• The FBM KLCI (-0.8%) declined yesterday amid sustained profit-taking activities after the Federal Reserve downplayed the recent slowdown in the U.S. economy and maintained its hawkish stance on its interest rates policy. All the lower liners were splashed in red, while only the Industrial (+0.1%) sub-sector managed to close higher – led by last minute buyingsupport.
• Market breadth was overwhelmingly negative as decliners overshadowed the advancers by more than four-fold. Traded volumes also eased 11.5% to 3.45 bln amid the bearish sentiment spilled over from the regional stockmarkets.

• Banking heavyweights weighed on the Main Board yesterday – led by Ambank (- 20.0 sen), Public Bank (-16.0 sen) and RHB Bank (-9.0 sen), followed by Gentingaffliated companies like Genting (-13.0 sen) and Genting Malaysia (-10.0 sen). Meanwhile, the broader market laggards were Nestle (-58.0 sen), Malaysian Pacific Industries (-28.0 sen), Bintulu Port (-24.0 sen) and GD Express (-14.0 sen). Ekovest (-26.0 sen), meanwhile, hit limit-down, after the Ministry of Finance (MoF) aborted the Bandar Malaysia deal with Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC). Ekovest and IWH's subsidiary, Iskandar Waterfront City (IWCity) shared the same controlling shareholder, Tan Sri Lim Kang Hoo.

• On the other side of the trade, Dutch Lady (+60.0 sen), Aeon Credit Service (+40.0 sen), Pentamaster (+32.0 sen), Cakaran (+28.0 sen) and United Plantations (+26.0 sen) were the bright spots in the broader market. Plantations giants like Hap Seng Consolidated, IOI Corporation and Kuala Lumpur Kepong all rose 4.0 sen on speculation of higher demands during the Ramadan holiday celebrations. PPB Group and Westports, meanwhile, also rallied 6.0 sen and 4.0 sen respectively on Thursday’s close.

• Chinese equities extended their decline after growth in China’s services sector missed market expectations. The Shanghai Composite (-0.3%) fell to for the third-straight day as concerns of slower economic growth and tougher financial regulations continue to weighed on the Chinese bourse. The Hang Seng (-0.3%) was also in the red, although the pullback was shallow, supported by HSBC (+3.0%) after the latter posted better-thanexpected 1Q2017 earnings. Japanese indices, meanwhile, remained closed for the Golden Week holidays. The majority of the ASEAN indices finished on a softer footing on Thursday’s closing bell.

• European stockmarkets rallied overnight as investors cheered a string of upbeat economic data from the U.S. and Eurozone. The FTSE (+0.2%) ended with minute gains after paring back earlier losses on rosier outlook for Britain’s economy following higher-than-expected growth in its services sectors, alongside similarly strong manufacturing and construction data announced earlier this week. The DAX (+1.0%), meanwhile hit record high, on a steady recovery in the European economy, while the CAC (1.4%) notched gains amid optimism on the upcoming French Presidential election after Pro-European centrist, Emmanuel Macron’s perceived win in Wednesday’s pre-election debate.

• Wall Street was lackluster overnight, after major benchmark indices ended almost unchanged as persistent selling-pressure in the energy stocks offset positive corporate results. The Dow (-0.03%) finished an inch above the 20,951.0 mark, after the House of Representatives narrowly passed a healthcare overhaul by the Trump administration. The S&P 500 (+0.1%), meanwhile, struggled to stay afloat, albeit still closing in the green – led by gains in the consumer staples and healthcare sectors and the Nasdaq inched 0.1% higher.

The Day Ahead

• We think stocks on Bursa Malaysia will end the week on a dour note after yesterday’s large falls has weakened domestic market sentiments considerably. The key index has also breached some of its technical support levels and is likely to pull back further with profit taking activities to escalate in view of the increasingly uncertain market environment, whilst bargain hunting activities are likely to stay scant for now as market players wait for the market to bottom.

• For now, we see the key index moving back to its major support of the 1,750 level, which should provide some support for the near term, but if it gives way, the 1,730 level will serve as the next support.

• In tandem with the weaker market sentiments, we also see retail players turning cautious and will continue to close out their short-term positions, retreating to the sidelines until there is further clarity on the market’s next direction.

