• Although the key index recorded an intraday gain of 9.0 points, it just closed with minimal gains as profit taking on some of the index heavyweights late in the day erased most of the gains. Similar conditions also prevailed in the broader market, resulting in a mixed market environment for the day. The mining sector recovered to post a 0.8% gain - the main outperforming sub-index for the day, while the FBM ACE lost 0.6% to emerge as the main laggard.

• Despite the positive end to the day, market breadth remained negative as losers beat gainers nearly on a 5-to-4 ratio. Traded volumes, however, climbed to 3.38 bln shares, 16.2% higher than the previous day.

• CIMB was the leading gainer on the FBM KLCI, rising 14.0 sen, followed by Petronas Chemicals (+8.0 sen), Genting (+15.0 sen) and RHB Bank (+10.0 sen). Elsewhere, F&N rose 40.0 sen, while Wing Tai jumped 35.0 sen after receiving an offer from its major shareholders to take the company private. Other leading stocks for the day include Hartalega (+30.0 sen) and Sern Kou (+11.0 sen).

• The main losers of the day were Nestle (- 50.0 sen), Pos (-37.0 sen), Air Asia (-31.0 sen) and its long haul unit, Air Asia X (- 8.5 sen) after the latter reported significantly lower quarterly earnings. On the big board, the main losers were IHH (- 13.0 sen), Westports (-13.0 sen), Hong Leong Financial Group (-32.0 sen) and Petronas Dagangan (-30.0 sen).

• Asian stockmarkets were broadly higher amid the calmer global market conditions with market players casting aside China’s rating cut by Moody’s. The Shanghai Composite closed marginally higher, as with the Hang Seng with minute gains. Japanese stocks also rose with the Nikkei’s 0.6% gain helped by the lower Yen. With the exception of the Jakarta Composite, ASEAN indices were broadly higher.

• Wall Street headed higher with the Dow climbing back above the 21,000 points level, while the S&P 500 sprung to a new all-time high following the release of the Fed’s minutes that showed that interest rate hikes are still on course for the year and there are no signs of a significant weakness in the U.S. economy.

• European indices, however, were little changed for the day with the DAX and CAC ending slightly lower, while the FTSE rose slightly - helped by stronger results in energy stocks. German and French stocks, meanwhile, went nowhere as investor await for the release of the Fed minutes to gauge the possibility of an interest rate hike in June.

The Day Ahead

• Despite the mixed-to-weaker market environment, the key index climbed yesterday as selective heavyweights provided the support. We see this uptrend continuing over the near term amid the still largely positive market undertone that could help the FBM KLCI make another stab at the 1,780 level – which remains a formidable level to breach with the stretched market valuations and lack of sustainable catalysts.

• Although the key index could tap the above resistance level again, the broader market condition may not mirror its performance as there are fewer compelling buys and the trading interest could quickly be muted by profit taking activities with retail players likely to adopt hit-and-run tactics. Still, the rotational plays will help to keep market depth on the firm side.

COMPANY BRIEFS

• DRB-Hicom Bhd is planning to sell a 49.9% equity stake in Proton Holdings Bhd to China’s Zhejiang Geely Holding Group Co Ltd. Aa definitive agreement is expected to be July this year. The contract includes Proton selling a 51.0% equity stake in its wholly-owned British carmaker Lotus to Geely. (The Star Online)

• Petronas Dagangan Bhd (PetDag) has signed a Memorandum of Understanding (MoU) with PHEONIX Petroleum Philippines Inc to dispose of its entire stake in Petronas Energy Philippines Inc, along with its remaining 40.0% stake in Duta Inc.

• The sale marks PetDag's exit from the Philippines liquefied petroleum gas, which it entered in 2012 alongside its entrance into Vietnam and Thailand. Currently, PetDag is still looking for a buyer for its Vietnamese subsidiary. (The Star Online)

• Sentoria Group Bhd has clinched a construction project to build 506 units of single-storey semi-detached houses in Pahang worth RM60.8 mln.

