• The FBM KLCI (+0.5%) ended the week on an upbeat note, boosted by the positive sentiments from the offshore stockmarkets earlier. The key-index also snapped two consecutive weeks of losses, closing 0.3% W.o.W higher. The lower liners - the FBM Small Cap (+0.5%) and Fledgling (+0.3%) also advanced, although the FBM ACE -0.2%) declined on profit-taking activities. The broader market, meanwhile, ended mostly higher on Friday’s close.

• Market breadth, however, stayed positive as winners beat losers on a ratio of 511- to-344 stocks. Traded volumes also gained 9.1% to 2.76 bln shares, driven by buying-interest in the O&G stocks, following anticipation of further OPEC-led supply cut for another nine months.

• Main Board outperformers include Tenaga Nasional, which rose 62.0 sen, after declaring a record dividend payout totaling RM3.5 bln in FY17, followed by Hong Leong Bank (+14.0 sen), PPB Group (+14.0 sen), Sime Darby (+9.0 sen) and Axiata (+7.0 sen). Broader market advancers, meanwhile, include consumer giants like Nestle (+40.0 sen) and Fraser & Neave (+20.0 sen), followed by Far East Holdings (+30.0 sen), Aeon Credit (+20.0 sen) and Carlsberg (+18.0 sen).

• On the flipside, Lii Hen Industries (-20.0 sen), Tasek (-10.0 sen), Success Transformer (-9.0 sen) and Asia Knight (- 8.0 sen) underperformed its peers. Edaran also trimmed 10.5 sen as investors booked profit, after the share price tripled since Tuesday. Genting affiliated companies like Genting Malaysia (-11.0 sen) and Genting (-9.0 sen) retreated, alongside BAT (-28.0 sen), IJM (-4.0 sen) and Kuala Lumpur Kepong (-4.0 sen).

• Major Asian indices ended mostly higher, as investors digested a fresh round of quarterly corporate results. The Nikkei notched 1.2% to record a new 21-year high, on the back of gains in banking and technology stocks. The Hang Seng (+0.8%) and Shanghai Composite index (+0.3%) also rallied, while the ASEAN stockmarkets finished broadly higher.

• Upbeat corporate quarterly earnings from technology giants like Microsoft and Amazon drove Wall Street higher on Friday. The Dow (+0.1%) ended with minute gains, capped by losses in Merck (-6.1%) and Chevron (-4.9%). The S&P 500 rose 0.8% with more than half of its constituents topping analyst’ expectations as of Thursday, while the Nasdaq jumped 2.2% to close above 6,700.0 points.

• European equities advanced, as investors looked past the political turmoil in the region to cheer the continuing monetary stimulus in Europe. The FTSE expanded by 0.3%, after rebounding from earlier losses, while the DAX (+0.6%) rallied, boosted by automakers. The CAC also finished 0.7% higher on Friday.

The Day Ahead

• Although Tenaga Nasional Bhd’s record dividend payout was the main reason for the FBM KLCI’s gains last Friday, the reversal has helped to nullify the negative trend on Bursa Malaysia. With Budget 2018 moderately positive for the economy, we see further near term upsides as perceived beneficiaries of the Budget – construction, selected services and consumer stocks, could be chased up with market players positioning their portfolios in favour on the stocks that are seen as winners.

• Therefore, we see the key index jumping back above the 1,750 level and retesting the 1,755 level as the buying interest returns and to set the tone for a more meaningful recovery after the recent market consolidation from the 1,790 level.

• The positive market undertone will also permeate to the lower liners and broader market shares where we also see increased buying interest following the announcement of the Budget that reinforces the country’s economic recovery prospects over the next 18 months.

Company Briefs

• Xin Hwa Holdings Bhd (XHH) is buying two pieces of land measuring 44.1 ac. in Plentong, Johor Baru, from Johor Corp, where it plans to build a new warehouse and an open yard for its fleet of vehicles for RM26.5 mln.

• Xin Hwa’s warehouses in Kempas, Johor, and Pasir Gudang, Johor are close to full utilisation and it has begun the building of a new warehouse in Pasir Gudang that will increase its warehousing space from 404,000 sq.ft. to about 584,000 sq. ft. (The Star Online)

• Nova MSC Bhd has won a tender worth S$26.9 mln (RM83.1 mln) from the Building and Construction Authority of Singapore to develop and maintain the Construction And Real Estate Network System 2.0 (Corenet 2.0). The Corenet e information system is a central repository for building codes, regulations and circulars published by Singapore’s building and construction regulatory agencies. The contract, including maintenance and other options would run from 27th October 2017 to 26th October 2023. (The Star Online)

• Lii Hen Industries Bhd has reported a fire occurred at the second premises of Favourite Design Sdn Bhd, a major wholly-owned subsidiary of the company in Kawasan Perindustrian Bukit Pasir, Muar, Johor on 27th October 2017. The premises are housed within eight blocks of single-storey furniture factory buildings, together with a three-storey office block. The financial impact of this incident is being assessed. (The Edge Daily)
• Yinson Holdings Bhd is in talks with JX Nippon Oil & Gas Exploration (M) Ltd and TH Heavy Engineering Bhd in connection with the group taking over the Floating Production Storage and Offloading vessel (FPSO) vessel charter for JX Nippon to itself. The group is constantly exploring and evaluating business opportunities in its home market to expand its FPSO business, including exploring redeployment opportunities for its fleet. (The Edge Daily)
• YFG Bhd’s Managing Director, Leong Choon Meng is stepping down from his post on 2nd November 2017 to pursue other personal interest. Leong was appointed to the post on 11th January 2017, replacing Teh Yee Joo, who was redesignated as Non-Independent Non Executive Director of the Practice Note 17 (PN17) company.
• YFG fell into PN17 status two years ago after its auditors expressed an emphasis on the company's ability to continue as a going concern, while the company's shareholders' equity shrank to less than 50.0% of its issued and paid-up capital. It is set to submit a proposed regularisation plan by end October 2017 after Bursa Securities granted it more time to do so, failing which it will be de-listed. (The Edge Daily)  

Source: Mplus Research - 30 Oct 2017