PUBLIC INVESTMENT BANK

PublicInvest Research Daily Wednesday, April 22, 2020 KDN PP17686/03/2013(032117) INDICES HIGHLIGHTS LAST CLOSE CHG % CHG

KLCI 1,381.73 -31.39 -2.2 DOW 23,018.88 -631.56 -2.7 Technicals: Suria Capital – Possible For Recovery (6521, Technical S&P 500 2,736.56 -86.60 -3.1 Buy) NASDAQ 8,263.23 -297.50 -3.5 FTSE-100 5,641.03 -171.80 -3.0 SURIA is staging a potential breakout from its consolidation phase. SHANGHAI 2,827.01 -25.54 -0.9 HANG SENG 23,793.55 -536.47 -2.2 Corresponding RSI and MACD indicators remain healthy while trending STI 2,551.92 -45.93 -1.8 sideways, with anticipation of continuous improvement in both NIKKEI 225 19,280.78 -388.34 -2.0 momentum and trend in the near term. Should resistance level of JCI 4,501.92 -73.99 -1.6 RM0.910 be genuinely broken with renewed buying interest, it may

MARKET ACTIVITY continue to lift price higher to subsequent resistance levels of RM0.970 and RM1.00. However, failure to hold on to support level of RM0.890 VOL(m) VAL(RMm) may indicate weakness in the share price and hence, a cut-loss signal. 6,533.19 2,940.44

BURSA’S MARKET SHARE (%) Technicals: Mycron Steel – Possible For Further Upside (5087, Technical Buy) Retail 36.5% Institutional 45.1% Foreign 18.4% MYCRON is attempting to pick up on its prior uptrend. Slightly improved

KEY COMMODITIES RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in LAST CLOSE CHG % CHG the near term. Should resistance level of RM0.275 be genuinely broken KLCI FUTURES (Apr) 1,370.00 -38.50 -2.7 OIL - BRENT (USD/b) 19.33 -6.24 -24.4 with renewed buying interest, it may continue to lift price higher to CPO FUTURE (RM/ton) 2,064.00 -168.00 -7.5 subsequent resistance levels of RM0.300 and RM0.320. However, RUBBER (RM/kg) 419.00 -5.00 -1.2 failure to hold on to support level of RM0.230 may indicate weakness in GOLD (USD/Ounce) 1,673.14 -21.44 -1.3 the share price and hence, a cut-loss signal. FOREX

LAST CLOSE % CHG HEADLINES MYR/USD 4.39 0.5 MYR/SGD 3.08 -0.1 YUAN/MYR 1.61 -0.2 Economy YEN/MYR 24.45 -0.6 MYR/EURO 4.76 0.0 § MYR/GBP 5.44 -0.2 US: Existing home sales pull back sharply in March. Existing home sales plunged by 8.5% to an annual rate of 5.27m in March TOP MOVERS IN MARKET after spiking by 6.3% to a revised of 5.76m in Feb. Economists had

TOP 5 VOLUME LAST CLOSE VOL (m) expected existing home sales to plummet 8.1% to a rate of 5.30m LAMBO GROUP BHD 0.02 503.15 from the 5.77m originally reported for the previous month. Despite VELESTO ENERGY B 0.15 246.92 the steep monthly decline, existing home sales in March were up by NETX HOLDINGS BH 0.01 204.64 0.8% compared to the same month a year ago, reflecting the ninth AIRASIA X BHD 0.13 186.78 straight month of YoY growth. Median existing home price for all HIBISCS 0.43 165.69 housing types was USD280,600 in March, up 3.8% from TOP 5 GAINERS LAST CLOSE RM (+) USD270,400 in Feb and up 8.0% from USD259,700 in the same KOBAY TECHNOLOGY 1.58 0.17 month a year ago. There were 1.50m homes for sale at the end of COMFORT GLOVE BH 1.23 0.15 LATITUDE TREE HL 1.92 0.13 March, up 2.7% from 1.46m at the end of Feb but down 10.2% from RUBBEREX M CORP 1.23 0.10 1.67m at the end of March 2019.The unsold inventory represents MCE HOLDINGS BHD 0.40 -4.70 3.4 months of supply at the current sales pace compared to 3.0

