• Despite the FBM KLCI traded sharply higher at the opening bell, quick profit taking in tandem with the weakness across global indices sent the key index to close 0.5% lower yesterday. The lower liners also edged mostly lower as the FBM Small Cap and FBM Fledgling fell 0.1% and 0.2% respectively, while the broader market ended mixed.

• Market breadth turned negative as decliners led gainers on a ratio of 481-to- 369. Traded volumes, however, gained 6.6% to 1.40 bln shares on the gradual return of market participants after the extended weekend festive break.

• Hong Leong Financial Group (-30.0 sen) and BAT (-30.0 sen) topped the FBM KLCI decliners list, followed Genting Malaysia (-24.0 sen), Genting (-22.0 sen) and Petronas Gas (-18.0 sen). Ajinomoto (- 48.0 sen) halted a streak of seven sessions of gains, while other decliners on the broader market include Genting Plantations (-12.0 sen), UMW Holdings (- 12.0 sen), Alliance Financial Group (-9.0 sen), Keck Seng (-9.0 sen) and Elsoft (-8.0 sen).

• Significant gainers on the broader market were Fraser & Neave (+RM1.00), United Malacca (+36.0 sen), Heng Yuan (+26.0 sen) and Heineken (+22.0 sen). Gamuda rose 3.0 sen after reporting a strong set of quarterly earnings. Meanwhile, Hong Leong Bank (+46.0 sen), Hap Seng (+6.0 sen), IJM (+6.0 sen), KLK (+4.0 sen), and Maybank (+3.0 sen) were among the biggest advancers on the key index.

• Tracking the weak performance on Wall Street overnight, Asian benchmark indices traded in a similar manner as the Nikkei fell 0.5%. Both the Hang Seng Index and Shanghai Composite slipped 0.6% each as the former was hit by selloff in technology shares. ASEAN stockmarkets, meanwhile, ended mostly lower.

• U.S stockmarkets recovered all their previous session losses overnight as the Dow added 0.7% as markets misinterpreted the less hawkish comments from the European Central Bank on its stimulus measures, while crude oil prices advanced for the fifth consecutive day. The S&P 500 added 0.9%, led by the financial (+1.6%) and technology (+1.3%) sectors, while the Nasdaq jumped 1.4%.

• European equities extended their losses as investors were concerned over possibility of a policy shift toward tightening by central banks. The FTSE slipped 0.6% to close at a seven-week low after the Bank of England policy makers signalled a potential rate hike amid the strength of the economy, while the CAC and DAX declined 0.1% and 0.2% respectively.

The Day Ahead

• We see the key index staging a quick rebound after yesterday’s slide following the strong push on U.S. stocks overnight. Still, we think the upsides may be limited as fresh buying interest is scant with the lack of convincing catalysts and a generally cautious market environment.

• The mild bargain hunting activities could lift the market to the critical resistance of 1,780 level, but we continue to think that the above level will serve as a major hurdle to clear. On the downside, the near-term support is at the 1,770 level, followed by 1,760 level.

• Meanwhile, the continuing lack of leads will also see the lower liners and broader market shares see reduced following as there are fewer compelling buys. At the same time, some market players are also on an extended festive break, thus the buying interest will also remain on the thin side for now.

COMPANY BRIEF

• Magni-Tech Industries Bhd’s 4QFY17 net profit doubled to RM38.5 mln, against RM18.8 mln in the previoust corresponding year, mainly due favourable foreign exchange rates and a 54.5% Y.o.Y jump in revenue to RM299.7 mln, from RM194.0 mln a year earlier.

• For the full financial year ended April 30 2017, net profit came in at RM120.1 mln, up 46.3% Y.o.Y from RM82.1 mln in FY16, alongside revenue, which climbed 33.5% Y.o.Y to RM1.14 bln, from RM854.1 mln in FY16. The group has also proposed a 7.0 sen dividend per share for FY17, comprising of a three sen final dividend and a four sen special dividend. (The Edge Daily)

• Sunsuria has entered into a 49:51 jointventure (JV) agreement with Hong Kongbased CITIC International Investment Ltd (CIIL) to carry out construction work and property development in Malaysia. The partnership will enable Sunsuria to leverage on the Chinese state-owned conglomerate’s strong financial strength and proven track record in construction to take on larger-scale projects. (The Star Online)

• Guan Chong Bhd is acquiring a 100.0% equity interest in Koko Budi Sdn Bhd for RM17.0 mln in order to expand its overall grinding capacity.

• The group has entered into a share sale agreement with the vendors for 3.8 mln shares which would make Koko Budi its wholly-owned subsidiary. (The Edge Daily)

• Ikhmas Jaya Group Bhd has secured a RM36.0 mln contract for works at the proposed Setia City Mall Phase 2 retail development in Selangor.

• The contract work include site clearance, earthworks, piling and pile caps, ground slab and ancillary works for the project from Greenhill Resources Sdn Bhd — a joint-venture company (JVco) between SP Setia Bhd and Asian Retail Investment Fund.

• Ikhmas Jaya’s total outstanding orderbook currently stands at approximately RM903.9 mln, while the group has also secured contracts with an aggregate value of RM369.2 mln year-to-date. (The Edge Daily)

• Jadi Imaging Holdings Bhd is disposing its freehold land, together with a detached factory-cum-three-storey office in Shah Alam for RM23.0 mln to Tropical Fairyland Sdn Bhd.

• Subsequently, the proceeds will be used for bank borrowings repayment, working capital, estimated real property gain tax payable and defray estimated expenses related to the proposed disposal. (The Edge Daily)

• Bintai Kinden Corp Bhd's 69.8%-owned subsidiary in Singapore has clinched a S$10.4 mln (RM32.4 mln) government contract to provide integrated facilities management services, which includes mechanical and engineering work, at the National Development Ministry's offices in Jem Office Tower. (The Star Online)

• U Mobile Sdn Bhd, the fourth largest cellular service provider in the nation by subscriber base, is terminating its 3G radio access network (RAN) sharing agreement with Maxis Bhd. (The Star Online)

• Healthcare furniture and equipment manufacturer LKL International Bhd has posted a 4QFY17 net profit of RM215,000, from a net loss of RM612,000 last year, despite a 34.6% Y.o.Y fall to RM6.1 mln, from RM9.3 mln in 4QFY16.

• Its full year net profit, however, increased 37.0% Y.o.Y to RM4.5 mln, from RM3.3 mln a year ago, although revenue dipped 8.8% Y.o.Y to RM33.9 mln, from RM37.5 mln in the same period last year. (The Edge Daily)

• Lay Hong Bhd has announced a final dividend of 0.5 sen per share for FY17, which will be paid on 8th November 2017. (The Edge Daily)  

Source: Mplus Research - 29 Jun 2017