• The FBM KLCI (+0.1%) snapped the streak of four consecutive sessions of losses to close marginally higher – led by gains in MISC, following more than fivefold increase in its third quarter earnings. The lower liners, meanwhile, succumbed mostly to the downward pressured, with the exception of the FBM Small Cap (+0.1%). The majority of the broader market, however, advanced on Monday.

• Market breadth was negative as decliners slightly outweighed advancers on a ratio of 451-to-429 stocks. Traded volumes, however, gained 7.2% to 3.0 bln shares amid rotational play in the lower liners.

• Meanwhile, O&G and plantations-related counters that dominated the key-index gainers’ list were MISC (+30.0 sen), IOI Corporation (+11.0 sen) Kuala Lumpur Kepong (+8.0 sen) and Petronas Chemicals (+8.0 sen). Genting Malaysia also closed 6.0 sen higher, on the back of bargain-hunting activities after the recent selldown. Broader market chart-toppers include KESM (+62.0 sen), PMB Technology (+62.0 sen), Heng Yuan Refining (+59.0 sen), Aeon Credit (+30.0 sen) and Petron Malaysia (+30.0 sen).

• On the other hand, broader market decliners were Ajinomoto (-66.0 sen), Dutch Lady (-58.0 sen), Perusahaan Sadur Timah (-28.0 sen), Lafarge Malaysia (-16.0 sen) and Hai-O (-13.0 sen). Meanwhile, Petronas Dagangan (- 86.0 sen) and Petronas Gas (-60.0 sen) continued to weigh on the Main Board, followed by BAT (-54.0 sen), Tenaga (-8.0 sen) and Genting (-4.0 sen).

• Key Asian benchmark indices were muted as President Donald Trump’s tour of Asia got underway. The Nikkei and the Hang Seng flatlined as investors digested fresh earnings report. The Shanghai Composite index, however, rose 0.5%, lifted by gains in healthcare and consumer staplesrelated counters, while ASEAN stockmarkets traded mostly higher.
• U.S. equities notched another session of fresh all-time highs, boosted by optimism on the tax reforms by Trump administration and the biggest technology tie-up made in history, between communications chipmaker, Broadcom and smartphone chip supplier Qualcomm Inc. The Dow edged higher, mainly due to the support from energy stocks. On the broader market, the S&P 500 rallied 0.1%, while tech-heavy Nasdaq closed 0.3% higher.
• Major European bourses ended mostly in the red as losses in telecoms offset gains in commodities-related stocks. The FTSE pared earlier losses and inched into the positive territory, buoyed by BHP Billiton and Anglo American. The DAX and the CAC, however, finished lower by 0.1% and 0.2% respectively.

The Day Ahead

• The key index seems to have found support at the 1,740 level and it is attempting to strengthen its base around the level. We see further attempts to shore up the FBM KLCI over the near term, but the gains might be muted as there are still few positive leads for investors to follow. As it is, market players are awaiting from the upcoming corporate results reporting season to provide some leads and to gauge the earnings prospects going into 2018.
• With the key index likely to continue its recovery, the next target is at 1,745 level, followed by the 1,750 level. The 1,740 level remains the immediate support for now.
• There is no change to our near term view on the lower liners and broader market shares where we expect the mixed-toweaker environment to prevail over the near term as trading activities could remain guarded.

Company Brief

• Eversendai Corporation Bhd’s unit, Eversendai Offshore RMC FZE has secured a major offshore fabrication project for Saudi Aramco in the United Arab Emirates. This makes Eversendai the first Malaysian company to be working on a Saudi Aramco offshore fabrication project.

• Eversendai Offshore expects this to be the first of many more projects to come its way from Saudi Aramco which is projected to invest more than US$300.0 bln over the next 10 years. With the Saudi Aramco 3 project, Eversendai has brought its total project wins for the year so far to RM1.56 bln, while its order book stands at approximately RM2.30 bln.

• The group also announced RM180.0 mln in new project wins, which include 13 gantry structures project in Doha, a mixed-use development project which comprises of commercial, retail cultural and entertainment areas in Doha, a bank headquarters building in Dubai, as well as jackets for Saipem in the Kingdom of Saudi Arabia. (The Star Online)

• Malaysia Building Society Bhd (MBSB) is acquiring the entire equity interest in Asian Finance Bank Bhd (AFB) for RM645.0 mln through a combination of cash and new MBSB shares. The proposed merger would result in it becoming a full-fledged Islamic bank.

