• Malaysian stocks continued their recovery from last Friday with the key index climbing another 0.4%, mainly from the last minute buying support on selected index heavyweights. If not for the last minute push on the selected heavyweights, the key index would have closed with minimal gains. Most indices climbed with the Industrial Products index rising 1.2% to become the top sub index performer, while the mining sector slipped 0.8% for the day – the main underperforming sub-index.

• Traded volumes continue to improve with 4.10 bln shares changing hands for the day, some 25.3% higher than last Friday’s volume. There were 542 gaining stocks against 420 losing stocks.

• Among the main movers were consumer giants like Dutch Lady (+RM1.02), F&N (+36.0 sen), Choo Bee (+35.0 sen) and AEON Credit (+26.0 sen). Choo Bee’s stock price jumped after it reported a three-fold jump in its 1Q2017 earnings. Among the index heavyweights, the major movers were Petronas Gas (+80.0 sen), Petronas Dagangan (+28.0 sen), Genting Malaysia (+19.0 sen) and MISC (+11.0 sen).

• The main decliners of the day include Ajinomoto (-48.0 sen), Time dotcom (- 24.0 sen), Carlsberg (-16.0 sen) and Magnum (-22.0 sen) – the latter after it received a notice of assessment from the Inland Revenue Board for RM476.5 mln. On the big board, the main underperformers were Genting Bhd (-15.0 sen), IHH (-3.0 sen), BAT (-78.0 sen) and Hong Leong Financial Group (-8.0 sen).

• Asian stocks were mixed at the start of the week with the Nikkei and Hang Seng climbing, while the Shanghai Composite slipped. Japanese stocks rose after the Yen weakened, with Hong Kong shares closing at its highest level since July 2015. ASEAN indices, meanwhile, were mixed at the close.

• Wall Street started the week on a positive note as the Dow rose 0.4%, spurred by gains in defence and technology stocks after the U.S and Saudi Arabia concluded arms deals. The S&P 500 gained 0.5%, while the Nasdaq rose 0.8% to close in on another all-time high.

• European stock indices, however, were little changed with U.K. stocks making headway, while German and French stocks closed slightly lower following their biggest drop since November last Friday with telecommunication stocks shoring up the markets. In the U.K., domestic centric stocks helped it to gain 0.3% for the day, the main outperformer among the key European indices. THE DAY AHEAD

• We think the FBM KLCI will be able to maintain its upward momentum over the near term, spurred by the recovery in global indices, as well as the strengthening crude oil prices amid increasing expectations of an extended production cut by major oil exporters this Thursday.

• We also think that the local bourse will remain in a rangebound trend, with shallow gains, on the back of quick profit taking strategies as investors adopt a cautious approach amid political uncertainties in the United States. At the same time, the ongoing results reporting season is also providing few sustained leads for investors to follow.

• On the upside, gains are likely to be capped at the 1,780 level, while further resistance will be pegged around the 1,790 psychological mark.

COMPANY UPDATE

• Econpile Holdings Bhd was awarded a RM48.5 mln contract by Pembinaan Key Sdn Bhd for piling, basement and substructure work on a 33-storey office block with a 8-stoery podium on a site located in Jalan Conlay, Kuala Lumpur. The project is expected to take 15 months to complete.

Comments

• With the inclusion of the above contract, Econpile has secured nearly RM1.2 bln worth of new projects for FY17, which is per our orderbook replenishment expectation for the year. As the outlook for the construction sector is still buoyant, we lift our orderbook replenishment assumption to RM1.0 bln (from RM700 mln) for FY18 and this raises our FY18 net profit forecast to RM93.6 mln (from RM89.3 mln). There is no change to our FY17 net profit estimate at RM81.9 mln.

• At RM2.42, however, Econpile trades at PERs of 14.9x and 13.1x for FY17 and FY18 respectively, which are within its peer averages. Hence, we retain our HOLD recommendation on Econpile.

• We also lift our target price to RM2.40, from RM2.30 after tweaking our earnings estimates. Our target price is derived from ascribing an unchanged target PER of 13.0x to its FY18 (unchanged) EPS of 18.5 sen. The ascribed PER is within the average of its peers with similar market capitalisation. COMPANY BRIEFS

• MK Land Holdings Bhd's wholly-owned subsidiary, Saujana Triangle Sdn Bhd has been slapped with income taxes and penalties amounting to RM80.8 mln by the Inland Revenue Board (IRB) for assessment years from 2009 to 2011 and 2013.

• The group said it disagreed with the decision and will appeal accordingly. MK Land is the third public listed company reprimanded by the IRB this month. (The Star Online)

• Taliworks Corp Bhd said the total amount owed by Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) has increased to RM530.0 mln, partly because Splash has not been receiving payments in full from water concessionaire Syarikat Bekalan Air Selangor Sdn Bhd (Syabas).

• Subsequently, the negotiations for the takeover of Splash by the Selangor government have been postponed to 5th October 2017. The group noted that the RM530.0 mln due to Taliworks represents 21.6% of Taliwork's total assets of RM2.46 bln as at end-2016. (The Edge Daily)

• Fajarbaru Builder Group Bhd has secured a RM29.5 mln contract from Pos Aviation Sdn Bhd to renovate part of KLIA Air Cargo Terminal 1. The contract is slated to be completed by 29th December, 2017. (Bernama)

• Key Alliance Group Bhd is acquiring enterprise cloud solutions provider RapidCloud (M) Sdn Bhd for RM3.5 mln cash, in a bid to leverage on the latter's 10,000 clients and its existing reseller relationship with AliBaba Cloud and Alibaba Global Gold Supplier.

