• The FBM KLCI lingered in the red, despite recovering from its intra-day low on Monday, amid cautious market sentiments. The lower liners were tepid as the FBM Small Cap (-0.5%), the FBM Ace (-0.2%) and the FBM Fledgling (- 0.8%) all declined, while the majority of the broader market constituents were splashed in red.

• Market breadth turned bearish as decliners overtook advancers on a ratio of 538-to-288 stocks. Traded volume, however, gained 10.5% to 2.23 bln shares amid follow through profit-taking ahead of the extended holiday break in China.

• BAT (-82.0 sen) weighed on the key-index after falling for the second straight day, on extended selling pressure, followed by Telekom (-20.0 sen), KLCC (-18.0 sen), Hong Leong Financial Group (-10.0 sen) and Petronas Dagangan (-10.0 sen) and IHH Healthcare (-4.0 sen). Meanwhile, Dutch Lady (-96.0 sen), Hong Leong Industries (-17.0 sen), Hai-O (-14.0 sen) and Lafarge Malaysia (-14.0 sen) underperformed its peers on Monday. Lotte Chemical fell 28.0 sen following a stop-work order from the Department of Environment (DOE) on its KBR Catalytic Olefins Technology catalytic cracking reactor within its TE3 project.

• On the contrary, Malaysian Pacific Industries (+46.0 sen), Multi-Usage (+16.0 sen), Panasonic Manufacturing (+16.0 sen), Hengyuan Refining (+15.0 sen) and Petron Malaysia (+14.0 sen) propped the broader market. Similarly, banking heavyweights like Public Bank (+14.0 sen), Ambank (+4.0 sen) and CIMB (+4.0 sen) advanced, alongside Kuala Lumpur Kepong (+6.0 sen) and PPB Group (+4.0 sen).

• Japanese stockmarkets closed higher, as the Nikkei gained 0.2%, on the back of improved business confidence among giant manufacturers in Japan in the last three months. The Shanghai Composite index and the Hang Seng, meanwhile, closed for an extended holiday break. ASEAN stockmarkets finished mostly positive on Monday.

• Wall Street kicked off the last quarter of the year on an upbeat note, propped by the strength in healthcare and financialsrelated stocks. The Dow rose 0.7% to close at new record high – 22,557.6 points. On the broader market, the S&P 500 was up by 0.4% - led by gains in General Motors, alongside the Nasdaq (+0.3%), despite profit-taking in major technology giants like Facebook and Alphabet.

• Earlier, key European equities ended on an upward momentum as investors digested higher-than-expected manufacturing data. The FTSE was 0.9% higher, on the back of gains in housebuilders after Prime Minister Theresa May extended the government mortgage guarantee scheme aimed at helping first-time buyers. The CAC and the DAX also closed in the green, with 0.4% and 0.6% gains respectively.

The Day Ahead

• The incessant selling by foreign funds is still permeating and this is leaving few hints of a possible recovery after the FBM KLCI’s10 consecutive days of decline. Still, we think the near term selling may be reaching an end as the key index nears the 1,750 support level. We also think that a rebound is due with the market already tethering on oversold, based on the technical indicators.

• The general market outlook, however, is still broadly on the dour side, devoid of any significant catalysts and hence, any recovery is likely to be mild for now and merely to adjust from oversold, in our view. This means that any rebound could find renewed resistance at around the 1,760 level for now.

• Similarly, the lower liners and broader market shares are also witnessing mixedto-lower performance of late and with market sentiments still on the low side, we see the weaker market conditions permeating for longer.

Company Brief

• Ranhill Holdings Bhd has acquired a 26.7% stake in Tawau Green Energy Sdn Bhd (TGE) for RM18.7 mln or RM1.00 per share on 29th September 2017. TGE is principally involved in the design, construction, own, operate and maintain a renewable energy power plant for the purpose of selling electrical energy to Sabah Electrical Sdn. Bhd.

• TGE has received requisite approvals to develop a 37MW geothermal power plant at Apas Kiri, Tawau, Sabah. The plant will operate using Binary ORC Technology - utilising indigenous geothermal resources to be exploited at the Apas Geothermal Prospect. The acquisition was funded by internally generated funds. (The Star Online)

• Petronas Chemicals Bhd has disposed a 50.0% stake in its unit, PRPC Polymers Sdn Bhd to Saudi Arabian Oil Company (Saudi Aramco) for US$900.0 mln or RM3.80 bln. PRPC Polymers’ principal activities are to develop, construct, commission and operate polymers and glycol plants for the production and sale of products. PRPC Polymers has not started operations since the date of incorporation.

