• The FBM KLCI finished lower on Monday, weighed down by selling-pressure in selected heavyweights amid portfolio rebalancing activities. All of the lower liners - the FBM Ace (-1.2%), the FBM Small Cap (-0.7%) and the FBM Fledgling (-1.0%) declined, while the broader market was also painted red, with the exception of the Consumer Products (+0.2%) industry.

• Market breadth was tepid as losers beat winners on a ratio of 286-to-659 stocks. Traded volumes also fell 27.1% to 1.8 bln shares as investors adopt a wait-and-see approach, ahead of the Senate’s vote on a tax reform bill in the United States.

• Top losers on the Main Board include IJM Corp (-19.0 sen), KLCC (-18.0 sen), Sime Darby Plantation (-16.0 sen), CIMB (-10.0 sen) and Maxis (-10.0 sen). Meanwhile, broader market laggards were Hartalega (-41.0 sen), Allianz (-36.0 sen), Malaysian Pacific Industries (-34.0 sen) and Petron Malaysia Refining (-32.0 sen). Lafarge Malaysia (-26.0 sen) also finished in the red after reporting three consecutive quarters of net losses amid a challenging business environment.

• On the flipside, top gainers include Hengyuan Refining (+90.0 sen), United Plantations (+30.0 sen), Hai-O Enterprise (+21.0 sen) Malaysia Airport (+20.0 sen) and Hong Leong Industries (+19.0 sen). Hong Leong-affiliated stocks like Hong Leong Financial Group (+34.0 sen) and Hong Leong Bank (+16.0 sen) buoyed the key-index, followed by BAT (+48.0 sen), Petronas Dagangan (+20.0 sen) and Genting (+15.0 sen).

• Key regional indices closed mostly in the negative territory as investors digested the approval of the Senate’s tax overhaul package. The Nikkei lost 0.5%, weighed down by losses in telecommunication services-related counters, alongside the Shanghai Composite index (-0.2%). The Hang Seng (+0.2%), however, rebounded from earlier losses and close in the green, buoyed by gains in energy stocks. ASEAN stockmarkets, meanwhile, closed mixed on Monday.

• Key U.S. benchmarks were mostly downward pressured, as losses in techstocks offset gains in retailers and banking heavyweights. Still, tThe Dow (+0.2%) logged a fresh new record close after U.S. Senate narrowly passed a major tax bill. The broader market, however, declined with both the S&P 500 (-0.1%) and the Nasdaq (-1.1%), in the red, weighed down by selling-pressure in technology companies.

• European stockmarkets rallied, however, on the back of optimism stemming from the recent passing of a major U.S tax reform package. The FTSE advanced 0.5%, boosted by a weaker Pound, despite the weakness in mining-related stocks like Fresnillo (-2.7%) and Randgold Resources (-1.2%). The DAX and the CAC, meanwhile, closed firmly in the green, with 1.5% and 1.4% gains respectively.

The Day Ahead

• The general market under undertone on Bursa Malaysia remains largely on the dour side as attempts to shore up a base above the 1,720 is still futile as the buying interest stays tepid with few positive catalysts that are also sending more market players to the sidelines.

• Although the key index is staying within our expected base building range of the 1,710 and 1,720 levels, the weak market sentiments could still send the key index down over the near term and leave it at the lower end of my base building range of 1,710 level for now.

• Retail interest is also waning with the insipid market conditions and with the lack of new leads, we see the lackluster trading trend persisting for now.

Company Brief

• Handal Resources Bhd has teamed up with Harbin Jingwei Advanced Composite Material and Engineering Corp to jointly develop and promote innovations and advanced material applications for the oil and gas industry in the region. Harbin Jingwei is in the business of advanced high performance composite materials and its parent company, Shanghai EB Pipeline Engineering Ltd, will provide technical knowhow on advanced material engineering. (The Star Online)

• AmanahRaya Trustees Bhd, as trustee for Al-Salam REIT, is acquiring 22 properties from several QSR Brands (M) Holdings Bhd units in an all-cash deal of RM115.0 mln. The vendors of the properties are KFC (Peninsular Malaysia) Sdn Bhd, Kentucky Fried Chicken (Malaysia) Sdn Bhd, KFC (Sabah) Sdn Bhd and SPM Restaurants Sdn Bhd.

• The proposed acquisitions are conditional upon a leaseback agreement with QSR Stores Sdn Bhd and Pizza Hut Restaurants Sdn Bhd that the properties will be leased for three years with an option to extend up to a period of 15 years, and a further option for renewal. The proposed acquisitions are deemed related party transactions as state investment company Johor Corp is the ultimate parent of AmanahRaya and the vendors.

