• Tracking the weakness in Wall Street overnight coupled with the negative performance across key regional indices, the FBM KLCI (-0.3%) halted a streak of three sessions of gains and subsequently rose 1.8% W.o.W. The lower liners – the FBM Small Cap (-0.2%), FBM Fledgling (- 0.3%) and FBM ACE (-0.8%), all retreated, while the broader market ended mixed.

• Market breadth turned negative as losers outnumbered gainers on a ratio of 475- to-414 stocks, while 386 counters flatlined. Traded volumes declined 3.8% to 2.34 bln shares as investors booked in profit from the recent recovery.

• More than half of the key index constituents retreated, dragged down by BAT (-RM2.08), followed by Hong Leong Financial Group (-90.0 sen), Hong Leong Bank (-42.0 sen), Genting (-26.0 sen) and Hap Seng Consolidated (-21.0 sen). Notable decliners on the broader market include Far East Holdings (-26.0 sen), UMW Holdings (-22.0 sen), Heineken (- 20.0 sen), United Plantations (-20.0 sen) and Sarawak Oil Palms (-18.0 sen).

• In contrast, amongst the biggest winners on the broader market were Ajinomoto (+50.0 sen), Malaysian Pacific Industries (+40.0 sen) Panasonic (+36.0 sen) and Selangor Properties (+30.0 sen). Heng Yuan gained 28.0 sen to record its sixth straight session of winning streak. On the FBM KLCI, MISC (+12.0 sen), RHB Bank (+12.0 sen), IHH (+10.0 sen), Am Bank (+6.0 sen) and Maybank (+5.0 sen) were the biggest gainers.

• Asia benchmark indices extended their losses on last Friday as the Nikkei fell 0.6%, due to weakness in telecommunication shares on concern over tighter e-commerce competition. The Shanghai Composite slipped 0.8%, while the Hang Seng Index sank 1.1%, pressured by property and technology shares. ASEAN stockmarkets, meanwhile, closed mostly lower.

• U.S. stockmarkets staged a quick recovery last Friday as the Dow gained 0.6 on optimism over the possible passing of tax-overhaul plan. On the broader market, the S&P 500 (+0.9%) recovered all its previous session losses with only the energy sector (-0.03%) in the red, while the Nasdaq jumped 1.2% higher.

• Earlier, European benchmark indices ended mostly higher as the FTSE added 0.6% after the British Pound tumbled against the Greenback, while the rose 0.3% respectively after recovering from their intraday losses. U.K. companies The CAC, however, fell 0.2% to record its third straight losing streak.

The Day Ahead

• Following approximately 40-point window gain on a course of three days, signs of quick profit taking emerged on the key index. We think that the earlier sharp rally will take a breather, allowing investors and traders to digest their gains in the coming days. We expect the weakness to be mild as any weakness will present an opportunity to bargain hunt the local equities, in line with gains in Wall Street on last Friday.

• The consolidation mode on FBM KLCI may see the key index to drift towards the 1,750 level, with the key support located at the 1,730 level. Meanwhile, the resistances are at 1,765 and 1,770 levels.

• We rotational plays on the lower liners and broader market shares to dominate the headlines as traders would opt to bargain hunt beaten down stocks as market sentiment recovered. However, gains will be capped as investors retreated to be sidelines ahead of the Christmas and New Year breaks.

Company Brief

• Eco World International Bhd and UKbased Willmott Dixon Holdings Ltd's development arm Be Living Holdings Ltd is planning to jointly-develop 12 sites in Greater London and the South East of England, with an estimated gross development value of at least £2.6 bln (RM14.0 bln).

• Eco World will own 70.0% equity stake in the proposed joint-venture (JV). The JV is also contemplating the acquisition of a development management company (DMco) with a full multi-disciplinary team of highly experienced personnel.

