Marching Higher

• The semi-annual portfolio re-balancing by institutional players sent the FBM KLCI (+1.1%) higher for the third straight session as the key index outperformed the regional peers. Consequently, the key index recorded +4.7% M.o.M gains in May 2020 - the biggest monthly gain since July 2019. The lower liners - the FBM Small Cap (+1.3%), FBM Fledgling (+1.8%) and FBM ACE (+1.6%), all advanced, while the broader market finished mostly higher.

• Market breadth turned positive as advancers overpowered the decliners on a ratio of 13-to-8. Traded volumes rose 30.3% to 9.04 bln shares on the higher trading activities from institutional players which also boosted trading value to record high at RM9.31 bln.

• Asia benchmark indices finished mostly lower as the Nikkei (-0.2%) retreated for the first time in five days, after Japan’s retail sales data fell 13.7% Y.o.Y in April 2020. The Hang Seng Index slipped 0.7%, but the Shanghai Composite (+0.2%) extended its gains. Asia stockmarkets, meanwhile, ended mixed on last Friday.

• U.S. stockmarkets finished on a mixed note as the Dow (-0.1%) extended its losses after enduring a choppy trading session as personal consumption for April 2020 dropped -13.6% Y.o.Y. On the broader market, the S&P 500 (+0.5%) rebounded after marching into the positive territory in the final two trading hours, while the Nasdaq jumped 1.3% higher.

• Major European stockmarkets - the FTSE (-2.3%), CAC (-1.6%) and DAX (- 1.7%), all faltered as sentiment turned cautious ahead of the U.S. President Donald Trump speech on China. Meanwhile, Eurozone’s inflation in April 2020 rose +0.1% Y.o.Y - the slowest pace of increase since June 2016.

The Day Ahead

• Last Friday’s gains on the FBM KLCI were stronger than anticipated amid the final hour buying interest some of the index linked stocks. It remains to be seen if there will be follow-through buying interest as the market’s undertone turned less cautious which could still prompt further buying activities.

• The recovery across global indices arising from the simmering tension between U.S. and China could make the road less bumpy for the FBM KLCI to sustain its recovery and we think that the upsides are still on the table. This could see index linked stocks marching higher again, albeit we think that gains may be capped at the 1,495 and 1,510 resistance levels. Any pullback is likely to be mild with the support located at the 1,430 level.

• The lower liners and broader market shares are finding some support after their recent consolidation. There could be further rotational play, but we think that gains may be tempered by bouts of quick profit taking activities.

COMPANY BRIEF

• RHB Bank Bhd’s 1Q2020 net profit declined 9.4% Y.o.Y to RM570.9 mln as the banking group set aside higher allowances for expected credit losses (ECL). Revenue for the quarter fell 3.5% Y.o.Y to RM3.23 bln. (The Star)

• Mah Sing Group Bhd’s 1Q2020 net profit dropped 45.3% Y.o.Y to RM30.1mln due to the traditionally softer demand during the Chinese New Year period and delayed construction progress because of the movement control order (MCO). Revenue for the quarter declined 17.6% Y.o.Y to RM371.1 mln. (The Star)

• CIMB Group Holdings Bhd has appointed Datuk Abdul Rahman Ahmad as its chief executive officer (CEO) and executive director (ED) effective 10th June 2020. The former CEO of Permodalan Nasional Bhd (PNB) will also be the CEO and ED of CIMB Bank Bhd. (The Edge)

• Hong Leong Bank Bhd’s (HLB) 3QFY20 net profit declined 15.7% Y.o.Y to RM534.8 mln due to lower net income, higher operating expenses, and a RM121.2 mln allowance for impairment losses on loans, advances and financing. Revenue for the quarter dropped 3.2% Y.o.Y to RM1.13 bln.

• For 9MFY20, cumulative net profit fell 5.1% Y.o.Y to RM1.93 bln. Revenue for the period, however, rose 0.6% Y.o.Y to RM3.58 bln. (The Edge)

• Hong Leong Financial Group Bhd’s (HLFG) 3QFY0 net profit declined 26.8% Y.o.Y to RM339.2 mln on lower earnings from all its operating divisions. Revenue for the quarter retreated 12.6% Y.o.Y to RM1.14 bln.