TOP 5 LOSERS LAST CLOSE RM (-) months in Feb and 3.8 months a year ago. (RTT) NESTLE (MALAY) 139.00 -2.00 DUTCH LADY MILK 47.12 -1.36 § US: Debt to surge past wartime record, deficit to quadruple. CARLSBERG BREWER 28.30 -1.28 KEP 20.40 -0.72 The US budget deficit may quadruple this year to almost USD4trn. PANASONIC MANUFA 31.38 -0.62 Projection from the Committee for a Responsible Federal Budget (CRFB) say that by 2023 US debt held by the public will surpass Gainers – 198 Losers – 827 Unchanged – 254 records set in the post-World War II years. And these projections only include spending enacted so far—in a three-month-old crisis that has seen emergency Congressional appropriations top USD2.3trn. Additional spending is almost certain as the coronavirus Research Team T 603 2268 3000 pandemic destroys millions of jobs and thousands of businesses F 603 2268 3014 while slashing tax revenues for local and state governments. Even E [email protected] before the crisis, US debt-to-GDP had more than doubled to 79% in 2019 from 35% in 2007. (Bloomberg) 1 Important disclaimer is provided at the end of this report.| PUBLIC INVESTMENT BANK Page 1 of 8

PUBLIC INVESTMENT BANK BERHAD

§ EU: ECB may discuss junk debt collateral in call. ECB policy

FBM KLCI makers will hold a call on Wednesday evening where they may

discuss whether to accept junk-rated debt as collateral from lenders. (m) Volume (m) KLCI Index 500 1,800 The video conference could be intended to head off concerns that

1,700 some sovereign and corporate bonds will soon be downgraded to 400 non-investment grade because of the cost of fighting the 1,600 300 coronavirus pandemic. Governors expect collateral to be discussed 1,500 200 on the call, asking not to be identified as the meeting is confidential. 1,400 While the ECB’s current rules mean Italy would have to be cut to 100 1,300 junk, the prospect of downgrades is unnerving investors. A cut in

0 1,200 the sovereign would flow through to the corporate bonds and May-19 Jul-19 Sep-19 Nov-19 Feb-20 Apr-20 commercial paper that the ECB also buys and takes as collateral. (Bloomberg) DOW JONES § The ZEW (m) Volume (m) INDU Index EU: German economic confidence improves in Apr. 350 35,000 Indicator of Economic Sentiment advanced 77.7 points to 28.2 300 30,000 points in April. This was well above the forecast of -42.3. 250 Meanwhile, the current conditions index plunged 48.4 points to - 25,000 200 91.5 points. The expected reading was -77.5. This constellation of 150 20,000 values currently witnessed for expectations and the assessment of 100 15,000 the current situation roughly corresponds to that seen in Apr/May 50 2009 during the financial crisis. (RTT) 0 10,000 May-19 Jun-19 Jul-19 Sep-19 Oct-19 Dec-19 Jan-20 Mar-20 Apr-20

§ UK: Jobless claims rise in glimpse of losses to come. UK jobless claims increased in March and the number of people S&P 500

seeking welfare support during the lockdown topped the 1.5m mark,

(m) Volume (m) SPX Index 2,000 4,000 highlighting the growing financial pressure on households from the

3,500 coronavirus pandemic. Jobless claims rose 12,200 from Feb, taking 1,500 the rate to a six-year high of 3.5%. Separate figures showed the 3,000 Department for Work and Pensions (DWP) is on average receiving 1,000 2,500 five times the number of claims for Universal Credit benefits than it 2,000 would in a normal week. The DWP figures don’t necessarily 500 1,500 translate into a one-for-one increase in unemployment, since people

0 1,000 can also claim for the benefit if they see a drop in income. The May-19 Jun-19 Jul-19 Sep-19 Oct-19 Dec-19 Jan-20 Mar-20 Apr-20 figure was also up only marginally on the 1.4m reported last week. (Bloomberg) HANG SENG § China: Hubei posts 1Q GDP slump. China’s central Hubei (m) Volume (m) HSI Index 6,000 31,000 province, epicentre of the new coronavirus outbreak in the country, 29,000 5,000 posted a 39.2% drop in economic output in the 1Q compared with a 27,000 4,000 year earlier, weighed down by a sharp decline in manufacturing. 25,000

