• Market conditions turned weaker yesterday with the FBM KLCI slipping 0.4%, erasing the previous day’s gains as selling and profit taking activities dominated the market environment. Market sentiments were also partly affected by the possible terrorist attacks in Manchester overnight. All indices on Bursa Malaysia closed in the red with mining index (-1.6%) taking the biggest beating.
• With the market environment shaken, market participation also thinned with the traded volumes sliding nearly 29% to 2.91 bln shares. Market breadth was negative as losers outpaced gainers 636-to-292 stocks.

• Heading the losers list on the FBM KLCI was Petronas Gas (-62.0 sen), IHH (-11.0 sen), Maxis (-10.0 sen) and RHB Bank (- 12.0 sen). On the broader market, F&N (- 80.0 sen), Dutch Lady (-76.0 sen), and Lafarge were among the top decliners. Lafarge fell after it reported a loss in the recent quarter. Meanwhile, MK Land slipped 2.0 sen after it received a tax bill of RM80.8 mln from the Inland Revenue Board.

• There were only four gainers on the FBM KLCI – MISC (-10.0 sen), CIMB (-4.0 sen), Public Bank (-4.0 sen) and Sime Darby (- 1.0 sen). On the broader market, gainers include Selangor Properties (+32.0 sen), Vitrox (+32.0 sen), Batu Kawan (+19.0 sen) and Visdynamic (+19.0 sen) - the latter hitting limit up despite receiving an Unusual Market Activity query from the Stock Exchange.

• Asian stocks remained mixed with the Nikkei retreating slightly as the Yen rose and increasing geopolitical concerns. The Hang Seng, however, continues to climb on mild buying support, but China stocks remains on the downtrend with small caps leading the fall on concerns over the government’s deleveraging exercise. ASEAN stocks indices also closed mixed.

• U.S. stocks remains on an upward trajectory with minute gains as the Dow and S&P 500 gaining another 0.2% each, while the Nasdaq rose 0.1%. The gains follow the release of President Trump’s budget plan that was within expectation, allaying fears that it may be more radical than earlier anticipated.

• Except for the U.K. stocks that were affected by the sombre mood after the fresh terror attacks, other key European stock indices climbed, albeit the gains were minuscule, helped by gains in banking, automotive and technology stocks on prospects of improved economic performances regionwide.

The Day Ahead

• After yesterday’s profit taking, we think the market could spring a mild rebound today, taking cue from the more positive performance of global stockmarkets and a calmer market conditions.

• Still, we think the rebound could be mild, tempered by the lingering wariness over the market’s direction amid the toppish valuations, lack of sustainable leads and fewer compelling buys. Therefore, we think the buying interest will remain tentative and this could limit the upsides with the 1,771 level continuing to serve as the immediate resistance, followed by the critical 1,780 level.

• We also see similar market conditions among the lower liners and broader market shares as retail players are also taking a cautious stance in the absence of significant leads.

COMPANY BRIEFS

• Samchem Holdings Bhd has announced that there are seven shareholders seeking to remove Executive Director, (ED) Ng Soh Kian from his post.

• Among the seven are Chief Operating Officer Eugene Chong Wee Yip and ED Chooi Chok Khooi. The group, however, did not mention the reason for the proposed removal. (Bernama)

• Oriental Interest Bhd is acquiring lands in Selangor, Kedah and Penang from its five directors in four different related-party transactions. The acquisitions amounted to RM129.2 mln and will be partially paid in cash totaling RM56.5 mln, together with the issuance of redeemable preference shares at RM1.00 per share in Oriental Interest. (The Edge Daily)

• Kerjaya Prospek Group Bhd has secured a RM77.0 mln contract from TSM Towers Sdn Bhd to build a 24-storey office building in Mutiara Damansara. The 15- month contract is expected be completed by 28th August, 2018. (The Star Online)

• Fitters Diversified Bhd has clinched a two-year construction contract worth RM97.8 mln, from Pencala Jaya Sdn Bhd to construct, complete and maintain 338 terrace homes in Rawang. The job will commence on 1st June 2017. (The Edge Daily)

• Eastern & Oriental Bhd has reported a 4QFY17 net profit of RM49.4 mln against a net loss of RM14.4 mln last year, mainly contributed by its property division, while quarterly revenue grew 45.9% Y.o.Y to RM218.9 mln, from RM150.0 mln in 4QFY16.

