• The FBM KLCI (+0.2%) finished the week on a stronger footing ahead of key U.S. employment figures and buying support in Hong Leong Bank and Public Bank. The key index (+0.4% W.o.W) also closed higher at 1771.5 points for the third consecutive week. All of the lower liners notched gains on Friday – led by FBM Ace (+0.8%), FBM Fledgling (+0.1%) and FBM Small Cap (+0.04%) amid a mostly positive broader market.

• Market breadth was muted as decliners beat advancers on a ratio of 432-to-368 stocks. Traded volume, meanwhile, shed 19.1% to 1.42 bln as investors booked profits ahead of major economic data from the United States.

• Hong Leong Bank (+34.0 sen) and Public Bank (+16.0 sen) led the Main Board movers, followed by Petronas Gas (+8.0 sen), Hap Seng Consolidated (+5.0 sen) and IHH Healthcare (+4.0 sen). ? The FBM KLCI (+0.2%) finished the week on a stronger footing ahead of key U.S. employment figures and buying support in Hong Leong Bank and Public Bank. The key index (+0.4% W.o.W) also closed higher at 1771.5 points for the third consecutive week. All of the lower liners notched gains on Friday – led by FBM Ace (+0.8%), FBM Fledgling (+0.1%) and FBM Small Cap (+0.04%) amid a mostly positive broader market.

• Market breadth was muted as decliners beat advancers on a ratio of 432-to-368 stocks. Traded volume, meanwhile, shed 19.1% to 1.42 bln as investors booked profits ahead of major economic data from the United States.

• Hong Leong Bank (+34.0 sen) and Public Bank (+16.0 sen) led the Main Board movers, followed by Petronas Gas (+8.0 sen), Hap Seng Consolidated (+5.0 sen) and IHH Healthcare (+4.0 sen). Yen. The Shanghai Composite index also fell 0.4% due to losses in telecommunication services-related stocks, although the Hang Seng index (+0.1%) bucked the general bearish sentiment to closed in green. ASEAN stockmarkets, meanwhile, closed mostly in the negative territory on Friday.

• Wall Street advanced on Friday, lifted by stronger-than-anticipated employment report. The Dow finished higher for the eighth consecutive session and hitting a fresh record high on the back of gains in Goldman Sachs (+5.8%), while both the S&P 500 and the Nasdaq notched 0.2% gains.

• Earlier, European stockmarkets rallied as investors digested upbeat U.S. labour data. The FTSE notched 0.5% gains, fuelled by higher-than-expected quarterly earnings from the Royal Bank of Scotland and a weaker Pound, while the CAC and the DAX advanced 1.4% and 1.2% respectively.

The Day Ahead

• Despite the sustained lack of market participation, the market continues to make headway with the selective buying still prevalent, which we think will continue over the near term as institutional players will again be the kingmakers and will lead the key index higher. The more positive global stockmarket environment will also help to give a lift to the local market conditions.

• As with the previous few sessions, however, we also see the gains remaining minute in the absence of noteworthy leads in the local stockmarket. Therefore, the key index will maintain a slow ascend towards the next resistance at the 1,780 level, which will serve as a major hurdle to clear convincingly, in our view.

• Meanwhile, the lower liners and broader market shares will stay mixed amid the lack of sustainable following.

Macro Brief

• Malaysia’s consumer prices index (CPI) in June 2017 rose 3.6% Y.o.Y, marking the second month of moderation from the 3.9% Y.o.Y increase in May 2017, mainly due to the volatile food and fuel prices. Core inflation rose 2.5% Y.o.Y in June 2017.
• The index of the transport group showed a significant increase (+10.5% Y.o.Y) as the average price of one litre of RON95 petrol was RM2.00 in June 2017 compared to RM1.70 in June 2016.

• CPI for the period January to June 2017 registered an increase of 4.1% Y.o.Y. Core inflation, which excludes most volatile items of fresh food as well as administered prices of goods and services, recorded changes ranging from 2.3% to 2.6% in the period January to June 2017. (The Star Online)

Company Briefs

• Gadang Holdings Bhd has secured a job to design and build the Cyberjaya Hospital in Sepang, Selangor for RM475.0 mln from government-owned Cyberview Sdn Bhd.

