• The FBM KLCI (+0.2%) rebounded after hovering mostly in the positive territory yesterday as gains were also in tandem with the broadly positive Asian stockmarkets. The lower liners also ended mildly higher as the FBM Small Cap and FBM Fledgling added 0.1% and 0.3% respectively, while the broader market saw all eleven major sectors ending on a positive note.

• Market breadth turned positive as advancers outstripped decliners on a ratio of 419-to-385 stocks. Traded volumes gained 5.4% to 1.77 bln shares amid the more positive market sentiment.

• On the FBM KLCI, Genting Malaysia (+9.0 sen), Sime Darby (+5.0 sen), Telekom (+5.0 sen), DIGI (+2.0 sen) and IJM (+2.0 sen) were some of the biggest advancers. Among the biggest gainers on the broader market were KESM Industries (+42.0 sen), Hong Leong Industries (+23.0 sen), Kluang Rubber (+23.0 sen), Pos Malaysia (+20.0 sen) and Allianz (+18.0 sen).

• On the flipside, notable losers on the broader market were Panasonic (-26.0 sen), Hartalega (-14.0 sen), Atlan Holdings (-12.0 sen), Time dotCom (-12.0 sen) and APM Automotive (10.0 sen). There were only five decliners on the big board – BAT (-12.0 sen), PPB Group (-4.0 sen), KLCC (-2.0 sen), Hong Leong Bank (- 2.0 sen) and Astro (-1.0 sen).

• Asia benchmark indices closed mostly higher yesterday as the Shanghai Composite added 0.1% on gains in financial shares, while the Hang Seng Index jumped 0.9%, defending the 27,000 points psychological level. Japanese equities, however, extended their losses as the Nikkei (-0.1%) logged its fifth consecutive session of decline. ASEAN stockmarkets, meanwhile, ended mostly higher.

• U.S. stockmarkets extended their gains overnight as the Dow (+0.9%) logged its biggest daily gains since April 2017 after political uncertainties fades. On the broader market, the S&P 500 added 1.0%, led by gains in the technology sector (+1.5%), while the Nasdaq surged 1.4%, halting its third consecutive session of decline.

• European benchmark indices – the FTSE (+0.9%), CAC (+0.9%) and DAX (+1.4%) all advanced, taking cue from the recovery in Asian stockmarkets, coupled with bargain hunting activities. Meanwhile, investors also brushed off the weaker-than-expected Germany’s ZEW Economic Sentiment Index that fell to 10 in August 2017 (from 17.5 in the previous month).

The Day Ahead

• We see the upsides extending on Bursa Malaysia over the near term, taking cue from the positive run on global indices overnight. The sustained uptrend could lift the FBM KLCI to retest the 1,776 level before making another pass at the psychological 1,780 level.

• While we continue to see near term upsides, we still think that the climb above the 1,780-1,800 points level will be hard to sustain due to the already fair stock valuations. Therefore, the market is again reaching toppish levels and further gains will become more difficult to come by.

• The lower liners and broader market shares could also tip higher over the near term as retail players take advantage of the more positive short term market environment to undertake trading activities. This could help to lift market breadth that has been lacking of late.

Company Briefs

• Hock Seng Lee Bhd’s 2Q2017 net profit shrink by 21.0% Y.o.Y to RM9.5 mln, from RM12.1 mln a year earlier, dragged down by lower construction income, while revenue fell marginally by less than one percent to RM106.4 mln, from RM107.1 mln last corresponding year.

• Cumulative 1H2017 net profit weakened 26.5% Y.o.Y to RM20.8 mln, from RM28.3 mln in 1H2016, in tandem with a 15.1% fall in revenue to RM211.6 mln, from RM249.3 mln a year earlier. The company’s existing order book stood at RM3.0 bln to date. The group has also proposed a tax-free dividend of one sen a share, payable on 10th October, 2017. (The Edge Daily)

• Kerjaya Prospek Group Bhd registered a 34.0% Y.o.Y jump in its 2Q2017 net profit to RM32.9 mln, from RM24.6 mln a year earlier, boosted by higher contribution from its construction segment. Revenue for the quarter, meanwhile, climbed 24.1% Y.o.Y to RM240.2 mln, from RM193.5 mln previously.

• Total 1H2017 net profit also gained about 28.0% Y.o.Y to RM61.8 mln, from RM48.3 mln in 1H2016, buoyed by a 24.8% Y.o.Y increase in revenue to RM473.4 mln, compared with RM379.4 mln last year.

• As at 30th June 2017, outstanding orderbook stood at RM2.5 bln and the group has also secured RM362.0 mln worth of construction jobs during the quarter under review. In addition, unbilled sales for its maiden project, Vista Residences stood at approximately RM83.0 mln.