3,000 23,000 The sudden outbreak of the new coronavirus has had an

21,000 unprecedented impact on economic and social development in the 2,000 19,000 province, with most economic indicators down significantly in the 1,000 17,000 1Q. Hubei’s manufacturing output plunged 45.8% in Jan-March from 0 15,000 a year earlier, led by slumps in the auto, electrical machinery and Apr-19 Jun-19 Jul-19 Sep-19 Oct-19 Nov-19 Jan-20 Feb-20 Apr-20 general equipment industries. (Reuters)

STRAITS TIMES § : BOJ warns banks face rising credit costs, investment

(m) Volume (m) FSSTI Index 1,600 3,600 losses. Japanese lenders must brace for rising bad-loan costs and

1,400 3,400 investment losses even as the financial system shows resilience to 1,200 3,200 the coronavirus caused economic slump. If the downturn is 1,000 3,000 prolonged, more companies at home at abroad could face solvency 800 2,800 problems, raising credit costs. Losses on banks’ securities 600 2,600 investment “could deteriorate” due to financial-market moves, and 400 foreign-currency funding may become destabilized. The pandemic 200 2,400

0 2,200 is adding to pressures on Japanese banks that have increased risk- May-19 Jul-19 Oct-19 Dec-19 Feb-20 Apr-20 taking to make up for declining profitability due to ultra-low interest rates and a shrinking population. To cushion the impact of the Source: Bloomberg, PublicInvest Research economic slump, the central bank has expanded asset purchases while the government has announced a record stimulus package. (Bloomberg)

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PUBLIC INVESTMENT BANK BERHAD

Markets

§ CIMB (Outperform, TP: RM4.90): Has exposure to troubled oil trader Hin Leong. CIMB Group is believed to be the Malaysian bank that has significant exposure to troubled oil trader Hin Leong Trading, which owes almost USD4bn to more than 20 banks, including DBS Group Holdings Ltd, HSBC Holdings Plc and Standard Chartered Plc. Market talk has it that CIMB’s exposure to Hin Leong is to the tune of USD120m to USD130m. This will mean an exposure of more than RM500m in its loan book. (The Edge)

§ Genting (Outperform, TP: RM5.10): Plans unprecedented pay cut as virus shuts casinos. Genting and its units are planning the first group-wide salary cut since its founding in 1965. Genting, backed by tycoon Tan Sri Lim Kok Thay, is proposing as much as a 20% temporary reduction of basic salary for employees based on their ranks, while Genting Ltd suggested an up to 50% cut for those holding vice-president roles or higher, according to an internal memo seen by Bloomberg News. (Bloomberg)

§ Serba Dinamik (Outperform, TP: RM2.66): Optimistic on projections despite COVID-19. Amidst global uncertainty due to the Covid-19 pandemic that had led to lockdowns and controlled movements worldwide, Serba Dinamik is optimistic on its projections, particularly its RM7.7bn project in Abu Dhabi. Its group CEO Datuk Mohd Abdul Karim Abdullah said the project, backed by a strong network of suppliers, consultants and contractors to support the job, would further strengthen the company’s position in the Middle East. He stressed that this project is diversification to reduce dependency on O&G revenue and does not deviate from its core competencies as it is highly competitive in engineering, procurement and construction (EPC) as well as IT - frontier technology. (Bernama)

§ TM (Neutral, TP: RM4.00): Completion of maintenance works by consortium. Telekom Malaysia (TM) has announced that preventive maintenance works on the Asia-America Gateway submarine cable network linking Malaysia and other Asian countries to the US and Hong Kong has been completed. TM said the maintenance works, which started on April 17, 2020, was carried out by a consortium of operators which maintains the submarine cable network. (Bernama)

§ HLT Global: To distribute rapid Covid-19 tests worldwide. HLT Global has signed a distributorship agreement with Accobiotech SB, to distibute Acco’s COVID-19 rapid test kit worldwide. HLT said the agreement is for a period of one year starting from April 20, 2020, and can be renewed upon mutual agreement between the parties. (SunBiz)

§ Tadmax: Sells 25% in Pulau Indah power project to Kepco, to focus on property, construction biz. Tadmax Resources has inked an agreement to sell a 25% stake in its Pulau Indah power plant project to Korea Electric Power Corp (Kepco) for RM41.75m. (The Edge)