• MBSB will pay RM396.9 mln in cash and RM255.5 mln via the issuance of 225.5 mln new ordinary shares in MBSB at an issue price of RM1.10 each. The cash option was based on a valuation of 1.2x the agreed net assets (NA) of AFB of RM496.1 mln as at 31st December 2016, while the shares option was based on a valuation of 1.5x the accepted NA.
• After the proposed merger, EPF’s share in MBSB will be slightly diluted to 63.2%. The decision to grant the AFB vendors the option to elect either the cash option or shares option was arrived at after taking into consideration MBSB’s capital structure and substantial shareholders’ shareholdings in MBSB. The proposed merger was expected to be completed by 1Q2018. (The Star Online)
• Dagang NeXchange Bhd’s (DNeX) 51.0%-owned subsidiary, DNeX RFID Sdn Bhd has been awarded a subcontract to supply radio frequency identification (RFID) vehicle entry permit (VEP) tag for foreign-registered vehicles.

• The subcontract, which was awarded by main contractor TCSens Sdn Bhd, involves DNeX RFID being responsible for hardware, software and systems related to encryption tools and encryption system for the issuance of the RFID VEP tag.

• Its RFID solutions subsidiary would charge RM15.00 for each RFID VEP tag issued. However, it did not give any estimate on the subcontract’s value. DNeX is currently operating and managing the VEP and road charges (RC) system project that involves foreign-registered vehicles entering Malaysia via Johor, namely Kompleks Sultan Abu Bakar in Tanjung Kupang and Bangunan Sultan Iskandar in Johor Baru. (The Star Online)

• ML Global Bhd has secured a RM149.3 mln contract from sister company, Casa Inspirasi Sdn Bhd (CISB) to build units under a mixed development project in Cameron Highlands, Pahang. Its unit ,MITC Engineering Sdn Bhd had accepted a letter of award from CISB which is a subsidiary of LBS Bina Group Bhd

• The proposed mixed development project in Tanah Rata comprises 58 units of shop office, a one-storey supermarket, nine-storey hotel building with 158 rooms, and two to three-storey car park. The construction work will be completed in 36 months by October 2020. With the contract in hand, the group’s current outstanding order book is of approximately RM2.12 bln. (The Star Online)

• UMW Oil and Gas Corp have secured syndicated facilities worth US$550.0 mln (RM2.33 bln), arranged by Maybank Investment Bank Bhd. The proceeds will be utilise to refinance the company’s existing working capital and similar indebtedness and its related corporations, payment of costs and expenses, as well as hedging arrangements in connection with the term facilities. (Bernama)

• IJM Corporation Bhd is constructing an office building for HSBC Bank Malaysia Bhd in Kuala Lumpur city centre, for a contract sum of approximately RM392.0 mln. IJM will be the turnkey contractor for the office building located in Jalan Tun Razak. The building is expected to be handed over to HSBC by December 2020. (The Edge Daily)

• PIE Industrial Bhd’s 3Q2017 net profit slumped 59.4% Y.o.Y to RM1.9 mln, due to higher provision for doubtful debts and lower gain from foreign currency exchange translation. Revenue for the quarter, however, grew 21.4% Y.o.Y to RM158.1 mln.
• For 9M2017, cumulative net profit jumped 88.2% Y.o.Y to RM24.2 mln. Revenue for the period grew 28.6% Y.o.Y to RM496.0 mln. (The Edge Daily)
• Cycle & Carriage Bintang Bhd’s 3Q2017 net loss stood at RM3.2 mln vs. a net profit of RM8.3 mln in the previous corresponding quarter due to losses in its retail operations. Revenue for the quarter dropped 12.8% Y.o.Y to RM331.6 mln.

• For 9M2017, cumulative net profit plunged 83.9% Y.o.Y to RM6.0 mln. Revenue for the period fell 7.0% Y.o.Y to RM1.04 bln. (The Edge Daily)

• Nexgram Bhd’s Chairman, Datuk Sri Wira Ayub Yaakob and Deputy Chairman Norzain Abdul Wahab have both resigned to pursue personal interests. Datuk Donald Lim Siang Chai has been re-designated as the new Executive Chairman. Lim is also the Chairman of Jiankun International Bhd and Advance Information Marketing Bhd. (The Edge Daily)

• Best Birdnest Sdn Bhd has surfaced as the largest shareholder in loss-making CME Group Bhd after buying a 16.6% stake from its Executive Director, Tunku Nizamuddin Tunku Shahabuddin – who has disposed of his entire stake in the company, which had previously been held via his private vehicle Ikram Mulia Holdings Sdn Bhd.

• The 80.6 mln shares had been sold in a single block off-market for RM3.63 mln or 4.5 sen per share, representing a 1.5 sen or 25.0% discount to the group’s closing price of 6.0 sen on 6th November 2017. (The Edge Daily)

Source: Mplus Research - 7 Nov 2017