• Meanwhile, full year net profit more than doubled to RM87.6 mln, from RM37.2 mln in FY16 and revenue jumped 66.9% Y.o.Y to RM704.8 mln, from RM422.2 mln the previous year. (The Edge Daily)
• Chemical Co of Malaysia Bhd made a turnaround in its earnings with a 1QFY17 net profit of RM8.2 mln, from a net loss of RM0.2 mln last year, amid better performance across all its business divisions, while revenue gained 40.1% Y.o.Y to RM212.2 mln, from RM151.5 mln in the previous corresponding year. (The Edge Daily)

• Bintulu Port Holdings Bhd’s 1Q2017 net profit rose 26.0% Y.o.Y to RM50.6 mln, from RM40.1 mln last year, in-tandem with a 13.5% Y.o.Y gain in revenue to RM161.1 mln, from RM141.9 mln a year earlier. The group has also proposed a six sen dividend. (The Edge Daily)

• Lii Hen Industries Bhd reported a 5.2% Y.o.Y gain in its 1Q2017 net profit to RM22.1 mln, against RM21.0 mln last year – led by favorable foreign exchange (forex) rates, while revenue for the quarter rose 4.6% Y.o.Y to RM173.0 mln, from RM165.4 mln in the same period last year. Subsequently, Lii Hen has also declared a 4.0 sen dividend. (The Edge Daily)

• Ann Joo Resources Bhd‘s 1Q2017 net profit jump 13 times to RM74.0 mln, from RM5.5 mln a year ago, mainly due to lower operating expenses. Revenue, meanwhile, increased marginally by 2.0% Y.o.Y to RM499.2 mln, from RM489.5 mln. (The Edge Daily)

• Malakoff Corporation Bhd's 1Q2017 net profit added 17.5% Y.o.Y to RM98.8 mln vs. RM84.1 mln a year ago, backed by contribution from Tanjung Bin Energy Sdn Bhd, while revenue surged 32.8% Y.o.Y to RM1.78 bln, from RM1.34 bln a year earlier. (Bernama)

• UMW Holdings Bhd posted a 21.7% Y.o.Y increase in its 1Q2017 net profit to RM20.2 mln, from RM16.6 mln in 1Q2016, mainly due to higher contribution from its automotive segment. Quarterly revenue, meanwhile, grew 27.0% Y.o.Y to RM2.80 bln, from RM2.20 bln last year. (Bernama)

• Ta Ann Holdings Bhd‘s1Q2017 net profit grew more than three times to RM39.5 mln, compared with RM12.6 mln a year ago, boosted by higher average CPO selling prices. Revenue also surged 40.0% Y.o.Y to RM305.6 mln, from RM218.5 mln. The group has declared a first dividend of 5.0 sen, payable on 28th June 2017. (The Edge Daily)

• AirAsia X Bhd's 1Q2017 net profit plunge 94.2% Y.o.Y to RM10.3, compared to RM179.5 mln last year, dragged down by higher operating expenses such as higher fuel prices. Revenue, however, rose 21.6% Y.o.Y to RM1.18 bln, from RM970.7 mln in 1Q2016. (The Star Online)

• Pos Malaysia Bhd posted a 26.0% Y.o.Y decrease in its 4QFY17 net profit to RM10.6 mln, from RM14.4 mln a year ago, mainly due to higher tax, cost of sales and operating expenses, although revenue was 47.0% Y.o.Y higher at RM635.6 mln, from RM433.6 mln last year. (The Star Online)

• Telekom Malaysia Bhd‘s 1Q2017 net profit declined 28.5% Y.o.Y to RM230.4 mln, from RM322.4 mln last year, on the back of higher operating expenses and lower forex gains on its borrowings. On the other hand, revenue grew marginally by 3.8% Y.o.Y to RM2.96 bln vs RM2.86 bln in the same period last year. (The Edge Daily)  

Source: Mplus Research - 24 May 2017