• The FBM KLCI (+0.1%) inched into the green territory, boosted by last-minute buying support on selected heavyweights, after declining for three-straight days. All the lower liners rebounded – led by the FBM Ace (+1.2%), FBM Fledgling (+0.5%) and the FBM Small Cap (+0.3%). The broader market, meanwhile also closed mostly higher with the exception of the Industrial products, Finance and Plantations sub-sectors.

• Market breadth turned positive as advancers outperformed the decliners on a ratio of 460-to-362. Traded volumes gain 3.2% to 1.79 bln shares amid bargain-hunting activities on the lower liners.

• Main Board chart-toppers were Hap Seng Consolidated (+26.0 sen), Axiata (+23.0 sen), Hong Leong Financial Group (+10.0 sen), Tenaga (+6.0 sen) and Astro (+5.0 sen). Meanwhile, rubber-gloves maker like Hartalega (+15.0 sen) and Kossan Rubber Industries (+14.0 sen) led the broader market higher. Other winners were Heng Yuan (+29.0 sen), Globetronics (+17.0 sen) and Inari (+15.0 sen).

• On the contrary, Boustead Heavy Industries (-12.0 sen), Dutch Lady (-10.0 sen), DKLS (-9.0 sen), BLD Plantation (- 7.0 sen) and Southern Acids (-7.0 sen) traded lower on Wednesday. Blue-chips decliners were Petronas Dagangan (-28.0 sen), BAT (-18.0 sen), Petronas Chemicals (-9.0 sen) and CIMB (-8.0 sen). Digi, meanwhile, lost 10.0 sen after reporting a 10.7% Y.o.Y fall in its 1H2017 net profit.

• Key regional benchmark indices ended mostly in the red, ahead of the U.S. Federal Reserve Chairwoman Janet Yellen’s testimony before the Congress. The Nikkei (-0.5%) close in the red on the back of mild profit-taking activities, after advancing for three consecutive sessions. The Shanghai Composite index (-0.1%) inched lower despite rebounding from earlier losses, while the Hang Seng index notched a 0.6% gain – led by gains in banking stocks after China’s central bank reportedly injected some RMB70.0 bln to ease the liquidity constraint in the financial market. The majority of ASEAN stockmarkets ended higher yesterday.

• Wall Street hit record highs amid optimism of a dovish approach to future interest rates hikes and plans to pare the Federal Reserve’s US$4.5 tln portfolio. The Dow (+0.6%) ended at fresh record high on gains of Microsoft (+1.7%), Home Depot (+1.3%) and Mcdonald’s (+1.1%). On the broader market, the S&P 500 rose 0.7%, while the Nasdaq jumped 1.1%, lifted by gains in Paypal (+1.8%), after the latter snagged Apple as its latest partner.

• Earlier, European stockmarkets finished on a high note as investors digested the quarterly corporate earnings and Janet Yellen’s latest comments on the U.S. Federal Reserve’s monetary policies. The FTSE jumped 1.2%, lifted by Burberry after the latter posted better-than expected revenue for the quarter. The CAC rose 1.6% - led by gains in banks and energy stocks, while the DAX (+1.5%) closed higher at 7,416.9 points.

The Day Ahead

• The FBM KLCI is starting to recover from its bout of technical oversold with the minute gains yesterday and with global markets tipping higher overnight, the recovery on Bursa Malaysia is expected to continue over the near term.

• As it is, we think that the key index may have found a near term bottom at around the 1,755 level and the continuing recovery could send the key index back to the 1,760 level, before making another pass at the 1,765 level. Meanwhile, the 1,750 level remains the key near term support.

• The improved market sentiment could also entice more retail players back into the market. However, we think their participation will mostly be on a trading basis, thus the gains will be punctuated by quick profit taking activities. Still, their increased participation is welcomed after a lull where the traded volumes have shrunk to half the 100-day average of late.

