A Rebound In Store

• Tracking the weakness across Asia stockmarkets, the FBM KLCI (-0.3%) retreated for the third consecutive day after lingering mostly in the negative territory yesterday. The lower liners – the FBM Small Cap (-1.2%), FBM Fledgling (- 0.4%) and FBM ACE (-2.5%), all closed in the red, while the broader market ended mostly negative.

• Expectedly, market breadth remained negative as decliners thumped advancers on a ratio of 3-to-1 stocks. Traded volumes slipped 30.1% to 4.02 bln shares as the negative market sentiment sent investors retreating to the sidelines.

• Key decliners on the FBM KLCI were Petronas Gas (-50.0 sen), Genting (-22.0 sen), Genting Malaysia (-11.0 sen), DIGI (- 10.0 sen) and Petronas Dagangan (-6.0 sen). Amongst the biggest decliners on the broader market were BAT (-94.0 sen), United Plantations (-42.0 sen), Top Glove (-30.0 sen) and KESM Industries (-28.0 sen). Ewein slipped 2.0 sen after its Group Managing Director, Datuk Ewe Swee Kheng was remanded by the Malaysian Anti-Corruption Commission.

• On the flipside, notable advancers on the broader market were Ayer Holdings (+39.0 sen), Fraser & Neave (+22.0 sen), Kuchai Development (+20.0 sen) and LPI Capital (+18.0 sen). On the FBM KLCI, Hong Leong Bank (+12.0 sen), Nestle (+10.0 sen), Hong Leong Financial Group (+8.0 sen), KLCC (+6.0 sen) and AmBank (+5.0 sen) were the major winners.

• Asia benchmark indices closed mixed yesterday as the Nikkei (-0.3%) extended its losses after the Japanese Yen appreciated against the Greenback. The Shanghai Composite (+0.1%) advanced for the tenth straight session, while the Hang Seng Index (+0.2%) logged its thirteenth straight winning streak on gains in financial shares. ASEAN stockmarkets, meanwhile, ended mixed.
• U.S. stockmarkets advanced overnight, recouping all their previous session losses as the Dow gained 0.8% on optimism over earnings growth. On the broader market, the S&P 500 added 0.7%, led by gains in the energy sector (+2.0%) after Brent oil price touched US$70 per barrel level, while the Nasdaq finished 0.8% higher.
• Earlier, European stockmarkets closed mostly lower as the CAC and DAX fell 0.3% and 0.6% respectively, dragged down by the stronger Euro currency against the Greenback. The FTSE, however, outperformed its peers by closing 0.2% higher after enduring a choppy trading session.

The Day Ahead

• After three consectuive sessions of losses, we think the Malaysian stockmarket could stage a rebound to end the week, taking cue from the positivity on Wall Street. The rebound could allow the key index to firm up its base around the the 1,820 level as we think the upsides could still be moderate over the near term with the market still lingering in the overbought position.

• On the climb, there should be resistances at around the 1,835-1,840 levels, while the other major support is at the psychological level of 1,800.

• Similarly, there could be some bargain hunting activities on the lower liners and broader market shares after the recent weakness, but the gains could be limited by the toppish conditions and quick profit taking activities.

Company Brief

• LBS Bina Group Bhd has launched its first property project in 2018, a RM954.7 mln condominium development in Bukit Jalil known as Residensi Bintang Bukit Jalil. The project will include a 47-storey north tower and 50-storey south tower on a 2.19 ha. (5.47 ac) land and is near the Bukit Jalil City Mall and Paradigm Garden City Mall.

