• Following the widely anticipated U.S. Federal Reserve move to raise its benchmark interest rates by 25 basis points, the FBM KLCI (+1.2%) staged a sharp rally in tandem with global stockmarkets as the key index closed at its highest level since August 2015. Both the lower liners and broader market shares also traded in a similar manner as the latter was anchored by gains in the Technology (+1.8%) sector.

• Market breadth turned positive as advancers outnumbered decliners on a ratio of 666-to-286 stocks. Traded volumes climbed 2.9% to 3.40 bln shares amid the positive market sentiment that saw buying interest returning.

• BAT (+RM1.10) topped the big board advancers list, followed by Hong Leong Financial Group (+32.0 sen), CIMB (+23.0 sen), Genting (+23.0 sen) and KLK (+20.0 sen). Notable advancers on the broader market include Lafarge (+29.0 sen), KESM Industries (+20.0 sen), Bursa (+16.0 sen) and Dufu Technology (+16.0 sen). Gamuda added 13.0 sen after the letter of award as the project delivery partner for the Penang Transport Master Plan was extended to August 2017.

• In contrast, UMW Holdings (-9.0 sen), PLB Engineering (-7.0 sen) CN Asia (-6.0 sen) and Quality Concrete (-6.0 sen) were the biggest losers on the broader market. SCGM slipped 9.0 sen after reporting a weaker set of quarterly earnings. Meanwhile, Hap Seng (-2.0 sen) was the sole decliner on the big board. Asian benchmark indices also advanced as the Nikkei (+0.1%) recouped all its intraday losses. Both the Shanghai Composite and Hang Seng added 0.8% and 2.1% respectively after their Central Banks raised their benchmark interest rates by 10 and 25 basis points respectively – mirroring the move by the U.S. Federal Reserve overnight.

• ASEAN stockmarkets, meanwhile, closed higher yesterday. U.S. stockmarkets retreated overnight as the Dow fell 0.1% on higher regulatory costs and cut in federal spending for medical research in President Donald Trump's budget proposal coupled with the weakness in crude oil prices. On the broader market, the S&P 500 declined 0.2%, dragged down by the weakness in healthcare sector (-0.9%).

• Key European stockmarkets, however, finished higher as the FTSE added 0.6% after the Bank of England left its key interest rate unchanged at record low of 0.25% while the U.K. unemployment rate fell to 4.7% in the period of November 2016 to January 2017 - the lowest since 1975. The CAC and DAX climbed 0.6% each on optimism over the preliminary result of the Dutch election.

The Day Ahead

• The Fed’s within-expectation interest rate decision has certainly buoyed interest on Malaysian stocks yesterday, especially with the Fed’s dovish view on its future rate hike. Nevertheless, we think the market could retreat ahead of the weekend as some investors could opt to lock-in some profits after yesterday’s strong surge.

• We view the pullback as healthy as it would allow the hefty gains to be digested with the general market undertone remaining fairly buoyant on optimism that the just-implemented interest rate hike and the prognosis of another two hikes for the year will not hurt the U.S. economic recovery, which appears to be gathering pace.

• We believe the pullback will be mild and the market should remain above the 1,730 support level for now, with the 1,750 level emerging as the next key resistance. We also think that both market breadth and depth should remain positive amid the continuing strong interest, both from institutional and retail players.

Company Briefs

• TSR Capital Bhd will develop a resort township with a projected gross development value of RM3.25 bln in Langkawi jointly with the landowner, Terusan Al-Maju Sdn Bhd and US-based Globe Venture Holdings Inc. TSR Capital had inked a Memorandum of Understanding (MoU) with the two firms on a 76-ac. prime land fronting the Andaman Sea. The MoU will remain in force for one year subject to further extension as may be mutually agreed on.

• The resort, named Beacon Langkawi, is located next to St Regis Langkawi and is set to become a first-class tourist destination and attraction. The international resort township will be a family centre for leisure and entertainment in collaboration with wellknown operator. Terusan Al-Maju and TSR have agreed to share the assets and liabilities, development cost, profit and loss, and the rights and responsibilities in the proposed project on a 60:40 basis respectively. Globe Venture Holdings’ role in the project, however, was not disclosed. (The Star Online)

• Top Glove Corporation Bhd’s 2QFY17 net profit slipped 20.6% Y.o.Y to RM83.1 mln due to sharp increases in raw material prices. Revenue for the quarter, however, gained 22.7% Y.o.Y to RM851.5 mln.

