• The FBM KLCI closed with marginal changes on Monday amid bargain hunting activities in major telco counters. The lower liners – the FBM Small Cap (+0.4%) and the FBM Ace (+0.3%) advanced, although the FBM Fledgling narrowed 0.1%. The broader market, meanwhile, finished mostly in the positive territory, with seven-of-ten sub-sectors in the green.

• Market breadth was slanted towards the negative side as losers edged winners on a ratio of 441-to-417 stocks. Traded volumes declined 14.0% to 2.04 bln shares as investors stayed on the sidelines ahead of quarterly corporate earnings announcement from major U.S. companies.

• Key-index chart-toppers include telco heavyweights like Digi (+7.0 sen) and Axiata (+4.0 sen), followed by BAT (+64.0 sen), PPB (+18.0 sen) and Hong Leong Bank (+4.0 sen). Meanwhile, other advancers on Monday were Ajinomoto (+86.0 sen), Petron Malaysia (+35.0 sen), Malaysia Airports (+20.0 sen), Apollo Food (+20.0 sen) and Prestariang (+18.0 sen).

• Significant broader market decliners include HCK Capital (-17.0 sen), NPC Resources (-14.0 sen), BIMB (-12.0 sen), Hartalega (-11.0 sen) and Bursa Malaysia (-10.0 sen). Meanwhile, KLCC (-8.0 sen), CIMB (-6.0 sen), IHH Healthcare (-6.0 sen), Astro (-3.0 sen) and Hong Leong Financial Group (-2.0 sen) weighed on the blue-chip gauge.

• Chinese stockmarkets started the week on a soft footing, dragged down by worries of tougher financial regulations amid more upcoming initial public offerings. The Shanghai Composite index lost 1.4%, on the back of losses in technology stocks, albeit slightly offset by better-than-expected GDP figures. The Hang Seng index grew 0.3% ahead of corporate quarterly earnings, while the Nikkei is closed for the Marine Day holiday. ASEAN stockmarkets finished broadly in the green on Monday.

• U.S. equities finished flattish amid thin trading as gains in consumer and utilities counters offset losses in healthcarerelated stocks. The Dow (-0.04%) inched into the red as investors digested fresh quarterly corporate results. The S&P 500 flatlined, while the Nasdaq (+0.03%) closed a shade above the breakeven point, supported by gains in Netflix.

• Earlier, European benchmark indices slipped into the negative territory ahead of the second round of formal Brexit discussions in Brussels. The FTSE (+0.4%) advanced, lifted by metal-related stocks like Antofagasta (+2.3%), following better-than-expected GDP growth from China. The DAX (-0.4%) and the CAC (-0.1%), however, declined ahead of quarterly results announcements from banking heavyweights.

The Day Ahead

• There is no change to our near term view that market sentiments on Bursa Malaysia are still insipid with the lack of fresh positive catalysts. Hence, we continue to think that Malaysian stocks are likely to remain mostly rangebound, lingering within the 1,750 and 1,760 levels over the near term.

• Market interest has been on the thin side on both the lower liners and index heavyweights and this trend is set to prolong amid as stock valuations remain stretched, awaiting for earnings to play catch up. Therefore, the upcoming results reporting season will be keenly watched to gauge their growth going forward.

COMPANY BRIEFS

• Pentamaster Corp Bhd, which seeks to list its automated solution business in Hong Kong held under holding company Pentamaster International Ltd (PIL), is selling a 7.4% stake in PIL to GEMS Opportunities Ltd Partnership for RM25.5 mln. Pentamaster will stand to gain RM19.1 mln from selling the equity interest in newly-incorporated PIL to GEMS, a Singapore-based private equity fund.

