• Despite lingering mostly in the negative territory, late gains from Petronas-related stocks sent the FBM KLCI 0.3% higher yesterday. The lower liners – the FBM Small Cap (+0.3%), FBM Fledgling (+0.02%) and FBM ACE (+0.7%) all advanced, while the Consumer Products (-0.3%), Properties (-0.5%) and Mining (- 0.8%) sectors underperformed in the broader market.

• Market breadth was slightly negative as decliners pipped gainers on a ratio of 448-to-419 stocks. Traded volumes rose 16.9% to 1.76 bln shares as market participants return from the extended Hari Raya break.

• Petronas-related stocks like Petronas Gas (+26.0 sen), Petronas Dagangan (+22.0 sen) and Petronas Chemicals (+20.0 sen) topped the big board winners list, while AmBank and Genting Malaysia added 14.0 sen and 13.0 sen respectively. Notable advancers on the broader market include UMW (+33.0 sen), Petron (+28.0 sen), Edgenta (+24.0 sen), Tong Herr (+22.0 sen) and Kossan (+18.0 sen).

• Consumer products stocks like Nestle (- RM1.00), MSM (-30.0 sen), Magni-Tech Industries (-25.0 sen) and Dutch Lady (- 18.0 sen) topped the broader market decliners list, while Chin Teck Plantations fell 47.0 sen. Key losers on the FBM KLCI were KLCC (-17.0 sen), PPB Group (-16.0 sen), CIMB (-6.0 sen), MISC (-5.0 sen) and Maxis (-4.0 sen).

• Japanese equities rebounded as the Nikkei added 0.1% on strong manufacturing PMI data in June at 52.4 – the tenth consecutive monthly expansion, while the Hang Seng Index also gained 0.1%. The Shanghai Composite (+0.1%) advanced for the third straight session after the Caixin manufacturing PMI rose to a three-month high of 50.4, beating market consensus of 49.5. ASEAN stockmarkets, meanwhile, ended mostly in the positive territory.

• U.S. stockmarkets closed mostly higher as the Dow added 0.6%, boosted by stronger-than-expected ISM Manufacturing PMI and ISM Manufacturing Orders in June with the latter rising to near three-year high at 63.5. On the broader market, the S&P 500 gained 0.2%, but the Nasdaq (-0.5%) retreated for the third consecutive session.

• European equities started off the month in a firm footing – the FTSE (+0.9%), CAC (+1.5%) and DAX (+1.2%), all rebounded, recovering all of their previous session’s losses. Gains were also underpinned by faster-than-expected growth in the Eurozone's factory sector in June, improving to 57.4, up from 57.0 in the previous month.

The Day Ahead

• While sentiments are not restored in full as yet, we still think the FBM KLCI is likely to continue on its near term recovery in tandem with the improved performance of global indices overnight. This will provide some catalysts for the market to nudge ahead, but we continue to think that the upsides may be capped by the lack of sustainable leads.

• Consequently, we see the key index testing the 1,770 points level before making another attempt the 1,780 level, which we continue to think that it will serve as a major hurdle for the key index to clear.

• The positive performance of the key index would also see interest among the lower liners picking up, which will also be aided by the return of more retail players after the Hari Raya break.

COMPANY BRIEF

• Yinson Holdings Bhd‘s 49.0%-owned joint-venture (JV) company, PTSC Asia Pacific Pte Ltd (PTSC AP) has accepted PetroVietnam Technical Services Corp (PTSC) offer to continue deploying its Floating Production Storage and Offloading (FPSO) unit for petroleum operations within the Lam Son oilfield offshore Vietnam.

• The remaining 51.0% shareholding in PTSC AP is held by PTSC. The offer will be valid for a maximum period of six weeks from 30th June 2017. The petroleum operations in the Lam Son field will be undertaken by PetroVietnam Exploration Production Corporation Ltd (PVEP), which is a 100.0%-owned by Vietnam's national oil and gas firm PetroVietnam.

• Separately, Yinson is planning to dispose of its 26.0% equity stake in its indirect wholly-owned unit, Yinson Production (West Africa) Pte Ltd to a Japanese consortium for about US$104.0 mln to US$117.0 mln.

