the acquisition of certain education business of HIC. The proposed acquisition is part of APFT’s regularisation plan to relinquish its PN17 status, in order to remain listed on the Main Market of Bursa Malaysia. (The Edge)

• LEAP-Market listed Metro Healthcare Bhd has proposed a private placement to raise up to RM18.1 mln to fund its business expansion plans to northern and central regions. Out of the funds raised, RM16.0 mln will be used to fund its business expansion plans which include setting up ambulatory care centre and upgrading its women’s clinic based in Johor Bahru, while RM1.6 mln will be used as working capital, with the remaining balance to be allocated for corporate exercise expenses. (The Edge)

• OCR Group Bhd has terminated its joint venture (JV) agreement with D’nonce Technology Bhd to develop affordable apartments in Seberang Perai Tengah, Penang, worth RM85.0 mln in gross development value. OCR, however, did not mention the reason for the cancellation of the agreement. The JV between OCR’s wholly-owned subsidiary Fajar Simfoni Sdn Bhd and D’nonce’s unit D’nonce Properties Sdn Bhd was signed in May 2019. (The Edge)  

Source: Mplus Research - 11 Mar 2020