• The FBM KLCI (+0.03%) was flattish, following a volatile intraday session ahead of the U.S. Central Bank’s meeting and rising political uncertainty in several European nations. However, all of the lower liners rallied, while the broader market closed mixed.

• Market breadth was muted as decliners slightly outpaced the advancers on a ratio of 473-to-444 stocks. Traded volume improved 3.6% to 3.92 bln shares amid continued buying-interest in the lower liners, alongside the stabilisation of the Ringgit.

• Blue-chip advancers on Tuesday were Genting-related subsidiaries like Genting (+17.0 sen) and Genting Malaysia (+10.0 sen), followed by KLCC Properties & REITs (+9.0 sen), Petronas Gas (+6.0 sen) and Maybank (+5.0 sen). Broader market winners include Iskandar Waterfront City (+21.0 sen), KESM Industries (+18.0 sen), Aeon Credit Service (+16.0 sen), Oldtown (+16.0) and Shell Refining (+16.0 sen).

• Significant broader markets underperformers include DKSH Holdings (-18.0 sen), Oriental Interest (-17.0 sen), Perusahaan Sadur Timah Malaysia (-17.0 sen), Pos Malaysia (-14.0 sen) and MultiUsage Holdings (-11.0 sen). Key-index losers were BAT (-90.0 sen), Petronas Dagangan (-38.0 sen), IJM (-6.0 sen), Axiata (-5.0 sen) and MISC (-4.0 sen).

• Major regional benchmark indices pared their gains yesterday as investors await the conclusion of the Federal Reserve’s two-day meeting for clues on the pace of future interest rate hikes. The Nikkei rose 0.1% with all but two of its sectors in red. The Hang Seng flatlined, while the Shanghai Composite index gained 0.1%, amid the release of mixed economic data. ASEAN stockmarkets, meanwhile closed mixed at Tuesday’s closing bell.

• U.S. equities finished on a weak note, dragged down by falling crude oil prices as stockpiles continue to grow despite OPEC’s deal to cut production. The Dow declined 0.2%, weighed down by losses in Chevron (-1.8%) and General Electric (- 1.1%), while the S&P 500 closed down by 0.3% with all but the consumer discretionary sector in the green. The Nasdaq also lost 0.3% to 5,856.8 points.

• U.K equities recovered some of its earlier losses, albeit still closing in the red amid rising political uncertainties following the Brexit decision. The FTSE retreated by 0.1% - led by losses in banking giants like the Royal Bank of Scotland (-2.5%). The CAC (-0.5%) ended slightly below the 4,975.0 psychological mark, while the DAX (-0.01%) finished fairly unchanged.

The Day Ahead

• We continue to think the FBM KLCI will trend within a tight trading range as market participants await for the outcome of the FOMC meeting to decide on the interest rates. With a rate hike near certainty, market participants will instead focus on the potential pace of future interest rate hikes and the Fed’s view on the U.S. economy.

• Therefore, we expect the key index to trend within the tight range between the 1,720 and 1,730 levels over the near term. Still, we think that rotational interest will remain prevalent as investors move to laggards after locking-in profits from their winning positions.

• Much of the rotation plays are expected among the lower liners and broader market shares as they continue to garner firm buying interest from retail players amid the still firm market undertone.

Company Briefs

• EKA Noodles Bhd announced board changes after Vibrant Class Sdn Bhd emerged as the company’s largest shareholder with a 19.7% stake. Vibrant Class, previously the second biggest shareholder, had acquired the 33.3 mln shares, or 10.7% equity interest held by EKA’s Group Managing Director, Datuk Seri Chin Seak Huat. The block was bought at 15 sen per share or about RM5.0 mln - almost double the PN 17- status company’s open-market share price of 8 sen at 14th March 2017’s close.