• The properties comprise 21 restaurants and one warehouse/office that support the F&B operations of the KFC and Pizza Hut fast food outlets. To fund the proposed acquisition, AmanahRaya intends to raise RM60.0 mln through a proposed placement, while the remaining RM55.0 mln will be raised through borrowings.

• Separately, Al-Salam REIT is also in the process of acquiring Mydin Hypermarket Gong Badak for a cash consideration of RM155.0 mln. PostMydin acquisition, the REIT's net asset value per unit will decline from RM1.06 to RM1.02 a unit as its borrowings will increase by RM157.6 mln to RM504.4 mln, while its gearing ratio will rise from 35.5% to 45.2%. (The Star Online)

• KKB Engineering Bhd has secured three contracts totalling RM16.8 mln with the first letter of award received from Hock Peng Realty Sdn Bhd for the supply and installation of steel structures, roof covering and wall cladding and accessories for the proposed Balingian coal stockyard in Mukah, Sarawak.

• KKB also received a purchase order for the supply of mild steel pipes and fittings for the Projek Bekalan Air Luar Bandar in Serian, Sarawak, from LP Capital Construction Sdn Bhd. The third contract is a purchase order for the supply of mild steel concrete lined pipes and fittings from MKM Wira (M) Sdn Bhd. The latter two contracts are due for completion in the 1H2018 and 3Q2018 respectively. (The Star Online)

• Berjaya Food Bhd’s Executive Chairman, Datuk Seri Robin Tan Yeong Ching has resigned from the post effective 4th December 2017, to comply with the “best practice” of the Malaysian code of corporate governance. The 43-year-old son of Berjaya Corp Bhd’s (BCorp) founder, Tan Sri Vincent Tan has been replaced by Datuk Tunku Shazuddin Tunku Sallehuddin. (The Edge Daily)

• Five directors of Trive Property Group Bhd have been reprimanded and fined a total of RM2.6 mln by the Securities Commission Malaysia (SC) for knowingly furnishing false or misleading statements in the 2014 audited financial statements of the company to the SC and Bursa Malaysia. Three directors namely Wong Kok Seong, Thu Soon Shien and Datuk Mohamad Amin Mohamad Salleh, who at the relevant time were audit committee members of Trive, were fined RM539,000 each. Two other directors — Datuk Seri Dr Pang Chow Huat and Zarul Ikhwan Zarul Ahmad — were fined RM465,500 each. (The Edge Daily)

• The major shareholders of Hovid Bhd have extended the closing date to accept their takeover offer to 29th December 2018, after their shareholding rose to only 61.5% as of the cut-off date on 4th December 2017 was below the 75% acceptance level they were seeking. This is the third extension since the proposal to take the pharmaceutical group private was announced on 9th October 2017. (The Edge Daily)

• UOA Development Bhd is buying a further 35.0% stake in Everise Project Sdn Bhd from Kaginic Assets Holdings Sdn Bhd for RM159.5 mln, which would bring its total shareholding in the property development company to 74.0%. Kaginic Assets had made an offer to dispose of its entire interest in Everise and UOA, as an existing major shareholder, had accepted the offer. (The Edge Daily)

• Ireka Corp Bhd has teamed up with the world’s largest manufacturer of rolling stock and rail-related products and systems, CRRC Urban Traffic (Europe) Co Ltd (CRRC UT) for the collaboration in rail, urban traffic solution, tourism and infrastructure projects in Malaysia and Southeast Asia. Ireka had also signed a share subscription agreement with CRRC UT to invest in Ireka and subsequently establish a joint venture relationship between both parties, of which Ireka holding 51.0% and CRRC UT holding 49.0%. (The Edge Daily)

• Cypark Resources Bhd has announced that it had received a Letter of Acceptance of Offer from the Energy Commission for the development of its 30 MW solar plant in Negeri Sembilan. The group will participate in the development of a large-scale solar photovoltaic plant in Empangan Terip, Negeri Sembilan through a consortium comprising CRE and Revenue Vantage Sdn Bhd. (The Edge Daily)

• UMW Oil & Gas Corp Bhd has bagged a US$6.8 mln (RM27.6 mln) contract to provide a jack-up drilling rig for ConocoPhillips Sarawak Ltd. The contract is to drill two firm wells, with the option of two additional wells. It is anticipated that drilling activities for one well will span about 50 days with the activities on the first well commencing in 2Q2018. (The Edge Daily)

• IJM Corp has entered into a pre-bid agreement with three companies to participate in the tender for the Kuala Lumpur-Singapore High-Speed Rail project. The agreement was signed with Sunway Construction Sdn Bhd, a unit of Sunway Construction Group Bhd, Jalinan Rejang Sdn Bhd and Maltimur Resources Sdn Bhd, with a consortium set up on an equal shareholding of 25.0% each. (The Edge Daily)timeframe of when the operation would resume. (The Star Online)  

Source: Mplus Research - 5 Dec 2017