Daily News

Refer to important disclosures at the end of this report

AllianceDBS Research, Malaysia Equity 19 May 2020

Market indices and statistics Currencies

Daily chg YTD chg Daily Daily
Indices Last % % Last chg chg %
RM/USD 4.3720 0.0210 0.48
FBM KLCI 1,410.2 0.48 -12.00 RM/£ 5.2917 -0.0173 -0.33
FBM Emas 9,979.3 1.13 -12.56 RM/100 Yen 4.0731 -0.0011 -0.03
FBM Syariah 11,299.9 1.49 -5.96 RM/€ 4.7018 0.0000 0.00
FBM Small Cap 11,991.7 3.26 -16.28 RM/SGD 3.0640 0.0079 0.26
FBM ACE 5,403.3 0.25 0.40 RM/CNY 0.6150 0.0023 0.38
Dow Jones 24,597.4 3.85 -14.80 RM/AUD 2.8176 0.0074 0.26
S&P 500 2,953.9 3.15 -9.33
Nasdaq 9,234.8 2.44 1.57 Commodities and futures
FTSE 6,048.6 4.29 -20.46 Daily Daily
Nikkei 20,133.7 0.48 -14.89 Last chg chg %
Hang Seng 23,934.8 0.58 -16.15 KLCI (1st month) 1,410.0 10.00 0.71
Strait Times 2,539.3 0.62 -21.92 CPO (3rd month) 2,150.0 61.00 2.92
PSEi Exchange 5,479.4 -1.13 -29.23 Brent (1st month) 34.8 2.31 7.11
Bangkok SET 858.9 0.51 -46.18 Gold (spot) 1,733.5 0.93 0.05
JSX Composite 4,511.1 0.08 -28.21
FBMKLCI chart
Market Turnover
Vol (m shrs) 11,210.9
1,700
Value (RM m) 4,407.3
1,650
1,600
Daily chg Value 1,550
Top 5 value Last % (RM m) 1,500
1,450
Hibiscus 0.62 6.0 273.9 1,400
Top Glove 10.50 1.2 167.0 1,350
Ekovest 0.61 23.2 153.8 1,300
Supermax 4.46 12.3 142.2 1,250
Armada 0.26 33.3 139.1 1,200
11-Mar
22-Jan

04-Mar

18-Mar
25-Mar
01-Jan
08-Jan
15-Jan

29-Jan
05-Feb
12-Feb
19-Feb
26-Feb

29-Apr
01-Apr
08-Apr
15-Apr
22-Apr

06-May
13-May

Source: Bloomberg

Malaysian news highlights Global news highlights

 ECRL gets green light for Kota Baru-Dungun realignment
 Tan Chong unit appointed exclusive distributor of MG
vehicles in Vietnam
 Sanichi, PNE, AT Systematization sign MoU with US-based
firm to produce ventilators
 US homebuilder sentiment bounces back in May, after
record plunge in April
 Japan’s economy fell into recession in first quarter of 2020
 Singapore: Non-oil exports up in April due to surge in
pharma sector
 Thai economy in recession after worst contraction since
4Q11

Refer to important disclosures at the end of this report

Sa: AA
 Daily News

MALAYSIAN NEWS
ECRL gets green light for Kota Baru-Dungun realignment

Construction work for the East Coast Rail Link’s (ECRL) Section A, comprising a
210.4km stretch from Kota Baru to Dungun, is set to commence soon after the
government gave its final approval. Malaysia Rail Link Sdn Bhd (MRL), the project
and asset owner of ECRL, said it received the approval in a letter dated May 14
from the Land Public Transport Agency (APAD). MRL said the approval for Section
A would include the final alignment route, locations of passenger/freight stations,
and the number of lots to be under land acquisition for the stretch. In addition, a
14.4km future spurline is expected to link the ECRL main line in Kelantan with the
port of Tok Bali, it said. “The ECRL will now have six stations under Section A
consisting of Kota Baru and Pasir Puteh in Kelantan and Jerteh, Bandar Permaisuri,
Kuala Terengganu and Dungun in Terengganu,” said MRL. (The Edge Markets)

Tan Chong unit appointed exclusive distributor of MG vehicles in Vietnam

Tan Chong Motor Holdings said its subsidiary in Vietnam has been appointed as the
exclusive importer and distributor of completely-built-up (CBU) MG brand vehicles
in that country. The appointment of TC Services Vietnam Co Ltd was made by
SAIC Motor Corp Ltd, the largest automobile group in China. In a filing with Bursa
Malaysia, Tan Chong said the five-year appointment will provide the group with an
opportunity to expand its foothold in the automotive industry in Vietnam. It added
that TC Services Vietnam will also provide after-sales spare parts and after-sales
services for MG CBU vehicles. (The Edge Markets)

Sanichi, PNE, AT Systematization sign MoU with US-based firm to produce

ventilators

Three Malaysian listed firms and a US-based company have joined forces to
produce medical-grade mechanical air ventilators to take advantage of the
worldwide shortage of the product. Sanichi Technology Bhd, AT Systematization
Bhd and PNE PCB Bhd said in separate filings to Bursa Malaysia today that they
have inked a memorandum of understanding (MoU) with Arzon Solar LLC (ARZ) to
form a joint-venture (JV) company for the purpose. The three Malaysian companies
said they will hold shareholding of 30% each in the JV, while ARZ will have a 10%
stake. They said they will be responsible for the production of the ventilators and
obtaining the necessary licences and certificates required. ARZ, meanwhile, will be
responsible for the distribution and marketing of ventilators for both the domestic
and international markets. AT Systematization, in its filing, said the collaboration
would also allow the company to leverage on the favourable outlook of the
healthcare industry. The company said that as the Covid-19 crisis accelerates, it
views this as an appropriate time to capitalise on the increase in demand for
medical ventilators. (The Edge Markets)