• Executive Director Datuk Ahmad Zaffry Sulaiman and Director Raja Nazrin Raja Ghazilla resigned, while Metronic Global Bhd’s former Group Managing Director Datuk Dr Chin Yew Sin, Leong Woay Hong @ Neoh Woay Hong, Lim Choo Hooi and Fong Yit Meng were appointed. (The Star Online)

• Transocean Holdings Bhd is paying RM140.0 mln to take over container transportation firm Taipanco Sdn Bhd in a bid to strengthen its logistics business and financial performance. Transocean had signed a conditional agreement to buy the entire equity interest in Taipanco from the vendors - Jee Chau Hau, Nazari Akhbar and Nor Rahah Ab Ghani - as well as a profit guarantee agreement.

• Taipanco’s core business activity is container transportation, primarily servicing two major ports in the central region namely Northport and Westport. Taipanco and its subsidiaries have a total fleet size of more than 200 prime movers with more than 700 units of trailers.

• The purchase would be satisfied through the issuance of 102.0 mln new ordinary shares and 38.0 mln new Redeemable Convertible Preference Shares (RCPS) in Transocean. This will result in a change of in the controlling shareholder. Executive chairman Tan Sri Mohd Nadzmi Mohd Salleh, who has deemed interest of 65.2% through Kumpulan Kenderaan Malaysia Bhd and Lengkap Suci Sdn Bhd, will see his stake diluted to as low as 14.8% upon the full conversion of the RCPS.

• Following the corporate exercise, the vendors will end up with a collective shareholding of 55.3% of the enlarged issued share capital of Transocean. Assuming full conversion of all RCPS, their combined shareholding will rise to 64.6%. The vendors will seek approval to be exempted from undertaking a mandatory takeover offer.

• The vendors gave an undertaking that the audited consolidated profit before tax (PBT) of Taipanco for each of the financial years ending 31st December 2017 to 2019, would be at least RM10.0 mln and that the cumulative audited consolidated PBT of Taipanco for the three-year period will not be less than RM33.0 mln. (The Star Online)

• Bermaz Auto Bhd’s 3QFY17 net profit fell 38.9% Y.o.Y to RM25.1 mln due to lower sales, weaker results from associated companies and higher vehicle cost as the Ringgit continued to depreciate. Revenue for the quarter declined 35.2% Y.o.Y to RM338.7 mln.

• For 9MFY17, cumulative net profit decreased 33% Y.o.Y to RM96.8 mln. Revenue for the period contracted 17.2% Y.o.Y to RM1.31 bln. A third interim dividend of 2.75 sen was declared. (The Star Online)

• UMW Oil & Gas Corp Bhd (UWM-OG) has secured a letter of award from Petrofac (Malaysia-PM304) Ltd for the provision of drilling rig services. UMW-OG’s indirect unit, UMW Offshore Drilling Sdn Bhd won the contract to drill two firm wells with the option of an additional well plus one well starting in 2Q2017. The UMW-OG group will assign its UMW Naga 5 for the latest contract, whose contract value was also not disclosed. UMW Naga 5 is a premium independent-leg cantilever jack-up drilling rig, which has a drilling depth capability of 30,000 ft. and a rated operating water depth of 400 ft.

• This is the second drilling contract announced by UMW-OG this month. Last week, UMW Offshore Drilling received a letter of award from Vestigo Petroleum Sdn Bhd to drill one firm well. (The Star Online)

• Bursa Malaysia has slapped Pan Malaysia Holdings Bhd (PMH) with an UMA query on 14th March 2017 after its share price rose as much as 43.3% to hit an intraday high of 21.5 sen. The company said it is unaware of what could account for the recent sharp rise in the price of the company's shares in a reply to Bursa Malaysia. (The Edge Daily)

• Spritzer Bhd announced that FMR LLC, part of United States-based Fidelity Investments, has emerged as a substantial shareholder after it acquired 38,100 shares in the open market. This boosted FMR's holdings in Spritzer to 9.35 mln shares, equivalent to a 5.1% stake. (The Edge Daily)

• Trading in the shares of information technology and security solutions provider Digistar Corp Bhd will be suspended on 15th March 2017, between 9.00am and 2.00pm, pending the release of a material announcement. Digistar is expected to launch its advanced security system — Panther Mobile – and it has roped in Celcom Axiata Bhd as partner. (The Edge Daily)  

Source: Mplus Research - 15 Mar 2017