• It was another good day on Bursa Malaysia with stocks continuing to make headway as the positive undertone from overseas markets extended to the local stockmarket that also allowed the key index to close at its highest level in nearly two years. Except for the FBM ACE that fell 0.8%, all other indices on the Bursa Malaysia rose, led by the construction index (+1.3%), followed by the technology index (+1.2%).
• Traded volumes continued to perk up amid the improved market sentiments with 3.66 bln shares changing hands, some 17.3% more than last Friday’s volume. Market breadth also stayed positive with 559 gainers-to-388 losing stocks.

• Nestle was the day’s big winner, closing RM1.08 higher, followed by United Plantations (+48.0 sen), Aeon Credit (+46.0 sen) and MPI (+32.0 sen). Among the index heavyweights, the biggest gainers were CIMB (+14.0 sen), Ambank +28.0 sen), Axiata (+8.0 sen) and Genting (+12.0 sen). Mudajaya gained another 2.0 sen as its Indian IPP commences operations.

• On the losers list, Ajinomoto was among the biggest loser, shedding 38.0 sen, followed by F&N (-18.0 sen), Kossan (- 14.0 sen) and Seacera (-11.0 sen). The latter fell after it announced a private placement of up to 30.0% of its enlarged share capital. On the big board, the main losers were Maybank (-3.0 sen), BAT (- 80.0 sen) and Astro (-3.0 sen).

• Regional stock indices rose in tandem with the positive undertone in the U.S. and European stockmarkets. Insurance and brokerage stocks led the gains on the Nikkei (+1.1%), while the Hang Seng climbed 1.3% with banks leading the gainers. The Shanghai Composite, meanwhile, rebounded 0.2% after its recent steep falls that was triggered by the authorities’ crackdown on leveraged stock trading. ASEAN indices were also mostly higher in tandem with the strong global stock performances.
• U.S. stocks are still on the ascend, closing only a hair width from the psychological 21,000 points level as markets continue to be buoyed by a string of above expectation corporate results as well as the President Trump’s upcoming unveiling of his tax cut proposal. The positive market saw the Nasdaq hit a new record high and above the 6,000 level.
• European stocks also stayed firm as corporate earnings also topped forecast to lift markets. M&A activities also helped to shore up markets after LVMH proposed to buyout Christian Dior’s minority shareholders. However, the stock indices’ gains were more modest with the DAX gaining just 0.1%, while the FTSE and CAC rose 0.2% each.

The Day Ahead

• The positive global market environment will continue to buoy stocks on Bursa Malaysia over the near term and we see the key index chalking up another milestone to yet another new high in two years, albeit stock valuations are increasingly stretched.

• The positivity could see the key index breaking the 1,767 barrier with relative ease to head towards the next major hurdle at the 1,780 level as global markets await for the release of President Trump’s tax cut proposal.

• We also see market breadth and depth staying on the positive trend amid the still firm market environment and this will lend further credence to the ongoing market rally.

Company Briefs

• Allianz Malaysia Bhd has aborted its plans to acquire HSBC Amanah Takaful (Malaysia) Bhd, which it had been pursuing since October 2016.

• The group discontinued its negotiations with the shareholders of HSBC Amanah, namely HSBC Insurance (Asia Pacific) Holdings Ltd, JAB Capital Bhd and the Employees Provident Fund (EPF) Board, over the proposed acquisition, although no reasons were given for the failure. (The Edge Daily)

• KKB Engineering Bhd has inked a Memorandum of Understanding (MoU) with a China-based nuclear power consultant company, State Nuclear Electric Power Planning Design & Research Institute Co Ltd (SNPDRI) to bid for possible future tenders for projects in Sarawak. The MoU will be valid for a term of six months, with an option for extension of a further six months. (The Star Online)

• 7-Eleven Malaysia Holdings Bhd has proposed to undertake a rights issue of new warrants at an issue price of 10.0 sen for each warrant, to raise up to RM61.7 mln to fund the group’s working capital needs.

• The proposal involves the issuance of up to 616.69 mln warrants on the basis of one warrant-for-every two existing shares.

• The exercise price for these warrants are fixed at RM1.00 per warrant, after taking into consideration the theoretical exrights price of 7-Eleven shares of RM1.48 - based on the five-day volume weighted average market price up to and including 18th April 18 2017 of RM1.66. (The Edge Daily)

• Nestle (Malaysia) Bhd posted a 4.4% Y.o.Y gain in its 1Q2017 net profit to RM230.4 mln, from RM220.7 mln a year ago, driven by more efficient cost management which offset the impact of higher commodity prices and a weaker Ringgit. Revenue for the quarter also rose 4.4% Y.o.Y to RM1.37 bln, from RM1.31 bln recorded in the same quarter last year.