• Key Alliance plans to place RapidCloud and another networking and system consultants firm — Progenet Sdn Bhd — under a new company, in which the current holding companies of RapidCloud and Progenet will hold 20.0% equity stake each after the acquisitions are finalised. (The Edge Daily)

• TSR Capital Bhd has signed a Memorandum of Understanding (MoU) with US-based Globe Ventures Holdings Bhd to collaborate on a mixed development project on a 21.1 ha. land at the Port Dickson waterfront in Negeri Sembilan.

• The MoU may lead to a developerinvestor or venture partner cooperation between the two companies relating to the tourism-oriented development. (The Star Online)

• Yinson Holdings Bhd has entered into a 49:51 joint-venture (JV) agreement with PetroVietnam Technical Services Corp to undertake the execution and performance of bareboat scope of work (including bareboat charter of a floating production storage and offloading unit) under a time charter contract.

• The project, estimated to cost US$648.0 mln (RM2.79 bln), will help strengthen its presence in the Vietnamese oil and gas industry. (The Edge Daily)

• Gabungan AQRS Bhd is completing the sale of its land in Dengkil, Selangor, to PR1MA Corp Malaysia — together with a 1,140 unit apartment block it planned to build on-site — within the next three weeks.

• Meanwhile, the group’s 1Q2017 net profit jumped nearly 4.4 times to RM16.1 mln against RM3.8 mln previously, on improved operating margin and sale of two pieces of land. Revenue also surged 99.6% Y.o.Y to RM158.9 mln, from RM79.6 mln. (The Edge Daily)

• UOA Development Bhd is planning to launch three new projects by 2H2017 with a combined gross development value of about RM700.0 mln — including its first affordable housing venture in Selayang.

• The group currently has an unbilled sales amount of RM1.4 bln as at end- 2016. Meanwhile, its 1Q2017 net profit slumped 55.0% Y.o.Y to RM43.4 mln, from RM96.1 mln a year ago, dragged down by a 23.0% Y.o.Y decline in revenue to RM155.1 mln, compared to RM201.2 mln a year ago. (Bernama)

• KUB Malaysia Bhd posted a 44.0% Y.o.Y jump in its 1Q2017 net profit at RM8.0 mln, from RM5.6 mln a year earlier, on stronger contributions from its energy and agro divisions. Quarterly revenue rose 21.0% Y.o.Y to RM148.6 mln, against RM122.7 mln in the last corresponding year.

• Separately, KUB has signed a MoU with Mabanaft Pte Ltd to jointly develop, own and operate a refrigerated liquefied petroleum gas terminal at Westports in Port Klang, Selangor. (The Edge Daily)

• Kian Joo Can Factory Bhd's net profit surged 55.4% Y.o.Y in 1Q2017 to RM18.4 mln vs. RM11.9 mln last year, mainly due to better earnings by its cans and trading divisions, although contributions from other divisions declined. Revenue, meanwhile, rose marginally by 0.8% Y.o.Y to RM431.6 mln, from RM428.1 mln in the same period last year. (The Edge Daily)

• CCM Duopharma Biotech Bhd reported a 22.0% Y.o.Y increase in its 1Q2017 net profit to RM9.6 mln, from RM7.8 mln in the previous corresponding period as a distribution agreement with a business partner to supply insulin has begun to contribute to its earnings. Revenue jumped 55.0% Y.o.Y to RM123.3 mln, from RM79.5 mln in the same quarter last year. (The Edge Daily) ? Mieco Chipboard Bhd's 1Q2017 net profit plummeted 82.3% Y.o.Y to RM5.5 mln, from RM31.2 mln in 1Q2016, as the previous period’s earnings included a one-off gain of RM35.0 mln from the sale of a subsidiary. Revenue meanwhile, gained 35.0% Y.o.Y to RM82.6 mln, from RM61.4 mln in 1Q2016. (The Edge Daily)

• Lafarge Malaysia Bhd slipped into the red with a net loss of RM48.9 mln against a net profit of RM20.7 mln last year, dragged down by the weaker cement business. Revenue for the quarter was also down by 16.1% Y.o.Y to RM561.9 mln, from RM669.8 mln last year. (The Star Online)

• UMW Oil & Gas Corp Bhd 1Q2017 net loss widened 60.0% Y.o.Y to RM104.1 mln, from a net loss of RM65.1 mln last year, dampened by unprofitable charter rates. Revenue was also 15.3% Y.o.Y lower at RM74.3 mln, from RM87.7 mln. (The Edge Daily)

• KLCC Property Holdings Bhd (KLCCP) has declared its first interim dividend of 8.6 sen a share, payable on 5th July 2017, despite a 3.3% Y.o.Y decline in its 1Q2017 net profit at RM176.7 mln, from RM182.8 mln a year ago.

• The slightly lower earnings were mainly due to the lease transition in Menara ExxonMobil and ongoing tenant remixing in its retail properties. Revenue, meanwhile, rose a marginal 0.6% Y.o.Y to RM336.7 mln, from RM334.8 mln last year. (Bernama)

• Batu Kawan Bhd 1Q2017 net profit soared 73.0% Y.o.Y to RM163.3 mln, from RM94.4 mln a year ago, owing to a sharp increase in contributions from its plantations division. Revenue also climbed 47.0% Y.o.Y to RM5.6 bln, from RM3.8 bln last year, while the group declared an interim dividend of 15.0 sen per share. (The Edge Daily)  

Source: Mplus Research - 23 May 2017