• Although the FBM KLCI (-0.2%) retreated last Friday on profit taking activities and subsequently snapping a winning streak five consecutive days, the key index manage to close 0.5% W.o.W higher. The lower liners also ended mostly weaker with the exception of the FBM Small Cap (+0.1%), while the broader market closed mostly lower.

• Market breadth turned negative as decliners outpaced advancers on a ratio of 495-to-335 stocks. Traded volumes, however, gained 3.6% Y.o.Y to 1.64 bln shares on the return of trading participants amid the slight recovery in the lower liners.

• Half of the key index components fell, led by BAT (-22.0 sen), followed by Hap Seng (-14.0 sen), Genting Malaysia (-12.0 sen), Tenaga (-8.0 sen), Hong Leong Financial Group (-8.0 sen) and Genting (-8.0 sen). Consumer products giants like Dutch Lady (-40.0 sen), New Hoong Fatt (-40.0 sen) and Nestle (-24.0 sen) topped the broader market losers list, while Aeon Credit and HCK Capital fell 26.0 sen and 20.0 sen respectively.

• Amongst the biggest advancers on the broader market include United Plantations (+60.0 sen), Ajinomoto (+56.0 sen), Heng Yuan (+54.0 sen) and Petron Malaysia (+35.0 sen). Caring Pharmacy jumped 11.0 sen after reporting a strong set of quarterly earnings. Key winners on the FBM KLCI were Telekom Malaysia (+6.0 sen), CIMB (+5.0 sen), Astro (+4.0 sen), Public Bank (+4.0 sen) and PPB Group (+4.0 sen).

• Asia benchmark indices ended mostly lower as the Nikkei slipped 0.6%, retreating back below the 20,000 psychological level on a selloff in technology shares like Tokyo Electron Ltd (-7.2%) and Advantest Corp (-5.0%) . The Hang Seng Index (-0.6%) was unable to hold above the 27,000 psychological level ahead of the corporate reporting earnings season, but the Shanghai Composite added 0.1%. ASEAN indices, meanwhile, closed mostly lower.

• Wall Street ended mixed on last Friday as the Dow (+0.2%) rose on the economic recovery that saw 2Q2017 GDP rose 2.6% Y.o.Y - recovering from the 1.9% growth in the previous quarter. On the broader market, both the S&P 500 and Nasdaq, however, fell 0.1% each as the former was weighed-down by the sluggish corporate earnings from Amazon, Exxon Mobil and Starbucks.

• European benchmark indices closed at three-month lows – the FTSE (-1.0%), CAC (-1.1%) and DAX (-0.4%) all extended their losses after the Eurozone’s business confidence index in July to 1.05 - below economists’ estimates of 1.12. A string of weaker-than-expected corporate earnings from British American Tobacco, UBS Group and Renault SA also added to the weakness.

The Day Ahead

• The FBM KLCI’s sideway trend is still taking shape amid the lack of sustainable catalysts to entice significant fresh buying from market participants. As it is, there is still little impetus from both the local and overseas markets and the market support has been piecemeal thus far, largely confined to the index heavyweights.

• As such, we see the key index lingering within the 1,760 and 1,770 levels over the near term. The insipid market environment is also likely to see traded volumes remaining on the low side with more market players staying on the sidelines until new leads appear. ? Under the prevailing market environment, we also expect the lower liners and broader market shares to sustain its ongoing mixed trading pattern. Quick profit taking activities among the retail players will result in limited upsides among the lower liners and broader market shares.

Company Briefs

• Sime Darby Bhd has announced several reshuffling in the group’s key position in preparation for its listing of its plantations and property units by yearend. Under the reshuffling arrangement, Chairman Tan Sri Abdul Ghani Othman will assume the same position in Sime Darby Plantation Bhd, while its group Chief Executive Officer (CEO) and President, Tan Sri Mohd Bakke Salleh will take over as the plantation company's Executive Deputy Chairman and Managing Director (MD).

• Meanwhile, Datuk Franki Anthony Dass, the current head of Sime Darby Plantation, will be taking on a new role as the company's Chief Adviser and Value Officer, while Renaka Ramachandran will be its Chief Financial Officer (CFO).

• Permodalan Nasional Bhd group Chairman, Tan Sri Abdul Wahid Omar will be the new Chairman of Sime Darby Property Bhd. Former Media Prima Bhd Group MD, Datuk Seri Amrin Awaluddin has been appointed as the property developer's MD, while Sime Darby's current Group CFO, Datuk Tong Poh Keow will be redesignated as Sime Darby Property's Executive Director and CFO.

• Meanwhile, Sime Darby's deputy Chairman, Tan Sri Dr Wan Abdul Aziz Wan Abdullah will be promoted to the Chairman of the leaner and more focused group itself, while Jeffri Salim Davidson will become its President and Group Chief Executive.

• Lastly, the group has also announced its two wholly-owned subsidiaries, Sime Darby Motors and Sime Darby Industrial will continue to be led by MDs Datuk Lawrence Lee Cheow Hock and Scott William Cameron respectively. (The Star Online)

• Virtual mobile network operator XOX Bhd is collaborating with Indonesian telecommunication services company, PT Inovasi Telematika Nusantara and Pengurus Besar Nahdlatul Ulama (PBNU) to take its Voopee mobile solution to Indonesia.

