• The FBM KLCI flatlined yesterday, despite lingering mostly in the red amid the lack of fresh trading catalysts. The lower liners advanced, with the exception of the FBM Ace (-0.4%) due to mild profit– taking activities. The broader market also finished positively, although the Industrial, Consumer products and Industrial products sub-sectors declined with shallow losses.

• Market breadth turned positive as advancers outpaced decliners on a ratio of 457-to-385 stocks. Traded volumes rose 5.9% to 2.16 bln shares, lifted by buying-support in the lower liners.

• BAT (-58.0 sen), Hong Leong Bank (-10.0 sen), Genting (-9.0 sen), MISC (-6.0 sen) and Petronas Gas (-4.0 sen) topped the major losers’ list, while other laggards include Heineken Malaysia (-18.0 sen), Panasonic Manufacturing (-14.0 sen) Hartalega (-12.0 sen), Atlan Holdings (- 10.0 sen) and Nestle (-10.0 sen).

• On the flipside, broader market outperformers were United Plantations (+84.0 sen), Ajinomoto (+46.0 sen) Dutch Lady (+30.0 sen) and KESM (+24.0 sen). Meanwhile, Iskandar Waterfront City rose 30.0 sen on speculation of potentially securing the previously terminated Bandar Malaysia contract. Telco giants like Digi (+4.0 sen), Maxis (+4.0 sen) and Telekom Malaysia (+4.0 sen) buoyed the Main Board, followed by CIMB (+5.0 sen) and Astro (+2.0 sen).

• Key regional benchmark indices finished mostly higher as better-than-expected Chinese economic data offset the subdued market sentiment after the U.S. healthcare reform bill was shelved for the second time, due to lack of votes. The Nikkei slipped 0.6%, although losses were capped by gains in energy stocks as crude oil prices strengthened. On the contrary, the Shanghai Composite index gained 0.4%, as commodities-related stocks traded higher amid perceived recovery in China’s economy, while the Hang Seng index notched a 0.2% gain to close slightly below the 26,525.0 psychological levels. ASEAN stockmarkets, meanwhile, finished on a mixed tone yesterday.

• Wall Street finished mostly higher, lifted by gains in technology stocks. The S&P 500 (+0.1%) inched higher, while the Nasdaq (+0.5%) closed at record high following eight consecutive sessions of gains, boosted by Netflix (+13.5%). The Dow, however, lost 0.3% - led by losses in Goldman Sachs (-2.6%) and Home Depot (-1.1%)

• European equities were splashed in red as uncertainties in President Donald Trump’s major reform proposals reverberated through global stockmarkets. The FTSE fell 0.2%, albeit recovering from earlier losses, cushioned by Royal Mail (+3.1%) after the latter’s quarterly sales topped expectations. The DAX was down by 1.3%, dragged down by major automakers amid a strengthening Euro, while the CAC (-1.1%) closed in the red.

The Day Ahead

• The rangebound trend on Bursa Malaysia looks to extend with few changes to the current market environment where there are still few positive leads and the subsequent lack of appetite for the index heavyweights. This is likely to leave the key index on an extended rangebound trend and the FBM KLCI likely to linger between the 1,750 and 1,760 levels over the near term.

• The lower liners, however, is seeing renewed buying interest, albeit the general undertone among the lower liners are still largely mixed. Therefore, the quick profit taking strategy will still be prevalent and this will also limit the near term gains, in our view.

Company Briefs

• Damansara Realty Bhd has given a letter of award to O&C Resources Bhd (OCR) to develop a 1Malaysia Civil Servants Housing (PPA1M) project in Precinct 5, Putrajaya. The contract would include a turnkey construction contract between it and DRJ for the PPA1M portion estimated to be worth RM324.0 mln.

• There will also be a commercial and collaboration agreement between OCR and DRJ for the non-PPA1M, or commercial portion of the project. For the non-PPA1M portion the parties were expected to negotiate and agree that DRJ would be entitled to 20.0% of the profit earned. The cumulative profit for DRJ, however, would not be less than RM10.0 mln.

