• The FBM KLCI (+0.1%) bucked the negative performance across its regional peers to record its third consecutive day of winning streak yesterday after enduring a choppy trading session, underpinned by gains in telco heavyweights. The lower liners, however, ended mostly lower as the FBM Small Cap and FBM Fledgling fell 0.1% and 0.3% respectively, while the broader market ended on a mixed note.

• Market breadth, however, stayed negative as decliners outnumbered advancers on a ratio of 346-to-449 stocks. Traded volumes fell 2.7% to 1.75 bln shares amid the negative broader market sentiment.

• Amongst the biggest gainers on the FBM KLCI were Petronas Dagangan (+28.0 sen), Axiata (+11.0 sen), KLK (+10.0 sen), BAT (+8.0 sen) and Hap Seng (+5.0 sen). Significant advancers on the broader market were Petron Malaysia (+44.0 sen), Rev Asia (+21.5 sen), UMS Holdings (+19.0 sen), Iskandar Waterfront City (+12.0 sen) and Focus Lumber (+10.0 sen).

• In contrast, amongst the biggest losers on the broader market were Ajinomoto (- 54.0 sen), KESM Industries (-18.0 sen), Enra Group (-14.0 sen) and Tasek Corporation (-14.0 sen). CCM slumped 12.0 sen after unveiling its plan to unwind its’ 73.4% equity stake in CCM Duopharma Biotech. Meanwhile, MISC (- 23.0 sen), Hong Leong Financial Group (- 18.0 sen), Petronas Gas (-14.0 sen), Public Bank (-4.0 sen) and KLCC (-3.0 sen) were the biggest decliners on the big board.

• Asia benchmark indices ended lower yesterday as the Nikkei fell 0.3% after the Services PMI data in July 2017 fell to 52 – the lowest since February 2017. The Hang Seng Index declined 0.3%, while the Shanghai Composite closed 0.4% lower after the Caixin Services PMI in July 2017 fell to 51.5, below economists’ expectation of 51.9. ASEAN indices, meanwhile, closed mostly lower.

• U.S. stockmarkets ended on a mixed note as the Dow (+0.04%) crept marginally higher ahead of the unemployment rate data. On the broader market, the S&P 500 fell 0.2%, dragged down by the energy sector (-1.3%) after crude oil prices retreated, while the Nasdaq declined 0.4%.

• Earlier, European benchmark indices ended mostly higher as the FTSE and CAC added 0.9% and 0.5% respectively as the former was driven by strong corporate earnings from Next (+9.7%) and Cobham (+8.4%). The DAX, however, fell 0.2% after the Euro currency strengthened against the Greenback.

The Day Ahead

• After the streak of recent gains, the upsides are looking increasingly difficult to come by, judging by the mixed market conditions yesterday that we expect to persist over the near term. As it is, the recent upsides have been largely superficial and was on the back of selective plays in the absence of significant leads as well as on low market participation. The lower liners and broader market shares, in particular, has seen significantly reduced following and this trend is expected to persist.

• Under the prevailing environment, we see the key index making few headway again due to the low market participation and we see the sideway trend persisting for longer. The key index is expected to linger within a tight range of between the 1,770 and 1,776 levels over the near term, while the broader market is likely to continue drifting.

Company Briefs

• Handal Resources Bhd has secured a three-year contract to service ExxonMobil Exploration and Production Malaysia Inc's (EMEPMI) offshore cranes.

• The contract includes the provision of onshore overhaul, major repair and refurbishment services for offshore cranes to EMEPMI and will be in effect for three years until 26th July 2020, with an option for a one-year extension. (The Edge Daily)

• Sunway Bhd is planning to sell its Sunway Clio property to Sunway Real Estate Investment Trust (Sunway REIT) for RM340.0 mln, in a bid to eliminate any conflict of interest with regards to the property.

• The property houses the Sunway Clio Hotel, a three-storey retail space and a multi-storey carpark and is located near to Sunway Resort Hotel & Spa and Sunway Pyramid Hotel, which are owned by Sunway REIT. Currently, the Sunway Clio Hotel is leased to Sunway Resort Hotel Sdn Bhd (SRH), which is also the lessee of Sunway Resort Hotel & Spa and Sunway Pyramid Hotel.

• Sunway REIT is planning to fund the proposed acquisition via its existing debt programme, while Sunway Bhd plans to use the proceeds to repay its existing borrowings and for working capital.

• Subsequently, Sunway Clio Hotel will be leased to SRH for an initial term of 10 years, with an option of renewal by SRH for another 10 years.

• Furthermore, Sunway REIT has also entered into a conditional carpark tenancy agreement with Sunway Leisure Sdn Bhd, which is also wholly-owned by Sunway Bhd, for a period of three years commencing from the date of completion of the acquisition, with the option of renewal of a further three years.

• Pursuant to the exercise, Sunway City Sdn Bhd (SunCity), which is the holding company of Sunway REIT and Sunway Leisure, will be providing Sunway REIT a guaranteed net property income (NPI) of RM20.2 mln per annum for a period of four years. (The Star Online)

• Fraser & Neave Holdings Bhd’s (F&N) 3QFY17 net profit slipped by 25.8% Y.o.Y to RM69.4 mln, from RM93.6 mln in the previous corresponding period due to weak consumer sentiment and higher input costs in Malaysia, while revenue declined by 6.1% Y.o.Y to RM1.04 bln against RM1.11 bln last year.

• Cumulative 9MFY17 net profit meanwhile, fell 9.5% Y.o.Y to RM303.7 mln, from RM335.8 mln in 9MFY16, alongside revenue which saw a 2.1% Y.o.Y drop at RM3.13 bln from RM3.19 bln a year earlier. (The Star Online)

• Spring Gallery Bhd has proposed to acquire developer Klasik Ikhtiar Sdn Bhd for RM3.5 mln cash, in order to tap into the Perumahan Penjawat Awam 1 Malaysia (PPA1M) project in Sentul. The group has signed a share sale agreement with Annathan Sinivesan and Nurul Shahiza Muhammad Adib for a 100.0% stake in Klasik Ikhtiar.

• To recap, the loss-making developer clinched a contract for the PPA1M project from the Government on 8th Februar, 2017. The project has a total Gross Development Value (GDV) of RM144.5 mln with a gross development cost of RM126.9 mln. It was reported that Klasik Ikhtiar posted a net loss of RM15.8 mln in 2016, on the back of a net asset of RM57.9 mln ? The deal is expected to be completed by September 2017 and will be funded either via internally generated funds or proceeds received from the conversion of its Irredeemable Cconvertible Preference Shares, or both.

• To date, Spring Gallery has seen two residential developments, mainly a contract in Johor worth RM176.0 mln, and another joint-venture (JV) in Perak terminated in July this year. The group had, on 27th July 2017 signed another RM100.2 mln deal to gain the rights to carry out and complete a concept masterplan for a development in Melaka. (The Edge Daily)

• Versatile Creative Bhd is collaborating with Iris World Marketing Sdn Bhd (IWMSB) to explore the possibility of developing concept stores throughout Malaysia for a mobile payment platform.

• Both parties has signed a Memorandum of Agreement (MoU) to look into the development of some 250 IRISPAY station E-Concept Stores, prior to entering into a definitive agreement.

• IWMSB will be responsible for securing the financing needed for the project, which cost an estimated GDV of between RM62.5 mln and RM70.0 mln. (The Edge Daily)  

Source: Mplus Research - 4 Aug 2017