Renewed Volatility

• The FBM KLCI (+1.0%) recorded its fifth straight winning streak as the key index reacted to the positive developments surrounding the potential Covod-19 vaccine, coupled with the higher crude oil prices. The lower liners - the FBM Small Cap (-1.3%), FBM Fledgling (- 0.6%) and FBM ACE (-0.7%), all retreated after erasing all their intraday gains, while the plantation sector (+3.2%) outperformed on the extended recovery in crude palm oil prices.

• Market breadth turned negative as decliners overtook the advancers on a ratio of 554-to-500 stocks. Traded volumes declined 15.1% to 9.51 bln shares but remains well above the historical average.

• Asia benchmark indices advanced as the Nikkei rose 1.5%, taking cue from the sharp gains on Wall Street overnight. The Hang Seng Index jumped 1.9% to recover above the 24,000 psychological level, while the Shanghai Composite added 0.8%. Asia stockmarkets, meanwhile, closed in a sea of green yesterday.

• U.S. stockmarkets pullback from their previous session sharp gains as the Dow (-1.6%) snapped a three-day winning streak on reports over Moderna vaccine for Covid-19 might not be as effective as expected. Likewise, the S&P 500 fell 1.1% with all eleven major sectors in the red, while the Nasdaq declined 0.5%.

• Major European stockmarkets closed mostly lower as the FTSE and CAC shed 0.8% and 0.9% respectively amid the uncertainty over the anticipated Covid- 19 vaccine from Modena. The DAX, however, rose 0.2% after climbing into the positive territory in the final trading hour after the ZEW Economic Sentiment Index rose to 51.0 in May 2020 - beating market expectations over 32.0.

The Day Ahead

• It was another solid performance on the FBM KLCI as the key index marched higher alongside with the positive sentiment across regional peers yesterday. Gains were also underpinned by the stronger crude palm oil prices on reports that India would resume the purchase of Malaysian palm oil. After rising for the past five straight days, we reckon that the increasingly toppish condition may warrant a pullback over the near term.

• A pullback may view as a healthy move alongside with the renewed volatility across global equities to allow investors to digest recent gains with the key index likely to be supported at the 1,400 psychological level. Upsides are capped at the 1,430 level over the near term.

• It was a weaker performance on the lower liners amid the emergence of profit taking activities, particularly in healthcare related stocks. Moving forward, we think that the overdue pullback or consolidation may start to materialise. Investors are also turning wary on the recent batch of earnings performance which could be used as an excuse to trim their holdings.

COMPANY BRIEF

• Hextar Global Bhd's 1Q2020 net profit jumped 53.8% Y.o.Y to RM9.5 mln, on the back of higher revenue from both the agriculture and consumer products segments. Revenue for the quarter climbed 27.7% Y.o.Y to RM104.6 mln. The group declared a first interim dividend of one sen per share. (The Star)
• T7 Global Bhd via its subsidiaries has secured two contracts worth a combined provision value of RM140.0 mln for the supply of services and equipment. Tanjung Offshore Services Sdn Bhd received a letter of award from Carigali Hess Operating Company Sdn Bhd for the provision of onshore fabrication, offshore hook-up and commissioning for infill flowlines. The contract is for duration of four years commencing 1st June 2020, with the value based on work order requests from Carigali Hess Operating Company.

• A second contract was awarded to T7 Wenmax Sdn Bhd, which is a unit of the group's sub-subsidiary, by PTS Resources Sdn Bhd for the supply of systems and equipment. The duration of the contract is one year commencing 18th May 2020. (The Star)

• Bintulu Port Holdings Bhd's 1Q2020 net profit slipped 21.0% Y.o.Y to RM31.1 mln as it incurred higher tax expense and spent more on maintenance and operational supplies, as well as staff cost. Revenue for the quarter declined marginally by 0.4% Y.o.Y to RM177.7 mln. A two sen first interim dividend, payable on 10th August 2020 was declared. (The Edge)

• Green Packet Bhd has reached a settlement agreement with MYTV Broadcasting Sdn Bhd over a dispute involving a 2018 contract to supply up to 3.6 mln set-top boxes (STB) to MYTV for RM272.0 mln. Under the settlement, Green Packet will supply STBs to MYTV for RM24.4 mln, following the withdrawal of arbitration proceedings initiated over the dispute. (The Edge)

• Hibiscus Petroleum Bhd’s 3QFY20 net profit declined 48.4% Y.o.Y to RM28.5 mln on lower topline contribution. Revenue for the quarter retreated 22.2% Y.o.Y to RM175.9 mln.

• For 9MFY20, cumulative net profit decreased 53.3% Y.o.Y to RM95.9 mln. Revenue for the period shrank 19.2% Y.o.Y to RM607.0 mln. (The Edge)

• Heineken Malaysia Bhd’s 1Q2020 net profit increased 7.9% Y.o.Y to RM57.0 mln, driven by effective Chinese New Year festive campaigns. Revenue for the quarter, however, fell 1.8% Y.o.Y to RM515.9 mln. Heineken warned that its operating cash flow is expected to be significantly impacted in the second quarter and over the rest of the financial year, given slower cash collection from the trade, and weak demand from ontrade and tourism channels. (The Edge)

• Malaysian Bulk Carriers Bhd’s (Maybulk) 1Q2020 net profit stood at RM47.7 mln vs. a net loss of RM10.8 mln reported in the previous corresponding quarter after the group recorded a gain on liquidation of a subsidiary amounting to RM51.3 mln. Revenue for the quarter, however, fell 18.4% Y.o.Y to RM52.3 mln. (The Edge)

• Pharmaniaga Bhd’s 1Q2020 net profit rose 14.2% Y.o.Y to RM22.4 mln on the back of stronger demand in Indonesia. Revenue grew 4.3% Y.o.Y to RM819.9 mln. A first interim dividend of six sen per share, payable on 30th June 2020 was declared. (The Edge)

• Sunway Real Estate Investment Trust's (Sunway REIT's) 3QFY20 net property income (NPI) declined 9.0% Y.o.Y to RM103.5 mln, impacted by of Covid-19 on its retail and hotel segments. Revenue for the quarter fell 7.1% Y.o.Y to RM140.8 mln from RM151.5 mln.

• For 9MFY20, cumulative NPI grew 3.3% Y.o.Y to RM339.2 mln. Revenue for the period increased 4.0% Y.o.Y to RM452.0 mln. No income distribution was proposed for the quarter as the income distribution frequency of the REIT had been changed from quarterly to semi-annually to sustain the REIT through the current challenging period. (The Edge)  

Source: Mplus Research - 20 May 2020