• The FBM KLCI (+0.3%) started off the month on a firm footing, recovering most of previous session losses as gains were underpinned by the stronger Ringgit against the Greenback, coupled with the rising crude oil price. The lower liners, however, ended mostly lower as the FBM Small Cap and FBM Fledgling shed 0.3% and 0.6% respectively, while the Finance (+0.5%), Properties (+0.03%) and Trading/Services (+0.01%) outperformed the negative broader market.

• Market breadth remained negative as decliners outpaced advancers on a ratio of 542-to-297 stocks. Traded volumes fell 5.9% to 1.82 bln shares amid the negative broader market sentiments.

• Banking heavyweights like Public Bank (+32.0 sen), Maybank (+11.0 sen) and AmBank (+5.0 sen) topped the key index advancers list, while BAT and Genting Malaysia added 42.0 sen and 10.0 sen respectively. Amongst the biggest winners on the broader market were United Plantations (+40.0 sen), Aeon Credit (+34.0 sen), Dutch Lady (+32.0 sen), Atlan Holdings (+28.0 sen) and Far East Holdings (+28.0 sen).

• Perusahaan Sadur Timah (-RM1.35) slumped after reporting a weak set of quarter earnings, while Heng Yuan (-46.0 sen), Lotte Chemical Titan (-42.0 sen), MPI (-30.0 sen) and HCK Capital (-24.0 sen) were amongst the biggest decliners on the broader market. Plantation giants like KLK (-20.0 sen), PPB Group (-8.0 sen) and Sime Darby (-7.0 sen) led the FBM KLCI losers list, while Genting and IJM fell 6.0 sen and 4.0 sen respectively.

• Asia benchmark indices advanced as the Nikkei gained 0.3%, anchored by strong corporate earnings from Nitto Denko and Mitsui Sumitomo Financial Group. The Shanghai Composite (+0.6%) recorded its fifth straight day of winning streak, while Hang Seng Index (+0.8%) was powered by gains in insurance and banking shares. ASEAN indices, meanwhile, closed mostly higher.

• U.S. stockmarkets rallied to close at fresh all-time high levels as the Dow gained 0.3%, supported by the strong market manufacturing PMI data in July that rose to its highest level in four months, coupled with stronger-than-expected corporate earnings. On the broader market, the S&P 500 and Nasdaq added 0.2% each.

• Earlier, European benchmark indices – the FTSE (+0.7%), CAC (+0.7%) and DAX (+1.1%), all ended in a positive note amid the upbeat Eurozone’s 2Q2017 GDP data that grew 0.6% Q.o.Q (+0.5% Q.o.Q growth in 1Q2017). Rolls Royce Holdings surged 10.3% after its net profit in 1H2017 swung to £1.6 bln.

The Day Ahead

• Although the key index managed to regain most of its losses from the day before, the general market environment remains insipid as the support was selective and concentrated mainly on the index heavyweights. Conditions in the broader market are still less-than-stellar with many investors continuing to stay on the sidelines as a result.

• Still, we see the key index sustaining its near term uptrend in tandem with the strong gains in overseas bourses overnight with the resistance at 1,770 level coming into play, followed by the 1,780 level.

• Despite the continuing uptrend, we think that the market interest will remain on the thin side with traded volumes in the lowerthan-average range as we expect retail players to stay on the sidelines with the lack of catalysts.

Company Briefs

• Media Prima Bhd and Hong Leong Industries Bhd have announced that their associated company, Malaysian Newsprint Industries Sdn Bhd (MNI), has begun creditors' voluntary winding up proceedings citing difficult market conditions, which led to losses for the past three years.

• MNI, which is principally involved in the manufacture and sale of newsprint, is an indirect associate of Media Prima via its 98.2%-owned The New Straits Times Press (M) Bhd (NSTP), which in turn holds 21.4% direct equity interest in MNI.

