• Stocks on Bursa Malaysia surged on Friday, tracking the positive performance of global stocks indices on optimism that a tax rate cut in the U.S is imminent. The positivity also allowed the FBM KLCI to climb back above the 1,750 level to close at its highest level in 2017, with the finance index (+1.5%) leading the charge, followed by the technology index (+1.3%). Only the industrial sector underperformed, falling 0.1% for the day.

• Expectedly market breadth was positive with gainers beating losers 588-to-320 stocks. The positive market environment also helped traded volumes to perk up 18.2% to 3.12 bln.

• On the big board, Maybank led the winners with a 32.0 sen gain, followed by CIMB (+11.0 sen) and Ambank (+14.0 sen). Public Bank, meanwhile, rose 4.0 sen after reported improved 1Q2017 earnings. On the broader market, gainers were led by KESM (+52.0 sen), Bintulu Port (+45.0 sen), Genting Malaysia (+39.0 sen) and F&N (+28.0 sen).

• Tenaga Nasional (-6.0 sen), Hong Leong Financial Group (-18.0 sen), Westports (- 5.0 sen) and BAT (-54.0 sen) were the main losers on the FBM KLCI. BAT fell after its 1Q2017 earnings were a third lower. Other key losers of the day were Lafarge (-19.0 sen), HCK (-17.0 sen), Apollo (-14.0 sen) and Tasek Cement (- 14.0 sen).

• Asian stock indices were broadly higher amid a more positive market environment following the results from the first round of the French Presidential election as well as President Trump’s upcoming announcement on its proposed tax cuts. The Nikkei was up for a fourth day, gaining another 1.4% yesterday, while the Hang Seng rose 0.4%. The Shanghai composite, however, lost 1.0% as the Chinese authorities continue to clamp down on borrowings for stock purchases. ASEAN indices also surged in tandem with the gains in global indices.

• U.S. stocks continues to climb on optimism of President Trump’s potentially generous tax cut that could see the corporate tax rate reduced to 15% from the current 35%. Both the Dow and S&P 500 climbed 1.1%, while the Nasdaq jumped 1.2%.

• Earlier, European stocks surged after the first round of France’s presidential election saw a centrist candidate emerging as the leading candidate, allaying fears that a far right candidate would secure the pole position. Expectedly the CAC was the big gainer, jumping over 4.0%, while the DAX and FTSE surged 3.4% and 2.1% respectively.

The Day Ahead

• With global indices cheering the U.S.’ potential income tax cut and the E.U’s future looking more secure after the first round of France’s Presidential election, we expect the positive trend on Bursa Malaysia to sustain as they play catch up to the gains overseas.

• Under the prevailing environment, we think the FBM KLCI will continue to post new highs for the year with the key index likely to target the 1,767 level before moving to test the 1,780 level later.

• We also think that the upsides could be accompanied by stronger market participation as the near term outlook is looking more positive and this is likely to draw in more near term players back into the market and temporarily casting aside the already toppish market valuations.

Company Briefs

• Gas Malaysia Bhd‘s subsidiary Gas Malaysia IEV Sdn Bhd (GMIEV) has commenced its virtual pipeline business following the officiation of its compressed natural gas mother station in Gebeng, Pahang.

• GMIEV is a joint-venture company incorporated in 2014 between Gas Malaysia and IEV Energy Sdn Bhd to supply compressed natural gas to customers that are currently not served by Gas Malaysia's natural gas distribution system network.

• The group has begun supplying to its first customer in Pekan, Pahang. (The Edge Daily)

• Integrated Logistics Bhd (ILB) is disposing of its 100.0% share equity in Feel Solar Sdn Bhd to Bee Sun Sdn Bhd for about RM3.0 mln. The group said it has decided to focus on investments in large-scale solar photovoltaic (LSSPV) plants introduced by the Energy Commission (EC) in 2016.

• ILB first invested in Feel Solar in July 2015, after it acquired a 100 stake in the latter for RM115,388 from three individuals.

• Trusted identification (ID) company Iris Corp Bhd will be working together with Norwegian biometrics company Zwipe to look into the potential for biometric smartcard applications in Malaysia.

• Both parties will look at possible ways the two companies can collaborate to promote the technology in Malaysia. The group said that there are some similarities between the manufacturing of the biometric cards and the manufacturing of the components for ID cards and passports, which Iris currently does, but added that Iris will need further investments to upgrade its manufacturing capabilities. (The Edge Daily)

• Cycle & Carriage Bintang Bhd’s (CCB) 1Q2017 net profit slipped to RM312,000, from RM9.5 mln in the same period last year – dragged down by the fierce price competition among the premium car segment, although revenue grew 11.9% Y.o.Y to RM352.7 mln from RM315.1 mln.

• Going forward, the group expects higher car sales to buoy its earnings and to mitigate the tightening margins in the automotive sector. (The Edge Daily)

• Polyethylene compounds maker Plastrade Technology Bhd is planning to undertake a private placement of up to 10.0% (or 15.0 mln shares) of its total issued shares to potentially raise RM5.6 mln for working capital purposes.

• The details of the proposed exercise will be announced in due course. (The Edge Daily)

• The High Court has struck out a RM303.5 mln claim against mass rapid transit (MRT) project delivery partner MMC Gamuda KVMRT (PDP) Sdn Bhd (KVMRT PDP). The suit was filed last July by Accolade Land Sdn Bhd, which claimed that the PDP (jointly-owned by MMC Corp Bhd and Gamuda Bhd) had breached a contract relating to the acquisition of land from Accolade.

• The High Court found Accolade’s suit to be “totally unsustainable”, because “the alleged oral agreement was not supported by any contemporaneous evidence”. (The Star Online)

• Seacera Group Bhd is proposing to issue between 70.0 mln and 80.0 mln new shares at RM1.00 per share to raise at least RM70.0 mln.

• The group has entered into conditional subscription agreements with 12 subscribers for the subscription of 70.8 mln new shares, representing 30.0% of its enlarged share capital.

• The issuance will be implemented in several tranches in six months from the date of approval by Bursa Malaysia, while subsequent tranches will be placed to third party investors at a price to be announced later. (The Edge Daily)

• Dolomite Corp Bhd's (DCB) Shandong unit has defaulted in instalment payments of principal sums of about RM30.0 mln. The group was unable to repay the instalment due to a delay in the completion of thermal power plant construction resulting from the main contractor’s inability to deliver within the agreed time, prolonged severe winters, and longer-than-expected time required to stabilise the plant.

• Ultimately, the aforementioned reasons led to the delay of issuance of the power generation certificate, which was only issued on 3rd March 2017, derailing the schedule for full commercial production. (The Edge Daily)

• Naim Indah Corp Bhd has disclosed that its 2016 audited net profit is actually 64.8% lower than the group’s unaudited quarterly disclosure to Bursa Malaysia.

• Naim’s audited 2016 net profit was RM10.3 mln against RM29.4 mln it reported on 27th February 2017, mainly due to lower gain on fair value adjustment in its investment property Centerpoint Seremban Mall. (The Edge Daily)  

Source: Mplus Research - 25 Apr 2017