• Once again, the FBM KLCI (+0.2%) inched higher as the key index registered its fifth straight day of winning streak after hovering mostly in the positive territory. Gains were spurred by positive developments on Wall Street overnight coupled with the recent rally in crude oil prices. The lower liners also ended higher, but the Plantations (-0.2%) and Properties (-0.01%) sector underperformed the broader market.

• Market breadth turned slightly positive as advancers edged decliners on a ratio of 425-to-410 stocks. Traded volumes improved 21.6% to 1.59 bln shares as trading interest amongst the lower liners lit up.

• Close to half of the key index constituents advanced, led by BAT (+34.0 sen), followed by CIMB (+19.0 sen), Petronas Gas (+6.0 sen), Genting (+5.0 sen) and Hap Seng (+5.0 sen). Notable winners on the broader market were Aeon Credit (+46.0 sen), Heineken Malaysia (+32.0 sen), JHM Consolidated (+20.0 sen) and Muhibbah Engineering (+19.0 sen). Pantech added 2.0 sen after reporting a strong set of quarterly earnings.

• In contrast, Atlan Holdings (-32.0 sen), Dutch Lady (-28.0 sen), Batu Kawan (- 26.0 sen, Far East Holdings (-23.0 sen) and Frasers & Neave (-18.0 sen) topped the broader market decliners. Key losers on the big board include Telekom Malaysia (-10.0 sen), Astro (-5.0 sen), Hong Leong Bank (-4.0 sen), Westports (- 3.0 sen) and Petronas Chemicals (-3.0 sen).

• Asia benchmark indices extended their gains with the Nikkei adding 0.2%, buoyed by the U.S. Federal Reserve’s cautious move over the subsequent interest rate hikes. The Shanghai Composite gained 0.1%, while the Hang Seng Index (+0.7%) closed above the 27,000 psychological level, anchored by the rally in Tencent Holdings (+2.5%) which has a 10% weightage in the Hang Seng’s Index. ASEAN indices, meanwhile, closed mostly higher.

• U.S. stockmarkets ended on a mixed note overnight as the Dow gained 0.4% to close at a fresh all-time high level, aided by the stronger-than-expected corporate earnings from Boeing and Verizon Communications. On the broader market, the S&P 500 fell 0.1% after recouping most of its intraday losses, while the Nasdaq closed 0.6% lower – retreating from its all-time high level.

• European benchmark indices – the FTSE (- 0.1%), CAC (-0.1%) and DAX (-0.8%), all retreated as a barrage of corporate earnings released, coupled with the stronger Euro currency dragged down market sentiment. Notable decliners include Deustche Bank (-6.5%) and Astra Zeneca (-15.4%) after their quarterly results missed analysts’ estimates.

The Day Ahead

• The market will likely to remain supported by the selective buying of institutional shares that has led to more positive technical outlook recently. However, the gains will still be superficial as the broad market sentiments are still insipid with few compelling buys and the corresponding lack of sustained buying.

• Therefore, we see limited upsides amid the still cautious market environment with the immediate resistance placed at the 1,776 level, while the 1,766 level is near term support.

• The lower liners and broader market shares will also continue to see a mostly mixed trading environment as many retail players are still resorting to quick profit taking strategies to ensure that they remain on the profitable side.

Company Briefs

• Tenaga Nasional Bhd’s (TNB) 3QFY17 net profit declined 15.0% Y.o.Y to RM1.96 bln, from RM2.31 bln in the previous corresponding year, dragged down by higher deferred tax expense. Revenue for the quarter, however, inched higher by 3.5% Y.o.Y to RM12.55 bln, from RM12.13 bln in 3QFY16.

• Going forward, TNB foresee unit electricity demand to grow in line with the projected gross domestic product (GDP) growth for the year, at about 4.8%. (The Star Online)

• Bertam Alliance Bhd’s unit, Bertam Development Sdn Bhd (BDSB) has been slapped with a statutory notice demanding for payment totalling RM4.6 mln from R&C Cergas Teguh.