• The job was awarded by HA Properties Sdn Bhd and will commence on 1st July 2017 until 30th June 2019. (The Edge Daily)

• Sarawak Cable Bhd's was awarded a RM81.4 mln contract from Tenaga Nasional Bhd to build a double circuit 500kV overhead transmission line from Alor Gajah to Bahau South in Melaka. The contract is expected to contribute to the group's FY17 to FY19 earnings. (The Edge Daily)

• FIMA Corp Bhd posted a 6.7% Y.o.Y decline in 4QFY17 net profit to RM11.1 mln, from RM11.8 mln in 4QFY16, in tandem with a 5.5% Y.o.Y fall in revenue to RM80.7 mln. The group has subsequently declared a dividend amounting to 12.0 sen per share. (The Edge Daily)

• EITA Resources Bhd's reported a 25- fold jump in its 2QFY17 net profit to RM5.5 mln from RM216,000 in the same period last year. Revenue however, slipped 4.3% Y.o.Y to RM66.9 mln vs. RM69.9 mln last year. EITA has also declared a two sen dividend, payable on 26th July 2017. (The Edge Daily)

• UOA Real Estate Investment Trust's (UOAREIT) 1Q2017 net rental income decreased 14.0% Y.o.Y to RM14.7 mln, from RM17.0 mln last year, due to lower gross rental.

• UOAREIT's gross rental shed 10.0% Y.o.Y to RM20.4 mln against RM22.7 mln in the previous corresponding quarter. It also made a provision of RM9.02 mln for income distribution, translating into a distribution of 2.1 sen per unit. (The Edge Daily)

• Hengyuan Refining Co Bhd's 1Q2017 net profit almost tripled to RM264.3 mln from RM101.7 mln a year ago, attributed to improved gross profit margin as well as a net gain on foreign currency exposure. Quarterly revenue jumped 56.0% Y.o.Y to RM2.9 bln, from RM1.9 bln a year ago, following the recovery in crude oil prices. (The Edge Daily)

• CIMB Group Holdings Bhd's 1Q2017 net profit surged 46.0% Y.o.Y to a record RM1.18 bln, from RM813.8 mln a year ago, spurred by higher interest, noninterest and Islamic banking income. Earnings were also driven by lower bad loan allowance, while quarterly revenue was higher at RM4.36 bln vs. RM3.73 bln. (The Star Online) ? DKSH Holdings (M) Bhd reported an 11.0% Y.o.Y decline in 1Q2017 net profit to RM10.1 mln on higher operating cost. Revenue however, improved slightly by 3.0% Y.o.Y to RM1.36 bln, from RM1.33 bln a year ago. (The Edge Daily)

• Malaysia Building Society Bhd's 1Q2017 net profit grew close to threefold at RM101.3 mln, from RM34.8 mln a year ago, contributed by higher gross loans and lower cost of funds, although revenue declined marginally by 0.2% Y.o.Y to RM811.2 mln, from RM812.6 mln a year ago. (The Star Online)

• Parkson Holdings Bhd's 3QFY17 net loss widened to RM33.2 mln, from a net loss of RM25.5 mln in the previous year, dragged down by soft consumer sentiment and losses incurred by the opening of new stores. On the flip side, revenue gained 3.3% Y.o.Y to RM1.06 bln, from RM1.03 bln last year.

• The group also posted a cumulative 9MFY17 net loss of RM23.2 mln, compared with a net profit of RM6.3 mln in the previous year, while revenue fell to RM2.99 bln, from RM3.0 bln previously. (The Edge Daily)

• Hap Seng Plantations Holdings Bhd's 1Q2017 net profit surged 105.0% Y.o.Y to RM34.1 mln, from RM16.6 mln in the same quarter last year, helped by higher crude palm oil and palm kernel selling prices. Meanwhile, quarterly revenue climbed 38.0% Y.o.Y to RM144.1 mln, from RM104.2 mln last year. (The Edge Daily)

• Sunsuria Bhd's 2QFY17 net profit jumped more than five times to RM18.0 mln, from RM3.2 mln in 2QFY16 on the back of strong sales. Quarterly revenue, meanwhile, almost tripled to RM103.7 mln from RM38.8 mln a year earlier. ? The group’s 1HFY17 net profit more than doubled to RM28.6 mln vs. RM12.6 mln a year earlier, in-line with its higher revenue, which tripled to RM167.5 mln, from RM56.3 mln in the precious corresponding period.

• The group is venturing into construction business after acquiring a 51.0% equity stake in construction company, Prosperspan Construction Sdn Bhd — now known as Sunsuria Asas Sdn Bhd — just last month. (The Edge Daily)

• TH Plantations Bhd registered a 1Q2017 net profit of RM11.2 mln, from a net loss of RM7.2 mln a year ago, as revenue improved to RM166.1 mln, from RM89.5 mln previously. The higher earnings were attributed to the recovery in palm oil production and prices. (The Edge Daily)  

Source: Mplus Research - 25 May 2017