• Tracking the positive sentiment on the regional stockmarkets, as well as the stronger Ringgit, the FBM KLCI closed 0.1% higher for the second consecutive day – led by gains in the banking and O&G heavyweights. The majority of the lower liners rallied, with the exception of the FBM Ace, which lost 0.4%. Meanwhile, the broader market ended mostly in green.

• Market breadth stayed positive as advancers beat decliners by a ratio of 431-to-366. Traded volumes, however, fell 5.4% to 1.88 bln shares as investors stay on the sidelines ahead of Donald Trump’s inauguration this Friday.

• Key index advancers were Petronaslinked companies like Petronas Gas (+22.0 sen) and Petronas Chemicals (+5.0 sen), followed by CIMB (+8.0 sen), Hong Leong Bank (+6.0 sen) and Astro Malaysia (+4.0 sen). Meanwhile, other chart-toppers include Aeon Credit Service (+56.0 sen), Panasonic Manufacturing Malaysia (+40.0 sen), Dutch Lady (+30.0 sen) and Ajinomoto (+20.0 sen). AirAsia rose 17.0 sen on expectations of a special dividend following the proposed disposal of its aircraft-leasing unit.

• Significant decliners on the broader market were Heineken Malaysia (-38.0 sen), TAHPS Group (-18.0 sen), Lafarge Malaysia (-12.0 sen), Uzma (-9.0 sen) and United Malacca (-8.0 sen). Main losers on the FBM KLCI were Hong Leong Financial Group (-16.0 sen) IHH Healthcare (-9.0 sen), Kuala Lumpur Kepong (-8.0 sen), Digi (-6.0 sen) and MISC (-6.0 sen).

• Asian stockmarkets ended on a positive note yesterday as the Nikkei advance 0.4% - led by the weakness in Yen, which in turn boosted export-oriented shares. The Hang Seng index rose 1.1% to 23,098.3 points on expectations of a recovery in Hong Kong banks in tandem with the potential U.S. interest rates hike. The Shanghai Composite index also finished up by 0.1%, while the ASEAN stockmarkets closed broadly positive.

• U.S. stockmarkets closed mostly higher, amid the ongoing U.S. quarterly earnings reporting and economic data releases. The Dow fell slightly by 0.1% as United Health Group (-1.8%) and Exxon Mobil (- 1.2%) declined, although the S&P 500 (+0.2%) rallied - led by gains in the financials counters. The Nasdaq also gained 0.3% to close above the 5,555.0 psychological level.

• Earlier, European shares were mostly positive as investors digested a string of corporate earnings. The FTSE advanced 0.4%, on the back of gains in Burberry Group (+3.6%) after the luxury brand’s quarterly earnings beat analysts’ expectations, while the DAX rose 0.5%. The CAC, however, defied the general bullish sentiment, closing marginally down by 0.1%.

The Day Ahead

• Despite the largely indifferent global stockmarket performance, stocks on Bursa Malaysia continues to post a decent recovery after their sharp fall on Monday. At the same time, there appears to be sustained interest among the lower liners and broader market stocks and we see this as positive as it could sustain the near-term upsides ahead of the upcoming inauguration of President Trump. Further supporting the recovery is the generally positive market undertone and this is likely to see the Chinese New Year rally continuing over the near term.

• On the upside, we see the FBM KLCI continuing its gradual uptrend towards the 1,670-resistance level, with market depth to remain decent, while the 1,660 will serve as the main support level for the time being, followed by the 1,650 level.

• We also think the lower liners and broader market stocks will continue attracting retail players amid the ongoing Chinese New Year rally and this will help to keep market interest at a decent level. MACRO BRIEF

• Malaysia’s inflation, as indicated by the consumer price index (CPI), grew 1.8% Y.o.Y to 116.9 in December 2016, while the overall inflation rate for 2016 was at 2.1% Y.o.Y – unchanged vs. 2015. For December 2016, the growth in the CPI was driven mainly by the increase in food and non-alcoholic beverages (+3.7% Y.o.Y), as well as housing, water, electricity, gas and other fuels (+2.1% Y.o.Y). However, the CPI was offset by the decrease in communications (-2.6% Y.o.Y), transport (-0.6% Y.o.Y) and clothing and footwear (-0.5% Y.o.Y).

• For the full year, the CPI’s main upward contributor was from food and nonalcoholic beverages that registered an increase of 3.9% Y.o.Y. Core inflation for the year, which excludes most volatile items of fresh food and administered prices of goods and services, recorded changes ranging from 2.0% to 3.6%, compared to the same period in 2015. (The Edge Daily)

Company Briefs

• Kwasa Land Sdn Bhd will receive RM165.5 mln for development rights and revenue sharing from Gadang Holdings Bhd for a property development project at Kwasa Damansara township. Kwasa Land, which is the master developer of the township in Sungai Buloh, had signed an agreement with Gadang's unit, Elegance Sonata Sdn Bhd for the development rights of the plot known as R3-1.

• 780 residential units comprising high rise towers and villas are to be built in R3-1, a 21.1-ac. freehold plot. R3-1 is projected to have a gross development value of approximately RM700.0 mln. The development period would be six years for the entire project and Plot R3-1 is expected to be launched by January 2019. (The Star Online)

• Mesiniaga Bhd has won a RM20.7 mln contract from Telekom Malaysia Bhd to design, supply and maintain a managed internet gateway service. The contract is valid for eight years from 1st January 2017 to 31st December 2024. (The Edge Daily)

• Genting Bhd’s wholly-owned subsidiaries, Genting Overseas Holdings Ltd (GOHL) and GOHL Capital Ltd, have successfully priced a US$1.00 bln offering of Guaranteed Unsecured Fixed Rate Notes, representing the group's landmark return to the U.S. Dollar bond market since 2004. The notes have been priced at 198 basis points over the 10-year US Treasury Note, at a price of 99.6. The notes bear fixed interest of 4.3% p.a., with interest payable semi-annually in arrears and rank pari passu with all other unsecured and unsubordinated obligations of the issuer.