§ Dataprep: To raise up to RM16.7m from private placement. Dataprep Holdings has proposed a private placement exercise to raise up to RM16.7m for working capital, repayment of bank borrowings and future investments. It intends to issue up to 139.06m shares, equivalent to 30% of its outstanding shares, at an issue price to be determined later. (The Edge)

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PUBLIC INVESTMENT BANK BERHAD

MARKET UPDATE

§ The FBM KLCI might have another weak opening today after US stocks closed sharply lower Tuesday, driving the major indices to their lowest levels in about two weeks, as high-flying technology shares gave up ground, and a historic collapse in oil prices eroded

the bullish mood on Wall Street. The downbeat atmosphere more than offset reported progress in Washington on additional aid for businesses badly hurt by the coronavirus pandemic. The Dow

Jones Industrial Average fell 631.56 points, or 2.7%, at 23,018, the S&P 500 index lost 86.60 points, or 3.1%, to close at 2,736.56, with both benchmarks finishing at their lowest levels since April 7. Meanwhile, the Nasdaq Composite Index retreated 297.50 points,

or 3.5%, to end at 8,263.23, marking its lowest close since April 13. Across the Atlantic, the Stoxx Europe 600 slumped 3.4%.

Back home, the FBM KLCI closed down 31.39 points or 2.22% at 1,381.73, while ’s energy index fell by a significantly larger quantum, after prices of US crude oil futures fell below zero for the first time in history. In the region, stocks closed

lower Tuesday, with the China CSI 300 losing 1.2%, Japan’s Nikkei 22 falling 2% and Hong Kong’s Hang Seng Index retreating 2.2%.

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TECHNICAL OUTLOOK

FBM KLCI: 1381.73 (-31.39; -2.22%)

Resistance: 1400, 1430, 1455

Support: 1250, 1310, 1360

FBM KLCI Daily Chart

Succumbing to intense selling pressure, the local benchmark tumbled yesterday. At the close, the FBM KLCI was down 31.39 points to end at 1381.73. Market breadth reversed its earlier trend as losers trumped gainers 827 to 198. At this juncture, the index is anticipated to trend sideways between the 1400 and 1360 marks with slight bearish bias amid weakened upward momentum. Support levels for the index are at 1250, 1310 and 1360, while the resistance levels are at 1400, 1430 and 1455.

Similarly, the FBM SCAP (10518.69; -314.80; -2.91%) has formed an evening star candlestick pattern, which is a bearish reversal signal. Furthermore, sectors across the board could have reached respective turning points after undergoing strong rallies from their follow-through technical rebound momentum. While a mild retracement towards subsequent support levels following the overstretched technical rebound is deemed healthy, investors might choose to lock in recent profits gained from the follow-through technical rebound, if any, should the FBM SCAP retrace and remain below the 9900 mark in the near term, as part of a trading strategy.

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ECONOMIC MONITOR (Announcements over next 7 days)

Date Economic Release Period Consensus Previous 22-Apr-20 Euro-Zone Consumer Confidence Apr -20.0 -11.6 22-Apr-20 Malaysia CPI YoY Mar -0.1% 1.3% 22-Apr-20 Malaysia Foreign Reserves 15-Apr -- USD101.7bn 23-Apr-20 Euro-Zone Markit PMI Manufacturing Apr 38.0 44.5 23-Apr-20 Euro-Zone Markit PMI Services Apr 22.8 26.4 23-Apr-20 US Initial Jobless Claims 18-Apr 4500K 5245K 23-Apr-20 US Markit PMI Manufacturing Apr 35.0 48.5 23-Apr-20 US New Home Sales Mar 640K 765K

CORPORATE MONITOR

COMPANY VISITS / BRIEFING

Company Date Time

RESULTS

Company Financial Quarter Date

IPO LISTING

Listing Issue Price Closing Application Company No. Of Shares Listing Date Sought (RM/Share) Date

Public Issue Offer For Sale Retail Institutional

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CORPORATE MONITOR

OFF-MARKET TRANSACTIONS (>1,000,000)

21-Apr-2020 Company Volume Value (RM) Average Price (RM) Malayan United Industries 21,600,000 2,160,000 0.10 Datasonic Group 10,000,000 10,400,000 1.04

