• Tracking the positive developments on Wall Street overnight, the FBM KLCI (+1.1%) extended its gains to close at its highest level since April 2016 after reclaiming the 1,700 psychological level. The positive sentiment also extended to both the lower liners and the broader market as the latter was led by gains in the Technology sector (+1.7%).

• Market breadth stayed positive as advancers outstripped decliners on a ratio of 595-to-308 stocks. Traded volume added 3.6% to 3.13 bln shares amid the positive market sentiments.

• More than two-third of the key index constituents closed higher, led by AmBank (+28.0 sen), followed by BAT (+20.0 sen), Hong Leong Financial Group (+20.0 sen), Petronas Chemicals (+20.0 sen) and PPB Group (+20.0 sen). Significant advancers on the key index were Frasers & Neave (+68.0 sen), Riverview Rubber (+26.0 sen), JHM (+24.0 sen) and Globetronics (+23.0 sen). MSM added 22.0 sen on speculation over an increase in sugar prices.

• On the flipside, Heineken (-14.0 sen), Apollo Foods (-10.0 sen), Kluang Rubber (-10.0 sen), Shangri-La (-10.0 sen) and Carlsberg (-8.0 sen) were amongst the biggest decliners on the broader market. There were only two decliners on the big board – IHH (-6.0 sen) and Petronas Gas (-4.0 sen).

• Japanese equities extended their gains as the Nikkei rose another 0.8% to close at its highest level in 14-months after the Japanese Yen continues to tank against the U.S. Dollar. The Shanghai Composite, however, slipped 0.5%, while the Hang Seng Index erased all its intraday gains before closing 0.2% lower on profit taking in property and telecommunication shares. ASEAN stockmarkets, meanwhile closed mostly higher.

• U.S. stockmarkets retreated from their all-time high levels as the Dow (-0.5%) marked its worst session since January 2017 ahead of the potential tightening in monetary policy as the U.S. Federal Reserve is poised to hike its benchmark interest rate for the first time in 2017. On the broader market, the S&P 500 slipped 0.6%, dragged down by the weakness in the financial sector (-1.5%).

• European stockmakrets traded in a tight range as the FTSE and DAX fell 0.01% and 0.1% respectively. The CAC, however, added 0.1%. Meanwhile, the Eurozone’s unemployment rate stood at 9.6% in January 2017 – unchanged from the previous month and was in line with economists’ expectations.

The Day Ahead

• A day after the FBM KLCI posted strong gains, quick profit taking activities could set in in tandem with the pullback in U.S stocks overnight. As it is, renewed concerns over a potential U.S interest rate hike in two weeks’ time could start to weigh on the near term investor sentiments and this may prompt market players to close out on their near term winning positions ahead of the weekend.

• Nevertheless, the pullback is likely to be mild for now and the retreat may see the key index finding support at the 1,710 level, with the major support at the psychological 1,700 level. Meanwhile, the next psychological resistance is at the 1,720 level.

• We also think the mild profit taking activities could permeate to the lower liners and broader market shares after yesterday’s gains.

Company Update

• Econpile Holdings Bhd has disposed of a piece of freehold land for RM5.0 mln to streamline its subsidiaries’ principal activities and unlock the value of the property assets. The land sale by its wholly-owned unit to another of its subsidiaries, Tropical Broadway Sdn Bhd, would see its value unlocked through development by the latter. Tropical Broadway is currently dormant and its intended business activity is property development. (The Edge Daily)

Comments

• We are neutral on the abovementioned announcement in regards to disposal of land. As at current juncture, Tropical Broadway Sdn Bhd is dormant and is only at preliminary planning stage for its property development in the foreseeable future.

• Hence, we made no changes to our earnings forecast and we maintained our BUY recommendation on Econpile with an unchanged target price of RM2.30. Our target price is derived from ascribing an unchanged target PER of 13.0x to its FY17 EPS of 17.6 sen, which is in line with its peers with similar market capitalisation.

Company Briefs

• Tiger Synergy Bhd is aborting its proposed Irredeemable Convertible Preference Shares (ICPS) rights issue with warrants, which was supposed toMemorandum and Articles of Association amendment shall also be cancelled. (The Edge Daily)
• Wah Seong Corp Bhd is planning to acquire a Finland-based steel pipe coating plant for €15.1 mln (RM70.7 mln) to supply coated steel pipes to Nord Stream 2 project.
• The coating equipment is a complete coating line used for concrete weight coating of steel pipes with a production capacity of about 200 concrete weight coated pipes a day.

• Wah Seong had earlier clinched a €600.0 mln contract from Nord Stream 2 AG for the provision of concrete weight coating and storing of pipes for Nord Stream 2 project – a planned pipeline through the Baltic Sea which will transport natural gas over 1,200 km from the world's largest gas reserves in Russia to consumers in Europe.

• The project will also include two parallel 48-inch lines, each starting from southwest of St Petersburg, Russian port and ending at German coast, Greifswald.

• Prior to this, the group has also acquired Germany-based pipe coating firm Mutares Holding-16 AG for €19.5 mln in mid-February this year to gain access to the latter's plant for pipe coating for the Nord Stream 2 Project in the Baltic Sea. (The Edge Daily)

• SapuraKencana Petroleum Bhd has secured multiple contracts worth a combined total of US$97.4 mln (RM433.6 mln).

• The first contract involved an umbrella contract from Petroliam Nasional Bhd (Petronas) for the Pan Malaysia Transportation and Installation of Offshore Facilities. The project includes the transportation and installation of platform, structures and pipelines and its associated works for one-year duration until 2018.

• It also bagged a contract to provide engineering, decommissioning, procurement, construction, installation and commissioning for Sepat Mobile Offshore Unit Stabilisation and Repair Works (Package 1) by Petronas Carigali Sdn Bhd (PCSB). The contract is valid for about five months.

• Meanwhile, PCSB also awarded SapuraKencana HL Sdn Bhd (SKHL) 33- month project for the provision of procurement, construction and commissioning of Full Well Stream Air Cooler Module on Central Processing Platform NC3CP-A.

• Lastly, it won a contract from PCPP Operating Company Sdn Bhd for the provision of engineering, preparation, removal and disposal for Dana and D30 facilities decommissioning project. The contract is expected to take about nine months to complete. (The Star Online)

• Inari Amertron Bhd test (OSAT) services in China.

• To recap, both parties inked a Memorandum of Understanding to form the partnership in March last year with Taipei-listed PCL Technologies Inc, in which it had taken a 9.7% equity interest for NT$355.0 mln (RM44.5 mln) in cash.

• The termination will not have any financial impact on the company and Inari will continue to explore other potential business opportunities in China that will be useful for its OSAT business expansion. (The Star Online)

• Wintoni Group Bhd, a Practice Note 17 (PN17) company, has missed the submission deadline for its 4Q2016 financial results pending matters to be resolved with its subsidiary.

• Following its failure to submit the results by the 28th February 2017, which is the original deadline, the group will now have until 7th March 2017 to submit its financial results or its shares will be suspended from trading the next market day. (The Edge Daily) raise as much as RM41.7 mln in cash. The group, however, is currently in the midst of exploring the feasibility of other fundraising proposals.

• Consequently, the proposed increase in authorised share capital and proposed

Source: Mplus Research - 3 Mar 2017