Lingering Within 1,710 and 1,720

• Tracking the bearish sentiments in the offshore stockmarkets, the FBM KLCI narrowed by 0.4% after lingering in the negative territory the entire session. Most of the lower liners closed higher, however, with the exception of the FBM Small Cap (-0.1%). The broader market was also painted red, with more than half of its constituents ending lower on Wednesday’s close.

• Market breadth stayed negative with 454 decliners against 380 advancers, while traded volumes also declined 13.9% to 1.58 bln shares amid risk-off in investors’ sentiment.

• Banking heavyweights like Hong Leong Bank (-82.0 sen), Hong Leong Financial Group (-46.0 sen), Maybank (-12.0 sen) and RHB Bank (-10.0 sen) lost ground yesterday, followed by Genting (-11.0 sen). Broader market decliners, meanwhile, include Malaysian Pacific Industries (-70.0 sen), United Plantations (-20.0 sen), Allianz (-18.0 sen), Sam Engineering (-18.0 sen) and Unisem (- 17.0 sen).

• On the flip side, Petron Malaysia Refining (+78.0 sen), Heineken Malaysia (+46.0 sen), United Malacca (+37.0 sen), Selangor Properties (+27.0 sen) and Nestle (+22.0 sen) traded higher. Meanwhile, key-index frontrunners were Sime Darby Plantation (+12.0 sen), Digi (+6.0 sen), Petronas Gas (+6.0 sen), BAT (+4.0 sen) and Telekom Malaysia (+4.0 sen).

• Key regional benchmark indices retreated – following the weakness on Wall Street on Tuesday and monetary policy concerns amid China’s persistent financial deleveraging. The Nikkei lost 2.0%, dragged down strengthening Yen and selling-pressure in materials-related stocks. The Shanghai Composite index and the Hang Seng ended lower by 0.3% and 2.1% respectively amid concerns over the intensifying crackdowns on stockmarket manipulators. ASEAN stockmarkets were also in a sea of red on Wednesday’s close.
• Major U.S. indices moved incrementally lower as investors booked profits, while waiting for more clarity on the final tax overhaul from Congress and a potential government shutdown at the end of the week. The Dow (-0.2%) slipped in the eleventh hour after gyrating between the positive and negative territory, while the S&P500 closed unchanged. On the other hand, the Nasdaq gained 0.2% - led by the rebound in technology stocks like Facebook, following last week’s decline.
• European equities ended mostly lower – led by the weakness in banking and auto stocks. The FTSE (+0.3%), however, overcame the general negative sentiment and finished higher, lifted by a weaker Pound. The DAX (-0.4%) slid into the red, dragged lower by Deutsche Post (-2.1%), while the CAC (-0.02%) flatlined.

The Day Ahead

• There remains no change to our immediate market view and the Malaysian stockmarket is poised to stay dour in view of the lack of domestic catalysts as well as fresh concerns over the global stockmarkets’ valuations tempering investor sentiment.

• The above issues will continue to keep many market players at bay for longer and consequently any recovery will be on the meek side. As it is, the recovery from oversold is still unfolding at a slow pace and the market will continue to be mixed with few sustainable leads. Nevertheless, the FBM KLCI has seemingly found a bottom around the 1,710 level, which should provide support for the foreseeable future. Under the prevailing environment, we continue to think that the FBM KLCI will continue to linger within the 1,710 and 1,720 levels as it continues to build up a base.
• Interest on the lower liners and broader market shares could stay subdued amid the uncertain market direction and retail players’ participation could wane further as many are already on their year-end break.

Company Brief

• HCK Capital Group Bhd is buying a piece of land in Sugai Buloh from Perbadanan Kemajuan Negeri Selangor (PKNS) for RM80.0 mln cash. HCK Bestari Sdn Bhd had inked a sale and purchase agreement with PKNS, which is the Selangor State Development Corporation, to purchase the 40,470 sq.m. land.