• Saudi Aramco will supply up to 70.0% of crude supply to PRPC RC, which eventually will lead to the sustainability of feedstock supply from PRPC RC to PRPC Polymers. Petronas Chemicals will have a positive cash flow impact by decreasing its capex commitment as a result of Saudi Aramco’s 50.0% participation in PRPC Polymers. (The Star Online)

• Bina Darulaman Bhd (BDB) has secured the tender to develop an agriculture irrigation system for Muda Agricultural Development Authority (MADA) in Kedah and Perlis for RM18.2 mln from the Ministry of Agriculture and AgroBased Industry. The project, Subpackage 1 of Package A for the project, falls under the National Key Economic Area entry point projects 10 (EPP 10). The completion period for the project shall be 18 months from the date of site possession. (The Edge Daily)

• Lotte Chemical Titan Holding Bhd (LCT) has received a stop-work order from the Department of Environment (DOE) on its KBR Catalytic Olefins Technology catalytic cracking reactor (K-COT) within its TE3 Project for the company, to mitigate and reduce odour emission and eliminate surface oil sheen/film discharge.

• The order from the DOE was issued on 1st October 2017 and LCT is attending to remedial actions and will provide an update in due course. The commissioning and the commercial startup of its TE3 Project remain on target for completion by 4Q2017. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) has proposed 13 collaborative projects under a two-year strategic collaboration to share best practices in capacity building with European transmission system operator, Elia System Operator SA.

• The collaborative projects are part of a MoU signed between TNB and Elia where both parties would cooperate in asset management, cross-boundary system and market operations, grid development, network studies and renewable integration. The two-year MoU is extendable for another year. (The Edge Daily)

• Tropicana Corp Bhd has redesignated Dion Tan, son of its founder and largest shareholder, Tan Sri Tan Chee Sing who has a 30.5% stake in the company as Managing Director, effective 2nd October 2017. CEO Datuk Yau Kok Seng, who has held the position since January 2013, is retiring on 30th November 2017 due to health reasons. (The Edge Daily)

• Uchi Technologies Bhd (UTB) has been granted pioneer status by the Malaysian Investment Development Authority (MIDA), which is valid for five years from the production date yet to be fixed.

• The pioneer status was for the design, development and manufacturing of real-time centralised energy measurement and control system, high precision hot fluid temperature control system, and ultra-low temperature and mass sensing control system for biochem equipment. (The Edge Daily)

• Johan Holdings Bhd plans to develop part of the 27.0 ac. land in Puchong where the ceramics tiles manufacturing plant of its former subsidiary Prestige Ceramics Sdn Bhd is located.

• The first phase will be a mixed development comprising service apartments and commercial development, with a projected GDV of RM364.4 mln. The gross development cost, inclusive of re-valued land cost, is projected at RM294.9 mln, giving it a projected gross development profit of RM69.5 mln. (The Edge Daily)

• Carimin Petroleum Bhd has won a fiveyear contract from Petronas Carigali Sdn Bhd to provide maintenance, construction and modification Services (Package C [Offshore] Peninsular Malaysia Oil) for an undisclosed sum.

• The duration of the contract is for a primary period of five years with one year extension option effective from 20th September 2017 and will expire on 19th September 2022, at an agreed fixed schedule of rates. (The Edge Daily)

• Jaks Resources Bhd is disposing a 1.2 ha. freehold industrial land housing a one-storey factory in Subang Jaya for RM25.9 mln, to Hectare Square Sdn Bhd. The disposal will result in a gain of RM13.4 mln. Proceeds arising from the sale will be utilised to repay bank borrowings. (The Edge Daily)

• mTouche Technology Bhd has entered into an MoU with A Conceptech Sdn Bhd to explore opportunities to develop the online-to-offline International Educational Hub and its programmes for higher learning and e-learning research activities.

• A Conceptech Sdn Bhd is a technologyfocused higher learning facilitator company. The MoU is valid for six months and is renewable for another six months upon mutual agreement. (The Edge Daily)  

Source: Mplus Research - 3 Oct 2017