• The FBM KLCI (-0.1%) ended lower yesterday as the key index recorded its fifth straight session of decline. The weakness mainly stemmed from the renewed selloff from foreign participants on Malaysian equities. The lower liners – the FBM Small Cap (-0.6%), FBM Fledgling (-0.3%) and FBM ACE (-1.1%), all extended their losses, while the broader market closed mostly negative.

• Market breadth remained negative as losers outstripped gainers on a ratio of 626-to-259 stocks. Traded volumes fell 24.3% to 2.46 bln shares as investors retreated to the sidelines amid the negative market sentiment.

• Banking heavyweight like Hong Leong Financial Group (-14.0 sen), AmBank (- 13.0 sen), RHB Bank (-12.0 sen) and Maybank (-7.0 sen) fell, while Genting Malaysia ended 7.0 sen lower. Notable decliners on the broader market include Heineken (-50.0 sen), MPI (-44.0 sen), Allianz (-34.0 sen) and Ajinomoto (-32.0 sen). Vis Dynamics tanked 20.0 sen after reporting a weak set of quarterly earnings.

• Consumer products giants like Panasonic (+28.0 sen), Magni-Tech Industries (+24.0 sen) and Dutch Lady (+22.0 sen) anchored the broader market advancers list, while Poh Kong jumped 10.5 sen after reporting a strong set of quarterly earnings. Key winners on the FBM KLCI were Petronas Gas (+42.0 sen), KLK (+8.0 sen), KLCC (+7.0 sen), Astro (+6.0 sen) and Petronas Chemicals (+5.0 sen).

• Japanese equities rebounded yesterday as the Nikkei (+0.5%) recovered all its previous session losses in after Prime Minister Shinzo Abe announced a general election slated for next month. He also ordered his cabinet to design new economic stimulus measures by year-end in a package worth US$17.80 bln. The Shanghai Composite fell 0.3%, while the Hang Seng Index (-1.4%) slipped for the third straight session on fears over a slowdown in the property market. ASEAN stockmarkets, meanwhile, ended mixed.

• Wall Street start off the week on a weak note as geopolitical tension with North Korea intensifies. Both the Dow and S&P 500 slipped 0.2% each on weakness in technology shares as the latter saw the technology sector sinking 1.4%. Nevertheless, the rally in crude oil prices that closed at their highest level in five months sent the energy sector to close 1.5% higher, cushioning the losses.

• European benchmark indices also ended mostly lower as the FTSE and CAC fell 0.1% and 0.2% respectively. The DAX, however, added 0.02% after enduring a volatile session as investors digested the German election result that saw Chancellor Angela Merkel retaining her seat, but nationalist Alternative for Germany (AfD) won parliamentary seats for the first time.

The Day Ahead

• The immediate market outlook is still fraught with uncertainties with the selling pressure still prevalent, particularly from the foreign funds that are continuing to unwind their positions in the Malaysian equity market. The FBM KLCI has also fallen below the 1,770 level and this could signal more weakness ahead with the key index poised to retest the 1,765 and 1,760 levels.

• Meanwhile, the overnight weaknesses in global technology stocks is also likely to spillover to Malaysian stocks and further dampen market sentiments, albeit oil and gas stocks may see renewed interest amid the stronger prices to cushion some of the weakness in the broad market.

• The lower liners and broader market shares are also likely to continue seeing profit taking and selling activities amid the increasingly uncertain market conditions that will see more retail players retreating to the sidelines.

COMPANY BRIEF

• A consortium comprising Damansara Realty Bhd's 95.5%-owned TMR Urusharta (M) Sdn Bhd and Kumpulan Perubatan (Johor) Sdn Bhd has been awarded a RM27.6 mln contract to provide medical services for Petronas' Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor.

• TMR's scope of work is to provide management of medical services and the 39-month contract will commence from 25th September 2017. The contract also comes with additional optional services worth RM7.8 mln. (The Star Online)

• Ho Wah Genting Bhd has inked a 49:51 joint-venture (JV) with Switzerland's Dufry Group to operate a duty-free shop in SkyAvenue mall at Genting Highlands Resort, Pahang. About RM9.0 mln is slated as initial investment for the JV company. (The Edge Daily)

• AirAsia Bhd has announced that two additional parties, namely Singaporelisted Plato Capital Ltd and private equity firm Oxley Capital Ltd, will be partnering the group and China Everbright Group in setting up a low-cost carrier in China known as AirAsia (China).

• Consequently, the aforementioned parties signed a term sheet on the 25th September, 2017 to facilitate the discussion and negotiation of definitive agreements for the proposed venture.

