• Tracking the negative sentiments on the U.S. stockmarkets overnight, the FBM KLCI ended the week 0.6% lower, weighed down by selling-pressure on selected heavyweights. The key-index also fell 0.2% W.o.W to 1759.9 points amid the thin trading. Meanwhile, the lower liners – the FBM Fledgling (-0.7%), the FBM Small Cap (-0.6%) and the FBM Ace (-0.3%) were splashed in red amid an equally red broader market.

• Market breadth was negative as decliners outpaced the advancers on a ratio of 644- to-209 stocks. Traded volumes, meanwhile, declined 15.8% to 1.31 bln shares, as the investors stayed on the sidelines due to the global political uncertainties.

• Main Board underperformers include BAT (-62.0 sen), Hong Leong Financial Group (-54.0 sen), IOI Corporation (-14.0 sen), Petronas Dagangan (-14.0 sen) and Genting (-12.0 sen). Other decliners were Ajinomoto (-42.0 sen), Bursa Malaysia (- 30.0 sen), Heineken Malaysia (-30.0 sen), Nestle (-28.0 sen) and United Plantations (-28.0 sen).

• On the other side of the trade, Far East Holdings (+15.0 sen), Oriental Interest (+13.0 sen), Aeon Credit Service (+12.0 sen) and Aluminium Company of Malaysia (+12.0 sen) advanced. Cycle and Carriage Bintang also gained 19.0 sen after its joint-venture (JV) company, MercedesBenz Malaysia posted a all-time sales record in June. There were only four gainers on the Main Board, mainly Ambank (+2.0 sen), IJM Corporation (+1.0 sen), Sime Darby (+1.0 sen) and Westports (+1.0 sen).

• Key regional indices closed mostly lower on Friday as global bond yields rallied amid expectations of higher U.S. interest rates. The Nikkei (-0.3%) capped its gains, following the Bank of Japan’s plans to ramp up its bond-buying programs, while the Hang Seng index lost 0.5% to 25,340.9 points. The Shanghai Composite index, however, rose 0.2%, lifted by gains in materials (+2.0%) stocks. The majority of the ASEAN stockmarkets were splashed in red on Friday’s closing.

• U.S. equities rallied on Friday as investors cheered higher-than-expected employment data. The Dow gained 0.4%, buoyed by gains in McDonald’s (+2.1%) and Nike (+1.4%), while the S&P 500 and the Nasdaq finished 0.6% and 1.0% respectively ahead of the quarterly results from major banking firms.

• Earlier, key European indices eked-out gains as investors digested a series of economic data from the U.S. ahead of the G-20 summit in Germany. The FTSE (+0.2%) pared back earlier losses to close in the green – led by gains in Easyjet (+5.4%), following an upgrade in its rating by Credit Suisse, while the DAX ended 0.1% to close above the 12,300 psychological level. The CAC (-0.1%), however, closed lower after lingering in the negative territory the entire session.

The Day Ahead

• We think the FBM KLCI could have found near term support around the 1,760 level as the recent falls has left it at the lower end of its rangebound trend and technical oversold condition. Thus, we think market players could take advantage of the slightly more positive market environment following the rebound on Wall Street last Friday to bargain hunt on some beaten down index heavyweights.

• While a rebound is in store, we think the upsides could be mild for now as there is still a measure of cautiousness and fresh buying interest will still be muted. This also means that market participation will remain on the modest side. On the upside, the 1,765 resistance will be in play, followed by the 1,770 level. On the downside, there will be key support at the 1,750 level.

COMPANY BRIEF

• Star Media Group Bhd, which has obtained shareholders’ approval to dispose of its 52.5% stake in Cityneon Holdings Ltd, will allocate more than 50.0% of the RM360.2 mln raised from the disposal as future investments to diversify and expand its primary business activities.

• The disposal would allow the group to unlock value in its investment and concentrate on the expansion of its primary business. The disposal values the transaction at an implied price-to-book ratio value of 3.2x while the EV/EBITDA multiple is 18.1x. (The Star Online)

• TSH Resources Bhd plans to raise about RM43.3 mln from the issuance of 25.0 mln new shares, or 1.8% of its issued share capital, where nearly all of the proceeds would be for working capital.

