• The FBM KLCI (+0.5%) extended its gains for the fifth-straight day on the back of buying-support in selected blue-chips and a stronger Ringgit. The FBM Small Cap (+0.3%) led the lower liners higher, while nine out-of-ten sectors on Bursa Malaysia ended on a positive tone.

• Market breadth was upbeat as winners overtook losers by a ratio of 432-to-308 stocks. Traded volumes rose 8.2% to 1.41 bln amid the renewed interest for emerging market equities due to the bullish sentiment in the global stockmarkets.

• Petronas Gas (+64.0 sen), BAT (+52.0 sen), Genting (+13.0 sen) and Hong Leong Financial Group (+12.0 sen) led the blue-chip gauge higher. Sime Darby rose 12.0 sen after it announced a potential listing of its plantation and property units. Broader market winners were UMW Holdings (+36.0 sen), Zhulian (+16.0 sen) DKSH (+15.0 sen), Globetronics Technology (+12.0 sen) and AMMB (+10.0 sen).

• On the opposite side of the trade, significant decliners were United Plantations (-50.0 sen), Ajinomoto (-18.0 sen), Eng Kah (-13.0 sen), AEON Credit Service (-10.0 sen) and Perusahaan Sadur Timah Malaysia (-10.0 sen). Meanwhile, key index underperformers include Tenaga Nasional (-12.0 sen), Telekom Malaysia (-5.0 sen), Maxis (-3.0 sen), Petronas Chemicals (-2.0 sen) and Maybank (-1.0 sen).

• Key regional benchmark indices finished higher, amid upbeat economic data and overnight gains on the U.S. stockmarkets. The Nikkei rose 1.8%, backed by gains in Tokyo Electron (+5.7%) and Shinsei Bank (+5.2%). Similarly, the Hang Seng index and the Shanghai Composite index rose 1.4% and 0.2% respectively, amid thin trading ahead of the Chinese New Year celebrations. ASEAN shares also rallied on Thursday’s close.

• Trading was muted on the U.S. stockmarkets after Wall Street hit record highs yesterday. Still, the Dow rose 0.2% as gains in materials-related shares offset the losses made in energy shares. On the broader market, the S&P 500 declined 0.1%, dragged down by Ford Motor (- 3.3%) after it confirmed that the 2017 outlook for the group will remain subdued. Meanwhile, the Nasdaq flatlined at 5,655.2 points.

• European stocks finished mixed as investors digested a string of corporate earnings announcements and more executive orders from the Donald Trump administration. The FTSE (-0.04%) was flattish, while the CAC fell 0.2%. The DAX, however, bucked the general bearish sentiment to close 0.4% higher.

The Day Ahead

• While we continue to think that the nearterm market conditions are still looking positive, we think that domestic market conditions could turn choppier ahead of Chinese New Year break where we think some investors will close out their shortterm positions.

• At the same time, the FBM KLCI is nearing overbought after its recent gains and this will provide an opportunity for the key index to take a breather.

• In addition, most investors - particularly retail players, are already on their Lunar New Year break and market interest is expected to wane for the half-day trading session.

• Still, we think the key index’s downsides will be cushioned by the limited selling and the 1,680 level will serve as the main support, while the 1,700 points level will become the main resistance.

Company Briefs

• Sime Darby Bhd intends to spin off its plantation and property businesses into two new listed companies, leaving it with the trading and logistics businesses under a plan to create three stand-alone pure plays. This initiative would enable each business to pursue their distinct aspirations with greater focus and agility, taking advantage of potential growth opportunities to maximise value for all shareholders.

• Sime Darby would evaluate the implementation measures and indicative timelines to give effect to the board’s decision. It will make appropriate disclosures after getting final approval of the board following the evaluations. However, Sime Darby did not give any timetable for the listings. The creation of the new businesses will be subject to the final approval of the board, shareholders, and listing requirements and regulatory approvals. (The Star Online)

• IHH Healthcare Bhd’s indirect subsidiary, Pantai Medical Centre Sdn Bhd (PMCSB), which is currently leasing a five-storey building from YNH Property Bhd to operate Pantai Hospital Manjung in Perak, is buying the building as well as the 19,986 sqm. land where it sits on for RM63.0 mln. The proposed acquisition is expected to result in rental savings in the long run, whilst enabling PMCSB to enjoy appreciation in the value of the property in the future. (The Star Online)

• Pensonic Holdings Bhd's 2QFY17 net profit plunged 77.1% Y.o.Y to RM0.6 mln, dragged down the weakness in overseas demand for refrigerators and other consumer electronic items, following the implementation of a new import ruling in most Middle-Eastern countries. Revenue for the quarter fell 11.3% Y.o.Y to RM81.2 mln from RM91.5 mln.

• As for 1HFY17, cumulative net profit shrank 60.5% Y.o.Y to RM2.0 mln. Revenue for the period declined 10.9% Y.o.Y to RM169.6 mln. (The Edge Daily)

• Cycle & Carriage Bintang Bhd (CCB) is buying a piece of leasehold land, together with a factory building, opposite the Bandar Malaysia project for RM59.8 mln. The proposed acquisition is to establish a 3S (sales, service and spare parts) Centre in Sungai Besi which forms a strategic part of CCB’s on-going network expansion plan across Malaysia.

• The property comprises a 45,000 sq.ft. piece of leasehold land rated at RM1,100 per sq.ft. and a single-storey detached factory. The 60-year leasehold land has approximately 45 years remaining. The acquisition will be financed through either internally-generated funds, bank borrowings or both. (The Edge Daily)

• Integrated engineering solutions provider, Kelington Group Bhd’s outstanding orderbook across its operations in Singapore, China, Taiwan and Malaysia currently stands at approximately RM260.0 mln after it secured a new contract worth RM40.0 mln. The company said the new contract was to provide turnkey construction and engineering services for one of the world’s major suppliers of specialty emulsion polymers.

• Kelington will be involved in constructing a new manufacturing facility in Pasir Gudang, Johor, and provide all mechanical, piping and equipment erection works. In addition to that, the company will also provide civil, building, structural, architectural and finishing works for the facility. The contract is expected to be completed by December 2017. (The Edge Daily)

• Sin Heng Chan (Malaya) Bhd (SHC) has announced two acquisitions for RM17.5 mln as part of its diversification plan into the district cooling systems business. The group is buying over Tunas Cool Energy Sdn Bhd from Astute Consultancy Sdn Bhd and Tunas Selatan Construction Sdn Bhd for RM7.5 mln.

• It is also buying a 25.0% equity interest in KJ Technical Services Sdn Bhd from co-owners Lee Kok Choon and Wee Tah Poh for RM5.0 mln cash and the issuance of 5.0 mln new shares of RM1.00 each in SHC. SHC intends to use internally-generated funds to fund the acquisitions, which are expected to be completed by June 2017. (The Edge Daily)

• Datuk Haris Onn Hussein, the brother of Defence Minister Datuk Seri Hishammuddin Hussein and cousin to Prime Minister Datuk Seri Najib Razak, has disposed of 5.0 mln shares held indirectly in construction firm Ekovest Bhd at RM2.60 apiece. Haris offloaded his shares in Ekovest via his flagship vehicle, Kota Jayasama Sdn Bhd on 20th January 2017 via a private arrangement.

• The transacted price was at a three sen or 1.1% discount to the day’s closing price of RM2.63. Following the disposal, Haris still owns 76.2 mln shares or an 8.9% interest in Ekovest via Kota Jayasama. (The Edge Daily)  

Source: Mplus Research - 27 Jan 2017