• The weakness on global indices also permeated to the FBM KLCI as it slipped back below the 1,740 level yesterday. Still, the losses were mild (-0.1%) as there was selective support on the index heavyweights, but the lower liners and broader market shares saw sharper corrections. The FBM ACE index (-1.23%) was the biggest loser, followed by the industrial index (-1.0%)
• Traded volumes were slightly higher at 2.85 bln (+2.1%), but losers overwhelmed gainers 661-to-258 stocks as the selling spree took hold amid the weaker market sentiments.

• Ajinomoto (-38.0 sen), Panasonic (-32.0 sen), Pharmaniaga (-16.0 sen) and Warisan (-15.0 sen) were among the big losers on the broader market. On the key index, meanwhile, Petronas Gas (-60.0 sen), Westports (-11.0 sen), IHH (-4.0 sen) and Axiata (-4.0 sen) were the main losers; the latter despite its plan to sell part of its stake in edotco to KWAP.

• The top gainers of the day were F&N (+58.0 sen), Far East Holdings (+42.0 sen), KESM (+30.0 sen) and Scientex (+23.0 sen). Meanwhile, the main movers on the big board were again Genting (+21.0 sen) and Genting Malaysia (+9.0 sen), followed by IOI Corp (+5.0 sen) and Maybank (+1.0 sen)

• Most Asian stock indices trended lower for the day as the weakness in U.S. and European stocks extended to the region. The Nikkei, however, bucked the weaker regional trend to close 0.1% higher, but the Shanghai Composite fell for a fourth day, as with the Hang Seng that also lower in tandem. ASEAN indices, meanwhile, were mixed at Wednesday’s close. There was no reprieve for U.S stocks as it continues to fall, extending its downtrend for a fifth straight day with the Dow falling 0.6%. Oil stocks were the big losers after the WTI prices slipped to its lowest level in more than a month. The S&P 500 declined 0.2% despite some better corporate results, but the Nasdaq bucked the cautious trend to gain 0.2%.

• European stocks were generally higher as the CAC (+0.3%) and DAX (+0.1%) rose to offset the lower FTSE (-0.5%) that is still reeling from the surprise election call resulting in the Pound continuing to rise. The CAC gained on a poll suggesting that a business friendly candidate is in the lead.

The Day Ahead

• Fresh leads remain far and in between on Bursa Malaysia and we expect FBM KLCI stocks to continue drifting over the near term. We see the key index trending within a tight range and near the 1,740 level as local institutions are likely to provide support with foreign funds taking a more cautionary stance over the near term.

• As it is, there is a need for stronger leads to allow the key index to break out of its near term sideway trend as well as its ongoing consolidation trend following the recent strong gains. Until then, we see market conditions remaining guarded and choppy as investors could bring forward their take profit decisions that could still see the key index drifting lower.

• The mixed-to-lower conditions on the broader market and lower liner shares are also expected to persist over the near term amid the fewer catalysts and toppish valuations. Therefore, we think both market depth and breadth could become thinner over the near term.

Company Briefs

• Iskandar Waterfront City Bhd (IWCity) has requested for additional time to decide on the proposed merger with its major shareholder Iskandar Waterfront Holdings Sdn Bhd (IWH).

• IWH has agreed to extend the original due date for another month from 19th April to 5 May 2017 for its board to revert with its decision on whether the board is agreeable to put forward the proposed merger to the shareholders.

• To recap, IWH had proposed a one-forone merger offer to take up the remaining 61.7% equity in IWCity at an offer price of RM1.50 per IWCity share on 8th March 2017. (The Edge Daily)

• Loss-making Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) is uncertain if it is able to return to profitability in FY17, mainly due to the time it will take for the group to complete and deliver its projects.

• The group posted a net loss of RM134.3 mln for FY16, against a net profit of RM43.9 mln for FY15, attributed to the recognition of asset impairment. (The Star Online)

• GuocoLand (Malaysia) Bhd saw a 38.0% decline in 3QFY17 net profit to RM8.3 mln, from RM13.4 mln a year ago, due to a disposal gain it recorded in 3QFY16. Similarly, revenue also decreased by 36.0% Y.o.Y to RM92.1 mln, from RM143.5 mln.

• The cumulative 9MFY17 net profit jumped by more than three-fold to RM119.4 mln, from RM27.2 mln last year – due to gains from the disposal of its 679.2 ha. land worth RM475 mln in Sepang in the last quarter. Revenue, however, declined 24.0% Y.o.Y to RM190.3 mln against RM250.3 mln in the last corresponding year. (The Edge Daily)

• KUB Malaysia Bhd is acquiring 1,534 ha. (3,791 ac.) of oil palm plantation land in Kinabatangan, Sabah from Kwantas Corp Bhd for RM100.5 mln.

• The land, which has a remaining lease tenure of 870 years, has a total planted area of 1,503.05 ha., of which 1,229.9 ha. consist of mature palms, 135.3 ha. young mature palms and 137.8 ha. of immature palms.

• The funding of the proposed acquisition will include internal funds and borrowings, although the exact funding mix will be determined at a later period. (The Edge Daily)

• Ekovest Bhd will receive an incentive from the government in respect to the Bunus regional sewage treatment plant (STP).

• The incentive will be paid upon the company's enhanced design for the Bunus STP, which will result in more than 20.0% cost savings of the final cost of the project to the government. The group will also have to fulfill the key performance indicators set under an incentive agreement.

• The total incentive for the Bunus STP will not exceed RM100.0 mln or 75.0% of the cost savings, whichever is lower. (The Star Online)

• Hua Yang Bhd is increasing its stake in Magna Prima Bhd by 20.1% to 31.0% for RM123.8 mln after it signed a conditional share sale agreement with Fantastic Realty Sdn Bhd, and five other individuals for the proposed acquisition.

• On the completion of the proposal, Magna Prima would become an associate of Hua Yang, which now has a 10.8% stake in Magna Prima that was acquired on 25th January 2017. (The Edge Daily)

• Gadang Holdings Bhd reported a marginal increase of 3.0% Y.o.Y in its 3QFY17 net profit to RM25.8 mln, from RM25.1 mln a year earlier, attributed to higher contributions from the property division and lower cost of sales. Revenue for the quarter, however, declined 27.0% Y.o.Y to RM128.5 mln, from RM17.9 mln in the same period last year, on lower contribution from its construction division.

• Cumulative 9MFY17 net profit gained 11.0% Y.o.Y to RM70.4 mln, from RM63.7 mln, on the back of improved contributions from its property and utility divisions, although revenue fell 11.0% Y.o.Y to RM381.0 mln, from RM427.3 mln.

• The group expects the performance of the company for the remaining financial year to be muted, due to higher operating costs. (The Edge Daily)

• Matang Bhd is bidding for two parcels of leasehold oil palm land totalling 4,219.79 ac. in Raub, Pahang, together with a 60-tonne per hour palm oil mill.

• The group has submitted the tender to Raub Mining & Development Company Sdn Bhd and Raub Oil Mill Sdn Bhd for the acquisitions and the results of the bidding are expected to be received by 19th July, 2017.

• The proposed acquisition is in-line with Matang’s plans to expand its oil palm operations. (The Edge Daily)  

Source: Mplus Research - 20 Apr 2017