• The FBM KLCI ended 0.2% higher at 1,771.1 points, in-tandem with the recovery in regional stockmarkets amid bargain-hunting activities in selected heavyweights. All the lower liners advanced, with the FBM Ace (+1.3%) at the helm, followed by the FBM Small Cap (+0.6%) and the FBM Fledgling (0.3%). Meanwhile, the Construction (-0.2%) sub sector was the only decliner on the broader market on Monday.

• Market breadth turned positive as winners outrun the losses on a ratio of 506-to-316 stocks. Traded volumes, however, shed 7.0% to 1.53 bln shares as investors stayed on the sidelines amid heightened geopolitical uncertainties.

• Significant movers on the Main Board include Hong Leong Financial Group (+30.0 sen), BAT (+20.0 sen), Genting Malaysia (+19.0 sen), Hap Seng Consolidated (+13.0 sen) and IHH Healthcare (+9.0 sen). Meanwhile, semicon players like KESM Industries (+RM1.18) and Malaysian Pacific Industries (+36.0 sen) led the broader market higher, alongside Lotte Chemical (+34.0 sen), Aeon Credit (+30.0 sen) and Hong Leong Financial Group (+30.0 sen).

• On the other side of the trade, United Plantations (-28.0 sen), Heng Yuan Refining (-21.0 sen), Apex Healthcare (- 15.0 sen), Malaysia Smelting Corporation (-13.0 sen) and Far East Holdings (-10.0 sen) were the main losers. Key-index decliners were banking giants – Hong Leong Bank (-14.0 sen) and Ambank (-9.0 sen), followed by PPB Group (-6.0 sen), IJM (-5.0 sen) and Kuala Lumpur Kepong (-4.0 sen)

• Most key regional bourses rebounded as investors digested a series of positive economic data, shrugging off geopolitical concerns. The Nikkei was 1.0% lower on Monday, despite better-than-expected GDP data, due to rising Yen. On the other hand, the Shanghai Composite index (+0.9%) rallied – led by gains in technology, consumer and healthcare-related stocks, while the Hang Seng index snapped three consecutive sessions of losses to close 1.4% higher, on the back of bargain hunting activities following a selldown last Friday. The majority of ASEAN stockmarkets meanwhile, closed higher on Monday.

• Key U.S. benchmark stockmarkets advanced on Monday on the back of bargain-hunting activities following last week’s panic selling as investors momentarily set aside rising political risk between Washington and Pyongyang. The Dow was up by 0.6% - led by gains in Visa (+1.8%). Meanwhile, on the broader market the S&P 500 added 1.0%, boosted by technology and real-estate counters while the Nasdaq jumped 1.3% to 6,340.2 points.

• European equities rebounded from its fivemonth low as geopolitical concerns eased after senior U.S. officials sought to downplay the risk of a nuclear showdown with North Korea. The FTSE rose 0.6%, propped up by Tui Group (+4.8%) after a major investment bank upgraded its rating. The DAX (+1.3%) also rallied to close marginally above the 12,165 points psychological mark, while the CAC added 1.2%, despite Eurozone production data coming in lower than analysts’ expectations.

The Day Ahead

• Stocks on Bursa Malaysia are likely to sustain their recovery over the near term in tandem with the mending of global stocks indices overnight as the North Korean missile crisis abates somewhat – giving rise to some measure of calmness to the equity markets. ? Nevetheless, we think some measure of cautiousness is still prevailing, thus the recovery could also remain modest with the key index gains finding resistance at around the 1,774 and 1,776 levels over the near term, while the 1,770 remains the key support for now.

• While we see bargain hunting activities on the lower liners and broader market shares also sustaining, we also think their upsides will be measured as market sentiments are still broadly on the cautious side.

Company Briefs

• Bina Puri Holdings Bhd has accepted a THB250.6 mln (RM35.0 mln) project in Thailand. A joint venture between Bina Puri Holdings (Thailand) Ltd and WNC Construction Co Ltd has entered into an agreement with another JV between Fine 22 Properties Company Ltd and Ya Thai Chemical Co to be the contractor of "I'm Fine Condominium" in Bangna, Thailand. Including this project, Bina Puri's unbuilt order book stands at RM1.50 bln. (The Star Online)

• UEM Edgenta Bhd has proposed to dispose of its 61.2% equity stake, or 90.5 mln shares in its New Zealand-based subsidiary, Opus International Consultants Limited (OIC) for NZ$161.1 mln (RM504.1 mln) or NZ$1.78 per share.