• For 1HFY17, cumulative net profit declined 32.8% Y.o.Y to RM156.4 mln. Revenue for the period, however, rose 9.5% Y.o.Y to RM1.64 bln. (The Star Online)

• Berjaya Sports Toto Bhd's (BToto) 3QFY17 net profit fell 17.8% Y.o.Y to RM47.9 mln, mainly due to a goods and services tax adjustment and higher operating expenses. Revenue for the quarter, however, grew 3.3% Y.o.Y to RM1.37 bln.

• For 9MFY17, cumulative net profit decreased 16.2% Y.o.Y to RM168.8 mln. Revenue for the period expanded 4.3% Y.o.Y to RM4.26 bln. (The Edge Daily)

• Poh Kong Holdings Bhd's 2QFY17 net profit jumped 243.1% Y.o.Y to RM6.1 mln, driven by an increase in demand for gold jewellery and gold investment products, higher retail gold prices and additional revenue from new outlets. Revenue for the quarter rose 11.1% Y.o.Y to RM226.3 mln.

• For 1HFY17, cumulative net profit surged 272.4% Y.o.Y RM7.8 mln. Revenue for the period increased 9.6% Y.o.Y to RM411.8 mln. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) has signed a large-scale solar (LSS) power purchase agreement (PPA) with a Mudajaya Group Bhd subsidiary, Sinar Kamiri Sdn Bhd where the latter would design, construct, own, operate and maintain a 49MW AC solar photovaltaic energy generating facility in Sungai Siput, Perak

• The PPA’s commercial operation date is 31st August 2018. The agreement governs the obligations of the parties to sell and purchase the energy generated by the facility for 21 years from the commercial operation date. (The Edge Daily)

• Willowglen MSC Bhd has bagged a contract worth RM7.8 mln from Tenaga Nasional Bhd (TNB) for the supply, installation, testing and commissioning of a secondary remote terminal unit for a motorised ring main unit substation. Commencing from 15th March 2017, the contract will be completed on 14th March 2019 and is non-renewable. (The Edge Daily)

• AirAsia Bhd is making a second attempt to acquire a 20-year-old aircraft from Caterhamjet Global Ltd (CJG) for US$10.0 mln cash with a plan to operate charter and private unscheduled business jet operations. It has entered into a sales and purchase agreement (SPA) with CJG for the acquisition of a Bombardier BD-700-1A10 Global Express.

• This is deemed a related party transaction as AirAsia Executive Chairman, Datuk Kamarudin Meranun and Group Chief Executive Officer, Tan Sri Tony Fernandes are the shareholders of CJG via their private vehicle Tune Group Sdn Bhd. The purchase price for the transaction is to be satisfied with cash from the AirAsia’s internal funds and the transaction is expected to be completed by 30th June 2017. (The Edge Daily)

• Magni-Tech Industries Bhd’s 3QFY17 net profit rose 13.4% Y.o.Y to RM29.6 mln, driven mainly by higher revenue, higher foreign exchange gain and on-going productivity improvements. Revenue for the quarter increased 7.5% Y.o.Y to RM289.1 mln.

• For 9MFY17, cumulative net profit improved 29.0% Y.o.Y to RM81.6 mln. Revenue for the period gained 27.3% Y.o.Y to RM840.3 mln. A third single interim dividend of three sen per share and a single tier special dividend of three sen per share was declared. (The Edge Daily)

• Dialog Group Bhd’s 88%-indirectly owned unit, Fitzeroy Engineering Group Ltd, has acquired the remaining 50.0% equity interest in steel-related works provider, Fineline Services Ltd for RM2.1 mln. The acquisition of Fineline, which currently supports and complements Dialog’s business activities in New Zealand would enable the latter to restructure and integrate the operation of Fitzeroy and Fineline to optimise the business growth there. (The Edge Daily)

• Tecnic Group Bhd has received the green light from the Bursa Malaysia to lift its Practice Note 16 (PN16) status, which it has been taken over by RohasEuco Holdings Sdn Bhd and will trade under the name Rohas Tecnic Bhd starting 17th March 2017. Rohas-Euco is a privately-owned entity controlled by Tan Sri Wan Azmi Wan Hamzah, his wife Puan Sri Nik Anida Nik Manshor, George Sia Bun Chun and his wife Chan Liew Hoon. (The Edge Daily)

• Reinsurer MNRB Holdings Bhd has taken up a RM320.0 mln credit facility to refinance its existing borrowings. The unsecured facility, provided by AmBank (M) Bhd, carries a floating interest rate that is reviewed quarterly and has a tenure of 18 months, with an option to extend for another six months. (The Edge Daily)  

Source: Mplus Research - 17 Mar 2017