• Once again, a last minute haul on selective index heavyweights allowed the key index to end the day on a positive note in an otherwise insipid day where it the market was in the negative territory for most of the day. The FBM ACE market was the top performance with a gain of 0.8%, while the main underperformer was the technology index with a 0.4% decline.
• Traded volumes perked up to 3.73 bln shares, some 38.0% higher than last Friday’s trade as mild rotational interest returned, but market breadth stayed negative with losers ahead of gainers 508-to-421 stocks.

• Tenaga Nasional Bhd (+10.0 sen) was the main key index gainer after it acquired a 50% stake in a British solar power generator, followed by Petronas Chemicals (+4.0 sen), MISC (+7.0 sen) and Genting (+7.0 sen). IWCity (+49.0 sen) closed limit up on reports that it will participate in the Bandar Malaysia project after all. Other major movers on the broader market were Dutch Lady (+64.0 sen), Panasonic Malaysia (+54.0 sen) and LPI Capital (+46.0 sen).

• CAB Cakaran (-17.0 sen) continues to lose ground after announcing its bonus issue, while the other main losers on the broader market includes Unisem (-14.0 sen), Mintye (-12.0 sen) and Pharmaniaga (-12.0 sen). On the FBM KLCI, the main underperformers were Ambank (-5.0sen), CIMB (-1.0 sen) and BAT (-26.0 sen).

• Asian stocks rose yesterday as there was little impact from the weekend’s cyberattack and from North Korea’s fresh threats. The Hang Seng (+0.9%) surged with H shares taking the lead on higher infrastructure spending on the mainland, while the Shanghai Composite rose slightly as concerns over the government’s crackdown on leveraged stocks acquisitions were easing. The Nikkei, however, closed 0.1% lower amid a stronger Yen. ASEAN indices closed mixed.

• After their recent slide, U.S stocks mounted a rebound overnight with the Dow climbing 0.4%, with the S&P 500 and the Nasdaq rising to new record highs as homebuilders rose in anticipation of stronger demand for houses as the U.S. economy recovers further. Oil stocks also rose as Russia and Saudi Arabia are in favour of extending production cuts. .

• Earlier, European stocks also started the week on a positive trend with the FTSE (+0.3%), DAX (+0.3%) and CAC (+0.2%) all making headway, as the latest cyber– attack concerns eased and oil prices rising on the potential extension of production cuts. German stocks also rose as Chancellor Merkel’s party won a regional election, boosting hopes that she will remain in power in the upcoming September elections.

The Day Ahead

• Yet again another last minute haul on selected index heavyweights allowed the key index to close in the positive territory yesterday amid the mixed market environment that is seeing market breadth broadly on the negative side with fewer compelling buys.

• Still, there is little selling pressure as the general market environment is remaining firm for now and this has helped the market to hold up. With the positivity remaining, the near term upsides appear intact for now and further upsides are possible with the 1,780 resistance likely to be challenged again.

• Nevertheless, we continue to think that the 1,780 level remains a formidable barrier to clear convincingly as valuations are already stretched.

Company Briefs

• Petronas Gas Bhd’s (PetGas) 1Q2017 net profit increased 3.6% Y.o.Y to RM463.2 mln, from RM447.2 mln a year earlier – due mainly to lower tax expense as a result of higher utilisation of the utilities business tax incentive. Revenue for the quarter also grew 3.4% Y.o.Y to RM1.17 bln vs. RM1.13 bln in 1Q2016.

• The group has declared a first interim dividend of 15.0 sen per share, payable on 14th June 2017. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) has withdrawn its judicial review proceedings against the Energy Commission (EC) and the Minister of Energy, Green Technology and Water over a condition precedent in the proposed new power purchase agreement (PPA) between the utility group and YTL Power International Bhd.

• To recap, TNB had applied to commence judicial review proceedings against the EC and the Minister in July 2016, in relation to a direction issued by EC to TNB. (The Edge Daily)

• Malaysian Bulk Carriers Bhd’s (Maybulk) 1Q2017 net loss widened 38.0% Y.o.Y to RM33.2 mln against RM24.1 mln in the previous corresponding period - on losses from its associate, PACC Offshore Services Holdings Ltd (POSH) which amounted to RM17.4 mln. Quarterly revenue, however, expanded 21.0% Y.o.Y to RM65.0 mln, from RM53.5 mln last year. (The Edge Daily)

• Hong Kong-listed Sino Haijing Holdings Ltd is selling its entire 24.6% equity stake in property developer Yong Tai Bhd to CoProsperity Holdings Ltd for RM117.7 mln. Sino Haijing became a substantial shareholder of Yong Tai in February 2016 after spending RM120.0 mln to buy 150 mln new shares, representing 34.5% of the enlarged issued and paidup share capital of Yong Tai, at an issue price of 80 sen a share. (The Star Online)

• Sime Darby Bhd is collaborating with MMC Corp Bhd in port management and establishing a sister port relationship to facilitate halal shipments between Malaysia and China.

