• The FBM KLCI rebounded from its intraday low, albeit still closing in the negative territory amid extended selling pressure in selected heavyweights. On a weekly basis, the key-index also ended lower for the third consecutive week by 0.3% W.o.W to 1,717.2 points. The lower liners finished mainly lower, with the exception of the FBM Small Cap (+0.3%), while eight out-of-ten sub sectors finished in the red on the broader market.

• Market breadth was negative as losers beat winners on a ratio of 521-to-344 stocks. Traded volumes also declined 18.0% to 1.84 bln shares, in the absence of fresh trading catalysts.

• Hong Leong-affiliated stocks led the Main Board lower included Hong Leong Financial Group (-32.0 sen) and Hong Leong Bank (-16.0 sen), followed by Digi (-26.0 sen), PPB Group (-16.0 sen) and MISC (-13.0 sen). Broader market losers, meanwhile, were KESM (-50.0 sen), Hong Leong Industries (-21.0 sen), Petron Malaysia (-20.0 sen), Kossan Rubber Industries (-18.0 sen) and Lion Industries (-18.0 sen).

• On the opposite side of the trade, steel makers like Ann Joo Resources (+20.0 sen) and Master Steel Works (+19.0 sen) rallied, followed by United Plantations (+40.0 sen), Ajinomoto (+20.0 sen) and Asia Knight (+16.0 sen). Key-index frontrunners were Kuala Lumpur Kepong (+24.0 sen), Petronas Gas (+22.0 sen), Petronas Dagangan (+10.0 sen), Ambank (+5.0 sen) and Genting (+5.0 sen).

• Japanese stock markets recovered earlier losses and inched higher as the Nikkei added 0.1% - helped by expectations of increasing exchange-traded funds purchases by the Bank of Japan (BoJ) which offset the weakness in automakers. Meanwhile, the Shanghai Composite index (+0.1%) and the Hang Seng (+0.5%) advanced on bargainhunting activities, following the recent weakness in China’s bond market. The majority of ASEAN stockmarkets also ended higher on Friday.

• Wall Street logged yet another record closing for the year, boosted by gains in technology companies like Amazon, ahead of the long-awaited Black Friday and Cyber Monday sales bonanza. The Dow expanded 0.1%, while on the broader market, the S&P500 and the Nasdaq finished at fresh record high after adding 0.2% and 0.3% respectively.

• U.K. stocks fell on Friday, dragged down by healthcare and consumer-related counters. The FTSE lost 0.1% on expectations of thinner profit margins amid the annual Black Friday event, coupled with unabated political uncertainties. The DAX (+0.4%) also ended in the green, lifted by upbeat business sentiments, while the CAC gained 0.2%, on gains in banking stocks.

The Day Ahead

• Although we expected the market to stage a quick recovery from Thursday’s losses, the downside pressure was more pronounced-than-expected on Friday – sending the key index to below the 1,720 level and further mounting the already weak market sentiments.

• With the market below the 1,720 support level, the selling may persist and the 1,700 psychological is coming into play. As it is, fresh buying interest is weak all round with the continuing lack of positive market catalysts. Consequently, we see more market players remaining on the sidelines and are re-assessing the market’s direction before deciding on their next course of action. ? In the meantime, a rebound from overbought is still on the cards, but the gains could be limited to around the 1,720-1,725 levels as the market’s strength is still insipid.

Macro Brief

• Malaysia’s Consumer Price Index (CPI) rose lower-than-expected (+3.7% Y.o.Y) in October 2017 vs. consensus forecast of a 4.0% Y.o.Y rise. The higher inflation is mainly due to higher transport costs. CPI for the period from January 2017 to October 2017 registered an increase of 4.0% Y.o.Y.

• Meanwhile, Malaysia's Central Bank expects 2017 inflation to fall within the higher end of its projected range of 3%- 4%. (The Edge Daily)

Company Brief

• Berjaya Food Bhd (BFood) has sold off its unit PT Boga Lestari Sentosa, which has operated Kenny Rogers Roasters (KRR) restaurants in Indonesia since 2011, for a nominal sum of 1,000 rupiah (30.5 sen). The disposal provides an opportunity for BFood to divest its non-profitable foreign investment and recover a portion of the inter-company debt.

• BFood’s unit Berjaya Food International Sdn Bhd also settled a portion of the inter-company debt owing by PT Boga to it amounting to 9.6 bln rupiah (RM2.9 mln). Based on the group’s 1QFY18 results, the disposal of the 99.9% stake in PT Boga resulted in a loss of about RM13.3 mln or 3.53 sen per share on a pro forma basis. The nominal consideration for the disposal was arrived at on a willing-seller willing-buyer basis after taking into account the past yearly losses and the shareholders’ deficit of PT Boga of 114.65 bln rupiah (RM34.9 mln). (The Star Online)

• Top Glove Corp Bhd entered into a Memorandum of Understanding to negotiate the terms for the acquisition of Adventa Bhd’s unit, Aspion Sdn Bhd, a surgical glove maker. The purchase consideration will be based on a net profit of RM80.0 mln for Aspion in FY18, a guarantee by Adventa to reimburse Top Glove for any shortfall in the net profit and a contemplated priceto-earnings multiple of 16.0x-18.0x the 2018 target net profit.

• The transaction will be satisfied via cash and shares, with the issuance of new shares not exceeding 10.0% of the value of the acquisition. Following the acquisition, the current management team of Aspion is expected to stay on with the company. The proposed acquisition of Aspion will help Top Glove to establish the group as the largest surgical glove exporter in Malaysia, develop its presence in the surgical glove market as well as boost gross profit margins. (The Star Online)

• Malaysia Airports Holdings Bhd’s (MAHB) 3Q2017 net profit surged 646.9% Y.o.Y to RM79.7 mln on strong revenue growth in both its airport and non-airport operations. Revenue in the quarter grew 12.7% Y.o.Y to RM1.21 bln.