• The group has inked a Heads of Agreement (HoA) with the consortium to facilitate the disposal and will be partnering with the latter to charter, operate and maintain a FPSO facility by Eni Ghana Exploration and Production Ltd in Ghana. The FPSO produced its first oil on 22th May, 2017. (The Edge Daily)

• Tiger Synergy Bhd and landowner LJ Development (KL) Sdn Bhd has proposed to undertake a residential or commercial development with an estimated gross development value (GDV) of RM80.0 mln in Klang, Selangor. ? The parties have signed a Memorandum of Understanding (MoU) for the aforementioned project and are expected to finalise the terms and conditions of the proposed JV within six months. The JV will enable the group to expand the operations of its property segment and also complement its existing business activities. (The Edge Daily)

• Chin Hin Group Bhd has plans to acquire a 45.0% stakes in three companies for RM24.8 mln to boost its exposure in the solar power investment business regionally to tropical countries.

• To this end, Chin Hin has signed a MoU with the shareholders of the three companies, namely Atlantic Blue Sdn Bhd, Powertrack Sdn Bhd and Solarvest Energy Sdn Bhd for the proposed acquisitions.

• Atlantic is principally involved in the installation of equipment for generation of solar electricity, the sale of electricity through solar generation and property investment holdings, while Powertrack and Solarvest are associate companies of Atlantic, and are principally involved in the engineering, procurement and construction of solar energy.

• The shareholders of the three companies have also provided profit guarantees of up to RM10.0 mln for FY18 and FY19. (The Star Online)

• Top Glove Corp Bhd has sold its 36.8%- indirect stake in Singapore-based Sonic Clean Pte Ltd, which provides cleanroom washing services and supplies to industries ranging from hard disk drive to medical industries, to Mclean Technologies Pte Ltd.

• The group and Unisteel Technology Ltd, which holds the remaining 63.2% equity stake in Sonic Clean, had on 30th June 2017, signed a conditional sale and purchase agreement to sell all 2.02 mln shares of Sonic Clean for S$2.00. The group said the proposed disposal is part of the group's strategic business rationalisation plan to streamline its business. (The Edge Daily)

• Bina Puri Holdings Bhd has received approvals from the Indonesia Stock Exchange (IDX) for the listing of its subsidiary, PT Megapower Makmur Tbk on 5th July, 2017.

• The proposed listing involves an offering of up to 245.1 mln new shares for subscription or purchase at the offer price of 200 rupiah (6.0 sen). (The Star Online)

• Felda Global Ventures Holdings Bhd (FGV) has decided to refer its Group President and Chief Executive Officer, Datuk Zakaria Arshad and Group Chief Financial Officer, Ahmad Tifli Mohd Talha to a domestic inquiry panel after evaluating the officers’ replies to their show-cause letters on the alleged irregularities at one of FGV's subsidiaries, Delima Oil Products Sdn Bhd. The domestic inquiry process is expected to take about two months to complete. (The Star Online)

• Mah Sing Group Bhd plans to develop an integrated development in Batu 2.5, Jalan Cheras, which will have an estimated GDV of RM2.2 bln. The group is also planning to build a business park with an estimated GDV of RM150.0 mln on a 10.9-ac. piece of freehold land in Bukit Mertajam, Penang.

• Meanwhile, Mah Sing has inked an agreement to acquire Cordova Land Sdn Bhd, which has an offer accepted by Kuala Lumpur City Hall (DBKL) to purchase a 11.2-ac. prime land in Jalan Cheras for RM263.5 mln. (The Edge Daily)

• ECS ICT Bhd's unit, ECS Pericomp Sdn Bhd has been appointed as an authorised distributor for Palo Alto Networks in Malaysia and Brunei. The appointment will enable the group to leverage on its ecosystem of channel system integrators and strengthen their market presence in Malaysia and Brunei. (The Star Online)

• Malaysian Rating Corp Bhd has downgraded its rating on Alam Maritim Resources Bhd's RM500.0 mln Sukuk Ijarah Medium-Term Notes to BB+IS from BBB+IS, to reflect a higher default risk with respect to a scheduled RM30.0 mln principal Sukuk payment due on 6th July 2017.

• The rating remains on MARCWatch Negative to highlight the Sukuk's increased vulnerability to missed payments or a distressed exchange after the company sought the Corporate Debt Restructuring Committee's (CDRC) assistance to mediate negotiations with its creditors. (The Star Online)

• Texchem Resources Bhd has announced that Dim Sum Delight Sdn Bhd, the operator of two Michelin-star Tim Ho Wan restaurants in Malaysia, has stopped business operations due to challenging future prospects.

• Dim Sum Delight, which is 51.0%-owned by Texchem has incurred a loss of RM895,642 in 2016 and is not expected to turn around in the near future. (The Edge Daily)  

Source: Mplus Research - 4 Jul 2017