Company Briefs

• Pasukhas Group Bhd (PGB), through its wholly-owned subsidiary Pasukhas Energy Sdn Bhd (PESB), has entered into a Memorandum of Understanding (MoU) with IR Hariyanto for the proposed acquisition of 61.0% stake in PT Indomuda Satria Internusa. The acquisition would pave the way for PGB to position the company as one of the regional power plant players as PT Indomuda provides construction, coal mining production and trading, power plant development, and offshore and onshore drilling services in the Asia Pacific region. (The Star Online)

• DiGi.Com Bhd’s 2Q2017 net profit fell 14.7% Y.o.Y to RM358.9 mln, mainly due to progressively higher depreciation and additional finance costs. Revenue for the quarter dipped 6.2% Y.o.Y to RM1.56 bln.

• For 1H2017, cumulative net profit declined 10.7% Y.o.Y to RM732.0 mln. Revenue for the period decreased 5.5% Y.o.Y to RM3.13 bln. A second interim single-tier dividend of 4.6 sen per share, payable on 29th September 2017 was declared. (The Edge Daily)

• Zhulian Corporation Bhd’s 2QFY17 net profit jumped 53.5% Y.o.Y to RM12.2 mln, anchored by improved margins and lower expenses. Revenue for the quarter grew 2.8% Y.o.Y to RM48.5 mln.

• For 1HFY17, cumulative net profit soared 78.0% Y.o.Y to RM26.8 mln. Revenue for the period increased 1.9% Y.o.Y to RM96.9 mln. A dividend per share of 1.5 sen was declared, payable on 8th September 2017. (The Edge Daily)

• Star Media Group Bhd is ceasing the business operations of its wholly-owned subsidiary, Li TV Group effective 7th October 2017 to mitigate further losses. Li TV Group consists of Li TV Holdings Ltd (Li TV) and its wholly-owned units Li TV International Ltd, Li TV Asia Pte Ltd and Li TV Asia Sdn Bhd.

• Based on Li TV's latest audited financial statements for 2016, Li TV incurred losses of US$1.6 mln. The cessation is expected to be completed by 4Q2017. (The Edge Daily)

• Felda Global Ventures Holdings Bhd (FGV) has made further changes to its board with the appointment of three new directors. All three currently hold office at the Federal Land Development Authority (Felda). Datuk Abu Bakar Harun and Ab Ghani Mohd Ali have been appointed as Independent and Non Executive Directors, while Datuk Muzzammil Mohd Nor was named as a Non-Independent and Non-Executive Alternate Director. (The Edge Daily)

• Malaysia Pacific Corp Bhd (MPCorp) has entered into a joint venture (JV) agreement with Taiwan-based Chun Fu Development Sdn Bhd to jointly develop 13 pieces of land in Plentong, Johor. Under the agreement, MPCorp shall hold up to 35.0% in the JV company, while the remaining 65.0% will be held by Chun Fu. (The Edge Daily)
   
• WCT Holdings Bhd has reached a preliminary view that subject to formal legal opinion, it has good grounds to defend and oppose three companies' claims for 181.6 mln riyals (RM214.1 mln) over payment for a government project in Doha, Qatar, where it was the main contractor.

• The claimants — Trans Gulf International Electro-Mechanical WLL, Powermech Engineering WLL and Trans Gulf International Electro-Mechanical WLL-Powermech Engineering WLL joint venture — were WCT's subcontractors for mechanical, electrical and plumbingrelated works for the project. (The Edge Daily)

• Eduspec Holdings Bhd has fixed the price for its fifth tranche of share placement at 15.0 sen each. This is 3.5 sen or 18.9% below Eduspec's closing price of 18.5 sen yesterday. The issue price represents a discount of 1.5 sen or 8.9% when compared with the latest five-day weighted average market price of 16.5 sen.

• The new shares to be issued will be the fifth tranche in its private placement exercise to raise funds to develop its education solutions and fund its business expansion in the Philippines. Back in April 2016, Eduspec had proposed to raise between RM23.7 mln and RM35.4 mln by placing out some 126.3 mln shares to third party investors. (The Edge Daily)  

Source: Mplus Research - 13 Jul 2017