• For 9MFY20, cumulative net profit dropped 8.3% Y.o.Y to RM1.33 bln. Revenue for the period retreated 2.8% Y.o.Y to RM3.83 bln. (The Edge)

• Affin Bank Bhd’s 1Q2020 net profit dropped 9.0% Y.o.Y to RM123.6 mln, dragged down by credit impairment losses of RM117.1 mln compared with a write-back of RM9.9 mln in the previous corresponding quarter, coupled with higher overheads. Revenue for the quarter, however, grew 33.4% Y.o.Y to RM630.4 mln. (The Edge)

• Carlsberg Malaysia Bhd’s 1Q2020 net profit fell 16.7% Y.o.Y to RM73.0 mln due to the COVID-19 outbreak that affected its sales and the resultant containment efforts that saw the suspension of its operations. Revenue for the quarter dropped 10.6% Y.o.Y to RM589.9 mln. (The Edge)

• Guan Chong Bhd’s 1Q2020 net profit grew 35.8% Y.o.Y to RM72.2 mln on higher selling prices of cocoa products and revenue contributed by its newlyacquired German subsidiary Schokinag Holding GmbH as well as a RM27.8 mln gain on disposal of Guan Chong’s entire stake in associate company Fuji Oil Global (M) Sdn Bhd. Revenue for the quarter gained 40.3% Y.o.Y to RM909.4 mln. (The Edge)

• PPB Group Bhd’s 1Q2020 net profit declined 24.6% Y.o.Y to RM187.3 mln due to lower earnings contributions across all divisions, including its associate company Wilmar International Ltd. Revenue for the quarter fell 7.6% Y.o.Y to RM1.07 bln. (The Edge)

• Hap Seng Consolidated Bhd’s 1Q2020 net profit grew marginally by 1.5% Y.o.Y to RM160.3 mln thanks to better results from property and credit financing divisions. Revenue for the quarter, however, slipped 15.7% Y.o.Y to RM1.48 bln. (The Edge)

• Ta Ann Holdings Bhd's 1Q2020 net profit improved 26.9% Y.o.Y to RM10.3 mln following higher average selling prices for crude palm oil (CPO) and fresh fruit bunch (FFB). Revenue for the quarter grew 41.2% Y.o.Y to RM252.6 mln. (The Edge)  Bumi Armada Bhd’s 1Q2020 net loss stood at RM224.0 mln as it recognised non-cash impairments of RM314.4 mln following the oil-price crash in the quarter that pushed Brent to 30-year lows. Revenue for the quarter, however, increased 12.4% Y.o.Y to RM552.6 mln. (The Edge)

• IOI Properties Group Bhd’s 3QFY20 net profit fell 63.3% Y.o.Y to RM71.4 mln after its property development activities were affected by the lockdowns in Malaysia and China. Revenue for the quarter declined 17.7% Y.o.Y to RM401.4 mln.

• For 9MFY20, cumulative net profit fell 22.0% Y.o.Y to RM407.7 mln. Revenue for the period dipped 11.2% Y.o.Y to RM1.51 bln. (The Edge)

• Paramount Corp Bhd’s 1Q2020 net profit surged 75.7x Y.o.Y RM467.0 mln on divestment gain of RM460.6 mln from the disposal of Pre-Tertiary Education Group. Revenue for the quarter, however, declined marginally by 0.1% Y.o.Y to RM122.1 mln. (The Edge)

• Star Media Group Bhd’s 1Q2020 net loss stood at RM4.0 mln vs. a net profit of RM3.5 mln recorded in the previous corresponding quarter amid lower revenue from the print media segment. Revenue for the quarter declined 20.4% Y.o.Y to RM65.8 mln. (The Edge)

• GD Express Carrier Bhd’s (GDex) independent and non-executive chairman Datuk Ahmad Sufian @ Qurnain Abdul Rashid is stepping down by the end-May. Meanwhile former Bank Negara Malaysia governor Tan Sri Muhammad Ibrahim is succeeding Ahmad as chairman on 1st June 2020. (The Edge)  InNature Bhd’s 1Q2020 net profit sank 72.2% Y.o.Y to RM2.8 mln following the unexpected closure of its stores as a result of the Movement Control Order (MCO). Revenue for the quarter declined 21.5% Y.o.Y to RM37.4 mln. (The Edge)

• Tomei Consolidated Bhd’s 1Q2020 net profit rose 39.7% Y.o.Y to RM4.0 mln due to better gross margin widened by higher gold prices. Revenue for the quarter, however, decreased 10.8% Y.o.Y to RM127.8 mln. (The Edge)  

Source: Mplus Research - 1 Jun 2020