• The parties inked a Memorandum of Understanding (MoU) to conduct a study, with plans to deploy the Voopee solution under the Nahdlatul Ulama branding to be adopted by PBNU members. The MoU will be valid for six months or until a commercial agreement is entered between the parties. (The Edge Daily)

• Pos Malaysia Bhd is partnering Singapore-based e-commerce logistics and selling platform, Anchanto to strengthen its e-commerce warehousing facilities. Moving forward, Pos Malaysia will utilise Anchanto's warehouse management technology to expand its ability in providing a comprehensive e-fulfilment service. The latter's electronic warehouse management system will be integrated with Pos Malaysia's own processes to form an e-commerce fulfilment system.

• The group is expects the partnership to generate a new business stream in ecommerce fulfilment business and enable Pos Malaysia to provide an endto-end service for its customers including warehousing and last-mile delivery by Pos Laju. Consequently, Pos Malaysia's online sellers will also be able to use Anchanto's SelluSeller, a one-stop platform that enables merchants and enterprises to sell on various e-marketplaces across Asia. (The Edge Daily)

• Tropicana Corp Bhd has launched a new collection of homes named Tropicana Urban Homes which offers more affordable houses to middle-income homebuyers. The group aims to build 10,000 to 15,000 condominium units under the collection in strategic urban areas in the developer's existing and new landbanks over the next five years.

• Tropicana Corp also foresees the new affordable projects to contribute up to RM2.0 bln sales in the next two years. The gross development values (GDVs) for Tropicana Urban Homes in Tropicana Heights and Tropicana Aman are RM423.0 mln and RM1.3 bln, respectively. (The Edge Daily)

• Berjaya Assets Bhd is buying an additional 1.3% (or 14.6 mln shares) equity interest in 7-Eleven Malaysia Holdings Bhd for RM18.0 mln, increasing Berjaya Assets total shareholding in the latter to 4.0% (or 43.9 mln shares). The stake was acquired at an average price of RM1.23 per share in the open market between 8th June 2017 and 26th July 2017. (The Edge Daily)

• Kronologi Asia Bhd’s 2Q2017 net profit more than double to RM4.1 mln, from RM1.7 mln a year ago, in-tandem with revenue which more than tripled to RM48.3 mln, from RM14.8 mln in the same period last year. The group expects growth to continue to be driven by the strong activity in the enterprise data management infrastructure business, although the product mix during the quarter included lower margin products. (The Edge Daily)
   
• EcoFirst Consolidated Bhd's 4QFY17 net profit surged by about 13 times to RM7.8 mln against RM608,000 last corresponding year – led by higher contributions from the development of Upper East at Tiger Lane in Ipoh and Liberty project at Ampang Ukay. Revenue for the quarter was also 49.8% Y.o.Y higher at RM65.5 mln, from RM43.8 mln 4QFY16. (The Star Online)

• Fajarbaru Builder Group Bhd has clinched a RM101.3 mln contract to complete the remaining building works of a commercial development for TYL Land & Development Sdn Bhd. The contract is valid for 27 months and will be recognised in 2018 to 2020.

• The group has also secured another contract worth RM705,000 from Malaysia Aiports (Sepang) Sdn Bhd in respect of the proposed apron line marking, access road connection and associated works at KLIA Air Cargo Terminal 1. The project will commence on 1st August, 2017 and last for 120 days. (The Star Online)

• Focus Dynamics Group Bhd is reviewing its previous proposed renounceable rights issue involving some 1.25 bln new shares with up to 622.7 mln free detachable warrants to include the issuance of Irredeemable Convertible Preference Shares (ICPS) as it will not have an immediate dilution effect on the groups' earnings per share (EPS).

• The proposed renounceable rights issue will include up to 1.25 bln Focus ICPS with up to 207.6 mln free detachable warrants (Warrants D) on the basis of six ICPS together with one free Warrant D for every six existing Focus shares.

• The proceeds from the aforementioned exercise will be used to develop a mixed commercial development which will feature retail and food and beverage lots, event halls, restaurants, a karaoke centre and carparks along Jalan Tun Razak-Royal Selangor Golf Club in Kuala Lumpur. (The Edge Daily)

• Orion IXL Bhd has been informed by its target acquisition ASAP Bhd that a suit has been filed against ASAP by Sporty Beans Sdn Bhd. ASAP entered into a joint-venture (JV) agreement with the Sporty Beans to design, develop, deploy and launch an e-portal for the latter, but ASAP had breached the agreement.

• Subsequently, the plaintiff (Sporty Beans) is claiming for RM45.4 mln for loss of profits as a result of the alleged breach of agreement by ASAP.

• The vendors of ASAP, mainly Datuk Mohamad Sharaff Mohd Shariff, Prabuddha Kumar Pronob Chakravertty and Lilibeth Gamboa Beliario has agreed to fully indemnify Orion IXL against all claims, actions, damages, losses, liabilities, costs and expenses that Orion IXL or ASAP may incur, suffer or be liable for in connection with the case filed by Sporty Beans. (The Edge Daily)  

Source: Mplus Research - 31 Jul 2017