• Besides for raising funds, the proposed disposal of PIL shares to GEMS would broaden PIL’s shareholder base by exposing it to international institutional investors. GEMS’ positioning as strategic investor of PIL, coupled with fund manager GEMS Capital Pte Ltd’s extensive investment experience and network, would add value to the proposed listing. On the utilisation of the RM25.5 mln proceeds, RM15.0 mln would go towards paying the listing expenses, while RM7.5 mln would be for repaying bank borrowings. (The Star Online)

• DRB-Hicom Bhd has launched a RM230.0 mln high-tech paint shop in Pekan, Pahang. This was part of the company’s effort to strengthen its foothold as one of the preferred automotive assemblers in the region. The newly-launched facility would allow it to double its production capacity to 50,000 units annually. The paint shop can operate round the clock due to its cutting-edge technology that requires little human intervention. (The Star Online)

• IJM Corp Bhd has clinched a RM450.9 mln contract to design and construct the planned UOB Tower 2 office building along Jalan Raja Laut, Kuala Lumpur. The project includes five levels of basement car park, one level of lower ground floor, two levels of podium for a banking hall and 27 levels of office space, including a green lounge reception, a sky lounge and mechanical floors. The completion period of the project is 40 months. (The Edge Daily)

• Ikhmas Jaya Group Bhd plans to raise some RM33.8 mln via private placement to be used as general working capital, including payment to suppliers and subcontractors. The private placement will involve the issuance of up to 52.0 mln new shares that is equivalent to 10.0% of its share capital to identified investors at an issue price to be fixed later. (The Edge Daily)

• Ibraco Bhd has bagged a RM302.6 mln contract for the construction of the new airport in Mukah, Sarawak, from the Sarawak Public Works Department. The contract relates to final formation, airfield pavement, access road, landside infrastructure and building works. (The Edge Daily)

• Green Packet Bhd has announced the proposed acquisition of a 100.0% stake in Mobiduu Solutions Sdn Bhd for RM4.0 mln. The purchase would facilitate and enhance its growth potential and business efficiency and would also allow the group to expand its existing technology platform, solutions and services to its customers, thus enabling it to provide an end-toend solution for its services. (The Edge Daily)

• ML Global Bhd is partnering Sany Construction Industry Development (M) Sdn Bhd, a subsidiary of China's Sany Group Co Ltd, to set up a precast concrete panel manufacturing plant in Nilai, Negeri Sembilan, which will cost up to RM40.0 mln in initial investment. The two parties had signed a Memorandum of Understanding for the joint venture in which ML Global will hold a 51.0% stake, while Sany Construction will hold the remaining 49.0%. The partnership comes ahead of the Construction Industry Development Board (CIDB)'s aim to enforce 50.0% industrial building system (IBS) usage in the private sector and 70.0% for the public sector by 2018, as outlined in the Construction Industry Transformation Programme (CITP). (The Edge Daily)

• Stone Master Corp Bhd has withdrawn its lawsuit against its new board of directors and shareholders after the Kuala Lumpur High Court set aside an ex-parte injunction to the group’s extraordinary general meeting (EGM) on 14th June 2017. Stone Master filed a notice of discontinuance on 13th July 2017 for the withdrawal of the legal. (The Edge Daily)

• I-Bhd's 2Q2017 net profit rose 33.7% Y.o.Y to RM19.63 mln, driven mainly by higher contribution from the property development segment. Revenue for the quarter rose 47.5% Y.o.Y to RM127.8 mln from RM86.7 mln. For 1H2017, cumulative net profit gained 27.2% Y.o.Y to RM38.2 mln. Revenue for the period added 38.0% Y.o.Y to RM230.7 mln. (The Edge Daily)

• Yong Tai Bhd is set to launch its latest project, a condominium-hotel (condotel) called The Dawn at Impression City in Kota Laksamana, Melaka. The Dawn @ Impression City will be built on a five-ac. site comprising one 28-storey block and one 29-storey block. It is the first series of hotels in the 138-ac. Impression City. (The Edge Daily)

• PRG Holdings Bhd has entered into a strategic cooperation agreement with China's Jiangsu Provincial Construction Group Co Ltd (JPC) to jointly undertake infrastructure, property, and construction activities in Malaysia and internationally. To date, PRG said JPC has completed more than 10,000 construction projects, with an estimated 100.0 mln sq.m. of construction and 10.0 mln sq.m. of real estate development. (The Edge Daily)  

Source: Mplus Research - 18 Jul 2017