• Meanwhile, Hong Leong Industries and Norwegian company, Norse Skog Papers (M) Sdn Bhd each has a 33.7% shareholding in MNI, while another investor, Rimbunan Hijau Group holds an 11.3% equity stake. (The Star Online)

• Sunway Bhd has acquired two freehold plots of land - a 14.8 ac. freehold land in USJ 1, Subang Jaya, for RM167.6 mln and a 5.3 ac. land in Kajang for RM63.0 mln. The former was acquired from Jaks Resources Bhd and will be used for warehousing and storage facilities for its trading manufacturing businesses upon acquisition, but could subsequently be redevelop into a proposed mixed development with a gross development value (GDV) of approximately RM1.4 bln in the next five years.

• Meanwhile, the Kajang land - bought from Concept Housing Development (M) Sdn Bhd comes together with semi-completed structures of a previously approved development whose construction had been discontinued. The group has proposed to continue building on the semi-completed structures but will replace the development with a proposed mixed-development comprising a retail podium or commercial lots and serviced apartments or Small Office Home Office (SOHO) with an estimated GDV of RM460.0 mln in the next five years.

• Both land acquisitions follow Sunway's earlier purchase of a parcel of freehold land measuring 4.5 ac. in Jalan Belfield, Kuala Lumpur, less than a month ago and the acquisition of 8.5 ac. in Jalan Peel in February.

• Cumulatively, in the last six months, the developer has acquired four plots of strategic land for development into a potential GDV of RM5.0 bln. (The Star Online)

• Tatt Giap Group Bhd is selling 41.0% of its 51.0% equity stake in Tatt Giap Steel Centre Sdn Bhd (TGSC) to Japanese steel player, Hanwa Co Ltd for RM12.3 mln. Following the acquisition, Hanwa will hold a total of 56.0% (from 15.0%) shareholding in TGSC. (The Edge Daily)

• Paramount Corp Bhd is planning to dispose of its private and international schools sites, Sekolah Sri KDU and Sri KDU International School, to newlyformed Alpha Real Estate Investment Trust (REIT) for RM165.0 mln, in-line with its asset light strategy and plans to monetise its real estate assets through a sale-and-leaseback transaction.

• Subsequently, Paramount and Sri KDU Sdn Bhd entered into a master agreement and triple net lease with Alpha REIT to sell the properties in Pekan Baru, Sungai Buloh in Selangor

• The proceeds from the proposed sale will be used to pare down Paramount’s debts (RM113.0 mln), reward shareholders (RM31.8 mln) and working capital needs (RM19.7 mln). The sale is expected to be completed in the 4Q 2017.

• Meanwhile, Paramount's sale-leaseback with Alpha REIT marks the start of the first education REIT in the country.

• Separately, Alpha REIT Chairman Datuk Stewart LaBrooy expects a second acquisition of an international school worth about RM140.0 mln in a month. (The Edge Daily)

• Sime Darby Bhd is selling its 40.0% stake in Seriemas Development Sdn Bhd to Permodalan Nasional Bhd (PNB) for RM625.0 mln cash to monetise the group's real estate assets. The proceeds will be used to reduce Sime Darby’s borrowings.

• Following the acquisition, PNB will hold 100.0% (from 60.0%) shareholding in Seriemas, including vacant tracts besides malls and hotels. Sime Darby’s original cost of investment in Seriemas was RM449.0 mln. (The Star Online)

• Wah Seong Corp Bhd has secured a RM103.6 mln contract from Siemens SAS to provide engineering, design, supply and fabrication services for a project in Kazakhstan. The contract includes the design and building of up of three substations, including heating, ventilation and air conditioning for the project. (The Edge Daily)

• Kerjaya Prospek Group Bhd‘s 70.0%- owned subsidiary, Future Rock Sdn Bhd has been awarded a sub-construction job in Penang, from China Communications Construction Company (M) Sdn Bhd worth RM46.0 mln.

• Future Rock will be undertaking a "perimeter bund" job for Phase 2B of the Seri Tanjung Pinang Phase 2 Project for 10 months, starting from 27th July 2017. (The Edge Daily)  

Source: Mplus Research - 2 Aug 2017