• For 9M2017, cumulative net profit soared 463.0% Y.o.Y to RM208.6 mln. Revenue for the period increased 10.0% Y.o.Y to RM3.40 bln. (The Star Online)

• Eco World International Bhd (EWI) has secured access to a prime development land in Sydney with plans to develop an A$139.0 mln (RM435.4 mln) project. The project site is situated at Macquarie Park, Sydney and adjacent to Macquarie University in the Macquarie University Precinct.

• EWI plans to develop 125 units of residential apartments with a small component of retail. The project is targeted to be launched in 1H2019 and completed over three-to-four years from the date of launch. There was an existing building located on the project site with 30 en-bloc apartment units. Under the Strata Schemes Development Act 2015 (Australia), 75.0% of unit owners in a strata scheme can agree to end their strata scheme, so the site can be redeveloped or sold.

• EWI has entered into a call and put option agreement with owners of 25 of the apartment units to acquire these units by way of a collective sale. This represents about 84.2% of the strata scheme which enables EWI to proceed with the acquisition of all the apartment units through a strata renewal process under the Act. The estimated purchase price to acquire the entire site is about AU$40.0 mln and the proposed acquisition is expected to be completed by November 2018. (The Star Online)

• Supermax Corp Bhd Group Managing Director, Datuk Seri Stanley Thai Kim Sim was sentenced to a five-year jail term and fined RM5.0 mln for insider trading. Thai is appealing against the conviction.

• The Securities Commission (SC) has annoucned that the Kuala Lumpur Sessions Court convicted Thai along with former remisier, Tiong Kiong Choon for insider trading offences after a full trial where 14 witnesses testified for the prosecution while four witnesses testified for the defence. (The Star Online)

• Time Dotcom Bhd’s 3Q2017 net profit dropped 49.0% Y.o.Y to RM28.2 mln, as the previous corresponding period included one-off revenues, lower interest income, higher interest expenses as well as a net loss on foreign currency exchange compared to a net gain in the corresponding period. Revenue for the quarter, however, grew 4.2% Y.o.Y to RM203.0 mln.

• For 9M2017, cumulative net profit shrank 60.0% Y.o.Y to RM117.2 mln. Revenue for the period, however, improved 14.9% Y.o.Y to RM626.7 mln. (The Edge Daily)

• Eita Resources Bhd has secured a subcontract worth RM14.5 mln to supply and install lift systems for a 68-storey office building from Synergy Promenade Sdn Bhd. The contract is to supply and install 18 units of lifts for the building located on Jalan Perumahan Gurney in Kuala Lumpur. Eita expects to complete the contract by 9th September 2019. (The Edge Daily)

• Chemical Company of Malaysia Bhd (CCM) 3QFY17 net profit stood at RM8.2 mln vs. a net loss of RM20.7 mln recorded in the previous corresponding quarter after the disposal of its lossmaking fertilizers division. Revenue for the quarter gained 16.7% Y.o.Y to RM88.1 mln.

• For 9M2017, cumulative net profit surged 646.4% Y.o.Y to RM22.8 mln. Revenue for the period climbed 17.4% Y.o.Y to RM261.5 mln. (The Edge Daily)

• Ann Joo Resources Bhd’s 3Q2017 net profit jumped 106.1% Y.o.Y to RM47.2 mln, in line with expansion of its revenue for the quarter of 83.5% Y.o.Y to RM595.2 mln.

• For 9M2017, cumulative net profit gained 24.0% Y.o.Y to RM149.9 mln. Revenue for the quarter grew 13.4% Y.o.Y to RM1.59 bln. (The Edge Daily) 
• The listing reference price for Sime Darby Plantation Bhd and Sime Darby Property Bhd shares have been pegged at RM5.59 and RM1.50 respectively. The shares in both companies will be listed on the Main Market of Bursa Securities on 30th November 2017. Trading of Sime Darby Bhd shares will be suspended on 27th November 2017 to facilitate the distribution of shares under the group’s demerger exercise. (The Edge Daily)

• UMW Oil & Gas Corp Bhd’s 3Q2017 net profit came in at RM3.4 mln vs. a net loss of RM135.4 mln registered in the previous corresponding quarter on higher topline contribution. Revenue for the quarter jumped 263.2% Y.o.Y to RM180.5 mln.

• For 9M2017, cumulative net loss narrowed to RM151.7 mln, from RM267.8 mln recorded in the corresponding period. Revenue for the period increased 47.6% Y.o.Y to RM394.7 mln. (The Edge Daily)

• SKP Resources Bhd's 2QFY18 net profit rose 54.4% Y.o.Y to RM35.1 mln on the back of higher revenue growth of 30.2% Y.o.Y to RM594.2 mln.

• For 1HFY18, cumulative net profit gained 67.0% Y.o.Y to RM68.4 mln. Revenue for the period added 44.1% Y.o.Y to RM1.12 bln. (The Edge Daily)

• Damansara Realty Bhd has received the Economic Planning Unit’s (EPU) approval for the acquisition of a piece of 53.1 ac.land in Johor for RM130.3 mln. The acquisition forms part of its proposed RM141.5 mln settlement agreement with Johor state investment arm, Johor Corp allowing it to reduce its net current liabilities and return its balance sheet to health. (The Edge Daily)  

Source: Mplus Research - 27 Nov 2017