• Moving forward, the group will continue to implement its "Fuel the Growth" strategy, which focuses on supply chain efficiency and intensified trade and consumer promotions, amid higher input costs and depressed consumer confidence levels. (The Star Online)

• Hong Leong Industries Bhd's 3QFY17 net profit rose 26.6% Y.o.Y to RM74.2 mln against RM58.7 mln a year earlier, alongside revenue which was 5.6% Y.o.Y higher at RM585.8 mln, from RM555.0 mln previously.

• The improved earnings were also attributed to higher share of profits from its associate company.

• Cumulative 9MFY17 net profit grew 16.8% Y.o.Y to RM207.7 mln, from RM177.7 mln in the previous corresponding year, while revenue was 5.9% Y.o.Y higher to RM1.71 bln, from RM1.62 bln in 9MFY16. Hong Leong Industries has also proposed a dividend of 30.0 sen per share, payable on 30th May, 2017. (Bernama)

• United Plantations Bhd‘s 1Q2017 net profit jumped 30.0% Y.o.Y to RM77.7 mln, compared to RM59.8 mln a year ago, driven by its plantation segment. Quarterly revenue surged by 46.1% Y.o.Y to RM379.2 mln vs. RM259.6 mln.

• The group said that its palm oil production has recovered from the hiccups caused by the El Nino weather phenomenon and the potentially higher production in the coming months could result in a build-up of palm oil stock, which could put pressure on prices of palm oil. (The Edge Daily)

• IGB Real Estate Investment Trust (IGBREIT) posted a 2.6% Y.o.Y gain in net property income for 1Q2017 at RM96.1 mln, from RM93.6 mln a year earlier – led by higher rental income.

• IGBREIT’s quarterly distributable income was also up 2.7% Y.o.Y to RM84.9 mln, against RM82.7 mln last year (1QFY16), while rental income grew by 3.1% Y.o.Y to RM106.5 mln, from RM103.3 mln earlier. (The Edge Daily)

• Globetronics Technology Bhd reported a 27.0% Y.o.Y increase in its 1Q2017 net profit to RM4.7 mln, in comparison to from RM3.7 mln in the same period last year, mainly driven by lower forex loss incurred during the period. Revenue, however, declined 15.0% Y.o.Y to RM49.8 mln, from RM58.7 mln.

• The group also declared a first interim single tier ordinary dividend of two sen per share and a single tier special dividend of three sen per share

• The group expects the mass production of new products to drive its business and product loading in 2H2017.

• Unisem (M) Bhd posted a 29.0% Y.o.Y surge in its 1Q2017 net profit to RM44.9 mln, from RM34.7 mln a year ago, on the back of improved profit margin, higher interest income and lower interest expense. Revenue also gained traction, rising 13.0% Y.o.Y to RM360.3 mln, from RM317.8 mln in 1Q2016. (The Edge Daily)
• Sasbadi Holdings Bhd’s 2QFY17 net profit fell 19.1% Y.o.Y to RM5.4 mln, from RM6.6 mln previously - dragged down by lower revenue and higher operating costs. Revenue dropped 19.7% Y.o.Y to RM27.2 mln, from RM33.9 mln previously.

• Cumulative 1HFY17 net profit rose 12.0% Y.o.Y to RM9.7 mln, from RM8.7 mln last year, alongside revenue which was up 6.4% Y.o.Y to RM58.4 mln, from RM54.9 mln.

• The group noted that its prospects will be driven by the continuous introduction of new print and digital products and network growth via its direct selling unit, Mindtech Education Sdn Bhd. Sasbadi will also explore new opportunities with the Education Ministry as well as pursue acquisition opportunities that are complementary to its business.

• Pantech Group Holdings Bhd posted a 53.9% Y.o.Y jump in 4QFY17 net profit to RM11.3 mln, from RM7.3 mln a year ago, buoyed by increased demand and delivery in its downstream oil and gas (O&G) projects like the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor. Quarterly revenue grew 39.7% Y.o.Y to RM152.6 mln, from RM109.2 mln in 4QFY16 and the group is also proposing a final dividend of 0.5 sen per share for FY17.

• Texchem Resources Bhd's restaurant division is forecast to double its gross profit and drive up revenue by 17.0% to 20.0% in FY17. It’s restaurant division, mainly its Sushi King restaurant chain is recovering from the impact of the goods and services tax (GST) implementation in 2015.

• Texchem plans to expand its Sushi King outlets to 130 this year from 113 now, opening in smaller towns where there has been an increase in demand, despite headwinds driven by higher raw material cost. (The Edge Daily)  

Source: Mplus Research - 26 Apr 2017