• Eco World International’s 4Q2017 net loss narrowed to RM32.6 mln, from a net loss of RM55.1 mln a year earlier, while full-year net loss stood at RM87.6 mln vs a net loss of RM220.1 mln previously. (The Star Online)

• Eco World Development Group Bhd's 4Q2017 net profit gained 15.0% Y.o.Y to RM33.7 mln, from RM29.4 mln last year, on the back of a 21.0% Y.o.Y increase in revenue to RM899.0 mln, from RM741.0 mln in 4Q2016.

• Full-year net profit in 2017 also jumped to RM209.7 mln vs RM129.3 mln a year earlier, while revenue was higher at RM2.92 bln, from RM2.55 bln in 2016. (The Star Online)

• Gamuda Bhd’s 1QFY18 net profit rose 25.2% Y.o.Y to RM203.0 mln, from RM162.2 mln a year ago, boosted by higher work progress contributions from the construction division. Quarterly revenue also soared 52.9% Y.o.Y to RM771.8 mln, from RM504.9 mln in the same quarter last year and the group declared a first interim dividend of 6.0 sen per share, payable on 25th January, 2018.

• Looking ahead, Gamuda expects its property arm to hit RM3.5 bln sales target in FY18, up from RM2.4 bln last year. The group also anticipates a better performance this year as MRT2’s progress picks up pace, alongside contributions from stronger property sales both overseas and in Malaysia, and steady contributions from the expressway division.

• Meanwhile, cumulative progress of the work portion under the Pan Borneo Highway project is on track at 11.7% as at November 2017. (The Star Online)

• REDtone International Bhd has terminated its plans to jointly explore business opportunities with PT Sigma Cipta Caraka TelkomSigma to offer managed information and communication technology (ICT) valueadded services and solutions for the Indonesian market. This follows the expiry of the Memorandum of Understanding (MoU) between REDtone and TelkomSigma, which is part of PT Telekomunikasi Indonesia Tbk that was signed in April 2015.

• Separately, REDtone posted a 2QFY18 net profit of RM1.3 mln against a net loss of RM2.6 mln a year ago, mainly due to higher gross margins. Revenue for the quarter however, fell 25.9% Y.o.Y to RM29.1 mln, from RM39.3 mln last year. (The Edge Daily)

• Scientex Bhd is acquiring a 336-acre piece of freehold land in Pulai, Johor for RM284.2 mln cash, to be developed into a mixed property development. The group has inked a sale and purchase agreement with DKTMG Land Sdn Bhd for the proposed land acquisition, which will enable Scientex to expand on its existing landbank in Johor. Further details on the project was undisclosed, as the project is still at its preliminary stage. (The Star Online)

• Carimin Petroleum Bhd is planning to buy a 21,130 sq metre land at Kawasan Perindustrian Teluk Kalung in Kemaman, Terengganu, from Noorfauziah Mat Fauzi and Mohd Fauzi Musa, for RM1.6 mln cash, in a bid to expand its fabricating facilities. (The Edge Daily)

• Metronic Global Bhd is planning to venture into the development of a 50- acre halal industrial park in China’s Sichuan province called Metronic Global Halal Industrial Hub. The proposed development is collaboration between Metronic and MB Longji Holdings Sdn Bhd (MBLH), which will enable the former to secure some engineering work, so it refocuses on its core business.

• Under the agreement, both parties will collaborate in bringing in investors to invest in and purchase land within the industrial park. The hub is situated within a development area measuring 1,800 acres in Suining, Sichuan Province, with MBLH as the master developer.

• Meanwhile, MBLH will be responsible for arranging local financing from Chinese banks for investors at a discounted rate, providing a liaison office with staff for Metronics to operate and conduct business, besides liaising with local government authorities for all regulatory approvals required to carry out development within the Halal hub.

