Dour Sentiment Returns To The Fore

• Despite the positive in Wall Street overnight, the FBM KLCI (-0.8%) gapped down and subsequently ended lower yesterday, marking its third straight losing streak. The lower liners – the FBM Small Cap (-0.4%), FBM Fledgling (-0.6%) and FBM ACE (-0.6%), all retreated, while the broader market ended mostly lower with the Properties sector (-1.5%) taking the heaviest beating.

• Market breadth was negative as losers overpowered gainers on a ratio of 576-to- 319 stocks, while 411 counters flat-lined. Traded volumes, however, gained 32.3% to 3.18 bln shares as selling pressure intensifies.

• More than half of the key index components were in the red, dragged down by Nestle (-28.0 sen), followed by Genting (-25.0 sen), Public Bank (-20.0 sen), Genting Malaysia (-14.0 sen) and RHB Bank (-9.0 sen). Amongst the biggest decliners include Petron Malaysia (-54.0 sen), Perdana Petroleum (-30.0 sen), Dutch Lady (-28.0 sen), Malaysian Pacific Industries (-28.0 sen) and Nestle (-28.0 sen).

• Glove manufacturers like Hartalega (+68.0 sen), Top Glove (+54.0 sen and Kossan (+34.0 sen) topped the broader market advancers list, while Latitude Tree and IJM gained 17.0 sen and 16.0 sen respectively. Anchoring the gainers list on the FBM KLCI were Hong Leong Financial Group (+8.0 sen), IHH (+6.0 sen), KLK (+4.0 sen), Petronas Chemicals (+4.0 sen) and Press Metal (+3.0 sen).

• Asia benchmark indices ended mixed yesterday as the Nikkei (-0.2%) fell on weakness in construction shares after some firms were embroiled in bid-rigging scandals. Both the Shanghai Composite and Hang Seng Index added 0.9% and 0.7% respectively, taking cue from the positive performance in Wall Street overnight. ASEAN stockmarkets, meanwhile, closed mixed.
• Despite the stronger-than-expected housing starts data from the damages caused by Hurricanes Harvey and Irma, U.S. stockmarkets retreated from fresh record high levels overnight as the Dow fell 0.2% on weakness in technology shares. On the broader market, the S&P 500 slipped 0.3%, while the Nasdaq closed 0.4% lower.
• Earlier, European benchmark indices ended mostly lower as both the CAC and DAX declined 0.7% each after the Euro Currency strengthen against the Greenback , whilst the latter fell on disappoint in reading on German business sentiment. The FTSE, however, added 0.1% to close at six-week high.

The Day Ahead

• Last week’s rally on the key index faded as sentiments continue to look dour after the successive days of weakness. With global markets experiencing mild profit taking coupled with the renewed selloff from foreign funds, the near term outlook on the local equities appears to be frail amid the lack of fresh local catalyst.

• We expect the weakness to persist with the key index could head towards the 1,730 level over the near term as the selling and profit taking activity intensifies amid the poor investor confidence level. On the flipside, the resistances are at 1,750 and 1,760 levels.

• We also reckon that the lower liners and the broader market could see further weakness, with both retail and institutional, trimming their positions as we approach the year end festive breaks.

Company Brief

• Pestech International Bhd‘s whollyowned Cambodian unit, Pestech Cambodia Ltd (PCL), has signed a contract agreement worth US$26.0 mln (RM106.1 mln), to develop two substations and double-circuit transmission line in Cambodia.

• Under the agreement, Pestech will design, engineer, manufacture, install, test and commission the substations and transmission line; a 115kV double circuit transmission line that will run from about 75km to 78km from Oddor Meanchey to Siem Reap, while the substations are: one 115/22kV substation in Oddor Meanchey, and one 230/22kV substation in Bek Chan (Porsenchey).

• The Oddor Meanchey transmission line and substation will take about 18 months to be completed, while the Bek Chan substation is expected to be completed in 24 months. (The Star Online)

• AirAsia X Bhd (AAX) has appointed Wong Mee Yen as its Chief Financial Officer (CFO), effective 1st January, 2018, replacing Cheok Huei Shian, who had led the AAX finance team since February 2015. (The Star Online)

• Chemical Company of Malaysia Bhd is planning to acquire an office-cum-factory in Bandar Baru Bangi for RM20.8 mln, to cater to growing market demand. The property is on leasehold land measuring 7,969 sqm. with a double-storey officecum-factory, and an annexed singlestorey factory, as well as all its fixtures and fittings. The purchase will be equally funded by external borrowings and internal funds. (The Edge Daily)

• G3 Global Bhd has proposed to sell its two loss-making units in the apparel business — Evatech Sdn Bhd and Uni Jeans Care Sdn Bhd to Jelapang Subur Sdn Bhd for RM11.3 mln and RM1.7 mln respectively. The group is expected to reap about RM4.7 mln gain from the sale of Evatech and a loss of RM480,582 from the proposed sale of Uni Jeans. Consequently, the sale proceeds will be used as working capital. (The Edge Daily)
• Vertice Bhd, formerly known as Voir Holdings Bhd is proposing to issue up to 61.6 mln (or 30.0% of its share base) new Vertice shares to independent third party investors to be identified later, in a bid to raise up to RM62.8 mln, to fund its construction project and working capital. The issue price of the placement will be determined later, while the placement will be implemented in one or more tranches, within six months after securing approval from Bursa Securities. (The Star Online)
• Techfast Holdings Bhd has entered into a five-year deal to source chemical products from a China-based chemical firm Tecore Synchem Inc and resell them to its customers. As Tecore’s Malaysian partners, Techfast will supply and sell Tecore’s products, including clear epoxy molding compound and silicone phosphor film to multinational companies that engage in the LED business.

• The agreement also includes the sale of products to contract manufacturers of the two customers located in Malaysia and overseas, including China and Taiwan. The group will also be responsible for product evaluation testing, customer demand information collation and customer supply chain coordination on behalf of Tecore. (The Edge Daily)

• Analabs Resources Bhd's 2QFY18 net profit slumped 53.6% Y.o.Y to RM1.6 mln, from RM3.5 mln in the last corresponding year, mainly due to higher operating expenses incurred in both the recovery and sale of recycled products and manufacturing, formulation and sale of resin, chemical and building materials. Revenue for the quarter, meanwhile, fell 11.5% Y.o.Y to RM34.6 mln, from RM39.1 mln previously. Even so, Analabs proposed a first interim dividend of one sen per share to be paid on a date to be fixed later. (The Edge Daily)

• Pentamaster Corp Bhd has redesignated its executive Chairman Chuah Choon Bin to non-executive Chairman, while its independent and non-executive director Sim Seng Loong and executive director Gan Pei Joo have both resigned, due to the board's restructuring in preparation for the proposed listing of the company's automated solution business through Pentamaster International Ltd on the Main Board of the Stock Exchange of Hong Kong Ltd.

• Meanwhile, Lee Kean Cheong, an independent and non-executive director of Teo Guan Lee Corp Bhd and Petrol One Resources Bhd, has been appointed as Pentamaster’s independent and non-executive director. (The Edge Daily)

Source: Mplus Research - 20 Dec 2017