• The key-index ended the first quarter on a soft note after the FBM KLCI finished 0.5% lower amid profit-taking activities in selected heavyweights. Meanwhile, the blue-chip gauge also declined 0.3% W.o.W to close marginally above the 1740.0 points. However, all the lower liners advanced – led higher by the FBM ACE (+1.8%). On the broader market, the majority of the sub-sectors were splashed in the red on the last trading day of the month.

• Market breadth was subdued as underperformers edged outperformers, on a ratio of 466-to-431 stocks. Traded volumes fell 3.1% to 3.13 bln shares amid the weaker market conditions.

• Main Board underperformers include PPB (-44.0 sen) Hong Leong Financial Group (- 32.0 sen), AmBank (-14.0 sen), IJM (-12.0 sen) and Genting Malaysia (-10.0 sen). Broader market laggards were Malaysian Pacific Industries (-38.0 sen), Fraser & Neave (-20.0 sen), FCW (-15.5 sen) and Hong Leong Industries (-15.0 sen). E&O lost 19.0 sen on the back of profit-taking after Kumpulan Wang Persaraan (KWAP) emerged as the strategic partner of the former’s flagship project in Penang.

• Meanwhile, Far East Holdings (+45.0 sen), Nestle (+38.0 sen), Iskandar Waterfront City (+32.0 sen), Vitrox (+24.0 sen) and Aeon Credit Service (+20.0 sen) dominated the winners’ list. Less than a third of the Main Board members advanced - including BAT (+60.0 sen), Hong Leong Bank (+8.0 sen), Petronas Dagangan (+6.0 sen), Petronas Chemicals (+5.0 sen) and MISC (+1.0 sen).

• Asian stockmarkets ended mixed ahead of Donald Trump’s two executive orders aimed at tackling U.S.’ trade deficit problems with China. The Nikkei erased 0.8% on the back of profit-taking amid portfolio re-balancing activities. The Hang Seng was also lower by 0.5%, although the Shanghai Composite closed up 0.4% on upbeat services data - China’s services Purchasing Managers’ Index (PMI) expanded to 55.1 in March, from 54.2 previously. ASEAN stockmarkets, meanwhile, were also sluggish last Friday.

• Key benchmark U.S. indices retreated on Friday, despite posting solid weekly and quarterly gains. The Dow fell 0.3% after a volatile intra-day session. On the broader market, the S&P 500 (-0.2%) erased earlier gains to close at 2,362.7 points, weighed down by financials-related counters, while the Nasdaq (-0.04%) flatlined.

• U.K. stockmarkets extended their decline for the second-straight session, weighed down by mining stocks due to the depressed metals prices. The FTSE fell 0.6% to 7,322.9 points. On The flip side, however, the CAC and the DAX rallied 0.7% and 0.5% respectively on expectations of continued monetary stimulus amid slower-than-expected Eurozone inflation.

The Day Ahead

• Although it was a meek quarterly end on Bursa Malaysia, 1Q2016’s performance has been sterling as the key index managed to gain 6.0% for the quarter, its best quarterly performance since 2Q2013. Still, the near term outlook remains clouded after the key index failed to break past the 1,750 level, which is proving to be a difficult level to clear.

• Therefore, it would appear that stronger catalysts are required for the above level to be breached and for the uptrend to be sustained amid the lack of fresh and convincing catalysts.

• Consequently, we think the key index could instead undergo a sideways consolidation over the near term for the strong quarterly gains to be digested. There is also further downside bias after the key index is tethering at the 1,740 support with the 1720-1,730 levels serving as the next key supports.

• While the index-linked stocks may waver, the bouts of rotational play on the lower liners and broader market shares is likely to continue as market sentiments are still holding up for now.

Company Briefs

• Sapura Energy Bhd has trimmed its 4QFY17 net loss to RM172.3 mln, from RM1.29 bln a year earlier, although revenue declined 18.8% Y.o.Y to RM1.81 bln, from RM2.23 bln. The improved performance was due to the absence of a RM717.6 mln provision for impairment on O&G properties charged in 4QFY16

• Consequently, Sapura Energy returned to the black with FY17 net profit at RM208.3 mln, vs. net loss of RM791.6 mln in FY16, despite posting weaker revenue, which fell 24.9% Y.o.Y to RM7.65 bln, from RM10.2 bln. The company has also proposed a single tier interim dividend of one sen per share, payable on 28th April this year. (The Star Online)

• AirAsia Bhd is establishing a RM194.0 mln (1 trillion Vietnamese dong) jointventure (JV) low-cost airline in Vietnam, which is expected to commence operations by early 2018.

