More Of The Same

• The FBM KLCI (-0.2%) retreated following the extension of Conditional Movement Control Order (CMCO) till 9th June 2020. The lower liners - the FBM Small Cap (+1.3%), FBM Fledgling (+1.3%) and FBM ACE (+3.6%), however, all extended their gains, while the healthcare sector (+5.2%) rallied following new clusters of Covid-19 cases reported in China and South Korea.

• Market breadth turned slightly negative as losers edged the gainers on a ratio of 456-to-436 stocks. Traded volumes rose 36.5% to 6.39 bln shares as investors returned from the extended weekend break.

• Asia benchmark indices finished lower amid the renewed concern over the emergence of new Covid-19 infections as the Nikkei fell 0.2%, while the Shanghai Composite declined 0.1% amid the weaker-than-expected inflation and producer price index data in April 2020 that rose +3.3% Y.o.Y and slipped - 3.1% Y.o.Y respectively. The Hang Seng Index sank 1.5% with Asia stockmarkets ended mostly lower on Tuesday’s close.

• U.S. stockmarkets took a beating after erasing all their intraday gains as the Dow sank 1.9% on doubts over the reopening of economy following the second wave of Covid-19 cases reported in China, South Korea, Germany and Russia. Likewise, the S&P 500 (-2.1%) slipped, while the Nasdaq also ended 2.1% lower.

• European stockmarkets ended mostly lower as the CAC and DAX extended their losses by 0.4% and 0.1% respectively, taking cue from the weakness across global equities. The FTSE (+0.9%), however, managed to extend its’ gains, boosted by Vodafone Group (+8.8%) after posting stellar financial performance.

The Day Ahead

• Although the FBM KLCI was powered sharply higher in the first hour of the opening bell, gains were quickly dismissed as investors turned their attention to the new clusters of Covid-19 infections. The weakness, however, was largely cushioned by the rise in glove manufacturers stocks like Top Glove and Hartalega - the two whom are part of the key index’s constituents.

• At the same time, investors are turning cautious on the impending Malaysia GDP data today and the FBM KLCI is likely to continue to trade in a rangebound manner, between the 1,360 and 1,400 psychological level which are also their immediate support and resistance respectively. A softer than expected data may see the key index dwindle towards the lower band of the consolidation and vice versa.

• We see the rotational play remain in place as investors continue to bargain hunt on beaten down stocks, coupled with stronger trading interests within the healthcare sector. We reckon that this trend may likely to prolong over the short to medium term amid the lack of fresh positive developments surrounding Covid-19 treatment.

COMPANY BRIEF

• UEM Edgenta Bhd has appointed Syahrunizam Samsudin as its managing director, effective 1st July 2020. Syahrunizam was formerly the chief executive officer of Touch'n Go Sdn Bhd (TNG). Syahrunizam also has industry and operational experience in manufacturing and assembly, engineering and oil and gas during his tenure as president/chief operating officer (COO) of Scomi Engineering. (Bernama)

• Ecofirst Consolidated Bhd’s 3QFY20 net profit declined 20.0% Y.o.Y to RM5.4 mln, on the back of lower revenue as its Ampang Ukay development reached the tail-end of construction. Revenue in the quarter fell 24.7% Y.o.Y to RM43.3 mln.

• For 9MFY20, cumulative net profit fell 3.0% Y.o.Y to RM15.0 mln. Revenue for the periof decreased 21.2% Y.o.Y to RM125.7 mln. (The Star)

• BTM Resources Bhd has scrapped its plan to venture into the liquefied petroleum gas business in Kazakhstan by terminating the heads of agreement it entered into last November with Tan Sri Halim Saadcontrolled Markmore Energy (Labuan) Ltd. (The Edge)

• Frontken Corp Bhd’s 1Q2020 net profit rose 10.4% Y.o.Y to RM17.0 mln, on the back of better revenue from its Taiwan semiconductor business. Revenue for the quarter gained 1.2% Y.o.Y to RM84.9 mln. (The Edge)

• K-One Technology Bhd expects to obtain approval from the Medical Device Authority under the Ministry of Health and other like authorities in other markets for the nasal swabs it plans to manufacture. This comes on the heels of its announcement on 6th May 2020 that it was going into manufacturing nasal swabs for Covid- 19 tests. (The Edge)
• Tasek Corp Bhd will see Hong Leong Asia Ltd — through subsidiaries HL Cement (Malaysia) Sdn Bhd and Ridge Star Ltd offer an unconditional voluntary takeover for the shares they do not own at RM5.80 apiece. HL Cement and Ridge Start now control 79.9% and 8.3% of Tasek’s ordinary shares respectively, bringing the total indirect stake held by HLA to 88.2%. HL Cement also controls 64.9% of the preference shares in Tasek. (The Edge)

• Destini Bhd secured a four-year contract from Japan’s JX Nippon Oil & Gas Exploration (Malaysia) Ltd to provide tubular equipment and services. The contract’s value, however, was not disclosed. (The Edge)

• Duopharma Biotech Bhd’s office and headquarters have recommenced operations and will be open during ordinary business hours. The premises were closed in accordance with the initial phases of the Movement Control Order. Research and development unit Duopharma Innovation Sdn Bhd in Zon Perindustrian Hicom-Glenmarie has also resumed operations with all manufacturing sites in Klang, Bangi and Glenmarie continuing their respective operations. (The Edge)

• Mlabs Systems Bhd has signed a memorandum of understanding with Cisco International Ltd to distribute Cisco Webex Meeting and Webex Team solutions. The group said that it will also be offering Cisco’s virtual annual general meeting service for listed companies. (The Edge)

• SMTrack Bhd is to undertake a private placement to raise up to RM53.3 mln in working capital. The working capital encompasses payment of utilities expenses, rental, trade and other payables and administrative and operating expenses. (The Edge)

• Damansara Realty Bhd (DRealty) has appointed AWC Bhd’s former business development general manager Azman Tambi Chik as its new chief executive officer effective 12th May 2020. Meanwhile, executive director Azhari Abdul Hamid has left his role, following the non-renewal of his fixedterm contract due to the restructuring that is currently being undertaken. Azhari controls a 14.6% stake in DRealty’s subsidiary HC Duraclean Sdn Bhd. (The Edge)

• Yee Lee Corp Bhd’s founder cum executive chairman Datuk Lim A Heng @ Lim Kok Cheong and parties acting in concert, who control an 89.9% stake in the company, have launched a voluntary general offer for the remaining 10.1% stake at RM2.06 per share — an 11.5% discount to their previous offer price of RM2.33 last year. (The Edge)  

Source: Mplus Research - 13 May 2020