• The FBM KLCI finished flattish on Friday – due to weakness in major O&G stocks. The key-index was also 0.3% lower W.o.W, closing a hairline above the 1740.0 psychological mark. The majority of the lower liners also retreated with the exception of the FBM Small Cap (+0.1%). Broader market constituents, meanwhile, closed mixed before the third-quarter corporate earnings reporting season is in full swing.

• Market breadth stayed muted as decliners outrun advancers on a ratio of 483-to-337 stocks. Traded volumes, meanwhile, trimmed 3.6% to 2.80 bln shares as foreign investors shy away from the local bourse amid prospects of higher returns in offshore markets.

• Petronas-linked counters like Dagangan (-46.0 sen) and Petronas Gas (-20.0 sen) continued to weighed on the Main Board, followed by Genting (-9.0 sen), RHB Bank (-5.0 sen) and Digi (-4.0 sen). Other underperformers include Heineken Malaysia (-22.0 sen), Batu Kawan (-14.0 sen), Kronologi Asia (-14.0 sen), Kim Loong (-9.0 sen) and UMW Holdings (-9.0 sen).

• Broader market chart-toppers, meanwhile, were Aeon Credit (+24.0 sen), PMB Technology (+23.0 sen), JHM (+22.0 sen), NPC Resources (+19.0 sen) and Press Metal (+19.0 sen). Notable heavyweights gainers were MISC (+11.0 sen), BAT (+6.0 sen) and CIMB (+5.0 sen), followed by Hong Leong Financial Group and IHH Healthcare, which added 4.0 sen each.

• Asian stockmarkets finished mostly higher as investors digested the President Donald Trump’s tax reform plans, as well the nomination of Jerome Powell as the next leader of the Federal Reserve. Japanese stockmarkets closed for the Culture Day celebrations, while the Shanghai Composite index shaved 0.3%, amid concerns of an economic slowdown in China. The Hang Seng, meanwhile, ended the week on stronger footing, closer 0.3% higher on the back of gains in real estate companies, alongside the majority of the ASEAN stockmarkets.

• Wall Street logged fresh record highs – boosted by gains in Apple shares, following better-than-anticipated quarterly earnings and strong near-term growth prospects. The Dow rose 0.1%, while the S&P 500 finished 0.3% higher on the back of gains Qualcomm (+12.7%). The Nasdaq (+0.7%) also ended firmly in the green on Friday’s close.

• European benchmarked indices traded higher on Friday as investors digested new corporate quarterly earnings releases. The FTSE gained 0.1% to 7,561.35 points, following stronger-thanexpected services data. The DAX also rallied 0.3% while, the CAC (+0.1%) closed with minute gains, weighed down by the weakness in French lender, Societe Generale on its soft third quarter earnings.

The Day Ahead

• The FBM KLCI continues to tether at the 1,740 level with the buying interest among the index heavyweights remaining on the weak side. As it is, foreign funds are still continuing to lock-in their profits on selected index heavyweights, while local funds are providing some measure of support.

• Under the prevailing environment, there appears to be further weakness as we see the profit taking activities persisting over the near term. This could see the key index dipping below the 1,740 level and may dip further to the 1,730 level in due course. We see the buying support remaining limited in view of the lack of new positive leads.

• Similarly, we see the mixed-to-weaker environment prevailing among the lower liners and broader market shares amid a more cautious trading environment with profit taking activities likely to escalate.

Company Brief

• Top Glove Corporation Bhd is buying Eastern Press Sdn Bhd, a major supplier of packaging materials for the group’s operations in Malaysia, for RM46.3 mln in cash. The price tag of the printing and packaging material manufacturer is RM1.0 mln lower than the indicative consideration given in the term sheet inked with the largest vendor, Y.S. Hoong Sdn Bhd (holding a 97.5% stake) on 13th October 2017.

• The purchase consideration was arrived at on a willing-buyer, willing-seller basis after considering the net profit guarantee of RM4.5 mln provided to it for FY18. The proposed acquisition is expected to be completed in 1Q2018. (The Star Online)

• Malaysia Building Society Bhd (MBSB) has requested for its securities to be suspended from trading on 6th November 2017 pending the release of a material announcement.

