• Once again the FBM KLCI closed with minute losses as selected index heavyweights saw end-of-day support to limit its losses in a trading session that saw the key index mostly in the negative zone. The FBM KLCI tested the 1,780 resistance early in the day, but the gains soon gave way to renewed selling that resulted in the key index touching a low of about 1,770 points at the start of the afternoon session. The Industrial index was the biggest loser, shedding 0.8%, while the Fledgling index rose 0.3%.
• Market breadth remained negative with losers at 473 stocks, beat the 417 gaining stocks. Traded volumes continue to thin, shedding 1.7% for the day to 3.45 bln shares.

• IWCity remains on the losing streak, slipping another 9.0 sen to RM1.89 after the government said that the decision to cancel its participation in the Bandar Malaysia project is final. Other big losers on the broader market include Dutch Lady (-34.0 sen), MPI (-30.0 sen) and Lafarge (-17.0sen). Index heavyweight losers were Petronas Gas (-66.0 sen), Public Bank (-12.0 sen), Astro (-5.0 sen) and IOI Corp (-4.0 sen) - the latter after its 3QFY17 earnings tumbled 58.0% Y.o.Y.

• Big board gainers were IHH (+8.0 sen), Petronas Chemicals (+6.0 sen), Axiata (- 4.0 sen) and Ambank (+6.0 sen). Elsewhere, the major movers include AEON Credit (+74.0 sen), Allianz (+60.0 sen) and Chin Tek (+21.0 sen). DRB Hicom (+19.0 sen) rose on reports suggesting that a controlling stake in Proton Bhd will be sold to a foreign party.

• Asian stocks closed broadly lower amid the rising political uncertainties in the U.S. that resulted in profit taking in Hong Kong stocks following their recent gains. The Hang Seng shed 0.2%, while Japanese stocks fell as the Yen rose against the Greenback. ASEAN indices were also mostly lower.

• U.S. stocks stumbled overnight as the Presidential political crisis deepened, dampening hopes for a tax cut and higher infrastructure spending and resulting in the Dow (-1.8%) enduring its steepest loss in eight months. The S&P 500 also tumbled 1.8%, but the Nasdaq fared worse, falling 2.6% as profit taking escalated following its streak of new alltime highs.

• There was also no reprieve for European stocks as they also tumbled with the CAC and DAX slipping 1.6% and 1.3% respectively, while the FTSE only lost 0.3%. Market sentiments in Europe were also affected by the unsavoury developments in the U.S.

THE DAY AHEAD

• With global equity market sentiment souring, we expect it to also extend to Bursa Malaysia stocks and the domestic market is likely to see renewed selling pressure over the near term. Already, there are signs of waning interest over the past few trading sessions and the weaker global stockmarket outlook could result in further selling as investors hasten their profit taking activities to lock in some of the strong gains over the past few months.

• The market pullback could see the key index retesting the 1,770 support, before the critical support at 1,750 comes into play. The 1,780 level remains the key resistance for now, although we do not think it will be re-challenged over the near term amid the unsettled market environment.

• We also think retail players could hasten their profit taking and selling activities as they retreat to the sidelines to ride out the near term volatility.

Company Briefs

• Seacera Group Bhd is buying a piece of leasehold land in Melaka, together with a warehouse erected on it for RM16.9 mln from QM Sports Sdn Bhd.

• The group plans to fund the purchase with RM4.5 cash, while the remainder will be paid via the issuance of about 8.9 mln shares at RM1.40 apiece.

• At RM16.9 mln, Seacera is purchasing the land at RM99.8 per sq. ft. As at end-2015, the 99-year old leasehold land, which expires in 2074, has an audited net book value of RM5.9 mln. The new land will be used as its warehouse and distribution hub for the southern region. (Bernama)

• Malaysian Resources Corp Bhd (MRCB) has announced a one-for-one renounceable rights issue to reduce its borrowings and finance the refurbishment of the national sports complex in Bukit Jalil. The cash call will come together with free detachable warrants on one-for-five basis to raise between RM2.17 bln and RM2.86 bln.

• Under the plan, MRCB will issue up to 2.86 bln in rights shares, together with up to 571.3 mln free detachable. (The Star Online)

• KKB Engineering Bhd’s 1Q2017 net loss shrunk by 24.6% Y.o.Y to RM1.5 mln, from RM2.0 mln a year earlier, in-tandem with a 93.7% Y.o.Y jump in revenue to RM42.9 mln, from RM22.2 mln.

• Going forward, KKB foresees the continuing uncertainty in the global economic environment, escalation of costs due to inflationary pressure, volatility of global steel prices and fluctuation of exchange rates to impact its performance. (The Edge Daily)

• Focus Lumber Bhd reported a 88.9% Y.o.Y surge in 1Q2017 net profit to RM6.3 mln against RM3.3 mln in the last corresponding year – due to improved production recovery rate, lower production cost per cubic meter and lower unrealised forex loss, which was RM0.1 mln vs. RM2.6 mln last year. Quarterly revenue, however, declined 10.2% Y.o.Y to RM47.8 mln, from RM53.3 mln a year ago.

