• Tracking the positive developments on Wall Street overnight, the FBM KLCI (+0.3%) extended its gains yesterday after lingering in the positive territory for the entire trading session. The lower liners also ended mostly higher with the FBM Small Cap and FBM Fledgling chalking up 0.03% and 0.1% gains respectively, while the broader market only saw the Properties (-0.4%) and Plantation (-0.1%) sectors underperformed its peers.

• Market breadth, however, remained negative as decliners edged advancers on a ratio of 446-to-384 stocks. Traded volumes declined marginally by 1.0% to 1.80 bln shares as investors continue to search for fresh local catalysts.

• BAT (+38.0 sen) topped the big board advancers list followed by MISC (+24.0 sen), KLK (+12.0 sen), PPB Group (+12.0 sen) and Genting (+9.00 sen). Notable gainers on the broader market include Heng Yuan (+40.0 sen), Bursa Malaysia (+20.0 sen), Kossan (+20.0 sen), Petron Malaysia (+20.0 sen) and Southern Acids (+17.0 sen).

• Perusahaan Sadur Timah (-25.0 sen) remained as the biggest decliner on the broader market for the second consecutive day, while other notable losers include Aeon Credit (-22.0 sen), Hong Leong Industries (-22.0 sen), United Uli-Corporation (-21.0 sen) and Allianz (- 14.0 sen). Key losers on the FBM KLCI were Hap Seng (-6.0 sen), Petronas Dagangan (-4.0 sen), Genting Malaysia (- 4.0 sen), IOI Corporation (2.0 sen) and Hong Leong Bank (-2.0 sen).

• Asia benchmark indices ended mostly higher yesterday as the Nikkei climbed 0.5% to close above the 20,000 psychological level, lifted by a string of better-than-expected earnings. The Hang Seng Index added 0.2% on gains in industrial and property shares, but the Shanghai Composite (+0.6%) snapped its streak of five winning days. ASEAN indices, meanwhile, closed mostly higher.

• Wall Street advanced overnight with the Dow (+0.2%) hitting another milestone to close above the 22,000 psychological level, propelled by Apple Inc (+4.7%) after it reported stronger-than-expected corporate earnings. On the broader market, the S&P 500 added 0.1% after recouping all its intraday losses on gains in technology and utilities sectors that rose 0.5% each, but the Nasdaq closed flat.

• Following the second consecutive month of moderating growth in Eurozone’s PPI data (+2.5% Y.o.Y) for June 2017, European benchmark indices - the FTSE (- 0.2%), CAC (-0.4%) and DAX (-0.6%), all ended in the negative territory. The negative market sentiment also stemmed by the advance of the Euro currency against the U.S. Dollar.

The Day Ahead

• We continue to think the key index will make further near term headway, running in tandem with the gains on Wall Street overnight. At the same time, we also think the gains will remain selective with institutions providing the lift, while the broader market and lower liners could continue to remain rangebound amid the lack of following from retail players.

• As it is, there remain few noteworthy leads for retail players to chase and this is deterring more market players from reentering the market. Consequently, we expect traded volumes to stay on the moderate-to-low side for longer.

• For now, we see the key index making small strides towards the 1,772-1,776 levels, before making a pass at the critical 1,780. On the downside, the 1,770 level is the present support, followed by 1,767 level.

Company Briefs

• Prestariang Bhd has secured a RM10.0 mln contract extension for the distribution and management of Microsoft software licences to public higher education institutions in Malaysia from the Higher Education Ministry. The group has received a letter of award dated 17th July 2017 for one year duration, starting 3th July 2017 until 2th July 2018. (The Star Online)

• Power Root Bhd is has decided to acquire a 6.0% equity stake in Power Root ME FZCO (PRMF) for 7.9 mln United Arab Emirates (UAE) dirham (RM9.2 mln). This follows the share sale agreement inked with Chay Hock Chang to buy three shares in PRMF, Power Root’s total equity interest in PRMF will increase from 91.0% to 97.0%, allowing Power Root to consolidate the earnings attributable to the sale shares.

• The selling price of the shares were pegged to a PER of about 9.5x – calculated based on PRMF’s net profit of 834,881 dirham (RM968,000) in FY17. (The Edge Daily)

• mTouche Technology Bhd is partnering Thai software, platform and artificial intelligence (AI) technology development company, Octa Gravity Co Ltd to enhance its digital media offering in Southeast Asia. Both parties have signed a master collaboration partnership agreement to jointly develop and market the digital media and infotainment platform, enhanced with the OCTABrain technology.