• The project, which is slated for completion by mid-2022, features 1,342 condominiums and will be undertaken by LBS’s 55.0%-owned subsidiary, MGB Bhd. LBS also said that it was eyeing property sales of RM1.80 bln this year. (The Edge Daily)

• Ta Ann Holdings Bhd is planning to acquire a 30.1% equity stake in Sarawak Plantation Bhd for RM169.9 mln, from Cermat Ceria Sdn Bhd, in-tandem with its plan to further expand its oil palm plantation business and gain larger market access in Sarawak. (The Star Online)

• Guidance Note 3 (GN3) company, R&A Telecommunication Group Bhd has filed a court action against former director Francis Tan Hock Leong and six other parties, following a police report made against Tan on 29th December last year for attempting to withdraw a previous police report made by the group relating to unauthorised transactions worth RM4.2 mln in April 2017.

• Consequently, R&A has filed a notice of application in the High Court against Tan, Nexgram Holdings Bhd, and Nexgram directors Mazru Mat Yusof, Helmi Faisal Fuad, Datuk Donald Lim Siang Chai, Fu Lit Fung and Zaharin Ahmad Zamani. (The Edge Daily)

• Uzma Bhd has secured another contract from Petronas Carigali to supply a 340K and 460K Hydraulic Workover Unit, just two days after it was awarded three umbrella contracts from Petronas.

• The three-year contracts will commence from 22th December 2017 until 21st December 2020, with an extension option of one year.

• The umbrella contract does not constitute a commitment for any specific work and the execution of the umbrella contract depends on work orders to be issued to UESB from time to time at Petronas Carigali's discretion. Hence, there is no form value for the umbrella contact. (The Edge Daily)

• Atlan Holdings Bhd's 3QFY17 net profit plunged 90.0% Y.o.Y to RM1.6 mln vs RM16.7 mln in the previous year, mainly due to foreign exchange loss, despite a 2.5% Y.o.Y growth in revenue to RM186.1 mln, from RM181.6 mln a year ago. Even so, the group has declared a third interim single dividend of 10.0 sen per share, payable on 15th March, 2018.

• Meanwhile, cumulative 9MFY17 net profit also declined 46.0% Y.o.Y to RM22.7 mln, from RM41.9 mln a year ago, alongside a 2.0% Y.o.Y fall in revenue to RM602.7 mln, from RM613.0 mln in 9MFY16. (The Star Online)

• Amtek Holdings Bhd is disposing its Crocodile brand inventory, accessories and retail fixed assets to Crocodile International Sdn Bhd (CISB) for about RM8.0 mln cash. The sale also entails the termination of the license agreement for distributing and retailing the "Crocodile" brand men's apparel and small leather goods in Malaysia. Consequently, the proposed disposal is expected to result in a loss on disposal of about RM2.2 mln for Amtek. (The Edge Daily)

• Glove-dipping line maker, HLT Global Bhd is planning to diversify into the rubber glove manufacturing business and has proposed to acquire a controlling stake in a glovemaker for RM33.0 mln.

• The group has entered into a Heads of Agreement (HoA) with Suntel International Co Ltd, Kan Mei Yoong and Lee Sow Yin for a 55.0% shareholding in HL Rubber Industries Sdn Bhd. The purchase will be satisfied via the issuance of 113.8 mln new HLT shares at 29.0 sen apiece — subject to a definitive agreement to be finalised later. (The Star Online)

• CIMB Group Holdings Bhd will trim its equity stake in two asset management joint-venture (JV) with Principal Financial Group for RM470.3 mln.

• The group has agreed to divest its 20.0% holdings in CIMB-Principal Asset Management Bhd to Principal International (Asia) Ltd, and 10.0% stake in CIMB-Principal Islamic Asset Management Sdn Bhd to Principal Financial Services Inc (PFI).

• Upon the completion, Principal Financial Group will increase its ownership stake to 60.0%, while CIMB will retain 40.0% ownership in the entities. CIMB is expected to recognise a gain on disposal of about RM950.0 mln. (The Star Online)

• Berjaya Assets Bhd‘s (BAssets) ownership in 7-Eleven Malaysia Holdings Bhd has increased to 4.6% (or 51.4 mln shares) after acquiring a

Source: Mplus Research - 12 Jan 2018