• The proceeds from the issuance will be used for general corporate purposes, including operating expenses, capital expenditure, investment, refinancing, working capital requirements, general funding requirements and for investments in other members of the group. This may include investments for the development of the Resorts World Las Vegas project. (The Edge Daily)

• Silk Holdings Bhd has entered into a conditional share purchase agreement with Permodalan Nasional Bhd (PNB) for the disposal of 100% of the issued and paid-up share capital of Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd (SILK) for RM380.0 mln.

• Silk Holdings intends to allocate up to RM200.0 mln for future investments including enhancing and strengthening its existing offshore marine support services business and investment in related businesses in the oil and gas segment as well as other viable investment opportunities to be identified, up to RM70.0 mln for distribution to Silk Holdings' shareholders, and RM110.0 mln for general corporate and working capital. The proposed disposal is expected to be completed by 1Q2017. (The Edge Daily)

• WCT Holdings Bhd is proposing a placement of 125.0 mln shares to raise about RM212.5 mln, based on an indicative issue price of RM1.70 per share. It would allocate RM80.0 mln to repay bank borrowings and RM130.0 mln for working capital. (The Edge Daily)

• Axiata Group Bhd’s wholly-owned telco tower management company, edotco Group Sdn Bhd, is now worth an equity value of close to US$1.50 bln (RM6.67 bln) following the definitive shareholder's agreement signed with Khazanah Nasional Bhd and Innovation Network Corp of Japan (INCJ). The final portfolio takes into account the potential injection of tower assets in Cambodia and Sri Lanka at a later date with a resultant increase in Axiata's shareholding in edotco. (The Edge Daily)

• Uzma Bhd will undertake the remaining fabrication, hook-up and commissioning works of the KNPG-B Topside PH II for the non-associated gas (NAG) development project located offshore Sabah until its targeted completion in July 2017. This follows a novated contract signed between its whollyowned subsidiary, Uzma Engineering Sdn Bhd with THHE Fabricators Sdn Bhd and Petronas Carigali Sdn Bhd on 24th October 2016. (The Edge Daily)

• Spring Gallery Bhd is making its maiden foray into the property development market through a joint venture (JV) with Hasil Senudong Sdn Bhd to develop a residential project in Kledang Utara, Perak. The proposed development will feature two blocks of medium-end apartments on a piece of land measuring 3.3 ha., with the estimated GDV atl RM161.2 mln.

• Under the JV agreement, Hasil Senudong will contribute the development land, as well as apply and obtain the approval for the conversion of the land within six months. Spring Gallery, meanwhile, will bear the entire cost of developing the project, estimated at RM106.4 mln. Spring Gallery has also agreed to pay a sum of RM17.5 mln to Hasil Senudong as performance bond under the JV agreement. (The Edge Daily)

• Guocoland (M) Bhd’s 2QFY17 net profit stood at RM110.8 mln vs. a net loss of RM7.5 mln in the previous corresponding quarter, lifted by gains from a land sale worth RM475.0 mln in Sepang, Selangor. Revenue for the quarter grew 23.9% Y.o.Y to RM44.6 mln.

• For 1HFY17, cumulative net profit surged 8.0x Y.o.Y to RM111.1 mln. Revenue for the period, however, fell 8.1% Y.o.Y to RM98.2 mln. (The Edge Daily)

• Country View Bhd's 4QFY16 net profit rose 43.1% Y.o.Y to RM9.2 mln, mainly due to new sales, combined with contributions from the sale of threestorey terrace houses in Taman Nusa Sentral, Johor. Revenue for the quarter swelled 123.0% Y.o.Y to RM52.2 mln.

• For FY16, cumulative net profit added 22.5% Y.o.Y to RM25.9 mln. Revenue for the period gained 45.4% Y.o.Y to RM161.1 mln. (The Edge Daily)

• FSBM Holdings Bhd, a loss-making information technology service and systems provider, announced that it has fixed the price for its private placement shares at 20 sen apiece. The price represents the five-day weighted average market price of the counter from 11th January 2017 to 17th January 2017. The bulk of the cash proceeds from this exercise will be channeled to fund its working capital and operating expenses.

• The first tranche of the placement exercise was completed in endDecember 2016, with 6.4 mln shares issued, raising a total of RM1.27 mln. However, it is unclear how many shares FSBM Holdings plans to issue in the second tranche of the private placement exercise. (The Edge Daily)

• Tex Cycle Technology (M) Bhd may book an estimated potential liability of RM38.7 mln in its balance sheet if FACT System Malaysia Sdn Bhd succeeds in its counterclaim against it. (The Edge Daily)

• Green Packet Bhd will subscribe to the proposed rights issues to be issued by Yen Global Bhd for a total consideration of RM12.1 mln, in its commitment to support the latter’s growth. Green Packet will subscribe in full for its entitlement under the proposed rights issue comprising 60.5 mln rights shares together with 45.4 mln warrants, at an issue price of 20 sen per rights share. It also said that it will not dispose of any Yen Global shares following the issuance of the rights share up to the entitlement date. The subscription consideration will be satisfied entirely in cash and will be funded via internal funds. (The Edge Daily)  

Source: Mplus Research - 19 Jan 2017