• Both parties jointly announced that their their subsidiaries — Northport Malaysia Bhd and Weifang Sime Darby Port Co Ltd — have signed a Memorandum of Understanding (MoU) to seal the partnership. (The Edge Daily)

• Axiata Group Bhd is buying a 65.0% shareholding in a Thailand-based information technology solutions and service company Suvitech Co Ltd (SCL) for US$11.1 mln (or RM47.9 mln).

• SCL is the owner and operator of a mobile virtual network enabler (MVNE) platform, which facilitates the provision of sales/dealer management, products/pricing and provisioning, as well as billing for consumer, enterprise and Internet of Things (IoT) services. (The Edge Daily)

• Rohas Tecnic Bhd, has secured a US$70.0 mln (RM300.0 mln) contract from Electricite du Lao to supply and construct transmission lines, substations and distribution lines in Laos.

• The work will commence in the second half of this year and will take about 24- months to complete. (The Star Online)

• Cahya Mata Sarawak Bhd‘s (CMSB) 1Q2017 net profit surged over 21-fold to RM22.7 mln, from RM1.1 mln last year, although revenue fell 19.0% Y.o.Y to RM282.3 mln, from RM346.91 mln in 1Q2016.

• The improved earnings were attributed to a reduction in the share of losses in associates, which had impacted its earnings in 1Q2016, increase in share of profits from joint-ventures and better performance of the cement division and construction and road maintenance division. (The Star Online)

• Chin Hin Group Bhd's 1Q2017 net profit jumped 60.0% Y.o.Y to RM8.1 mln, in comparison to RM5.0 mln in the previous corresponding quarter. On the contrary, revenue declined 8.0% Y.o.Y to RM261.6 mln against RM284.4 mln.

• The stronger earnings were mainly due lower finance costs and the absence of the listing expenses that was charged in 1Q2016. (The Edge Daily)

• Petronas Chemicals Group Bhd's first quarter net profit jumped 120.0% Y.o.Y to RM1.3 bln, from RM592.0 mln a year earlier, in-tandem with stronger revenue contribution at RM4.7 bln, from RM3.15 bln in the same quarter last year. (The Edge Daily)

• Felda Global Ventures Holdings Bhd (FGV) has signed a Memorandum of Understanding (MoU) with China-based Sinograin Oils Corporation to jointly explore the possibility of supply, storage, processing and distribution of FGV's palm oil based products in China.

• The MoU sets out the parties' understanding and intention during the interim exploratory period and that the MoU shall remain valid for one year or such extended period as agreed in writing by the parties. (The Edge Daily)

• UMW Oil & Gas Corp Bhd (UMWOG) was awarded two contracts with a combined worth of US$34.8 mln (about RM151.1 mln) from Petronas Carigali Sdn Bhd.

• The two contracts, which will commence in June 2017, will involve its jack-up drilling rigs known as UMW Naga 3 and UMW Naga 4. (The Edge Daily)

• Tan Chong Motor Holdings Bhd is countersuing a Cambodian car dealership, which claimed it was the sole distributor of Nissan vehicles in Cambodia, for US$33mln (RM142.8 mln). (The Edge Daily)

• Loss-making Wintoni Group Bhd has received a requisition from two shareholders of the company to convene an extraordinary general meeting (EGM) which seeks to replace three board members.

• Cheah Kwong Lee (who holds a substantial 10.2% stake in Wintoni) and Chan Chong Loong expressed their intention to remove three directors, namely; its Non-Executive Chairman Datuk Seri Mohd Shariff Omar and executive directors — Ahmad Amryn Abdul Malik and Raja Kamarudin Raja Adnan.

• They are requesting to appoint three new ones in their place, namely Cheah himself, as well as Chong Seng Foo and Wong Mei Thien. (The Edge Daily)  

Source: Mplus Research - 16 May 2017