• The FBM KLCI ended Monday on soft footing and for a second-straight session, weighed down by persistent foreign outflows amid expectations of higher U.S. interest rates. Most of the lower liners, mainly the FBM Fledgling (-0.6%) and the FBM Small Cap (-0.3%) declined, although the FBM Ace (+0.7%) opposed the general weak sentiment to finish in the green. Meanwhile, only two-of-ten sub-sectors ended yesterday positively.
• Market breadth was negative, as losers outweighed the winners on a ratio of 556- to-294. Traded volumes, however, jumped 27.5% to 1.67 bln shares amid the extended profit-taking on the lower liners.

• Genting-related companies like Genting (- 16.0 sen) and Genting Malaysia (-5.0 sen) continued to see selling pressure amid risks of an RM1.49 bln impairment writeoff. Meanwhile, other key-index decliners were Petronas Chemicals (-20.0 sen), Hap Seng Consolidated (-9.0 sen) and Telekom Malaysia (-7.0 sen). Broader market constituents which slipped into the red on Monday include Ajinomoto (- 52.0 sen), United Plantations (-32.0 sen), Malaysia Pacific Industries (-26.0 sen), Nestle (-24.0 sen) and Dutch Lady (-20.0 sen).

• On the flip side, chart-toppers include Panasonic Manufacturing (+60.0 sen), Enra (+25.0 sen), Sam Engineering (+22.0 sen) and Heng Yuan Refining (+19.0 sen). Earthworks and civil engineering specialist Advancecon gained 21.5 sen on its debut on Bursa Malaysia yesterday. Significant Main Board advancers included Petronas Gas (+42.0 sen), Hong Leong Financial Group (+24.0 sen), MISC (+7.0 sen), KLCC (+4.0 sen) and Kuala Lumpur Kepong (+4.0 sen).

• The majority of Asian equities rallied ahead of a series of key economic data from China due this week. The Shanghai Composite index fell 0.2% as investors stayed on the sidelines amid uncertainties on China’s economic health, while the Hang Seng index (+0.6%) rallied on the upbeat U.S. employment data. The Nikkei was also up by 0.8%, lifted by a weaker Yen, while ASEAN stockmarkets closed mixed.

• Wall Street inched higher, on the back of the positive sentiment spilled over from the European stockmarkets earlier and gains in Amazon, ahead of an Amazon one-day sale event. The Dow flatlined as gains in materials-related counters offset losses in consumer staples. On the broader market, the S&P 500 notched a 0.1% gain to 2,427.4 points, while the Nasdaq traded 0.4% higher.

• European stockmarkets advanced, boosted by stronger-than-expected exports data from Germany. The DAX and the CAC gained 0.5% and 0.4% respectively, amid a weaker Euro vs. the Greenback. Similarly, FTSE (+0.3%) also traded higher, lifted by gains aerospace company BAE (+2.0%) after the British Court ruled against an anti-arms trade group seeking to halt BAE’s sales to Saudi Arabia.

The Day Ahead

• After failing to fire yesterday, the general market outlook looks increasingly indifferent with market interest continuing to abate. There is still few fresh impetus to draw in fresh buying and this is likely to leave the key index to continue drifting, despite the recovery of foreign stockmarkets of late.

• Hence, we see the downside bias persisting with the 1,750 support level coming in play and any upside is likely to be mild due to the lack of sustainable interest as more market players retreat to the sidelines and that have resulted in traded volumes remaining on the thin side. Any rebound will be mild with the 1,760-1,765 levels serving as the near term hurdles.

COMPANY BRIEF

• LPI Capital Bhd’s 2Q2017 net profit sank 67.9% Y.o.Y to RM68.1 mln, mainly due to the reduction in extraordinary gains from realisation of its equity investments. Revenue for the quarter, however, rose 4.0% Y.o.Y to RM352.7 mln.
• For 1H2017, cumulative net profit declined 50.1% Y.o.Y to RM138.6 mln. Revenue for the period, however, gained 6.2% Y.o.Y to RM700.0 mln. A dividend of 27.0 sen per share was declared. (The Star Online)

• Advancecon Holdings Bhd, which made its debut on the Main Market of Bursa Malaysia yesterday, has bagged a RM30.1 mln contract for part of the proposed Pan Borneo Highway in Sarawak.

• It received a letter of award from LM Partners Sdn Bhd to undertake the site clearing, excavation and upgrading of a 10.5 km stretch. The contract shall start on 5th August 2017 and the target completion date is on 23rd September 2019. (The Star Online)

• Enra Group Bhd's subsidiary has bagged a US$48.0 mln (RM206.0 mln) contract to provide a mooring system and storage tanker services to Petroliam Nasional Bhd (Petronas) in the Andaman Sea, off the coast of Myanmar.

• Its 60.0%-owned Enra SPM Sdn Bhd had accepted a letter of award from PC Myanmar (Hong Kong) Ltd (PCML) to provide ties for the Yetagun offshore gas field operated by the PCML. The contract is for four years and the leasing period is expected to start once the facilities have been commissioned and delivered to PCML. (The Star Online)

• Versatile Creative Bhd announced that it has delayed the due diligence exercise for the development of medium-cost apartments in Johor, which has a gross development value of RM110.0 mln. It is also seeking an extension of the Memorandum of Understanding (MOU) signed with Double Action Ventures Sdn Bhd and will finalise the draft definitive agreement upon finalisation of the land conversion payment issue within the deadline of two months. (The Edge Daily)

• Iris Corp Bhd has appointed two new directors, Datuk Rozabil @ Rozamujib Abdul Rahman and Datuk Poh Yang Hong to its board, effective 7th July 2017.

• The two new directors emerge as the new substantial shareholder — via their vehicle Caprice Development Sdn Bhd — through a 10% private placement exercise in Iris Corp. (The Edge Daily)

• Gadang Holdings Bhd is selling its indirect wholly-owned plantation unit Desiran Impian Sdn Bhd for RM15.0 mln. The group’s subsidiary, Gadang Plantations Holdings Sdn Bhd is selling the unit to Kumpulan Sawit Tan Holdings Sdn Bhd. Proceeds from the sale will be used for general working capital requirements and the deal is expected to be completed by May 2018. (The Edge Daily)

• 7-Eleven Malaysia Holdings Bhd’s Chief Executive Officer (CEO) Gary Thomas Brown has stepped down from his role in the group, citing personal reasons. The group has named its Non-Executive Director, Ho Meng as Brown’s successor and will assume his new position as CEO effective 1st August 2017. (The Edge Daily)

• The number of passengers passing through the 39 airports in the country that Malaysia Airports Holdings Bhd (MAHB) manages rose 13.5% Y.o.Y in June 2017 to 7.6 mln.

• The overall increase in passengers in June 2017 was supported by growth in airline seats and an improvement in average load factors during the Hari Raya Aidilfitri celebration. Overall average load factor also improved by 0.3% Y.o.Y to 74.7% in June 2017. (The Edge Daily)  

Source: Mplus Research - 11 Jul 2017