• Bertam Alliance has announced that it will defend the proceedings and will contest any winding-up proceedings that may follow. (The Edge Daily)

• Caring Pharmacy Group Bhd's 4QFY17 net profit jumped by 59.2% Y.o.Y to RM4.4 mln against RM2.7 mln last year, lifted by higher sales generated from existing outlets. Revenue also strengthened by 10.3% Y.o.Y to RM119.5 mln, from RM108.3 mln previously.

• The group has 107 community pharmacies as at 31st May 2017, after opening four new complex outlets and closing down one high street outlet and one specialty retail outlet in the quarter under review. Caring has proposed a final dividend of 3.0 sen per share. (The Edge Daily)
   
• Tasek Corp Bhd’s 2Q2017 net profit plummeted by 91.7% Y.o.Y to RM1.5 mln, from RM18.0 mln in the same quarter last year – due to lower net revenue for its cement segment, while group revenue dropped 22.3% Y.o.Y to RM135.0 mln, from RM173.7 mln.

• Despite the weaker earnings, the group proposed an interim dividend of 20.0 sen per share, payable on 8th September 2017. (The Edge Daily)

• Pavilion Real Estate Investment Trust (Pavilion REIT), which signed an agreement to buy Pavilion Elite Mall for RM580.0 mln from Urusharta (KL) Sdn Bhd, is proposing a private placement to raise RM370.6 mln to help finance the purchase.

• Urusharta’s ultimate shareholders are Tan Sri Lim Siew Choon and Qatar Holdings LLC — both key stakeholders in Pavilion REIT. The placement exercise entails issuing 218.0 mln (or 7.2% of Pavilion REIT’s current outstanding shares totalling nearly 3.03 bln) new units via a book-building exercise.

• The shares will be issued to third party investors at an indicative price of RM1.70 apiece. Subsequently, the trust will also borrow RM225.9 mln to fund the balance consideration.

• Separately, Pavilion REIT’s 2Q2017 net property income fell 5.8% Y.o.Y to RM76.7 mln, from RM81.4 mln, marking its first quarterly decline since 3Q2015. Similarly, distribution per unit (DPU) was lower at 1.94 sen apiecetranslating into a yield of 4.5%, from 2.06 sen in 2Q2O16. This brings its 1HFY17 distribution to 3.96 sen, payable on 6th September, 2017.

• Meanwhile, revenue for the quarter rose marginally by 1.9% Y.o.Y to RM120.3 mln vs RM118.0 mln previously, attributed to higher percentage rent, albeit slightly offset by a RM7.0 mln increase in operating expenses for maintenance purposes. (The Star Online)

• Ancom Bhd posted a 4QFY17 net profit of RM3.9 mln, from a net loss of RM5.2 mln last corresponding period, buoyed by stronger revenue contribution from its agricultural and industrial chemicals sector and media segment. Meanwhile, quarter revenue expanded 28.2% Y.o.Y at RM477.5 mln, compared with RM372.4 mln previously. (The Edge Daily)

• Zecon Bhd is planning a private placement that will raise about RM6.5 mln as interim funding for the group's working capital pending the completion of a proposed rights issue of redeemable convertible unsecured loan stocks (RCULS).

• The RCULS would help the group raise minimum proceeds of RM24.9 mln for its working capital requirements and is expected to be completed in the 4Q2017. (The Edge Daily)

• Homeritz Corp Bhd's 3QFY17 net profit climbed 20.7% Y.o.Y to RM7.8 mln, from RM6.5 mln a year ago, alongside higher revenue, which grew 10.2% Y.o.Y to RM44.6 mln, from RM40.5 mln.

• Consequently, Homeriz has proposed a second interim single tier tax-exempt dividend of 5.0%, equivalent to one sen per share, payable by 29th September, 2017. (The Edge Daily)  

Source: Mplus Research - 28 Jul 2017