• The key-index narrowed by another 0.4% – on extended profit-taking activities ahead of the Easter holidays. On a weekly basis, the FBM KLCI also traded on soft footing, closing down by 0.6% W.o.W. to end slightly above the 1730.0 points. The bears dominated the broader market on Friday with all the lower liners – the FBM Small Cap (-1.0%), the FBM Fledging (- 1.1%) and the FBM Ace (-1.7%) in the red.
• Market breadth mirrored the negative sentiments on the local bourse as losers overtook the winners by more than fourfold. Traded volumes retreated 18.4% to 3.15 bln as investors await for fresh trading catalyst.

• Petronas-affiliated companies like Petronas Dagangan and Petronas Chemicals declined 16.0 sen and 15.0 sen respectively, Meanwhile, key-index losers include Kuala Lumpur Kepong (-28.0 sen), Hong Leong Financial Group (-14.0 sen) and Genting (-11.0 sen). Broader market decliners were Nestle (-86.0 sen), Malaysian Pacific Industries (-42.0 sen), HCK Capital Group (-33.0 sen), TAHPS (- 25.0 sen) and Pos Malaysia (-14.0 sen).

• Meanwhile, significant gainers like United Plantations (+30.0 sen), Ajinomoto (+24.0 sen) Batu Kawan (+10.0 sen), Enra (+10.0 sen) and Seacera (+7.0 sen) propped the broader market higher. There were only four Main Board advancers last Friday, which includes Astro (+2.0 sen), IJM (+2.0 sen), Telekom Malaysia (+1.0 sen) and Westports (+1.0 sen).

• Japanese stockmarkets finished in the negative territory after the Nikkei (-0.5%) closed at 18,335.6 points amid heightened geopolitical conflicts in the region. The Shanghai Composite index (- 0.9%) slipped into the red, ahead of China’s GDP data on Monday, while the Hang Seng was closed for the Good Friday holiday. Many ASEAN stockmarkets were also closed in-tandem with the Good Friday celebrations.

• U.S. and UK stockmarkets were also closed for the aforementioned holidays.

The Day Ahead

• Once again, the FBM KLCI closed at a support level, thus leaving the key index at the crossroads again. With many key global indices remaining closed for the Easter holidays, there will be little fresh catalysts for investors to follow over the near term.

• Still, we think the key index could find near term support at the 1,730 level for now, resulting in a potentially mild rebound after the recent weakness and as the near term profit taking subsides.

• The buying interest is likely remain tepid as most investors could still staying on the sidelines for longer amid the lack of a clear market direction, both on the overseas and local fronts, and we think any upsides will be limited to the 1,740 level.

• Interest on the lower liners and broader market shares are also waning due to the toppish valuations and fewer compelling buys: the pullback may also escalate after their strong gains in 1Q2016. This may see the market breadth and depth subsiding over the near term as retail players scour for new leads.

Company Update

• Mitrajaya Holdings Bhd has bagged at RM273.8 mln contract from STF Resources Sdn Bhd for the construction of ”A Centre of Excellence” in Jalan Dato’ Onn in Kuala Lumpur. The project is expected to commence later this month for completion in April 2019.

Comments

• The award of the above contract raises Mitrajaya’s orderbook to RM1.80 bln, sufficient to keep the group’s construction unit busy until 2020. The above contract also its first major contract secured in 2017 and is within our orderbook replenishment target of RM700 mln for the whole year.

• There is no change to our earnings forecast as the above contract secured is within our expectations and we keep our BUY recommendation with an unchanged target price of RM1.75.

• We arrived at our target price from ascribing an unchanged target PER of 11.0x to its fully diluted 2017 construction earnings, while its property units’ values, both local and overseas, are based on 0.8x their respective book values. At the target price, Mitrajaya’s PERs are at 10.8x and 12.0x for 2017 and 2018 respectively, within the industry averages.