• Separately, the group has also announced a minimum 25.0% dividend policy as part of Kerjaya’s effort to retain existing shareholders as well as to attract new shareholders to the company’s shares. (The Star Online)

• Boon Koon Group Bhd’s 1QFY18 net profit surged more than tenfold to RM3.1 mln, from RM300,000 last year, on the back of a 10.0% increase in revenue at RM29.3 mln, from RM26.6 in the preceding year. (The Edge Daily)

• RCE Capital Bhd's 1QFY18 net profit expanded 19.4% Y.o.Y to RM20.9 mln, from RM17.5 mln a year ago – due to higher net interest income as well as relatively stable loan impairment. Revenue for the quarter also grew 9.9% Y.o.Y to RM57.1 mln, from RM51.9 mln in the previous corresponding quarter. (The Edge Daily)

• Far East Holdings Bhd is planning to buy a 3,204 ac. plot of land from PHG Plantation Sdn Bhd for RM110.6 mln. Both parties have signed a sale and purchase agreement on 22th August, 2017, to buy the land located in Rompin, Pahang. (The Edge Daily)

• Hektar Real Estate Investment Trust's (Hektar REIT) rights issue has been oversubscribed by 13.3%. The group has received acceptances and excess applications for 69.1 mln rights units, which was 8.1 mln units more than the 61.0 mln units made available.

• The rights units were priced at RM1.11 per unit on the basis of 7 units–for-every 46 units held and the proceeds will be used to finance the group's proposed acquisition of the 1Segamat Shopping Centre in Johor. (The Edge Daily)

• IGB Corp Bhd's 2Q2017 net profit surged 41.0% Y.o.Y to RM76.3 mln, from RM54.1 mln in the same period last year, attributed to improved performance of its property investment and hotel divisions, despite a 6.0% Y.o.Y drop in revenue to RM246.6 mln from RM262.5 mln in 2Q2016.

• Cumulative 1H2017 net profit, meanwhile, jumped 81.0% Y.o.Y to RM191.5 mln, from RM105.9 mln a year ago, lifted by a one-off gain of RM34.3 mln from the sale of Renaissance KL and improved contributions from its property investment and hotel divisions. Revenue, however, slipped 8.0% Y.o.Y to RM501.4 mln, from RM542.7 mln in the previous corresponding period. (The Edge Daily)

• UMW Oil & Gas Corp Bhd’s (UMW-OG) 2Q2017 net loss narrowed to RM51.0 mln, from RM67.3 mln previously, on the back of higher rig utilisation rate, coupled with lower losses from oilfield services, while revenue rose 7.6% Y.o.Y to RM139.9 mln, from RM130.0 mln last year.

• However, for 1H2017, net loss widened to RM155.1 mln, from RM132.3 mln a year earlier, mainly due to lower time charter rates and reduced foreign exchange gains. Revenue also fell marginally by 1.6% Y.o.Y to RM214.2 mln, from RM217.7 mln previously.

• Separately, UMW-OG has secured a RM113 mln contract for the provision of jack-up drilling rig services from Repsol Oil & Gas Malaysia Ltd. (The Star Online)

• Boustead Plantations Bhd has inked a letter of intent (LoI) with Pertama Land & Development Sdn Bhd to acquire 42 parcels of plantation land in the districts of Labuk and Sugut, Sabah – measuring a collective 11,600 ha. for RM750.0 mln. Following the acceptance of the LoI by Pertama Land & Development, due diligence is expected to be conducted within 30 days. (The Star Online)

• Inari Amertron Bhd registered a 68.0% Y.o.Y surge in 4QFY17 net profit to RM65.6 mln against RM39.9 mln a year ago, boosted by higher demand of its products and gain from disposal of quoted shares. Revenue, meanwhile, also saw a 34.4% hike to RM345.7 mln, from RM257.2 mln a year ago.

• The upbeat quarterly earnings lifted the full year net profit to RM227.9 mln (+54.0% Y.o.Y), from RM148.3 mln last year, while revenue gained 12.8% Y.o.Y to an all-time high of RM1.18 bln, from RM1.04 bln in FY16. (The Star Online)

• Perisai Petroleum Teknologi Bhd has announced that three clients are claiming RM13.7 mln in losses and damages, due to an alleged breach of contractual obligation. The three clients are Konsortium Pelabuhan Kemaman Sdn Bhd (KPK), Pangkalan Bekalan Kemaman Sdn Bhd (PBK) and EPIC Mushtari Engineering Sdn Bhd.

• Consequently, the group has been given a week to pay the amount, failing which the claimants plan to commence legal proceeding against the company. (The Edge Daily)

• Dagang Nexchange Bhd's (DNeX) 2Q2017 net profit plunged 87.0% Y.o.Y to RM11.9 mln, from RM89.5 mln in the same period last year, mainly due to a pre-acquisition gain of excess fair value of RM85.3 mln from the acquisition of Ping Petroleum Ltd last year. Revenue, however, inched 4.0% Y.o.Y higher to RM49.1 mln, from RM47.4 mln.

• Cumulative 1H2017 net profit also slumped 72.0% Y.o.Y to RM27.0 mln from RM94.9 mln a year ago, on the back of the volatility of crude oil prices and margin compression in the oil and gas industry, despite a 25.0% increase in revenue to RM92.9 mln, from RM74.3 mln a year ago. (The Edge Daily)  

Source: Mplus Research - 23 Aug 2017