• Despite opening higher at the start of the trading bell, quick profit taking sent the FBM KLCI (-0.1%) lower on Monday, dragged down by weakness on selective banking and telco heavyweights. The lower liners, however, ended mostly higher as the FBM Small Cap and FBM ACE added 0.01% and 0.8% respectively, while the Construction (-0.1%), Finance (- 0.2%) and Mining (-2.0%) sectors underperformed its peers.

• Market breadth turned negative as losers outpaced gainers on a ratio of 487-to-404 stocks. Traded volumes fell marginally by 1.8% to 3.16 bln shares as signs of profit taking emerged.

• Big board decliners were telco and banking heavyweights like Axiata (-11.0 sen), CIMB (-8.0 sen), Maybank (-5.0 sen), DIGI (-5.0 sen) and Public Bank (-4.0 sen). Notable losers on the broader market include Kluang Rubber (-25.0 sen), KESM Industries (-20.0 sen), Petron Refining and Marketing (-16.0 sen), Advanced Packaging (-13.0 sen) and Heng Yuan (- 12.0 sen).

• Rubber glove manufacturers like Top Glove (+38.0 sen), Hartalega (+22.0 sen) and Kossan (+12.0 sen) advanced, while Batu Kawan gained 26.0 sen. Muar Ban Lee added 6.0 sen after proposing for a private placement to raise up to RM10.0 mln. Meanwhile, Petronas Dagangan (+72.0 sen), BAT (+22.0 sen), Hong Leong Financial Group (+16.0 sen), Genting Malaysia (+11.0 sen) and MISC (+10.0 sen) topped the local bourse advancers list.

• Asia benchmark indices closed mostly higher yesterday as the Nikkei added 0.5% to register its tenth straight winning streak, taking cue from the positive developments on Wall Street. The Hang Seng Index rose 0.8% on consideration over a potential reduction or elimination in trading tax, but the Shanghai Composite fell 0.4%. ASEAN stockmarkets, meanwhile, ended mostly higher.

• U.S. stockmarkets rose to record high levels overnight as the Dow (+0.4%) extended its gains after the U.S. Federal Reserve Chairwoman hinted another interest rate hike, despite the soft inflation data in September 2017. On the broader market, S&P 500 gained 0.2%, anchored by the gains in telecommunications sector (+0.8%), while the Nasdaq ended 0.3% higher.

• Earlier, European benchmark indices closed mostly higher as the CAC added 0.2%, while the DAX (+0.1%) closed above the 13,000 psychological level after recording its fourth consecutive day of winning streak. The FTSE, however, gave up all its intraday gains to close 0.1% lower after Covatec – a medical giant tumbled 21.2% on weak 3Q2017 earnings.

The Day Ahead

• Sentiments on the key index are still indifferent amid the continuing mild profit taking by foreign funds that is also leaving the FBM KLCI to drift within the 1,750 and 1,760 levels. Whilst the global market environment is still perking up, a similar trend on Bursa Malaysia has yet to materialise, albeit the recent selldown is leaving the key index tethering on the oversold zone.

• We believe the 1,750 level will continue to serve as the major support and the current consolidation trend is nearing its conclusion. However, any recovery is likely to be mild at this juncture as the buying support is still weak and we see the near term uptrend limited to the 1,760 level.

• While the index heavyweights continue to be rangebound, rotational interest among the lower liners looks to persist for longer as trading activities come to the fore to provide a significant boost to market breadth.

Company Brief

• Ahmad Zaki Resources Bhd was awarded an additional work package contract worth RM288.5 mln to construct three elevated stations and associated works for the upcoming KV MRT 2 line in Serdang Raya (South), Seri Kembangan and Universiti Putra Malaysia. Following the latest MRT 2 job, the group’s outstanding orderbook jumped to RM4.0 bln, with about RM502.5 mln worth of job wins year-to-date. (The Edge Daily)

• Bintai Kinden Corp Bhd has secured a sub-contract from WZR Property Sdn Bhd to develop an air traffic surveillance and management system at the Kuala Lumpur International Airport (KLIA) worth RM11.0 mln. The non-renewable contract for the Communication, Navigation, Surveillance/Air Traffic Management (CNS/ATM) System for the Kuala Lumpur Flight Information Region’s (KL FIR) New Traffic Control Centre (KL NTCC), is expected to be completed by November next year. (The Edge Daily)