• The partnership will also invest in the development of a low-cost carrier terminal, an aviation academy for pilots, engineers and crew training as well as a maintenance, repair and overhaul provider in China. (The Star Online)

• FoundPac Group Bhd is planning to buy a 75.0% equity stake in laser stencils maker Dynamic Stencil Sdn Bhd worth RM16.5 mln, in a bid to expand its product offering in the electrical and electronics segment.

• The purchase consideration was made considering a price-to-earnings ratiobased valuation of RM22.0 mln for the whole 100.0% holdings in Dynamic Stencil, together with a two-year profit guarantee amounting to RM9.0 mln from the vendors. (The Edge Daily)

• MISC Bhd plans to sell all its 45.0% shareholding in Centralised Terminals Sdn Bhd to Dialog Group Bhd for RM193.0 mln. Following the sale, Dialog will emerge as the sole owner of Centralised Terminals.

• To recap, Centralised Terminals was set up as a 45:55 JV between MISC and Dialog. The former owns an 80.0% stake in Langsat Terminal (One) Sdn Bhd and Langsat Terminal (Two) Sdn Bhd, which are centralised tankage and tank terminal facilities serving the oil, gas and petrochemical industry in Johor. (The Star Online)

• Rubber glove dipping line service provider HLT Global Bhd has proposed a bonus issuance of up to 133.0 mln new shares, on the basis of one bonus share-for-every two existing shares held on an entitlement date to be determined later.

• The group has also proposed to issue up to 199.4 mln free warrants, on the basis of three warrants-for-every four HLT Global shares held on the same entitlement date. The bonus shares will not be entitled for the bonus warrants. (The Edge Daily)

• PLB Engineering Bhd has also proposed a one-for-four bonus issue of up to 22.8 mln shares, at an entitlement date to be determined later. (The Edge Daily)

• Alliance Bank Malaysia Bhd will officially assume the listing status of Alliance Financial Group Bhd (AFG) on the Main Market of Bursa Malaysia starting from 26th September 2017, after which AFG will be delisted.

• The exercise is in-line with AFG's corporate reorganisation announced in September 2016, which saw the shareholders of AFG exchanging their existing AFG shares for Alliance Bank shares on a one-for-one basis The number of shares and percentage of shareholding held by the shareholders in AFG will remain the same in Alliance Bank. (The Edge Daily)

• Iris Corp Bhd and Dipon Gulf Infotech Consultancy LLC have acceded to an out-of-court settlement for a sum of RM16.1 mln and costs of RM65,000 at a rate of 5.0% per year, which will be formalised in a deed of settlement.

• The settlement is for Dipon's commercial suit for money allegedly owed by Iris for a machine readable passport project in United Arab States and in Saudi Arabia. Iris does not expect the settlement to have any other material financial and operational impact to the group. (The Edge Daily)

• Lotte Chemical Titan Holding Bhd (LCT) has announced that the damage caused by a fire at the site of its new TE3 project in Pasir Gudang Johor on 20th September, 2017 as insignificant, with losses estimated at not more than RM50,000 to replace burnt cables.

• The incident was reportedly due to the contact between residual vapour from the quench water drain pit and the steam line and did not damaged other plants which are currently operating as usual. (The Edge Daily)

• Bison Consolidated Bhd’s 3QFY17 net profit leapt 52.2% Y.o.Y to RM6.2 mln, from RM4.1 mln a year ago, due to better management of its products and service offerings and collaboration with suppliers, while revenue for the quarter gained 25.5% Y.o.Y to RM81.7 mln, from RM65.1 mln previously.

• Cumulative 9MFY17 net profit also surged 35.5% Y.o.Y to RM18.7 mln vs. RM13.8 mln in October last year, on the back of a 24.1% growth in revenue to RM237.2 mln, from RM191.1 mln in 9MY16. (The Edge Daily)

• Poh Huat Resources Holdings Bhd posted a 3.4% Y.o.Y drop in 3QFY17 net profit to RM9.7 mln, from RM10.0 mln a year ago, dragged down by forex losses totaling RM80,000. Quarterly revenue, however, grew 20.6% Y.o.Y to RM151.5 mln, from RM125.7 mln previously, lifted by higher shipping volume for both the group's Malaysian and Vietnamese operations.

• For 9MFY17, its bottomline surged 35.4% to RM37.9 mln, from RM28.0 mln a year ago, while revenue rose 15.5% Y.o.Y to RM442.6 mln, compared to RM383.2 mln last year. The improved earnings were mainly due to a writeback for the land and buildings disposal in Qingdao, China to Beacon Brewery Co Ltd. (The Edge Daily)  

Source: Mplus Research - 26 Sept 2017