• The FBM KLCI (+0.1%) shrugged off the weak sentiments in the regional stockmarkets to finish higher on Thursday, on the back of bargain-hunting activities in selected heavyweights. The lower liners also rebounded – led by the FBM Ace, which gained 1.7%, alongside all the broader market constituents, which closed positively.

• Market breadth recovered, with 459 advancers against 389 decliners. Meanwhile, traded volumes thinned by 3.0% to 1.64 bln shares, ahead of the Aidilfitri holiday celebrations.

• Main Board outperformers include BAT (+68.0 sen), Petronas Gas (+20.0 sen), Genting (+18.0 sen), Hap Seng Consolidated (+18.0 sen) and Hong Leong Financial Group (+16.0 sen). Other advancers were Ajinomoto (+86.0 sen), Aeon Credit Service (+44.0 sen), Vitrox (+36.0 sen), Nestle (+24.0 sen) and Sam Engineering & Equipment (+24.0 sen).

• On the other side of the trade, Petron Malaysia (-24.0 sen), Heng Yuan Refining (-23.0 sen), Dutch Lady (-20.0 sen), UEM Edgenta (-16.0 sen) and Southern Acids (- 16.0 sen) retreated. Key-index losers were Petronas Dagangan (-60.0 sen), PPB (-10.0 sen), MISC (-7.0 sen), Telekom Malaysia (-5.0 sen) and Astro (-4.0 sen).

• Japanese equities extended its losses for the second-straight day, on the back of the weakness in export-related stocks as the Yen firmed up against the Greenback. Both the Nikkei and the Hang Seng index edged lower by 0.1%, while the Shanghai Composite index (-0.3%) slipped into the red, weighed down by losses in information technology (-1.7%) and materials (-1.6%) companies. ASEAN stockmarkets also continued to trade on a downward bias. ? The majority of the key U.S. indices finished with shallow losses as the investors look to President Donald Trump’s new healthcare bill, which aim to replace Obamacare. Both the Dow and the S&P 500 edged 0.1% lower, although losses were capped by gains in healthcare-related stocks. On the other hand, the Nasdaq flatlined, albeit still closing a shade above the positive territory.

• U.K. equities finished in the red as the FTSE closed down by 0.1%, despite rebounding from intra-day low, on the back of gains in energy stocks. The DAX and the CAC, meanwhile, ended 0.2% higher ahead of the two-day European Council meeting.

The Day Ahead

• Despite yesterday’s mild rebound, the general market environment remains weak amid the lack of fresh leads, albeit the recent consolidation has reduced stock valuations to more palatable levels. Still, we think the buying interest will be insipid ahead of the Hari Raya break as most investors will adopt a wait-and-see attitude before making fresh commitments.

• Hence, we expect the key index to revert to a sideway trend with supports on selective index heavyweights helping to shore up the market amid the lack of fresh buying interest. We see the FBM KLCI lingering within the 1,770 and 1,780 levels to end the week.

• The lower liners and broader market shares will also see reduced following for the day due to the lack of buying interest and this will also limit their recovery and upsides.

Company Brief

• DRB-Hicom Bhd has received a letter from Finance Ministry (MOF) approving a research and development (R&D) reimbursement grant for R&D carried out by Proton Holdings Bhd’s subsidiary, Perusahaan Otomobil Nasional Sdn Bhd (PONSB). The value of the reimbursement grant was RM1.1 bln and is to be paid in a lump sum directly to PONSB, who would in turn use the grant proceeds to deleverage its existing financial liabilities. (Bernama)

• MISC Bhd’s wholly-owned subsidiary, AET Tanker Holdings Sdn Bhd (AET) has been awarded a charter contract worth at least US$200.0 mln (RM858.2 mln) from Norwegian oil and gas firm, Statoil. AET would commission Samsung Heavy Industries to build two 125,000 dwt DP shuttle tankers for delivery in 2019 before chartering it to Statoil.

• It will operate the two specialist DP2 offshore loading shuttle tankers in oilfields on the Norwegian continental shelf of the North Sea, Norwegian Sea and the southern Barents Sea. Statoil would decide on the charter period by 31st December 2017. A five-year charter contract is valued at US$200mil (RM858.2 mln), while a seven-year one will be worth US$275.0 mln (RM1.20 bln). (The Star Online)

• United Malacca Bhd's 4QFY17 net profit rose 43.3% Y.o.Y to RM29.0 mln, lifted by higher fresh fruit bunches production, and better crude palm oil and palm kernel prices. Revenue for the quarter gained 46.7% Y.o.Y to RM70.3 mln.

• For FY17, cumulative net profit increased 41.9% Y.o.Y to RM84.6 mln. Revenue for the year grew 33.5% Y.o.Y to RM274.7 mln. A second interim single-tier dividend of 12.0 sen and a special 3.0 sen singletier dividend, both payable on 24th August 2017, was declared.(The Edge Daily)

• Bintai Kinden Corp Bhd has bagged a S$39.6 mln (RM122.1 mln) contract from Singapore's Land Transport Authority (LTA) to undertake mechanical services work for a four-inone rail and bus depot in Singapore. Bintai Kinden’s 69.8%-owned subsidiary, Bintai Kindenko Pte Ltd had, on 22nd June 2017, accepted a letter of award from the LTA for the project. (The Edge Daily)

• George Kent (M) Bhd’s 1QFY17 net profit rose 23.3% Y.o.Y to RM18.5 mln, on higher revenue from its construction and water-meter units. Revenue for the quarter added 5.3% Y.o.Y to RM129.4 mln. (The Edge Daily)

• Aluminium Company of Malaysia Bhd (Alcom) is investing RM18.0 mln to expand capacity of its coated fin stock business. The capacity expansion will be undertaken by the addition of a production line in its existing facility in Bukit Raja, Selangor. The new line is anticipated to be fully commissioned in the next two financial years and the group expects to see return from the new line, which will add 12,000 tonnes to its annual coated fin stock capacity, a year after that. (The Edge Daily)

• Eduspec Holdings Bhd has entered a framework agreement to appoint Beijing ZhongChuang HuaYing Technology Co Ltd (BZC) for the promotion and distribution of the Carnegie Mellon University Robotics Academy (CMRA) certified Science, Technology, Engineering and Mathematics (STEM) Robotics curriculum in China.

• The agreement also seeks to appoint BZC as the exclusive distributor in China for a period of five years at a total contract value of US$15.0 mln (RM64.4 mln). (The Edge Daily)

• S P Setia Bhd has signed a conditional share purchase agreement to acquire I&P Group Sdn Bhd from its controlling shareholder, Permodalan Nasional Bhd (PNB) for RM3.65 bln cash. The purchase price is at a discount of approximately 39.3% to the adjusted unaudited net asset value of I&P Group. S P Setia is proposing a cash call plus private placement to raise the required funding.

• The group’s fundraising proposal involves a renounceable rights issue of new shares, renounceable rights issue of a new Class B Islamic Redeemable Convertible Preference Shares (RCPS-i B), and a private placement of new shares, with each exercise expected to raise RM1.20 bln. The RCPS-i B has a profit rate of 5.9% per annum and is non-callable for the first five years but can be convertible to ordinary shares at a conversion ratio to be determined later. Its entitlement basis and the issue price will be fixed at a later stage. (The Edge Daily)  

Source: Mplus Research - 23 Jun 2017