• OCR will source its own financing for the job will undertake the construction for a period of four years. (The Star Online)

• The government will trade land with Ekovest Bhd in return for rehabilitation works undertaken by the property developer on the first 2.2km of a 10.0 km stretch of the Gombak river under the Kuala Lumpur River City (KLRC) project. Under the deal, Ekovest will get 30.0-ac. of land within the KLRC development.

• With the land swap package, Ekovest can generate over RM9.00 bln in GDV, which is 10.0x the cost of the land given to the group. Ekovest will undertake construction works of the nonmechanical Gombak River Enhancement And Tunnel (GREAT) system for the 2.2km portion, for which it is investing RM950.0 mln in development cost. It expects the project to be completed in two and a half years. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) has reported that the deadline to fulfil conditions for its planned acquisition of a 51.0% stake in Southern Power Generation Sdn Bhd had been extended by another 30 days after the seller requested more time. TNB is buying the Southern Power Generation stake from SIPP Energy Sdn Bhd for RM51.0 mln. It announced the deal on 3rd May 2017. (The Edge Daily)

• IHH Healthcare Bhd's wholly-owned Singapore unit, Parkway Pantai Ltd is on the prowl in India for large hospitals in which it can take a controlling stake. While the search was for large hospitals in big cities, the key factor is for IHH to get a controlling 51.0% stake in the target entity. (The Edge Daily)

• Berjaya Sports Toto Bhd has acquired 5.4 mln shares, representing a 0.5% equity interest in 7-Eleven Malaysia Holdings Bhd for RM7.4 mln at an average price of RM1.37 per share. The shares were acquired in the open market between 4th July 2017 and 14th July 2017 through its 88.3%-owned subsidiary Berjaya Philippines Inc (BPI), which is listed on the Philippine Stock Exchange (PSE). Following the acquisition, BPI now holds a total of 11.3 mln shares representing 1.0% equity interest in 7-Eleven. (The Edge Daily)

• Axiata Group Bhd and other major shareholders of Singapore's M1 Ltd — Keppel Telecommunications & Transportation Ltd and Singapore Press Holdings Ltd, have called off the strategic review to dispose of their stakes in M1 as proposals from interested parties did not meet the minimum criteria. No arrangement or agreement with any third party has been reached in relation to each majority shareholders' respective shareholdings in M1. (The Edge Daily)

• Spring Gallery Bhd has ended a joint venture (JV) with Hasil Senudong Sdn Bhd (HSSB) to undertake a residential development with a gross development value of RM161.2 mln in Perak after both parties failed to strike an agreement before the deadline expired. It inked the JV agreement with HSSB for the proposed project on 18th January 2017, in which HSSB was to contribute a piece of 3.3 ha. land for the development. However, Spring Gallery reported that HSSB failed to obtain the approval to convert the use of the land from recreation to residential. (The Edge Daily)

• Chin Hin Group Bhd has proposed to acquire a 45.0% stake in Atlantic Blue Sdn Bhd, a solar system installer, for RM24.8 mln. The acquisition will enable the group to enhance its involvement in the solar power investment business, diversify its customer base, and further strengthen its income from the solar power business. (The Edge Daily)

• Stone Master Corp Bhd has officially axed its Managing Director, Datuk Koh Mui Tee, together with Executive Director Datuk Lee Hwa Cheng, after the group withdrew its lawsuit against the new board on 18th July 2017. The group also announced its new board line up of seven directors, including a new Chairman.

• Matang Bhd is looking to acquire two contiguous parcels of leasehold agricultural land in Raub, Pahang, which measures a total of 4,219.8 ac. for RM180.0 mln. Matang has issued a Letter of Intent to Raub Mining & Development Company Sdn Bhd and Raub Oil Mill Sdn Bhd setting out its intention to buy the land, which will include the oil palm plantation, buildings, plant, machinery, equipment, and a palm oil mill on the lands, as well as vehicles and stocks of the aforesaid plantation and mill. (The Edge Daily)  

Source: Mplus Research - 19 Jul 2017