Still On A Window Dressing Mode

• Tracking the positive performance on Wall Street overnight, coupled with window dressing activities, the local bourse continued to see renewed buying support as the FBM KLCI (+0.5%) extended its gains yesterday. The lower liners – the FBM Small Cap (+0.3%), FBM Fledgling (+0.5%) and FBM ACE (+1.7%), also all ended higher again, while the broader market ended mostly higher.

• Market breadth remained positive as gainers outpaced losers on a ratio of 563- to-353 stocks, while 366 counters flatlined. Traded volumes added 16.5% to 2.51 bln shares as investors bargain hunt for beaten down stocks.

• Banking heavyweights like Hong Leong Financial Group (+50.0 sen), Public Bank (+16.0 sen) and RHB Bank (+15.0 sen) anchored the winners on the FBM KLCI, while Genting and Genting Malaysia added 37.0 sen and 24.0 sen respectively. Notable advancers on the broader market were Heng Yuan (+56.0 sen), Calrsberg (+52.0 sen), Vitrox (+50.0 sen), Bursa (+30.0 sen) and Dutch Lady (+30.0 sen).

• On the flipside, United Plantations (-40.0 sen), Malaysian Pacific Industries (-34.0 sen), Ajinomoto (-24.0 sen) and Enra Group (-20.0 sen) topped the broader market decliners list. Magni-Tech Industries slipped 38.0 sen after reported a weak set of quarterly results. Key losers on the big board were Tenaga (-6.0 sen), Petronas Dagangan (-4.0 sen), Axiata (- 4.0 sen), DIGI (-2.0 sen) and Astro (-2.0 sen).

• Japanese stockmarkets extended their losses yesterday as the Nikkei fell 0.5% after the Japanese Yen appreciated against the U.S. Dollar. The Hang Seng Index (+1.5%) surged on gains in financial shares, while the Shanghai Composite (+0.7%) rebounded, taking cue from gains on Wall Street overnight. ASEAN stockmarkets, meanwhile, ended mostly lower.
• U.S. stockmarkets ended mixed overnight as the Dow (+0.3%) extended its gains after the U.S. Federal Reserve raised its benchmark interest rates for the second time this year and expects another three hikes in 2018. On the broader market, the S&P 500 (-0.1%) retreated from its record high level, while the Nasdaq climbed 0.2% higher.
• European benchmark indices - the FTSE (-0.1%), CAC (-0.5%) and DAX (-0.4%), all retreated after the Greenback retreated for the first time in four days against the Euro Currency. The weakness was also compounded with political uncertainty in Italy whereby the parliament will be dissolved between Christmas and the New Year with national elections probably set for 4th March 2018.

The Day Ahead

• As expected, the window dressing activities continued yesterday despite the key index largely in a tight trading range for most of the day. We see the window dressing process continuing over the near term as we believe the year-end target remains at 1,750 level.

• The window dressing activities will be supported by the positive market developments overseas, including the U.S. interest rate hike that was largely anticipated. Nevertheless, the key index’s window dressing efforts will be moderate – similar to the recent trend where most of the gains will be attained at the end of the trading day. On the upside, the key index could head towards the 1,740 and 1,745 levels. The main near term support remains at 1,720.
• Similarly, the lower liners will also continue to see rotation plays, albeit there will still be quick profit taking activities as follow-through buying may ebb as there are few sustainable leads for retail players to follow, whilst many are also already on their year-end break.

Company Brief

• Malayan Banking Bhd’s (Maybank) 100.0%-owned subsidiary Maybank Asset Management Group Bhd (MAMG), is planning to acquire two fund management companies owned by Permodalan Nasional Bhd (PNB) totalling RM51.0 mln.

• Both firms - Amanah Mutual Bhd (AMB) and Singapore Unit Trusts Ltd (SUTL), which are involved in unit trust funds management, are worth RM16.1 mln and RM34.9 mln respectively. AMB and SUTL are fully owned by PNB, which is also the majority shareholder of Maybank.

