• The strong exports data in April 2017, which grew 20.6% Y.o.Y, rising crude oil prices and firmer Ringgit against the Greenback sent the FBM KLCI (+0.6%) to close at its highest level since May 2015. The lower liners also ended mostly positive with the exception of FBM ACE (- 1.0%), while broader market ended higher yesterday.

• Market breadth stayed positive as advancers overcame decliners on a ratio of 542-to-382 stocks. Trading volumes edged 0.8% higher with 2.48 bln shares exchanging hands.

• Anchoring the gainers on the big board were banking heavyweights like Hong Leong Financial Group (+80.0 sen), Hong Leong Bank (+52.0 sen) and Public Bank (+18.0 sen), while BAT and Petronas Gas added 64.0 sen and 44.0 sen respectively. Notable gainers on the broader market include technology stocks like KESM Industries (+92.0 sen), Vitrox (+44.0 sen), Pentamaster Corporation (+31.0 sen) and JHM Consolidation (+29.0 sen) - whom all closed a 10-year high levels. Meanwhile, Malaysia Airport Holdings rose 32.0 sen.

• On the other side of the trade, Kluang Rubber (-18.0 sen), Litrak (-15.0 sen), Manulife (-15.0 sen), Bursa Malaysia (- 12.0 sen) and Ajinomoto (-10.0 sen) topped the broader market decliners list. Key losers on the FBM KLCI were MISC (- 6.0 sen), Astro (-6.0 sen), AmBank (-5.0 sen), IHH (-3.0 sen) and Genting (-3.0 sen).

• Asian benchmark indices were weaker as the Nikkei fell 0.03% but managed to maintain above the 20,000 psychological level as the stronger Japanese Yen against the U.S. Dollars saw exporters fall. Despite reporting a firmer factory activity and PMI data, the Shanghai Composite slipped 0.5%, while the Hang Seng Index closed 0.2% lower. ASEAN stock indices ended mostly negative.

• U.S. stockmarket retreated from their record high levels as the Dow fell 0.1% on rising geopolitical tension in the Middle East with Qatar faces a diplomatic row with its neighbouring countries over its alleged support for terrorism. The S&P 500 decreased 0.1%, while the Nasdaq closed 0.2% lower.

• Earlier, European benchmark indices also ended in the negative territory as the FTSE and CAC shed 0.3% and 0.7% respectively. The negative sentiment stemmed from concerns over the weekend London attacks. The DAX was closed for the Whit Monday public holiday.

The Day Ahead

• The key index has done well to surge past the 1,780 level to close in on the 1,790 level yesterday amid the support on the index linked stocks. However, we think the key index may have overshot its near term mark as the market’s valuation now tethers on the expensive side. The upsides were also on a relatively indifferent total traded volume, implying that many market participants are still on the sidelines.

• Therefore, we think that profit taking activities is a possibility for the gains to be digested. Furthermore, the tentative global market environment is likely to see the cautionary stance returning and market participants are likely to remain wary of the recent upsides.

• We expect the key index to pullback to around the 1,780 level and will attempt to build up a base at around the above level in the near term.

COMPANY BRIEFS

• Perak Transit Bhd is proposing a 1-for-10 bonus issue of up to 114.3 mln shares, together with free 571.5 mln warrants on a basis of one warrant-for-every two shares owned by the shareholders. (The Edge Daily)

• Xingquan International Sports Holdings Ltd’s shares, which are expected to be suspended after the company failed to submit its third quarter financial results in time, plunged to an all-time low yesterday.

• The group has attributed the delay to the expiry of the employment contract of its Chief Financial Officer on 30th April 2017 and the unexpected resignation of its Independent Director and Chairman of the audit committee, Tan Eng Choon on 29th May 2017. (The Edge Daily)

• Ikhmas Jaya Group Bhd has secured a RM188.6 mln contract to undertake earthworks, piling, diaphragm and reinforced concrete works at the Bukit Bintang City Centre (BBCC).

• The recent contract win brought its total outstanding order book to RM881.5 mln, of which M333.3 mln was secured in 2017. (The Star Online)

• Dolphin International Bhd is planning to raise between RM5.3 mln and RM6.6 mln via a private placement to fund an ongoing palm oil mill enhancement and optimisation job as well as for working capital purposes.

• The proposed exercise, which amounts to 10.0% of its total issued shares, might be issued in tranches at different issue prices to be determined later. The counter hit its all-time low of 23.0 sen on 5th June 2017. (The Edge Daily)

• Enra Group Bhd’s wholly-owned unit, Enra Engineering & Construction Sdn Bhd (EEC) is collaborating with railway track solutions provider Emrail via a 51:49 joint-venture (JV) to provide total engineering solutions, asset management and maintenance services for rail projects in Malaysia. EEC will fund its initial investment in the JV company through internal funds. (The Edge Daily)

• KUB Malaysia Bhd has received a mandatory take-over offer from Temasek Padu Sdn Bhd at 35.0 sen a share, after the latter emerged as a 52.2% shareholder in KUB.

• The offer is at a 38.6% discount to KUB Malaysia’s closing price of 57.0 sen on 5th June 2017. It is also at a discount of between 28.6% and 40.7% to the counter’s five-day, 1-month, 3-month, 6-month and 12-month volume weighted average market price (VWAP). (The Edge Daily)

• China Automobile Parts Holdings Ltd (CAP) has been granted a one-month period of extension to submit its audited financial statement for the financial year ended 31st December 2015 after its auditor PKF renounced reliability of the one submitted previously.

• Further, the company has not determined when it can submit its 1QFY17 report, which is also overdue, risking suspension of trading of its shares by 8th June 2017. (The Edge Daily)

• Techfast Holdings Bhd is proposing to acquire the remaining 10.0% stake in two subsidiaries, Cape Technology Sdn Bhd and Oriem Technology Sdn Bhd, for RM3.2 mln.

• The acquisition is expected to contribute positively towards the group’s 2017 earnings and earnings per share by about 0.2 sen per share. (The Edge Daily)

• Ideal Jacobs (Malaysia) Corp Bhd, a manufacturer of industrial labels and nameplates, plans to diversify its business to include the provision of integrated facilities management and construction activities by acquiring Widad Business Group Sdn Bhd. The company expects Widad to contribute more than 25.0% of the group’s net profit in the future. (The Edge Daily)

• Puncak Niaga Holdings Bhd announced that its wholly-owned unit, Murni Estate Sdn Bhd (MESB) will be paying RM248.9 mln, instead of RM267.9 mln, for the deal to purchase the plantation asset owned by Shin Yang Holdings Sdn Bhd.

• The lower revised purchase price was due to the revised value of the land at RM604.4 mln (from RM735.1 mln previously) less liabilities of RM327.8 mln in Danum Sinar Sdn Bhd, the owner of the plantation assets. (The Star Online)  

Source: Mplus Research - 6 Jun 2017