• The FBM KLCI notched 0.1% gains – led by optimism spilled over from Wall Street and the moderately positive Budget 2018 announced last Friday, as well as buying support in plantation heavyweights amid rising crude palm oil prices. All the lower liners closed in the green, with the FBM Small Cap (+0.6%) at the helm, while the broader market advanced.
• Market breadth was upbeat as advancers outrun decliners on a ratio of 518-to-402 stocks. Traded volumes rose 4.4% to 2.88 bln shares, boosted by buying-interest on the lower liners.

• Oil palm planters like Kuala Lumpur Kepong (+12.0 sen), Sime Darby (+10.0 sen) and Genting Malaysia (+9.0 sen) rallied, followed by Petronas Chemicals (+12.0 sen) and Hong Leong Financial Group (+8.0 sen). Meanwhile, notable broader market gainers include Nestle (+76.0 sen), Carlsberg (+32.0 sen), Lafarge Malaysia (+32.0 sen), Globetronics (+21.0 sen) and PMB Technology (+18.0 sen).

• On the contrary, Malaysian Pacific Industries (-20.0 sen), Perak Corporation (-13.0 sen), Southern Acids (-12.0 sen), Sam Engineering (-11.0 sen) and Sasbadi (-9.5 sen) traded lower on Monday’s closing bell. Main Board decliners were Tenaga Nasional (-16.0 sen), Genting (- 8.0 sen), KLCC Property & REITs (-6.0 sen), PPB Group (-4.0 sen) and Astro (- 3.0 sen).

• Key regional benchmark indices slipped into the red, dragged down by the rout in Chinese government bonds amid fears of increased deleveraging efforts in the financial sector. The Nikkei was flattish, weighed down by profit-taking activities after logging seven consecutive weeks of gain. The Hang Seng was down by 0.4%, while the Shanghai Composite index shed 0.8% on Monday’s close. The majority of the ASEAN stockmarkets were splashed in red yesterday.
• U.S. equities narrowed on Monday, after the White House announced that it was considering implementing tax reform plans in phases, instead of enacting them immediately, which was originally expected by investors. The Dow gave up 0.3%, albeit slightly offset by gains in Apple (+2.3%) on strong expected demands for its latest iPhone X. On the broader market, the S&P 500 lost 0.3%, while the Nasdaq flatlined.
• European stocks ended mostly mixed, as investors digested the latest corporate earnings and the political turbulence in Spain. The FTSE fell 0.2% after lingering in the red for the entire intraday session, while the CAC closed flattish. On the other hand, the DAX notched up a gain of 0.1% - led by gains in Volkswagen (+3.3%).

THE DAY AHEAD

• The general market undertone is improving after Budget 2018 providing a dose of market confidence which we think will persist over the near term as market players reposition their portfolios on stocks that are perceived beneficiaries of the Budget.

• However, the recovery strength is still tentative as fresh buying is still scant with market players still weighing on their next course of action. Therefore, the climb to the 1,750 will be gradual as the key index attempts to build up a base around the above level.

• Although the near term uptrend appears tentative, there should be further upsides as the market continues its recovery from its selldown from the 1,790 level a month ago that has left the key index oversold.
• We also think lower liners and broader market shares will continue to see renewed interest, albeit the upsides could be capped by quick profit taking activities.

COMPANY BRIEF

• The Employees Provident Fund (EPF) has emerged as a substantial shareholder with a 5.1% stake in Signature International Bhd, the manufacturer of premium kitchen systems, on 11th October 2017.

• EPF’s entry gives the group a dose of confidence as Signature has put in proposals to design, build, supply and install kitchen system for some of the large property development projects undertaken by Malaysian-based developers abroad. Among the projects is Battersea Power Station, which is developed by a consortium of Malaysian companies. (The Star Online)

• UEM Sunrise Bhd has inked a deal with Country View Bhd for the sale of 163.9 ac. of land in Johor for RM310.0 mln. The land sale to Country View leaves UEM Sunrise with 10,000 ac. of land bank remaining in the Southern Region, totalling approximately RM94.0 bln in gross development value. The land will be developed into a mixed commercial project. (The Star Online)

• Perusahaan Sadur Timah Malaysia Bhd’s (Perstima) 2QFY18 net profit sank 73.5% Y.o.Y to RM3.5 mln, due to higher production cost. Revenue for the quarter, however, added 17.5% Y.o.Y to RM234.3 mln.