• Further, Maybank has also signed a conditional share subscription agreement with PNB for the subscription of some 8.3 mln new shares in MAMG for RM50.0 mln (or RM6.00 per share). Consequently, PNB will hold 20.0% of the enlarged share capital of MAMG, with the remaining 80.0% will be held by Maybank. (The Edge Daily)

• Kejuruteraan Asastera Bhd (KAB) was awarded a RM14.5 mln subcontract from Kerjaya Prospek (M) Sdn Bhd to undertake electrical and telephone services works for a luxury condominium project. The group has received a letter of acceptance from Kerjaya Prospek to act as the latter's nominated subcontractor for the proposed project, which involves the installation, testing and commissioning of electrical systems, as well as telephone and telecommunications infrastructure. The subcontract duration will be from the 8th January 2018 till 24th May 2020.
• The Penang State Government has decreased the water intake fee charged on PBA Holdings Bhd to 3.0 sen per cubic metre for 2018, from 6.0 sen previously, to reduce the water supply company’s burden caused by the major flood in Penang in November. (The Star Online)
• Minetech Resources Bhd is planning to buy a 60.0% equity stake in quarry operator, Bertam Capital Sdn Bhd (BCSB) for RM16.8 mln from Bertam Roadbase Sdn Bhd (BRSB). The acquisition will be fully satisfied via an issuance of 120.0 mln new Minetech shares to BRSB at an issue price of 14.0 sen per share. As BCSB has the exclusive mining rights to a granite quarry in Nilai, Negeri Sembilan, the group expects the acquisition to immediately contribute to Minetech’s bottomline and complement its existing operations. (The Edge Daily)
• Aeon Credit Service (M) Bhd was slapped with notices of additional taxes and penalties, amounting to RM96.8 mln from the Inland Revenue Board (IRB). The notices of additional assessment were for the years of assessment 2010 to 2016, with penalties.

• Consequently, Aeon Credit has appointed tax solicitors and is initiating proceedings to challenge the validity and legality of the said notices of additional assessment. (The Edge Daily)

• AirAsia Bhd has appointed Riad Asmat as Chief Executive Officer (CEO) effective 10th January 2018, replacing the current CEO Aireen Omar who will be promoted to AirAsia Deputy Group CEO, digital transformation & corporate services. Subsequently, Riad will report directly to the other AirAsia deputy group CEO for airlines business, Bo Lingam. (The Star Online)

• Berjaya Food Bhd (BFood) 2QFY18 net profit rose 15.5% Y.o.Y to RM5.8 mln, from RM5.0 mln last year, due to higher pretax profit recorded by Starbucks’ operations in Malaysia and lower losses incurred by the Kenny Rogers Roasters (KRR) operation in Indonesia. Quarterly revenue also gained 7.8% Y.o.Y to RM160.8 mln, from RM149.1 mln a year ago and the group declared a second interim dividend of one sen per share, payable on 26th January, 2018.

• For the cumulative 1HFY18, net profit increased by 11.1% Y.o.Y to RM11.2 mln vs. RM10.0 mln in the last corresponding period, while revenue was up 8.5% Y.o.Y to RM315.2 mln, from RM290.5 mln in 1HFY17. (The Edge Daily)

• PUC Bhd marked its entry into the ecommerce market yesterday with the launch of its social marketing platform deemed "Presto", which aims to benefit shoppers and sellers with digital tools, creative rewards mechanism and costeffective marketing solutions. Presto will also roll out its e-wallet service by early 2018, having received approval from Bank Negara Malaysia for a large scheme e-money licence last September. (The Edge Daily)

• O&C Resources Bhd (OCR) saw its 1QFY18 net profit jumped 269.0% Y.o.Y to RM1.06 mln, from RM288,000 a year earlier, boosted by increased contributions from the construction and property development divisions, while revenue surged 80.0% Y.o.Y to RM21.5 mln, from RM12.0 mln last year. (The Edge Daily)

Source: Mplus Research - 14 Dec 2017