• Gadang will undertake the proposed development of the 288-bed hospital, but did not indicate how long the construction work for Cyberjaya Hospital would take or when it would begin the work. (The Star Online) ? Zelan Bhd has raised the amount of its arbitration claim against Meena Holdings LLC by about RM120.0 mln to RM647.5 mln. The increase was largely due to “various items of claims which have increased through effluxion of time (passing of time) and also based on documents received subsequent to the compilation of the initial amount claimed.

• Zelan Holdings had previously claimed RM527.4 mln for the October 2015 termination of the contract awarded to it by Meena Holdings in April 2008 in relation to the Meena Plaza mixed use development project in Abu Dhabi, United Arab Emirates.

• In 2016, Zelan Holdings succeeded in seeking arbitration at the International Chamber of Commerce’s International Court of Arbitration against Meena Holdings for, among others, failure to pay certified value for rectification of basement defects works, rejection of Zelan Holdings’ application for interim time extension, and wrongful issuance of non-compliance reports. (The Star Online)

• Malakoff Corp Bhd has reached an agreement with a consortium of three companies and three other Japanese boiler manufacturers to settle the lawsuits it had brought against them for an alleged breach of contract at its Tanjung Bin power plant in Johor. The agreement was entered into by Malakoff’s 90.0%-owned subsidiary Tanjung Bin Power Sdn Bhd (TBP), and consortium partners — Sumitomo Corp, Zelan Holdings (M) Sdn Bhd and SumiPower Malaysia Sdn Bhd, and broiler manufacturers IHI Corp Japan, ISHI Power Sdn Bhd and IHI Power Systems (M) Sdn Bhd.

• Meanwhile, TBP will withdraw and discontinue the arbitration proceedings against Sumitomo, Zelan and SumiPower, based on the terms agreed upon. Malakoff had in December 2015 filed a RM780.0 mln litigation action against IHI Corp, ISHI Power and IHI Power for at least 22 different boiler tube failure incidents at its Tanjung Bin power station, which led to the plant’s inability to meet certain required output conditions. In November 2016, Malakoff also sought RM785.0 mln via arbitration proceedings from Sumitomo, Zelan, and Sumi-Power for breach of contract as the consortium had been engaged to provide TBP with engineering, procurement, construction and commissioning (EPCC) and related services. (The Edge Daily)

• Matrix Concepts Holdings Bhd plans to buy 21 parcels of land in Port Dickson, Negeri Sembilan, for RM57.0 mln, which will serve as an extension to its existing Bandar Sri Sendayan development. Matrix’s wholly-owned unit BSS Development Bhd has signed sale and purchase agreements with individual landowners for the land measuring in total 53.4-ha.

• The land would sustain continuous development in the township, which is surrounded by upcoming developments, and acts as a catalyst to increase value to the properties in the vicinity to improve the infrastructure serving the land. (The Edge Daily)

• Affin Holdings Bhd is seeking Bank Negara Malaysia’s approval to acquire an additional 7.1% stake in AXA Affin General Insurance Bhd for RM99.1 mln. Affin currently owns a 36.9% stake in the general insurer. It intends to buy the additional stake from Felda Marketing Services Sdn Bhd, an indirect subsidiary of Felda Global Ventures Holdings Bhd. In March 2016, Affin has obtained approval from the central bank to commence negotiations with Felda Marketing for the acquisition of the stake. (The Edge Daily)

• SLP Resources Bhd’s 2Q2017 net profit declined 57.8% Y.o.Y to RM2.6 mln, due to higher costs of raw materials, which were mainly caused by higher average prices of plastic resins. Revenue for the quarter, however, added 2.5% Y.o.Y to RM43.2 mln.

• For 1H2017, cumulative net profit fell 40.6% Y.o.Y to RM6.6 mln. Revenue for the period, however, gained 2.7% Y.o.Y to RM89.2 mln. A first interim dividend of 1.5 sen per share, payable on 5th October 2017 was declared. (The Edge Daily)  

Source: Mplus Research - 7 Aug 2017