• EITA Resources Bhd has clinched a contract from Mass Rapid Transit Corp Sdn Bhd for RM69.8 mln to install 30 lifts and 77 escalators at four MRT sites. The project, slated to be completed by April 2022, will involve part of Package V203 (Jinjang-Jalan Ipoh North Portal viaduct guideway), Packages V204 (Bandar Malaysia South Portal-Kampung Muhibbah viaduct gateway), V205 (Kampung Muhibbah-Serdang Raya viaduct gateway) and V206 (Serdang Raya-UPM viaduct gateway). (The Star Online)

• My E.G. Services Bhd has received a Letter of Appointment from the Malaysian Ministry of Home Affairs to undertake the voluntary repatriation of illegal foreign workers for the Immigration Department of Malaysia from 10th October 2017 until 31st December,2017.

• The value of the project is not determined at the current juncture as it is dependent on the number of foreign workers successfully repatriated. MyEG also did not disclose the value per worker, nor the number of workers it has targeted for the repatriation process. (The Star Online)

• Nationwide Express Courier Services Bhd is acquiring Airpak’s rights, title and interest in and to its courier service business, including certain assets and liabilities. The acquisition will be paid via RM15.0 mln cash and the issuance of 3.0 mln new National Express shares, at an indicative price of 73.0 sen apiece, or a total of RM2.2 mln.

• Both parties has inked an agreement for the second time after deciding not to extend the deadline of the first agreement — which entails Nationwide Express to fully acquire Airpak for RM33.2 mln. (The Edge Daily)

• Nova MSC Bhd’s 51.0%-owned subsidiary, CNA Development Pte Ltd (CNAD) has secured Japan Asia Group Ltd as the subscriber of its S$4.0 mln worth of redeemable convertible bonds which will be used to finance CNAD’s capex needs.

• Following the corporate exercise, Nova MSC’s net gearing will increase to 0.43x, compared with 0.04x as at 31st March 2017. (The Edge Daily)

• Bursa Securities has agreed to delay the share suspension and delisting of Perisai Petroleum Teknologi Bhd pending a decision on the latter’s application to extend the deadline of its regularisation plan, which was due on 11th October 2017.

• To recap, Perisai fell into the PN17 status in 2016 after its wholly-owned subsidiary defaulted in payment of the principal and interest on a S$125.0 mln bond. (The Edge Daily)

• Rohas Tecnic Bhd has received its shareholders’ approval to acquire a 75.0% stake in HG Power Transmission Sdn Bhd for RM91.7 mln. HG Power has exposure outside Malaysia and is in the business which Rohas Tecnic is familiar with. The group also expects the HG Power to contribute about 50.0% of Rohas’s profit in due course. (The Edge Daily)

• Amalgamated Industrial Steel Bhd ‘s (AISB) proposal to acquire two parcels of land in Kayu Ara at Petaling Jaya, for RM19.6 mln was deemed “fair, reasonable and not detrimental” to minority shareholders by independent adviser Sierac Corporate Advisers Sdn Bhd.

• The acquisition will enable the lossmaking company to diversify its business into property development and reduce its reliance on the trading of steel-related products. (The Edge Daily)

• Public Investment Bank Bhd has advised shareholders of AbleGroup Bhd to reject the takeover bid by Parallel Pinnacle Sdn Bhd, saying the offer is “not fair and not reasonable” considering that Parallel’s offer price of 13.0 sen was at a 40.9% discount to the group’s estimated revalued net asset value of 22.0 sen per share, and that AbleGroup shares are relatively liquid at 12.4% average monthly trading volume compared with 10.8% seen at the KL Industrial Production Index. (The Edge Daily)

• Iris Corp Bhd has announced the appointment of former Astro customer division Vice President Shaiful Zahrin Subhan as its Group CEO, effective from 16th October 2017.

• The group’s Managing Director Datuk Tan Say Jim has also retired in conjunction with his mandatory retirement at age 60, while Chief Operating Officer Choong Choo Hock has been re-designated as CEO of IRIS Trusted Identification and Information Technology division. (The Star Online)    

Source: Mplus Research - 17 Oct 2017