• Despite opening slightly higher at the start of the trading bell, quick profit taking sent the FBM KLCI (-0.3%) lower and to erase all its previous session gains. The weakness was also in tandem with the negative sentiment on Wall Street overnight. The lower liners – the FBM Small Cap (-0.4%), FBM Fledgling (- 0.8%) and FBM ACE (-1.2%) all retreated, while both the Properties (+0.03%) and Plantations (+0.3%) sector outperformed the negative broader market.

• Market breadth was negative as losers outstripped gainers on a ratio of 599-to- 276 stocks. Traded volumes fell 8.9% to 2.49 bln shares as investors grew cautious amid the negative market sentiment.

• Key losers on the big board were BAT (- 60.0 sen) after it reported lower earnings, followed by Genting Malaysia (-12.0 sen), Petronas Gas (-10.0 sen), KLK (-10.0 sen) and CIMB (-7.0 sen). Significant decliners on the broader market include Top Glove (-29.0 sen), Kluang Rubber (-24.0 sen), Panasonic (-18.0 sen), Petron Refining & Marketing (-18.0 sen) and Supermax (- 15.0 sen).

• Amongst the biggest advancers on the broader market were Nestle (+68.0 sen), Denko (+28.0 sen), SAM Engineering & Equipment (+26.0 sen), KESM Industries (+16.0 sen) and Globetronics (+14.0 sen). Meanwhile, Petronas Dagangan (+22.0 sen), IOI Corporation (+7.0 sen), AmBank (+2.0 sen), KLCC (+2.0 sen) and Maybank (+1.0 sen) topped the FBM KLCI advancers list.

• Japanese equities extended its gains yesterday as the Nikkei gained 0.5%, lifted by buying support in large-cap stocks like Toyota Motor Corp (+0.7%), Mitsubishi UFJ Financial Group (+1.6%) and Mizuho Financial Group (+1.2%). The Shanghai Composite added 0.1%, but the Hang Seng Index (-0.5%) extended its losses. ASEAN stockmarkets, meanwhile, ended mostly higher.

• U.S. stockmarkets staged a quick recovery to recoup all their previous session losses overnight as the Dow added 0.7% to close at fresh record high level on stronger-than-expected corporate earnings from Caterpillar (+5.0%) and McDonalds (+0.3%). On the broader market, both the S&P 500 and Nasdaq added 0.2% each with the former led by gains in the financial sector (+0.7%).

• European benchmark indices – the FTSE (+0.03%), CAC (+0.2%) and DAX (+0.1%), all extended their gains after recovering all their intraday losses, taking cue from the surge on Wall Street. Meanwhile, investors are on the lookout ahead of the European Central Bank monetary policy meeting over the next two days that is set to announce a reduction in its financial stimulus.

The Day Ahead

• Bursa Malaysia’s market condition is once again on the insipid side as there was little follow through buying support to break the downtrend after yesterday’s weakness. As it is, it appears that the buying interest is still weak with few leads to entice market players to take up fresh positions not only on the index heavyweights, but also on the lower liners and broader market shares.

• Although a rebound remains due after the recent selldown, it is still elusive as the buying interest is still indifferent, thus we see the uncertain market environment extending over the near term. The key index may consolidate further towards the 1,730 support, while any rebound at this juncture is likely to be mild and limited to the 1,740 to 1,745 levels.

• Interest on the lower liners and broader market shares are also waning as the profit taking activities are increasing. Therefore, we also see these stocks consolidating further as retail players opt to lock-in their short-term profits.

Company Briefs

• Top Glove Corp Bhd has clarified that it is not acquiring Adventa Bhd or Supermax Corp Bhd, following a series of speculations related to the potential acquisition target for Top Glove, after the latter announced its plans to acquire a Malaysian rubber gloves manufacturer.

• Separately, the group’s Executive Chairman, Tan Sri Lim Wee Chai has emerged as a substantial shareholder in Tropicana Corp Bhd after he bought a 10.2% equity stake from the latter’s founder Tan Sri Danny Tan and his related companies. Subsequently, Tan Sri Lim Wee Chai was appointed to the board of Tropicana as Deputy Chairman with immediate effect.

• Sunway Bhd is planning to acquire the remaining 20.0% equity shareholding held by the Employees Provident Fund (EPF) in Sunway South Quay Sdn Bhd (SSQ) for RM136.6 mln cash plus payment of RM73.4 mln for the settlement of the Musyarakah Capital invested by EPF in SSQ.

• Pantech Group Holdings Bhd's 2QFY18 net profit more than doubled to RM11.8 mln, from RM5.1 mln in the previous corresponding period, on the back of stronger revenue performance which grew 51.3% Y.o.Y to RM157.1 mln from RM103.81 mln a year ago.

• Cumulative 1HFY18 net profit also jumped 94.4% Y.o.Y to RM25.7 mln, from RM13.2 mln last year, in-tandem with a 35.5% Y.o.Y growth in revenue to RM308.6 mln, from RM227.8 mln a year earlier.

• Serba Dinamik Holdings Bhd is planning to acquire Bangunan Affin Bank, a 16- storey office building with a four-storey basement carpark in Shah Alam, from Affin Bank Bhd for RM43.5 mln. The building will be used as its head office and will house its operational staff within Selangor and all of its employees from its existing head office in Shah Alam.

• Vizione Holdings Bhd‘s 1QFY18 net profit jumped more than fourfold to RM529,000, from RM121,000 in the same quarter last year, boosted by higher revenue from its construction segment. Revenue, meanwhile, grew more than twofold to RM21.3 mln, from RM8.6 mln in 1QFY17

• Luxchem Corporation Bhd's 3Q2017 net profit shrunk 10.0% Y.o.Y to RM9.0 mln, from RM10.0 mln a year earlier, dragged down by higher expenses despite a 5.0% growth in revenue to RM188.2 mln, from RM179.4 mln a year earlier.

• Cumulative 9M2017 net profit, however, increased marginally by 4.0% Y.o.Y to RM31.3 mln, from RM30.0 mln in 9M2016, while revenue gained 18.0% Y.o.Y to RM609.5 mln, from RM515.2 mln in the last corresponding period.

• Brem Holding Bhd’s 48.3%-owned subsidiary, Titi Kaya Sdn Bhd has obtained about 9.2% stake (or 48.4 mln shares) in Titijaya Land Bhd as share consideration from the sale of its 1.04 mln shares in NPO Builders Sdn Bhd to the latter via a sale shares agreement signed on 30th September, 2016.

• NPO Builders owns two tracts of land totalling 46.2 ac. in Bukit Raja, Selangor, which Titijaya intends to develop into a mixed project with a gross development value (GDV) of RM2.4 bln.

• Pintaras Jaya Bhd was awarded a RM20.4 mln contract for piling and construction work for a proposed commercial block in Shah Alam, Selangor. The project, from Top Value Hotel Sdn Bhd, includes the piling, pilecaps, earthworks and substructure works for a proposed 29-level commercial block situated at Setia Alam, Shah Alam.

• Edaran Bhd has clinched an RM150.0 mln contract from the Royal Malaysian Customs Department, for the enhancement of the department’s information systems. The contract period will be for two years, effective from September 2017.  

Source: Mplus Research - 25 Oct 2017