• The FBM KLCI (-0.4%) started off the year on a dour note as the key index halted a streak of four consecutive days of gains on profit taking amongst selective banking heavyweights. The lower liners, however, closed mostly higher as the FBM Small Cap and FBM Fledgling gained 0.7% and 0.2% respectively, while the Consumer Products (-0.2%), Trading/Services (-0.2%) and Finance (- 0.5%) sectors underperformed the mostly positive broader market.

• Market breadth stayed positive as gainers outpaced losers on a ratio of 446-to-361 stocks. Traded volumes added 14.7% to 1.67 bln shares on rotational play amongst the lower liners.

• Topping the gainers on the FBM KLCI was Hong Leong Financial Group (+32.0 sen), followed by Sime Darby (+9.0 sen), Petronas Gas (+8.0 sen), PPB Group (+8.0 sen) and Westports (+5.0 sen). Notable advancers on the broader market were Daibochi (+22.0 sen), Success Transformer (+20.0 sen), UMS Holdings (+19.0 sen) and SAM Engineering (+16.0 sen). Cypark added 1.0 sen after reporting a stronger set of quarterly earnings.

• Among the biggest decliners on the broader market include Naim (-41.0 sen), Panasonic (-28.0 sen), MSM (-20.0 sen), CMSB (-16.0 sen) and Frasers & Neave (- 14.0 sen). Banking heavyweights like Hong Leong Bank (-20.0 sen), Maybank (- 19.0 sen) and AmBank (-4.0 sen) fell, while KLCC (-41.0 sen) and Axiata (-20.0 sen) were amongst the biggest decliners on the big board.

• Japanese remain closed for the extended New Year break. The Shanghai Composite (+1.0%) rallied on the upbeat Caixin Manufacturing data in December 2016 which stood at 51.9 – the highest in four

years, while the Hang Seng Index extended its gains by 0.7%. ASEAN stockmarkets, meanwhile, ended mostly higher.

• Wall Street started off the year on a strong footing as the Dow added 0.6%, spurred by the strong ISM Manufacturing PMI that rose to two year high at 54.7 in December 2016. On the broader market, both the S&P 500 Nasdaq gained 0.9% each as the former was lifted by the healthcare sector (+1.1%).

• Earlier, the strong manufacturing PMI data in Eurozone, which stood at 54.9 in December 2016 – the highest since April 2011, sent European benchmark indices to close mostly higher as the FTSE and CAC rose 0.5% and 0.4% respectively on the strong manufacturing performance. The DAX, however, fell 0.1% on profit taking.

The Day Ahead

• Although the profit taking activities permeated the market yesterday, it was selective and was largely limited to banking entities, leaving stocks on the broader market and lower liners to continue their ascend as retail players also took up some fresh position.

• Under the prevailing environment - where global investors await for the inauguration of President Trump and the implementation of his subsequent policies, the market could hold steady. Hence, we think the profit taking activities are likely to short and the market could resume its near-term uptrend with institutional investors renewing their short-term positions.

• This could see the key index posting a quick rebound and potentially retesting the 1,640 level over the near term. The overnight rebound in most key global stocks indices will also aid the FBM KLCI’s climb amid the near term positivity which will also extend to the broader market and lower liners.

Company Briefs

• Vivocom Intl Holdings Bhd‘s subsidiary Vivocom Enterprise Sdn Bhd (VESB) has secured two contracts totaling RM71.3 mln for construction works. The first contract was awarded by Oriental Mace Sdn Bhd to construct a factory, warehouse and office buildings in Bandar Baru Enstek, Seremban, Negeri Sembilan for RM19.3 mln. The project is slated for completion within 15 months from the date of commencement.

• The second contract was secured from Udaran Sdn Bhd to construct a mixed development comprising two-storey terrace houses and commercial buildings in Marang, Terengganu worth RM52.0 mln, which will be completed within two years from the date of commencement. (The Edge Daily)

• Total waste management services provider, JAG Bhd is planning to penetrate the property market for the first time with a mixed development on a 3.3 –ac. piece of freehold land in Kg Jawa, Klang, Selangor. The land was purchased for RM9.9 mln in August 2016.

• Its maiden property development will be a three-phase mixed development offering which will encompass shop-offices, office suites and residential apartments, with total gross development value to range from RM155.0 mln to RM170.0 mln. Construction work on the property development is expected to commence in the 4Q2017.

• JAG is also exploring and negotiating with other parties to acquire more landbank and will consider undertaking property development projects through jointventures. (The Star Online)

• Gunung Capital Bhd has secured a RM43.9 mln contract from the Defence Ministry to provide bus transportation toand-from nominated schools for the children of the armed forces personnel nationwide. The contract will last for three years, from 1st January 2017 to 30th November, 2019.

• The company estimates that a total of 233 units of 44-seater buses and 85 units of 25-seater buses will be required to fulfil its obligations under the service contract.

• The scope of services is for the school children residing within the armed forces quarters and includes the provision of services for 76 armed forces camps over 10 zones. (The Star Online)

• Wah Seong Corp Bhd has partnered Hong Kong firm, Lesso Home Service Holdings Ltd to sell products and services via an online platform facilitated by the latter. Both parties signed a 49:51 joint-venture (JV) and shareholders' agreement on 3rd January 2017, which will see the two companies combining their capabilities and expertise via a JV company (JVco) to become an integrated sales and service centre.

• The JVco will provide quality imported products and services, including but not limited to building materials, architectural products and home furnishing goods.

• The group hopes to expand its business by capitalising on the extensive supply chain network of Lesso in China and Wah Seong’s established distribution network of in Malaysia. (The Edge Daily)

• Tien Wah Press Holdings Bhd will utilise proceeds from the sale of its 30.0% stake in Benkert (Malaysia) Sdn Bhd as working capital and repayment of its long-term loan.

• About 20.0% of the RM25.8 mln sale proceeds will be used as working capital for the group, its newly acquired subsidiary, PT Bintang Pesona Jagat, and Alliance Print Technologies FZE, while the balance will be used to pare down its borrowings.

• To recap, the group announced that it had accepted Benkert UK Ltd's offer to buy the 30.0% stake in Benkert (Malaysia) on 23 December last year. Benkert UK owns the other 70.0% stake in Benkert (Malaysia). The group’s decision was to avoid any conflict of interest, as Benkert Malaysia may be in direct competition with PT Bintang Pesona Jagat. (The Edge Daily)

• Favelle Favco Bhd has clinched RM64.0 mln worth of orders in December 2016 to supply tower cranes to ALE UK Holdings, Marr Contracting Pty Ltd, TES Inc and Stride High Pty Ltd.

• The four orders to supply tower cranes were secured via its wholly-owned subsidiaries, Kroll Cranes A/S, Favelle Favco Cranes Pty Ltd and Favelle Favco Cranes (USA) Inc. The tower cranes will be delivered from 2Q2017 to 3Q2017. (The Star Online)  

Source: Mplus Research - 4 Jan 2017