• The proposed disposal of OIC is an opportunity for UEM Edgenta to monetise its investment upfront at a healthy premium over the current market price and will enable the company to reduce its gross gearing from 0.8x (post drawdown of Sukuk of RM300 mln in April 2017) to 0.4x. The disposal would also provide opportunity to sustain dividend payout to its shareholders in the future. ? The company has earmarked RM415.2 mln of its proceeds for repayment of its borrowings, RM85.5 mln for general corporate purposes and working capital while the balance of RM3.4 mln as estimated expenses for the proposed disposal. UEM Edgenta will record an estimated gain on disposal of about RM267.8 mln on a consolidated basis from the proposed disposal. (The Star Online)

• Media Prima Bhd’s 2Q2017 net loss stood at RM132.9 mln against a net profit of RM27.9 mln recorded in the previous corresponding quarter, largely due to an impairment of its investment in its associate Malaysian Newsprint Industries Sdn Bhd (MNI) amounted to RM142.4 mln. Revenue for the quarter declined 5.9% Y.o.Y to RM328.8 mln.

• For 1H2017, cumulative net loss stood at RM171.4 mln vs. a net profit of RM45.2 mln registered in the previous corresponding period. Revenue for the period decreased 8.1% Y.o.Y to RM601.0 mln. (The Star Online)

• Guan Chong Bhd’s 2Q2017 net profit surged 114.6% Y.o.Y to RM22.9 mln, mainly due to lower bean prices and higher net gain on foreign exchange. Revenue for the quarter, however, fell 17.3% Y.o.Y to RM482.3 mln.

• For 1H2017, cumulative net profit grew 17.6% Y.o.Y to RM28.6 mln. Revenue for the quarter dropped 5.1% Y.o.Y to RM1.11 bln. (The Edge Daily)

• Practice Note 17 (PN17) company, YFG Bhd has bagged a RM235.0 mln contract to build apartments in Kajang, Selangor, but lost the RM245.0 mln sub-contract for PR1MA (1Malaysia People’s Housing) Homes in Pedas, Rembau, Negeri Sembilan.

• The PR1MA project, which was awarded to YFG on 16th February 2017 was terminated by Wearegold Sdn Bhd (WRG) as the latter is not able to take part in its proposed regularalisation plan due to unforeseen reasons. (The Edge Daily)

• Asiamet Education Group Bhd, which operates the Asia Metropolitan University, is disposing of its campus building in Kota Bharu, Kelantan for RM10.2 mln. The building, comprising 11 units of shop lots with a net lettable area of 4,537 sq.m. is being sold to Universiti Teknologi MARA (UiTM). The sale is in line with its asset light strategy to enhance its financial footing and to raise funds as working capital with an estimated gain from the disposal is about RM1.3 mln. (The Edge Daily)

• Asia Knight Bhd plans to undertake a share capital reduction and buy a 60.0% stake in a plastic products producer for RM48.0 mln, together with a rights issue with warrants to raise about RM34.9 mln to part finance the purchase, to regularise its Practice Note 17 (PN17) status.

• The proposed capital reduction will reduce its share capital to RM3.6 mln from RM60.6 mln and give rise to a credit of RM57.0 mln, which it will use to offset its accumulated losses. As for its planned cash call, Asia Knight will issue 348.8 mln rights shares and 174.4 mln warrants, on the basis of six rights shares with three free warrantsfor-every one existing Asia Knight share held on an entitlement date to be fixed. The rights issuance should raise gross proceeds of about RM34.9 mln, at an issue price of 10 sen a share. (The Edge Daily)

• Utusan Melayu (Malaysia) Bhd’s 2Q2017 net loss narrowed to RM10.7 mln, from RM16.3 mln a year ago on lower operating costs, coupled with a recognised gain on disposal of properties of RM3.7 mln. Revenue for the quarter, however, dropped 7.3% Y.o.Y to RM53.8 mln, mainly due to lower advertisement revenue.

• For 1H2017, cumulative net loss also narrowed to RM33.5 mln, from RM42.5 mln in the previous corresponding period. Revenue for the period, however, fell 9.9% Y.o.Y to RM95.3 mln. (The Edge Daily)

• Hap Seng Consolidated Bhd is selling 10.1 ac. of leasehold land in Tawau, Sabah for RM175.3 mln to a related party, Hong Kong-based Lei Shing Hong Ltd (LSH).

• The proposed disposal enables Hap Seng realise an attractive gain and the proceeds will be used to reduce bank borrowings and/or to contribute to the working capital of the group. The disposal consideration of about RM400 psf was arrived at on a willing-buyer willing-seller basis based on a valuation by independent valuer VPC Alliance (Sabah) Sdn Bhd. (The Edge Daily)  

Source: Mplus Research - 15 Aug 2017