Improving Sentiment

• The FBM KLCI (+0.4%) marched higher for the third straight session in tandem with gains across regional peers following higher commodity prices such as crude oil. Consequently, the key index climbed 1.5% W.o.W. The lower liners - the FBM Small Cap (+1.7%), FBM Fledgling (+0.8%) and FBM ACE (+1.6%), all advanced, while the REIT sector (- 0.3%) underperformed the positive broader market.

• Market breadth turned positive as advancers outpaced the decliners on a ratio of 592-to-316 stocks. Traded volumes rose 31.7% to 9.23 bln shares spurred by the positive market sentiment.

• Japanese equities advanced as the Nikkei rose 0.6% taking cue from the stronger performance on Wall Street overnight. Both the Hang Seng Index and Shanghai Composite, however, extended their losses by 0.1% each after enduring a choppy trading session. Asia stockmarkets, meanwhile, closed mostly higher on last Friday.

• U.S. stockmarkets extended their gains as the Dow climbed 0.3% but upsides were limited owing to renewed trade uncertainty between U.S. and China. On the broader market, the S&P 500 added 0.4%, while the Nasdaq march 0.8% higher.

• Earlier, European stockmarkets - the FTSE (+1.0%), CAC (+0.1%) and DAX (+1.2%), all rebounded in tandem with gains across global equities. Meanwhile, Germany 1Q2020 GDP shrank -2.2% Y.o.Y, marking the sharpest contraction since the previous financial crisis but was in line with economists’ consensus expectations.

THE DAY AHEAD

• Expectedly, the FBM KLCI nudged higher last Friday following higher commodity prices. This came after the Energy Information Administration (EIA) raised the outlook of crude oil forecast, whilst Malaysia slashed the export duty for crude palm oil to 0% for June 2020 contract.

• Moving forward, we think that the buying momentum may see some choppiness amid the renewed Sino-U.S. trade tension. A build-up from last week’s gains may see with the FBM KLCI to re-test the upper band of the consolidation range at around the 1,430 level after the key index managed to rise above the 1,400 psychological level. At the same time the 1,360 will serve as the support level.

• After a two-day pause, the lower liners resume their recovery as investors continue to ramp up their position, capitalizing on the positive market sentiment. We reckon that rotational play may continue with trading interest to hinge towards the energy and plantation stocks over the near term following the higher commodity prices as of late.

COMPANY BRIEF

• Icon Offshore Bhd’s 1Q2020 net profit stood at RM20.4 mln against a net loss of RM7.6 mln recorded in the previous corresponding quarter, boosted by higher vessel utilisation rate, while the company benefited from one-time gain on its debt restructuring exercise. Revenue for the quarter climbed 17.0% Y.o.Y to RM48.9 mln. (The Star)

• The major shareholder of Ho Wah Genting Bhd (HWGB) have raised the takeover price for the shares from 14 sen to 20.5 sen as minority shareholders deemed the earlier offer as unattractive. While Ho Wah Genting Holding Sdn Bhd raised the offer for the shares, it retained the offer price of warrants at one sen a unit.

• The offerors are Datuk Lim Ooi Hong, Lim Wee Kita and Datuk Teo Tiew. They had through Ho Wah Genting Holding acquired 97.2 mln shares or 19.2% as at 8th May 2020. This latest purchase saw them increasing their shareholding in HWGB from 29.8% or 150.6 mln shares to 247.8 mln shares or 49.0%. (The Star)

• Genting Malaysia Bhd (GenM) wants Miami-Dade County in the US to fund a US$770.0mln (RM3.35 bln) monorail system, linking Miami mainland with South Beach. GenM and its partners (which include Meridiam, the company behind the PortMiami tunnel) have proposed to build and operate the 6.44km “Miami Beach Monorail” and turn over fare revenue to the country authority, in exchange for yearly payments of US$59.4 mln over 30 years. (The Edge)

• Kronologi Asia Bhd’s 1Q2020 net loss stood at RM11.2 mln, from a net profit of RM3.7 mln recorded in the previous corresponding quarter, as it recognised an RM11.6 mln one-time non-cash impairment “out of prudence” on property, plant and equipment amid the economic slowdown and uncertainties induced by Covid-19. Revenue for the quarter, however, jumped 59.9% Y.o.Y to RM52.0 mln. (The Edge)

• LKL International Bhd will see MIDF Amanah Investment Bank Bhd cease to be its sponsor effective on 16th May 2020, as the medical equipment provider has successfully maintained the services of a sponsor for at least three financial years since listing. This is in accordance with Bursa Malaysia’s listing rules. (The Edge)

• Malayan Flour Mills Bhd (MFM) 1Q2020 net loss stood at RM16.8 mln, from a net profit of RM19.9 reported in the previous corresponding quarter, following losses from its poultry integration business and Indonesian joint venture. Revenue for the quarter, however, grew 3.0% Y.o.Y to RM654.3 mln. (The Edge)

• Malaysian Genomics Resources Centre Bhd (MGRC) saw Khazanah Nasional Bhd ceasing to be a major shareholder. Khazanah’s indirect unit and MGRC’s largest shareholder Syntamatix Sdn Bhd disposed of 12.0 mln shares or 11.6% on 13th May 2020. Khazanah had a 61.2% stake in MGRC as of October 2019. It is unclear who took up the stake sold by Khazanah. (The Edge)

• Minetech Resources Bhd won a RM30.4 mln subcontract to build the 36- classroom SMK Pelangi Perdana secondary school in Parit Buntar, Perak. Work will start on 1st June 2020 and is expected to be completed by 13th February 2021. (The Edge)

• Pentamaster Corporation Bhd’s 1Q2020 net profit fell 14.3% Y.o.Y to RM16.8 mln, following its revenue being hit by travelling restrictions amid the Covid-19 outbreak. Revenue for the quarter dropped 15.7% Y.o.Y to RM100.1 mln. (The Edge)

• Petra Energy Bhd’s 1Q2020 net loss amounted to RM20.8 mln vs. a net profit of RM1.7 mln reported in the previous corresponding quarter as it faced upstream activities revision amid the recent oil price crash and Covid-19 outbreak. Revenue for the quarter fell 35.3% Y.o.Y to RM72.4 mln. (The Edge)

• Rohas Tecnic Bhd has bagged a RM102.0 mln contract from the Power Grid Company of Bangladesh Ltd to supply transmission lines in that country. The turnkey contract is expected to start in 3Q2020, and has tenure of 24 months. (The Edge)  

Source: Mplus Research - 18 May 2020