Company Briefs

• MRCB-Quill Real Estate Investment Trust (MQREIT) reported a 39.9% Y.o.Y increase in its 1Q2017 net property income to RM37.1 mln, from RM26.5 mln last year, in-tandem with higher revenue which was up by 38.0% Y.o.Y at RM46.6 mln, compared with RM33.8 mln a year ago. No income distribution was proposed for the current quarter as MQREIT’s income distribution is paid on a half yearly basis. (The Edge Online)

• Samchem Holdings Bhd’s 1Q2017 net profit jumped 38.0% Y.o.Y RM5.0 mln, from RM3.6 mln in the same period last year on higher sales and stronger profit margin, while revenue surged 36.0% Y.o.Y to RM217.6 mln vs. RM159.6 mln in the previous year. (The Edge Online)

• Daibochi Plastic and Packaging Industry Bhd's 1Q2017 net profit dropped 11.0% Y.o.Y to RM5.8 mln, compared to RM6.5 mln last year, dragged down by lower foreign currency gain and higher raw material costs. Revenue, however, widen 5.0% Y.o.Y at RM94.1 mln, from RM89.7 mln in 1Q2016.

• It proposed a first interim dividend of 1.3 sen per share for the quarter, payable on 22th June this year. Going forward, the group expects to see higher exports to Indonesia on the back of new contracts to major food & beverage (F&B) and fast moving consumer goods (FMCG) companies. (The Edge Online)

• The demerger between UMW Holdings Bhd (UMWH) and its oil and gas unit, UMW Oil & Gas Corp Bhd (UMWOG), is set to be completed by July, despite the abortion of the latter's four-party merger with Icon Offshore Bhd and Orkim Sdn Bhd. Trading in the shares of Icon and UMWOG had been suspended since 4th April, 2017 and will resume trading tomorrow.

• Separately, UMWOG has proposed to raise up to RM1.81 bln via a rights issue of up to 6.05 bln new shares, coupled with up to 1.51 bln free warrants at an issue price of 30.0 sen per rights share.

• The rights issue will be done on the basis of 14 rights shares-for-every five existing shares, while the warrants will be issued on the basis of one warrant-for-every four rights shares subscribed. UMWOG plans to utilise RM1.50 bln from the proceeds to pare down bank borrowings, RM310.0 mln for working capital and the remainder to defray the expenses of the corporate exercise. (The Star Online)

• Trading in the shares of Iskandar Waterfront City Bhd (IWCity) has been halted until Friday, following news of the termination of the 60.0% equity stake sale in Bandar Malaysia project to the joint-venture company, IWH CREC Sdn Bhd. IWCity is expected to announce additional details on the termination. (The Edge Online)

• Separately, Ekovest Bhd, which saw its share price hit limit down yesterday, said it views the sell-down as temporary, hoping to alleviate investors’ concerns on the negative impact of the termination of the TRX City Sdn BhdIWH CREC Sdn Bhd deal in relation to the Bandar Malaysia development on Ekovest's activities.

• Iskandar Waterfront Holdings Bhd (IWH), which owns a 60.0% shareholding in IWH CREC, is the flagship of tycoon Tan Sri Lim Kang Hoo, who also holds a controlling 32.0% stake in Ekovest. The lost deal indirectly raises uncertainties over Ekovest's concessionaire for the Setiawangsa — Pantai Expressway (formerly known as the DUKE Phase-3) that would connect to Bandar Malaysia. (The Star Online)

• MISC Bhd posted an 18.0% Y.o.Y gain in its 1Q2017 net profit to RM676.2 mln, from RM571.0 mln a year earlier, following the turnaround in its offshore segment, thanks to the consolidation of the Gumusut-Kakap Semi-Floating Production System (L) Ltd or GKL.

• Quarterly revenue also grew 25.0% Y.o.Y to RM2.98 bln, from RM2.39 bln and declared a first interim dividend of seven sen, payable on 31st May 2017. (The Edge Online)

• Tan Chong Motor Holdings Bhd‘s 1Q2017 net loss narrowed to RM35.3 mln, from RM37.2 mln in 1Q2016, mainly due to dampened demand for new vehicles, while revenue for the quarter fell 29.7% Y.o.Y to RM995.7 mln, from RM1.42 bln in the last corresponding quarter. (The Star Online)  

Source: Mplus Research - 5 May 2017