• On 18th August 2017, MBSB obtained the Ministry of Finance’s approval for its proposed acquisition of 100% interest in the shares of Asian Finance Bank. (The Star Online)

• Jaycorp Bhd, has proposed to diversify into construction and property development business. The group has reported that the move could open up new opportunities and fetch additional streams of income, thereby reducing its reliance on its current core businesses, include furniture, packaging, processing of wood and renewable energy.

• Jaycorp anticipates its new business segments could contribute at least 25.0% to its bottom line in the future and result in a diversion of more than 25.0% of the group’s net assets. (The Edge Daily)

• Lafarge Malaysia Bhd has reported that a fire broke out at its integrated cement plant in Rawang, Selangor on 3rd November 2017. Three people have been reported missing after a fire broke out and the cause of the incident and extent of its damage are currently being worked out. (The Edge Daily)

• SLP Resources Bhd's 3Q2017 net profit has fallen 45.2% Y.o.Y to RM3.4 mln, due to lower margins after a change in the sales mix, coupled with corporate exercise expenses in relation to a private placement and bonus issue undertaken by the company during the quarter. Revenue for the quarter, however, added 11.9% Y.o.Y to RM45.9 mln.

• For 9M2017, cumulative net profit shrank 42.2% Y.o.Y to RM10.0 mln. Revenue for the period, however, rose 5.8% Y.o.Y to RM135.1 mln. (The Edge Daily)

• Hong Leong Bank Bhd anticipates its digital banking business to expand 30.0% to 40.0% in terms of customer base in the next two to three years. This is premised on a significant growth in both its mobile and Internet banking users for the past year. Meanwhile, Hong Leong Bank is maintaining its loan growth target of 5.0% to 6.0% for FY18. (The Edge Daily)

• AirAsia Bhd carried 12.0% more passengers at 9.9 mln across the budget airline's operations in Malaysia, Indonesia and the Philippines in 3QFY17, on strong and sustained demand for air travel.

• Capacity or number of seats flew rose by 14.2% Y.o.Y to 11.4 mln in 3Q2017. Load factor or number of passengers carried as a percentage of capacity, however, fell to 87% in 3Q2017, from 88% in the previous corresponding quarter. (The Edge Daily)

• MISC Bhd’s 3Q2017 net profit surged 5.1x Y.o.Y to RM680.5 mln, driven by higher earnings from its liquefied natural gas (LNG), petroleum and offshore divisions. Revenue for the quarter increased 1.3% Y.o.Y to RM2.32 bln.

• For 9M2017, cumulative net profit dipped 6.8% Y.o.Y to RM1.91 bln. Revenue for the period, however, rose 7.0% Y.o.Y to RM7.60 bln. An interim dividend of 7.0 sen, payable on 30th November 2017, was declared. (The Edge Daily)

• Daya Materials Bhd’s Executive Vice Chairman and Director Nathan Tham Jooi Loon have resigned to pursue other personal interests. Its chief executive officer (CEO), Datuk Lim Thean Shiang will take over as the new Executive Vice Chairman. (The Edge Daily)

• Maxis Bhd’s Chief Executive Officer (CEO), Morten Lundal will be leaving the company upon the expiry of his contract on 31st March 2018. Maxis has announced that the board will announce Lundal's successor in due course. Lundal came on board as Maxis CEO on 1st October 2013, bringing with him more than 16 years of experience in the telecommunications industry. (The Edge Daily) 
• Lay Hong Bhd‘s chairman, Yap Hoong Chai has disposed of his 39.6 mln shares, representing a 13.0% stake, in MMAG Holdings Bhd, which was held through his family vehicle, Innofarm Sdn Bhd.

• Yap’s move came less than two months after he emerged as a substantial shareholder in the information and communications technology hardware distributor. At the same time, Chan Swee Ying, the wife of former MMAG Chairman and Managing Director Chin Boon Long, had purchased 57.3 mln MMAG shares representing an 18.9% stake in the company. (The Edge Daily)  

Source: Mplus Research - 6 Nov 2017