• Moving forward, Focus Lumber said that it will continuously work towards improving the quality of its products and reducing average production cost, through investment in new machineries. (The Edge Daily)

• Anzo Holdings Bhd has returned to black after posting a 4QFY17 net profit of RM1.3 mln, from a net loss of RM3.8 mln in the same period last year.

• The improved earnings were mainly due to construction billings from its Porto De Melaka project, amounting to RM5.7 mln, reversal on provision for doubtful debts of RM1.3 mln and no further inventory write down in the current quarter. Revenue for the quarter also rose more than 5-times to RM7.6 mln, from RM1.4 mln recorded in 4QFY16.

• On an annual basis, the group’s net loss narrowed 57.4% Y.o.Y to RM4.6 mln, from a net loss of RM10.9 mln in FY16, after its cumulative revenue doubled to RM12.3 mln, from RM6.1 mln a year ago. The group expects its current total construction order book of RM301.0 mln to sustain its current momentum and meet its objective to turn profitable by FY18. (The Edge Daily)
• UEM Sunrise Bhd’s 1Q2017 net profit surged 20-fold jump to RM61.3 mln, compared with RM3.0 mln last year, backed by higher revenue from its development projects and revision of estimated cost for completed projects. Quarterly revenue meanwhile jumped 110.0% Y.o.Y to RM541.8 mln, from RM257.8 mln. On its prospects, UEM said the domestic property outlook is expected to be muted with marginal sales growth.

• Separately, UEM has appointed former Telekom Malaysia Bhd’s Group Chief Executive and Managing Director Tan Sri Zamzamzairani Mohd Isa as its Chairman, effective 18th May 2017. Tan Sri Zamzamzairani will be replacing Tan Sri Dr Ahmad Tajuddin Ali, who will be retiring. (The Star Online)

• Amway Malaysia Holdings Bhd posted a 48.0% Y.o.Y fall in 1Q2017 net profit to RM9.5 mln vs RM18.1 mln in the last corresponding year – dragged down by to lower sales and higher import costs, on the back of a weaker Ringgit. Accordingly, revenue declined 22.5% Y.o.Y to RM237.2 mln, from RM305.9 mln in 1Q2016. The group has proposed a five sen per share dividend.

• Amway expects the remaining year to be extremely challenging, affected by the softer economic landscape arising from declining consumer spending and low consumer confidence, as well as the negative impact of foreign exchange on its margin. (Bernama)

• Paramount Corp Bhd’s 1Q2017 net profit in 1Q2017 fell 14.0% Y.o.Y to RM8.3 mln, compared with RM9.7 mln a year ago, attributed to a one-off disposal gain from the sale of an apartment in 1Q2016.

• Revenue for the quarter was, however, 26.0% Y.o.Y higher at RM142.9 mln, from RM113.3 mln in 1Q2016. (The Edge Daily)

• MyEG Services Bhd has confirmed that it wants to acquire a stake in popular food review website, Eat Drink KL, although negotiations are ongoing. The group will make further announcements regarding the proposed acquisition in due time. (The Edge Daily)

• SCH Group Bhd is planning to diversify into the downstream quarry industry following Memoranda of Understanding (MoUs) inked with three companies.

• The MoUs were signed with Sewara Engineering Sdn Bhd, Stigma Impiana Sdn Bhd and Dataran 888 Sdn Bhd in relation to the exclusive collaboration on the excavation and removal, and subsequent distribution and sale of deposits. (The Edge Daily)

• After four straight quarterly losses, Petra Energy Bhd made a turnaround in its earnings with a 1Q2017 net profit of RM5.3 mln, from a net loss of RM7.1 mln a year earlier - mainly due to profit from the services and production as well as development segments, although quarterly revenue dropped 38.5% Y.o.Y to RM69.6 mln, from RM113.2 mln in 1Q2016. (The Edge Daily)

• Formosa Prosonic Industries Bhd's 1Q2017 net profit soared over 11 times to RM8.9 mln, in comparison to RM793,000 in the same quarter last year, on higher sales and a gain on foreign exchange. Revenue also gained 9.2% Y.o.Y to RM75.5 mln, from RM69.2 mln. (The Edge Daily)

• Priceworth International Bhd will commence logging operations within Sabah's Forest Management Unit 5 (FMU5) in Trus Madi, following the approval of the state's authorities. The Sabah Forestry Department had approved Anika Desiran Sdn Bhd's (ADSB) plan to undertake logging operations at FMU5's compartments 57 and 58 and the latter had appointed Priceworth as its contractor.

• ADSB is a 100.0%-owned subsidiary of Rumpun Capaian Sdn Bhd, which was awarded a 100-year concession in September 1997 to carry out harvesting, forest management and rehabilitation, and industrial tree planting within 101,161ha. in Trus Madi.

• Subsequently, Priceworth's whollyowned unit, GSR Pte Ltd is acquiring the entire stake in Rumpun Capaian Sdn Bhd from Transkripsi Pintar Sdn Bhd for RM260.0 mln. (The Star Online)

• Mah Sing Group Bhd is acquiring a 1.4 ha. (3.6 ac.) land located in front of the Titiwangsa Lake Garden for up to RM60.0 mln cash, to undertake an estimated RM650.0 mln condominium project. (The Edge Daily)  

Source: Mplus Research - 18 May 2017