• The FBM KLCI ended on a positive note of Friday, but not after a choppy session that saw the key index tip-toeing within the positive and negative territories until a last minute haul on selective index heavyweights allowed the key index to close with marginal gains. The overall market environment was mixed amid the lack of fresh catalyst with the industrial products (-0.8%) and properties (-0.2%) indices retreating after their recent gains. Meanwhile, the FBM Small Cap index was the main outperformer, rising 1.6% for the day.
• Amid the mixed market environment, traded volumes were also more subdued with only 2.70 bln shares done for the day, 24% lower than the previous day. Market breadth was also negative with losers outpacing gainers on a ratio of 5- to-4 stocks.

• The leading stocks on the FBM KLCI were banks like Maybank (+7.0 sen) and CIMB (+4.0 sen), followed by Genting (+16.0 sen) and MISC (+6.0 sen). On the broader market, DKLS (+14.0 sen), Luxchem (+14.0 sen) and MSC (+14.0 sen) were among the main movers.

• CAB Cakaran lost 16.0 sen despite announcing a bonus issue, as with SP Setia (-5.0 sen) after it reported lower 1Q2017 earnings. Other significant losers of the day include Unisem (-16.0 sen), PLS (-15.0 sen) and Chin Tek (-15.0 sen). On the big board, the main underperformers were Petronas Gas (- 52.0 sen) and Petronas Chemicals (-9.0 sen), followed by Genting Malaysia (-10.0 sen) and Hong Leong Financial Group (- 40.0 sen).

• Asian stocks were mixed with the Nikkei retreating after its string of gains as the Yen strengthened. The Hang Seng, however, rose on reports that China is providing some buying support. China stocks also ended the week on a positive note after enduring selldowns in the past few sessions on the back of the authorities’ clampdown on leveraged buying. ASEAN stocks were mixed at Friday’s close.

• Wall Street continues to slide with both the Dow and S&P 500 down 0.1% respectively after a weaker-thanexpected retail sales data re-ignited concern over the state of the economy. A higher CPI reading also pushed expectations of a potentially higher interest rate in the FOMC meeting next month. The Nasdaq, however, bucked the generally negative trend to rise 0.1%.

• Stocks in Europe ended the week on a positive note with buying interest returning ahead of the swearing in of France’s new President. Key European indices all climbed with the FTSE rising 0.7%; the CAC and DAX gaining 0.4% and 0.5% respectively with more funds pouring into equity markets as risk over the dissolution of the European Union abates.

The Day Ahead

• Despite Friday’s marginal gains, it appears that the buying interest may be dwindling as volumes are starting to thin, judging by last Friday’s volumes. At the same time, there are fewer compelling buys as valuations are already stretched in most instances and fresh buying is becoming more selective, leaving the market in a toppish mode, despite the general market sentiments staying firm for now.

• Therefore, we think the market is still due for a consolidation spell for the gains over the past five months to be digested. The key index is also finding it difficult to penetrate the 1,780 resistance despite repeated attempts and this is adding to the market’s fatigue, in our view. For now however, we think the market will likely retain a sideway trend within the 1,770- 1,780 levels as it attempts to undergo a sideway consolidation and to allow for some of the gains to be digested.

Company Briefs

• Ancom Bhd is collaborating with two Indonesian companies and a Thai firm to bid for consulting services and advertising media work for Jakarta’s Mass Rapid Transit (MRT) project.

• Its indirect wholly-owned subsidiary, Puncak Berlian Sdn Bhd has signed a preliminary agreement with PT Alternatif Media Group, PT Avabanindo Perkasa and Thailand-listed VGI Global Media PCL to set up a consortium to bid for the tender.

• The consortium members will jointly prepare the request for proposal or any other similar document required by MRT Jakarta in order to become a participant of the project tender.

• The consortium may expand the earning base of its media division, should the consortium be successful in securing the project. (The Edge Daily)

• KNM Group Bhd was awarded a RM159.0 mln contract to undertake engineering, procurement, construction and commissioning (EPCC) works for the 300,000-litre per day Impress ethanol plant — expansion (IEL Phase 2) project in Chachaengsao Province, Thailand.

• KNM's wholly-owned subsidiary, KNM Process Systems Sdn Bhd (KNMPS) and its 74%-owned subsidiary, KNM Projects (Thailand) Co Ltd (KNMPT) have collectively secured the contract from Thailand's Impress Ethanol Co Ltd (IEL).

• IEL is a manufacturer and distributor of alcohol/ethanol or fuel from agricultural products and it is a 72%-owned subsidiary of KNM. The construction of the IEL Phase 2 project will take about 18 months. (The Edge Daily)

• Malaysia Building Society Bhd (MBSB) is sanguine on the proposed acquisition of Asian Finance Bank Bhd (AFB). The company noted that Bank Negara Malaysia has given the two parties until 21st June 2017 to complete the negotiations. (The Edge Daily)

• Star Media Group Bhd has inked a deal to dispose of its 128.5 mln shares (or a 52.5% stake) in Singapore-listed Cityneon Holdings Ltd for S$115.6 mln (RM360.2 mln).

• Star Media has signed a conditional share purchase agreement with a special purpose vehicle (SPV) called Lucrum 1 Investment Ltd for the disposal.

• Subsequently, Star Media plans to utilise the disposal proceeds for future investments and general working capital within 24 months. (The Star Online)

• Tenaga Nasional Bhd (TNB) has purchased a 50.0% equity interest in one of Britain’s largest portfolios of operating solar power assets with a combined net installed capacity of 365 MW. The acquisition, with an enterprise value of about £470.0 mln, is in-line with its five-year international expansion plan to acquire renewable energy projects by 2020.

• The acquisition was made through Vortex Solar UK Ltd, in which TNB has a 50.0% shareholding whereas Beaufort Investments S.a.r.l. holds the remaining 50.0%.

• TNB will fund the acquisition from its US$750.0 mln Sukuk proceeds issued by the company in October last year.

• Following the acquisition, TNB’s international renewable energy portfolio will have a combined net installed capacity of 252 MW, following acquisitions in power companies in India and Turkey in 2016. (The Star Online)

• Dayang Enterprise Holdings Bhd plans to divest 37.5% of its 98% stake in Perdana Petroleum Bhd by way of dividend-inspecie. The group will also maintain the latter's listing status after the completion of the proposed divestment. (The Edge Daily)  

Source: Mplus Research - 15 May 2017