• For 1HFY18, cumulative net profit dipped 74.6% Y.o.Y to RM6.4 mln. Revenue for the period, however, grew 25.6% Y.o.Y to RM471.8 mln (The Star Online)
• Kelington Group Bhd has secured a contract worth CNY102.6 mln, equivalent to RM65.4 mln, from Chengdu Construction Engineering Corporation to supply and install bulk gas system and distribution piping for an integrated circuit manufacturing systems project in Chengdu, China.
• The work will commence immediately and is expected to be completed by April 2018. The plant in Chengdu will commence operations beginning 4Q2018. (The Edge Daily)

• Both Ekovest Bhd and Iskandar Waterfront City Bhd (IWCity) have obtained Bursa Malaysia’s approval to suspend their shares from trading from 9.00am on 30th October 2017 until 5.00pm on 31st October 2017, pending a material announcement. (The Edge Daily)

• Boustead Plantations Bhd has signed an agreement with Dutaland Bhd for the acquisition of 42 parcels of leasehold plantation lands in the Labuk and Sugut districts in Sabah for RM750.0 mln. The land plots,currently cultivated with oil palm, have a combined size of 11,579.3 ha. (The Edge Daily)

• Boustead Heavy Industries Corp Bhd (BHIC) has won a RM19.5 mln contract from the Ministry of Defence to supply and deliver a communication suite for Squadron 23rd Frigate of the Royal Malaysian Navy. The contract is valid for the next two years and a contract between the government of Malaysia and BDTS will be signed at a later date. (The Edge Daily)

• Bintai Kinden Corp Bhd has bagged a contract worth RM18.5 mln from Tenaga Nasional Bhd (TNB) to undertake works at its electrical substation. The contract is for the design, supply, erecting, testing and commissioning for Mainhead 'A': PMU 132/33kV Vision City Kuala Lumpur. The job is expected to be completed within 480 days from the commencement date. (The Edge Daily)

• Heitech Padu Bhd has bagged an RM42.4 mln contract from the Immigration Department for an application maintenance service project. The contract for the MyIMMS Application System Maintenance Service project was awarded will run over a three year period until 17th August 2020. (The Edge Daily)

• Vizione Holdings Bhd has bagged a RM401.0 mln contract from Paragon Hemisphere Sdn Bhd to build four blocks of office suites on Jalan Sunway, Semenyih, Ulu Langat, Selangor. Phase 1 of the proposed project will take 36 months to complete, while construction work on Phase 2 will begin on 1st May 2018. (The Edge Daily)

• Pestech International Bhd is acquiring a railway contractor, Colas Rail System Engineering Sdn Bhd (CRSE), for some RM10.4 mln to stimulate growth in its utility and railway business. (The Edge Daily)

• AirAsia Bhd has formalised a joint venture partnership with Singapore’s aviation gateway services and food solutions provider, SATS Ltd on ground handling businesses. (The Edge Daily)

• EcoFirst Consolidated Bhd’s 1QFY18 net profit jumped 171.0% Y.o.Y to RM3.6 mln on higher sales in its development project named Upper East in Ipoh. Revenue for the quarter surged 155.4% Y.o.Y to RM44.8 mln. (The Edge Daily)
• Homeritz Corp Bhd’s 4QFY17 net profit gained 52.7% Y.o.Y to RM7.0 mln, supported by higher revenue and a stronger U.S. Dollar against the Ringgit. Revenue for the quarter rose 16.9% Y.o.Y to RM39.7 mln.
• For FY17, cumulative net profit increased 10.2% Y.o.Y to RM30.9 mln. Revenue for the year improved 7.2% Y.o.Y to RM169.0 mln. A final dividend of 2.2 sen per share, bringing total payout for the financial year to 4.2 sen per share was proposed. (The Edge Daily)

Source: Mplus Research - 31 Oct 2017