• The above amount raised is based on the indicative issue price is RM1.73 per placement share, being the five-day volume weighted average market price (VWAMP) of TSH shares up to and including 6th July 2017. The placement shares would be placed to third party investor or investors to be identified later. (The Star Online)

• Genting Malaysia Bhd (GenM) has announced it is working to recover its investment of US$347.4 mln (RM1.49 bln) in an integrated gaming resort in Taunton, Massachusetts, US, which has been put on hold pending the resolution of a legal case. The investment was in the form of subscription to interest-bearing promissory notes issued by the Mashpee Wampanoag Tribe to finance the pre-development expenses of the resort on 1st April 2016.

• The amount mentioned comprised the principal invested, as well as accrued interest as at 30th June 2017. The recoverability of the notes is dependent on the resolution of the legal case. (The Edge Daily)

• Titijaya Land Bhd is seeing signs of recovery in the property market, with stronger bookings compared to the past two years. The group, which has been prudent for the last two years with some planned launches deferred believes 2018 is the right time to launch new projects.

• Titijaya is optimistic of reaching its sale target of RM300.0 mln for the financia year ended 30th June 2017 (FY17). For the 9MFY17, the company achieved RM180.0 mln sales. (The Edge Daily)

• Alam Maritim Resources Bhd, its subsidiaries, joint-venture companies and associated companies are negotiating with their respective financiers and Sukukholders to restructure the repayment terms of their existing loans/financing facilities and Sukuk programme.

• The discussion is part of its debt restructuring scheme and that it is required to submit the proposed debt restructuring scheme within 60 days from the date of Bank Negara Malaysia's corporate restructuring committee's approval letter dated 25th May 2017.

• Earlier, Malaysian Rating Corp Bhd (MARC) downgraded Alam Maritim's Sukuk rating to D from BB following the missed Sukuk principal payment of RM30.0 mln on the outstanding RM75.0 mln under its Sukuk Ijarah medium term notes programme on 6th July 2017. (The Edge Daily)

• Yap Chor How has been appointed as an Executive Director (ED) of PanPages Bhd, effective 7th July 2017. He is the son of Lay Hong Bhd’s Executive Chairman, Yap Hoong Chai, and is credited to have started the operations of grocery retailer G-Mart Borneo Retail Sdn Bhd in 2009 before expanding the number of stores from 9 to 17 across Sabah.

• Lay Hong, in which Chor How is also an ED and CEO of retail business, announced in May 2017 its plans to sell a 30.0% stake in G-Mart to PanPages for RM10.8 mln to tap into the retail electronic commerce business.

• The stake sale was completed on 20th June 2017. Hoong Chai emerged as a substantial shareholder of PanPages, which specialises in developing business platforms, on 22nd June 2017 via ta family vehicle, Innofarm Sdn Bhd, which is now the largest shareholder in PanPages with a 26.4% stake. (The Edge Daily)

• Media Prima Bhd’s Datuk Seri Amrin Awaluddin will be stepping down from the Group Managing Director (MD) post, while Datuk Kamal Khalid will be taking over the top post. Kamal is the current Chief Executive Officer (CEO) of Media Prima Television Networks.

• The change of chiefs comes following the announcement of the media group’s new appointment of Tan Sri Ismee Ismail, the former group MD and CEO of Lembaga Tabung Haji, as the group’s Non-Executive Chairman to replace Datuk Seri Fateh Iskandar Mohamed Mansor. (The Edge Daily)
   
• Animal health specialist, Sunzen Biotech Bhd plans to diversify into the manufacturing and trading of traditional Chinese medicine and herbal health food and beverages business, through the acquisition of a 70.0% equity stake in health and wellness company Ecolite Biotech Manufacturing Sdn Bhd.

• The RM12.1 mln purchase price will be settled via the issuance of 37.7 mln new Sunzen shares — about 7.0% of its enlarged share base at an issue price of 32.0 sen per share. The proposed purchase and diversification could potentially contribute 25.0% or more of its net profit. (The Edge Daily)

• SCGM Bhd is setting up a manufacturing facility in the Klang Valley to boost its market share in central peninsular Malaysia. The 47,000 sq. ft. facility, housed in rented premises in Telok Panglima Garang, Klang, would produce thermoform lunchboxes for the Klang Valley market.

• With four thermoform machines and two extruders, the Klang Valley factory would have a production capacity of 5.0 mln kg per annum. It is expected to start operations by end-2017. (The Edge Daily)  

Source: Mplus Research - 10 Jul 2017