• Under the agreement, mTouche also secured the exclusive rights to market and commercialise the newly-developed platform for markets in the Southeast Asian region and Hong Kong.

• The OCTABrain AI engine can be integrated to any social network and online advertising network, adding human thinking to the platform with the ability of in-deep users behaviour analysis, finding consumer insight, stimulate consumer demand and choosing the right AdNetwork for effective marketing campaigns. (The Edge Daily)

• Bina Darulaman Bhd's 2Q2017 net profit plunged 83.4% Y.o.Y to RM433,000 against RM2.6 mln in the same period last year, dragged down by lower profit contribution from its property development and construction businesses, despite a 14.7% Y.o.Y growth in revenue to RM79.0 mln, from RM68.8 mln in 2Q2016.

• Cumulative 1H2017 net profit also plummeted by 85.5% Y.o.Y to RM716,000, from RM4.9 mln a year ago, on lower property sales, although revenue gained 23.7% Y.o.Y to RM142.8 mln from RM115.5 mln last year – due to the early commencement of the state road maintenance project, coupled with external construction jobs. (The Edge Daily)

• IGB Real Estate Investment Trust's (IGB REIT) net property income (NPI) in 2Q2017 rose marginally by 1.6% Y.o.Y to RM88.0 mln, from RM86.6 mln in the previous corresponding period, mainly due to higher rental contributions. The distributable income stood at RM76.8 mln (or 2.2 sen per unit), consisting of realised profit of RM67.7 mln and the non-cash adjustment arising mainly from manager fee payable in units of RM8.2 mln.
   
• Quarterly revenue, meanwhile, was 2.2% Y.o.Y higher at RM127.3 mln, from RM124.6 mln a year earlier.

• The REIT has declared a distribution per unit of 4.38 sen, including 4.3 sen taxable and 0.08 sen non-taxable for the 1H2017.

• For 1H2017, IGB REIT recorded a 2.1% Y.o.Y increase in NPI at RM184.1 mln from RM180.3 mln a year ago, while distributable income for the period totaled RM161.7 mln (or 4.61 sen per unit), consisting of realised profit of RM143.1 mln and non-cash adjustment from manager free payable in units of RM16.8 mln. Similarly, revenue also grew 2.0% Y.o.Y to RM261.0 mln, compared to RM255.8 mln in 1H2016. (The Edge Daily)

• Glomac Bhd is planning to undertake a bonus issue on the basis of one bonus share-for-every 10 Glomac shares, which will involve issuing up to 74.8 mln shares to shareholders on a date to be fixed later.

• Upon completion of the exercise, Glomac’s share capital could increase up to RM419.8 mln (or 822.99 mln shares). The group’s issued share capital stood at RM363.9 mln (or 727.8 mln shares, including 4.9 mln held as treasury shares) as at 21st July, 2017. (The Star Online)

• Censof Holdings Bhd has secured a government contract worth about RM6.0 mln from the Inland Revenue Board of Malaysia for software application development. The project is for a three-year period, starting from 1st August 2017 till 31st July 2020. (The Edge Daily)

• Puncak Niaga Holdings Bhd announced that its 100.0%-owned unit, Puncak Niaga Construction Sdn Bhd (PNCSB) is facing a notice of adjudication for an alleged payment of RM25.4 mln to its former sub-contractor, Genbina Sdn Bhd.

• The notice is in relation to disputes arising from the alleged payment claim for a design and build contract relating to the construction of sewerage piping in Bunus, Kuala Lumpur (D44 Project).

• The group also said that the aforementioned payment amount excludes interests, costs and any other relief by Genbina against PNCSB in relation to the payment claim. (The Edge Daily)

• Chemical Company of Malaysia Bhd (CCM) is planning to distribute its 73.4% equity stake in CCM Duopharma Biotech Bhd to its shareholders, as well as a placement of 10.0% of its current share capital to investors by way of bookbuilding to raise approximately RM67.0 mln, at an indicative price of RM1.49 per share to be finalised later.

• Further, the group has also proposed to dispose three parcels of lands in Shah Alam to GBA Corp Sdn Bhd (GBA) for RM190.0 mln cash. Its original cost of investment for the three plots was RM23.3 mln. (The Edge Daily  

Source: Mplus Research - 3 Aug 2017