• The FBM KLCI (-0.1%) edged lower last Friday to mark its third consecutive losing days after trading in a lacklustre manner. Still, the key index manged to climb 0.03% W.o.W – marking its fourth straight weekly winning streak. The lower liners – the FBM Small Cap (-0.2%), FBM Fledgling (-0.2%) and FBM ACE (-1.0%), all retreated, while the broader market ended mixed.

• Market breadth turned negative as decliners overcame the advancers on a ratio of 590-to-312 stocks. Traded volumes fell 22.6% to 3.70 bln shares on profit taking activities.

• Hong Leong Financial Group (-20.0 sen) and KLK (-20.0 sen) topped the big board decliners list, followed by Sime Darby (- 10.0 sen), Petronas Dagangan (-4.0 sen) and Axiata (-4.0 sen). Aeon Credit sank 58.0 sen after announcing its plans to undertake rights issue, while other broader market decliners were Bursa (- 22.0 sen), Panasonic (-22.0 sen), REV Asia (-20.0 sen) and VisDynamics (-15.5 sen).

• Notable advancers on the broader market include Malaysian Pacific Industries (+72.0 sen), Ajinomoto (+30.0 sen), Tasek Corporation (+26.0 sen), HCK Capital (+25.0 sen) and Fraser & Neave (+22.0 sen). Key winners on the FBM KLCI were Genting Malaysia (+12.0 sen), Maxis (+3.0 sen), Westports (+3.0 sen), Astro (+2.0 sen) and CIMB (+2.0 sen).

• Key regional benchmark indices extended their gains as the Nikkei (+0.9%) advanced after the Japanese Yen weakened for the first time in nine days. The Shanghai Composite added 0.6%, while the Hang Seng gained 0.1% after enduring a choppy trading session. ASEAN stockmarkets, meanwhile, ended mostly higher.

• U.S. stockmarkets closed mostly lower last Friday after the Republicans rejected an overhaul of U.S. healthcare system proposed by President Trump. Both the Dow (-0.3%) and the S&P 500 (-0.1%) erased their intraday gains as the former registered its losing streak for a seventh consecutive day. The Nasdaq, however, added 0.2%, recovering all its previous session’s losses.

• Earlier, European benchmark indices closed mostly lower as the FTSE and CAC fell 0.1% and 0.2% respectively, dragged down by the weakness in mining and banking shares. The DAX, however, added 0.2% after the Flash Manufacturing PMI rose to 58.3 – above economists’ forecast of 56.2.

The Day Ahead

• The mixed-to-lower market environment is expected to persist over the near term after the recent runup has left the market environment in a state of flux. Many stocks remains overbought and market players are increasingly cautious with fewer compelling buys. Therefore, we expect the FBM KLCI to remain listless and linger within the 1,740 and 1,750 levels for now.

• Although the market appears toppish for the time being, there general market outlook remains positive for now and the current mixed market spell is merely for the gains to be digested and the market to take a breather.

• Meanwhile, the lower liners and broader market shares are also expected to see sideway consolidation as retail investors await for fresh buying catalysts. MACRO BRIEF

• Malaysia’s inflation rate rose 4.5% Y.o.Y in February 2017 to 119.7 due to rising costs for transport, which was higher than economists’ forecast of a 3.9% Y.o.Y gain. However, the core inflation remained stable at 2.5% Y.o.Y growth.

• The index of transport group showed a significant increase (+17.9% Y.o.Y), after rising 8.3% Y.o.Y in January 2017 due to higher fuel prices. YTD, the CPI rose 3.9% and in monthly terms, February CPI climbed 1.3% M.o.M. (The Star Online)

Company Briefs

• Sunway Construction Bhd‘s (SunCon) subsidiaries, Sunway Construction Sdn Bhd (SCSB) and Sunway Geotechnics (M) Sdn Bhd (SunGeo) have secured RM186.0 mln worth of contracts. The largest contract worth RM152.4 mln was awarded by Gas District Cooling (Putrajaya) Sdn Bhd to SCSB - includes the engineering, procurement, construction and commissioning (EPCC) works at Gas District Cooling (GDC) Plant 1 in Precinct 1, Putrajaya. The project will commence on the 27th March 2017 until to 27th August 2018.

• Meanwhile, SunGeo has clinched a RM18.1 mln contract for bore piling works for the Sungai Besi — Ulu Kelang (SUKE), Section B — Cheras to Ulu Kelang package from Cergas Murni Sdn Bhd, which will commence on 15th May 2017 until 30th April 2018.

• Further, SunGeo has also secured another bore piling work contract for the Damansara – Shah Alam (DASH) expressway for Section A – Puncak Perdana to Kota Damansara section worth RM15.8 mln. (The Edge Daily)
   
• Superlon Holdings Bhd's 3QFY17 net profit jumped 45.3% Y.o.Y to RM6.3 mln, from RM4.3 mln a year ago – largely on higher sales of copper pipes. Revenue, meanwhile, was 15.5% Y.o.Y higher to RM25.8 mln vs. RM22.3 mln in 3QFY16. The group has also declared a special dividend of six sen apiece, payable on 5th May 2017.

• Cumulative 9MFY17 net profit grew 33.8% Y.o.Y to RM17.3 mln, from RM13.0 mln in the previous corresponding period, in-tandem with higher revenue, which expanded by 10.4% Y.o.Y to RM73.7 mln, from RM66.8 mln last year. (The Edge Daily)

• PVC doors and metal roof sheeting manufacturer, Astino Bhd’s 2QFY17 net profit ballooned 74.7% Y.o.Y to RM12.1 mln, from RM6.9 mln in 2QFY16 - mainly due to improved export sales and profit margin. Quarterly revenue also grew 12.3% Y.o.Y to RM133.9 mln from RM119.3 mln a year ago.

• Astino’s cumulative 1HFY17 net profit jumped 47.3% Y.o.Y to RM17.7 mln, from RM12.0 mln in 1HFY16, while revenue gained 5.4% Y.o.Y to RM247.3 mln, against RM234.7 mln.

• Moving forward, the group expects tighter margins in the local steel products market, attributed to the weak domestic demand, high production costs and volatility of foreign currency. (The Edge Daily)

• GD Express Carrier Bhd (GDEX) has proposed a three-for-one bonus issue of 4.7 bln shares, which is expected to be completed in 1H2017.

• Assuming that none of the outstanding Warrants-B is exercised prior to the entitlement date, 4.18 bln bonus shares will be issued under a minimum scenario, while about 4.71 bln bonus shares will be issued under a maximum scenario if all of the outstanding warrants-B is exercised prior to the entitlement date. (The Star Online)

• Brahim’s Holdings Bhd is set to operate five cafeterias in the National University of Malaysia (UKM) and provide training and consultancy services for other cafeterias in the Bangi-based tertiary education institution.

• The group’s 51.0%-owned subsidiary Brahim’s SATS Food Services Sdn Bhd (BSFS) has entered into two Cafeteria Operation Agreements (COAs) with UKM for the purpose of leasing, renovating and upgrading of five cafeterias and provision of training and consultancy services for other cafeterias in the university.

• Under the COAs, BSFS will also supply meals, beverages and refreshments to other cafeterias in the university and will pay UKM based on a profit-sharing scheme. (The Star Online)  

Source: Mplus Research - 27 Mar 2017