• Contracts for integrated building management system, plus the mechanical and electrical system, are estimated at RM50.0 mln for the entire initial development phase of 50 acres, while pre-tax profit is projected at RM12.5 mln during the expected duration of 12 to 18 months. (The Edge Daily)

• Straits Inter Logistics Bhd is planning a private placement of up to 55.2 mln shares (or 10.0% of its issued share capital) to third party investors to be identified later, at an issue price which will also be determined at a later date. At an indicative issue price of 25.0 sen per placement share, the proposed corporate exercise will raise up to RM13.8 mln, which will be mainly used for working capital and raw material expenses. (The Edge Daily)

• Ta Win Holdings Bhd has announced its plans to undertake a rights issue, in order to raise an estimated RM51.4 mln - to finance its working capital and pare borrowings. The cash call will involve the issuance of 192.9 mln rights shares at 20.0 sen apiece.

• The group is also planning to issue 257.2 mln redeemable convertible preference shares (RCPS) at 5.0 sen apiece, together with 128.6 mln free detachable warrants.

• This is to be issued on the basis of three rights shares and four RCPS, together with two warrants attached, for every one existing Ta Win share owned.

• About RM38.6 mln from the gross proceeds will be earmarked for daily operations cost, as well as the purchase of raw materials and supplies. (The Edge Daily)

• Loss-making shipping company Hubline Bhd has proposed a private placement of up to 10.0% of its issued capital, to raise about RM23.0 mln, in a bid to reduce its borrowings. The proposal comes on the heel of the company's issuance of redeemable convertible notes to raise RM80.0 mln fresh capital.

• Proceeds from the proposed share placement would be used for partial repayment of borrowings, capital expenditure, partial payment of secured container shipping business creditors, working capital, as well as expenses related to the exercise. (The Edge Daily)

• LBS Bina Bhd is planning to set up a RM500.0 mln Sukuk Murabahah programme to finance future acquisitions and development cost of the projects undertaken by the group to repay borrowings, as well as for working capital.

• The sukuk programme will enable the group to have flexibility in its fundraising exercise, with varying amount and tenures for optimal assetliability matching. The programme has a tenure of up to 20 years from the date of its first issue. (The Edge Daily)

• Sunway Bhd will establish a RM5.0 bln perpetual Islamic medium term note (IMTN) programme to finance its investment activities, capital expenditure and for working capital. The IMTNs is expected to be issued by 1Q2018. (The Star Online)

• Ire-Tex Corp Bhd has dropped its legal action against Datuk Tey Por Yee and 19 others on 15th December, 2017, stating that the lawsuit is unsustainable due to cost reasons.

• To recap, the suit was filed at the High Court on 21st June, 2017, after IreTex’s substantial shareholder Elite Cosmo Group Ltd appointed two directors of its choice into the company and removed four directors through an EGM on 25th August, 2017. (The Edge Daily)

• Uzma Bhd is undertaking an internal reorganisation exercise, which aims to streamline the group's structure and management.

• The group has noted that many of its core projects are undertaken by its wholly-owned unit Uzma Engineering Sdn Bhd (UESB), as the latter holds most of the Petronas licenses. In a bid to reduce the concentration risk at UESB, Uzma plans to transfer some of UESB’s businesses to individual entity according to its nature of business, so that its core activities are not housed under one single subsidiary. (The Edge Daily)

• Kinsteel Bhd’s external auditor Messrs Crowe Horwath has expressed a disclaimer of opinion in the company's audit report for FY17, on uncertainties related to Kinsteel’s ability to continue as a going concern.

• The going concern for Kinsteel, which is undergoing a regularisation plan — including debt restructuring measures — is also dependent on support from its lenders and shareholders, combined with its ability to run a cashflowhealthy operation. Downside risks include the inability to realise its assets and discharge its liabilities in the normal course of business. Kinsteel had posted a net loss of RM343.0 mln in FY17 and its current liabilities had exceeded its current assets by RM961.5 mln as at 30th June, 2017. The figure has since climbed to RM696.0 mln. (The Star Online)  

Source: Mplus Research - 18 Dec 2017