ENTITLEMENTS

Company Particulars Gross DPS Announcement Ex-Date Lodgement Payment (RM) Date Date Date

Pacific & Orient Third Interim Single Tier Dividend of 0.004 8-Apr 22-Apr 23-Apr 30-Apr RM0.004 UEM Edgenta Single Tier Second Interim Dividend of 8 0.080 26-Feb 22-Apr 23-Apr 14-May sen Chin Well Holdings Single Tier Interim Dividend of 1.5 sen 0.015 27-Feb 23-Apr 24-Apr 22-May Single Tier Dividend of 4.00 sen per 0.040 28-Feb 24-Apr 27-Apr 14-May share Axiata Special Dividend of 0.5 sen per share 0.005 28-Feb 24-Apr 27-Apr 14-May First interim dividend of 2 sen 0.020 26-Feb 24-Apr 27-Apr 12-May

TE- Tax Exempt

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RATING CLASSIFICATION

STOCKS

OUTPERFORM The stock return is expected to exceed a relevant benchmark’s total of 10% or higher over the next 12months.

NEUTRAL The stock return is expected to be within +/- 10% of a relevant benchmark’s return over the next 12 months.

UNDERPERFORM The stock return is expected to be below a relevant benchmark’s return by -10% over the next 12 months.zxc

TRADING BUY The stock return is expected to exceed a relevant benchmark’s return by 5% or higher over the next 3 months but the underlying fundamentals are not strong enough to warrant an Outperform call.

TRADING SELL The stock return is expected to be below a relevant benchmark’s return by -5% or more over the next 3 months.

NOT RATED The stock is not within regular research coverage.

SECTOR

OVERWEIGHT The sector is expected to outperform a relevant benchmark over the next 12 months.

NEUTRAL The sector is expected to perform in line with a relevant benchmark over the next 12 months.

UNDERWEIGHT The sector is expected to underperform a relevant benchmark over the next 12 months.

DISCLAIMER

This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, , its affiliates and related companies, directors, officers, connected persons/employees, associates or agents.

This document is not and should not be construed or considered as an offer, recommendation, invitation or a solicitation of an offer to purchase or subscribe or sell any securities, related investments or financial instruments. Any recommendation in this document does not have regards to the specific investment objectives, financial situation, risk profile and particular needs of any specific persons who receive it. We encourage the addressee of this document to independently evaluate the merits of the information contained herein, consider their own investment objectives, financial situation, particular needs, risks and legal profiles, seek the advice of their, amongst others, tax, accounting, legal, business professionals and financial advisers before participating in any transaction in respect of any of the securities of the company(ies) covered in this document.

PIVB, Public Bank Berhad, our affiliates and related companies, directors, officers, connected persons/employees, associates or agents may own or have positions in the securities of the company(ies) covered in this document or any securities related thereto and may from time to time add or dispose of, or may be materially interested in, any such securities. Further PIVB, Public Bank Berhad, our affiliates and related companies, associates or agents do and/or seek to do business with the company(ies) covered in this document and may from time to time act as market maker or have assumed an underwriting commitment in the securities of such company(ies), may sell them or buy them from customers on a principal basis, may have or intend to accommodate credit facilities or other banking services and may also perform or seek to perform investment banking, advisory or underwriting services for or relating to such company(ies) as well as solicit such investment advisory or other services from any entity mentioned in this document. The analyst(s) and associate analyst(s) principally responsible for the preparation of this document may participate in the solicitation of businesses described aforesaid and would receive compensation based upon various factors, including the quality of research, investor client feedback, stock pickings and performance of his/her recommendation and competitive factors. The analyst(s) and associate analyst(s) may also receive compensation or benefit (including gift and company/issuer-sponsored and paid trips in line with the Bank’s policies) in executing his/her duties. Hence, the addressee or any persons reviewing this document should be aware of the foregoing, amongst others, may give rise to real or potential conflicts of interest.

Published and printed by:

PUBLIC INVESTMENT BANK BERHAD (20027-W) 9th Floor, Bangunan Public Bank 6, Jalan Sultan Sulaiman 50000 Kuala Lumpur T 603 2268 3000 F 603 2268 3014 Dealing Line 603 2268 3129

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