Company Briefs

• Country Heights Holdings Bhd is selling its 70.0% stake in loss-making Country Heights Education Sdn Bhd for RM105,001 to Ng Yin Ming via a management buyout. Consequently, the latter will cease to be a subsidiary of the group following the disposal. (The Edge Daily)

• S P Setia Bhd is merging with I&P Group Sdn Bhd, to form one of the largest property company in Malaysia with a landbank of close to 10,000 ac. Both parties are the property investments of Permodalan Nasional Bhd (PNB).

• S P Setia, PNB and Amanahraya Trustees Bhd (as trustee for Amanah Saham Bumiputera) has inked a non-binding Memorandum of Intent to commence negotiations on the proposed acquisition by S P Setia of the entire equity interest in I&P Group, which has 4,263 ac. of landbank, for an indicative price ranging from RM3.50 bln to RM3.75 bln. (The Star Online)

• Reach Energy Bhd has re-designated its Executive Director Shahul Hamid Mohd Ismail to the newly created post of Chief Executive Officer (CEO) with immediate effect.

• Mr. Shahul is the General Director of Emir-Oil LLP, in which Reach Energy holds an indirect 60.0% equity interest and was the first director since the inception of the company on 7th February 2013. (The Edge Daily)

• JKG Land Bhd expects to expand its presence in Kedah with the acquisition of the remaining 50.0% equity interest in Inno Alliance (M) Sdn Bhd (IASB), which owns a plot of land in Kulim, Kedah.

• The group is buying the equity stake for RM11.0 mln from Datuk Beh Heng Teong, Datuk Beh Huck Lee, Oriental Fleet Sdn Bhd (OFSB) and Beh Heng Seong Sdn Bhd (BHSSB). (The Edge Daily)

• Vizione Holdings Bhd made a turnaround with a 3QFY17 net profit of RM152,000, against a net loss of RM513,000 a year earlier, in-tandem with revenue which jumped 91.7% Y.o.Y to RM14.6 mln, from RM7.6 mln in 3QFY16. The stronger revenue was attributed to higher progressive billings from its construction activities.

• Cumulative 9MFY17 net profit stood at RM415,000, compared with a net loss of RM548,000 in the previous corresponding period. Revenue also gained 13.0% Y.o.Y to RM33.1 mln, from RM29.3 mln last year. (The Edge Daily)

• PRG Holdings Bhd is planning to penetrate into the international halal markets via its wholly-owned subsidiary Premier International Marketing Sdn Bhd (PIM).

• PIM has into a Memorandum of Understanding (MoU) with Felcra International Private Ltd (FIV) and Overseas Investment Union of The Investment Association of China (OIU) on 16th April 2017 to explore potential business opportunities to market halal products owned by Felcra Livestock and Agri Product Sdn Bhd (FLAP) in China and Hong Kong.

• FIV is a wholly-owned subsidiary of Federal Land Consolidation and Rehabilitation Authority Bhd (Felcra). (The Star Online)

• R&A Telecommunication Group Bhd and its wholly-owned subsidiary, R&A Telecommunication Sdn Bhd (RASB) have lodged a police report against its bank authorised signatories over alleged criminal breach of trust.

• In the first case, two of its signatories allegedly paid RM4.2 mln from the group to RASB on 1st April, 2014 without the board's authorisation, while the second incident involved one of RASB's signatories allegedly paying RM4.2 mln from the company to Info Genetic Sdn Bhd, a company which R&A said has no business relations with it or RASB. (The Edge Daily)

• Piling and foundation services provider Ikhmas Jaya Bhd has secured a subcontract worth RM33.8 mln for a residential development project in Shah Alam. The group has received a letter of intent from Jack-(In) Pile (M) Sdn Bhd to undertake piling and substructure works for the project.

• The project includes a 15-storey building, consisting of 658 small-office home-office (SOHO) units and five shoplots. (The Edge Daily)  

Source: Mplus Research - 17 Apr 2017