• The proposed acquisition shall be funded by a combination of the proceeds from the rights issue of warrants totalling RM10.5 mln completed on 2nd October 2017, internally generated funds and bank borrowings. (The Star Online)

• The Sultan of Johor, Sultan Ibrahim Ibni Almarhum Sultan Iskandar, has lifted his shareholding in 7-Eleven Malaysia Holdings Bhd to 15.5% or 172.4 mln shares after he purchased 63.1 mln shares in an off-market deal at an average price of RM1.45 for a total of RM91.5 mln. (The Star Online)

• Scientex Bhd's 1QFY18 net profit increased 39.6% Y.o.Y to RM72.4 mln, boosted by stronger property and manufacturing revenue. Revenue for the quarter gained 23.2% Y.o.Y to RM658.9 mln. (The Star Online)

• Astro Malaysia Holdings Bhd’s 3QFY18 net profit slipped 2.9% Y.o.Y to RM146.7 mln, impacted by higher operating expenses. Revenue for the quarter fell 1.9% Y.o.Y to RM1.40 bln.

• For 9MFY18, cumulative net profit rose 23.0% Y.o.Y to RM588.9 mln. Revenue for the period, however, dropped 1.7% Y.o.Y to RM4.14 bln. A third interim dividend of three sen per share, payable on 5th January 2018, was declared. (The Edge Daily)

• Sapura Resources Bhd's 3QFY18 net profit plunged 99.6% Y.o.Y to RM0.4 mln after the previous corresponding period’s earnings included a one-off gain on disposal of a 49.0% stake in APIIT Education Group. Revenue for the quarter, however, grew 9.1% Y.o.Y to RM12.9 mln.

• For 9MFY18, cumulative net loss stood at RM1.4 mln, compared to a net profit of RM102.7 mln recorded in the previous corresponding period. Revenue for the period, however, added 5.7% Y.o.Y to RM37.6 mln. (The Edge Daily)

• Ranhill Holdings Bhd’s wholly-owned subsidiary, SAJ Capital Sdn Bhd is proposing a Sukuk issue up to RM650.0 mln in nominal value, which the water supply services provider will be guaranteeing. The Sukuk will have 12- year tenure and the proceeds will be used to finance the redemption of RM800.0 mln Islamic Medium Term Notes by Ranhill Capital Sdn Bhd, another Ranhill wholly-owned subsidiary. (The Edge Daily)

• My E.G. Services Bhd (MyEG) has been granted a licence by the government to offer money lending services to complement its existing business activities. MyEG’s indirectly owned subsidiary, MY E.G. Credit Sdn Bhd (MYEC) has received a letter from the Ministry of Urban Wellbeing, Housing and Local Government for the license that is valid for two years and is subject to renewal from the ministry. (The Edge Daily)
• Acoustech Bhd has announced it is going to jointly develop shop offices worth an estimated RM71.4 mln in gross development value (GDV) with a unit of Yayasan Pelajaran Johor’s (YPJ). Acoustech and YPJ Builders Sdn Bhd plans to develop 84 units of two and three-storey shop offices on two plots of leasehold land in Kota Tinggi, Johor. The plots collectively measure 19.3 ac. (The Edge Daily)
• Nexgram Holdings Bhd has aborted its plan to jointly develop the Angkasa Icon City mixed commercial project in Cyberjaya, Selangor with Seychelles company, China Asian Capital Holding Ltd (CACH). Nexgram’s wholly-owned subsidiary Nexgram Land Sdn Bhd and CACH had agreed to discontinue the joint development agreement (JDA) signed on 19th May 2017 after a few subsequent discussions. (The Edge Daily)

• Halex Holdings Bhd plans to buy Hextar Chemicals Ltd (HCL) at an indicative price of RM550.0 mln. The acquisition will also allow the company and its subsidiaries to expand its agrochemical business by tapping into HCL’s customer and supplier network in more than 30 countries worldwide. (The Edge Daily)

Source: Mplus Research - 7 Dec 2017