• The group has executed a shareholders agreement and a share subscription agreement with Gumin Co Ltd, an individual Tran Trong Kien and existing Vietnamese seaplane service provider, Hai Au Aviation Joint Stock Company (HAA).

• Under the agreements, Air Asia will subscribe for 30.0% stake in the JV company for RM58.2 mln via internal funding. The former and Gumin will also provide loans worth US$2.0 mln (RM8.8 mln) and US$4.0 mln respectively to HAA. (The Star Online)

• Actis became the largest shareholder of GHL Systems Bhd after acquiring a 44.4% equity stake in the latter, triggering a mandatory general offer (MGO) for the shares it does not own in the company.

• Actis has purchased 28.3% equity stake from Cycas (a unit of private equity firm Creador) and acquired the balance 16.1% stake from GHL Executive Vice Chairman, Simon Loh, who is now left with a 19.1% stake in the company. The shares were acquired at RM1.00 per share valued at RM290.2 mln.

• Actis also said that it does not intend to maintain the listing status of GHL should it obtained more than 75.0% of GHL's shares. (The Star Online)

• Ahmad Zaki Resources Bhd (AZRB) is proposing a private placement of up to 10.0% of its issued shares to raise money for working capital purposes. Details of the proposed exercise will be announced at a later date, while the placement is slated to be completed by 2QFY17.

• As of March 17, AZRB’s share capital stood at RM120.9 mln with 483.5 mln shares, including 1.5 mln treasury shares. (The Edge Daily)

• ATTA Global Group Bhd (formerly known as SMPC Corp Bhd) is planning to raise up to RM188.6 mln via the rights issue of Irredeemable Convertible Preference Shares (ICPS) to existing shareholders to fund working capital or potential divestment into an entirely new business.

• The minimum amount it could raise from the exercise is RM12.0 mln. To ensure the minimum subscription is achieved, it has secured written irrevocable undertakings from two directors-cumshareholders of Atta to take up the requisite shares.

• The ICPS will be issued on the basis of 10 ICPS for every ATTA share owned is priced at six sen per share. The entitlement date is to be announced later.

• The group’s share capital, which stood at RM79.7 mln (or 79.7 mln shares) as at 30th March 2017, could grow to RM2.21 bln (or 3.46 bln shares) in the maximum scenario. (The Edge Daily)

• Vizione Holdings Bhd has inked a Heads of Agreement (HoA) for the proposed acquisition of Wira Syukur (M) Sdn Bhd (WSSB) for RM280.0 mln in cash. WSSB’s vendors are Vizione’s Managing Director, Datuk Ng Aun Hooi, Bee Jian Ming and Goon Mong Yee.

• The purchase will be funded with new shares in Vizione at an issue price of 11.0 sen per share, subject to the finalization of the deal. The vendors have also promised an accumulative profit guarantee of RM82.6 mln in respect of the actual aggregate audited net profit of WSSB for the 2017 and 2018. (The Edge Daily)

• Nexgram Holdings Bhd sank deeper into the red in 2QFY17 after posting a net loss of RM6.2 mln, from a net profit of RM24.0 mln last corresponding period - marking its third quarterly loss in a row, while revenue plunged 62.0% Y.o.Y to RM9.7 mln, from RM25.2 mln due to ongoing decline in the performance of its information technology (IT) subsidiaries.

• Going forward, Nexgram said it is in the midst of securing new projects for its property, construction and logistics businesses as part of its business rationalisation. (The Edge Daily)

• Kerjaya Prospek Group Bhd has secured a RM31.6 mln contract from Bina BMK Sdn Bhd to construct 32 three-storey terrace houses in Penang. The project is located in Bandar Tanjung Pinang and will commence on 22th March 2017 until 21st September 2018. (The Edge Daily)  

Source: Mplus Research - 3 Apr 2017