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 Daily News

GLOBAL NEWS
US homebuilder sentiment bounces back in May, after record plunge in April

After the sharpest one-month drop of the index in April, US homebuilder sentiment
bounced back slightly in May as builders saw a quick rebound in interest from
buyers. Confidence in the market for single-family, newly built homes rose 7 points
in May to 37, according to the National Association of Home Builders/Wells Fargo
Housing Market Index. Anything above 50 is considered positive, so sentiment
remains in negative territory. The index stood at 66 in May 2019 and hit a recent
high of 76 in December. Sentiment plunged an unprecedented 42 points in April,
as the coronavirus pandemic shut down much of the economy and job losses
soared. Homebuilding continued, deemed an essential business, but buyers pulled
back decisively. Now, buyers appear to be shopping again in person and virtually.
Record low mortgage rates are also helping with affordability. All components of
the index rose in May but remain in negative territory. Current sales conditions
increased 6 points to 42, sales expectations in the next six months jumped 10
points to 46 and buyer traffic rose 8 points to 21. (CNBC)

Japan’s economy fell into recession in first quarter of 2020

The world’s third-largest economy after the US and China shrank at an annualized
rate of 3.4% in 1Q20, pushed down by the initial effects of the coronavirus
pandemic. That followed a revised 7.3% contraction in the previous quarter that was
triggered by an increase in the national sales tax. Two straight quarters of contraction
is one definition of a recession. Prime Minister Shinzo Abe declared a national state of
emergency in April to contain the spread of the coronavirus and is expected to end
nationwide in the next week or two. Many stores and restaurants have closed during
the pandemic, while tourism has virtually halted because most foreign visitors are
barred from entering the country and Japanese people have been encouraged to
avoid travel. Exports fell at an annual rate of 21.8% in the first quarter, reflecting
supply-chain disruptions and lockdowns in China, one of Japan’s biggest markets.
Private consumption and capital spending by companies also fell, but not as much.
Economists are forecasting a contraction at an annualized pace of 20% or more in the
current quarter. (Wall Street Journal)

Singapore non-oil exports up in April due to surge in pharma sector

Singapore non-oil domestic exports (Nodx) increased 9.7% y-o-y in April, driven by
a 12.8% surge in non-electronics exports that included a 174.3% gain in
pharmaceuticals, said Enterprise Singapore (ESG) May 18. This is the third straight
month of y-o-y gains for Nodx, despite a gloomy economic climate caused by the
pandemic. Analysts polled by Bloomberg had forecast a 5% decline in Nodx, after
exports climbed 3.1% in February and 17.6% in March. But even after another
surprising rise, many are still not convinced about the sustainability of the upswing.
Pharmaceuticals, which spearheaded the growth, account for only 13% of
manufacturing and 10% of exports. Medical supplies to fight the outbreak were in
high demand globally, while a low base for the sector in April last year may have
exaggerated the increase. Singapore's exports to its top markets grew as a whole
last month, though shipments to China, Hong Kong, Malaysia, Indonesia and
Thailand declined. The largest contributors to the Nodx growth were the US
(+124%), the EU (+106.8%) and Japan (+81.1%). (Straits Times)

Thai economy in recession after worst contraction since 4Q11

Thailand's economy contracted at its sharpest pace in eight years in 1Q20, pushing
South-east Asia's second-largest economy into recession sooner than expected, as
the coronavirus pandemic hit tourism and domestic activity. The state planning
agency, reporting Q1 data May 18, slashed its forecast for this year's GDP to a
contraction of 5% to 6%. That would be the worst decline since 1998 when the
Asian financial crisis damaged the economy. The economy shrank 1.8% y-o-y
1Q20, the deepest contraction since the fourth quarter of 2011, when there was
bad flooding. The economy will be hit the hardest in the second quarter by the
lockdown, Mr Thosaporn Sirisumphand, head of the National Economic and Social
Development Council, told a news briefing. "There should be a U-shaped
recovery," he said, adding that foreign tourists may be allowed to return in the
third or fourth quarter. (Straits Times)

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 Daily News

DISCLOSURE

Stock rating definitions

STRONG BUY - > 20% total return over the next 3 months, with identifiable share price catalysts within this time frame
BUY - > 15% total return over the next 12 months for small caps, >10% for large caps
HOLD - -10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps
FULLY VALUED - negative total return > -10% over the next 12 months
SELL - negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame

Commonly used abbreviations

Adex = advertising expenditure EPS = earnings per share PBT = profit before tax
bn = billion EV = enterprise value P/B = price / book ratio
BV = book value FCF = free cash flow P/E = price / earnings ratio
CF = cash flow FV = fair value PEG = P/E ratio to growth ratio
CAGR = compounded annual growth rate FY = financial year q-o-q = quarter-on-quarter
Capex = capital expenditure m = million RM = Ringgit
CY = calendar year M-o-m = month-on-month ROA = return on assets
Div yld = dividend yield NAV = net assets value ROE = return on equity
DCF = discounted cash flow NM = not meaningful TP = target price
DDM = dividend discount model NTA = net tangible assets trn = trillion
DPS = dividend per share NR = not rated WACC = weighted average cost of capital
EBIT = earnings before interest & tax p.a. = per annum y-o-y = year-on-year
EBITDA = EBIT before depreciation and amortisation PAT = profit after tax YTD = year-to-date

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 Daily News

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