More Upsides In The Offing

• Tracking the positive sentiments on Wall Street overnight, coupled with higher crude oil prices, the FBM KLCI (+0.3%) rebounded last Friday and consequently halted a streak of three sessions of losses. The key index also logged its sixth straight weekly winning streak, rising 0.3% W.o.W. The lower liners – the FBM Small Cap (+0.8%), FBM Fledgling (+1.4%) and FBM ACE (+0.6%) all advanced, while the broader market ended positive.

• Market breadth turned positive as advancers outpaced decliners on a ratio of 643-to-389 stocks, while 389 shares closed flatlined. Traded volumes, however, fell 2.1% to 3.93 bln shares investors turned cautious following the recent runup.

• More than half the key index constituents advanced, led by Nestle (+70.0 sen), followed by Petronas Gas (+50.0 sen), Genting (+18.0 sen), Press Metal (+17.0 sen) and AmBank (+15.0 sen). Significant advancers on the broader market include Panasonic (+RM1.20), Kluang Rubber (+95.0 sen), Sungei Bagan Rubber (+61.0 sen), Kuchai Development (+52.0 sen) and United Plantation (+52.0 sen).

• In contrast, amongt the biggest decliners on the broader market were BAT (-26.0 sen), Tasek Corporation (-20.0 sen), BIMB (-11.0 sen), Formosa Prosonic (-11.0 sen) and UEM Edgenta (-9.0 sen). Meanwhile, Hong Leong Financial Group (-6.0 sen), Tenaga (-4.0 sen), Sime Darby (-4.0 sen), Petronas Dagangan (-4.0 sen) and IOI Corporation (-3.0 sen) were the big board decliners.

• Asia benchmark indices ended mostly higher as the Hang Seng Index jumped 0.9% to record its fourteenth consecutive winning streak, while the Shanghai Composite added 0.1%. The Nikkei (-0.2%), however, retreated for the third straight session, dragged down by the weakness in consumer staples sector. ASEAN stockmarkets, meanwhile, ended mostly higher.
• U.S. stockmarkets extended their gains last Friday as the Dow climbed another 0.9% amid the start of the 4Q2017 earnings season, coupled with the positive retail sales data that rose 0.4% Y.o.Y in December – the fourth straight monthly gain. On the broader market, the S&P 500 rose 0.7%, anchored by gains in consumer discretionary and energy shares, while the Nasdaq ended 0.7% higher.
• Earlier, European stockmarkets – the FTSE (+0.2%), CAC (+0.5%) and DAX (+0.3%) all advanced, taking cue from the positive developments on Wall Street. The buoyant sentiment also stemmed by the German coalition party leaders reaching a breakthrough in preliminary talks to form a new government.

THE DAY AHEAD

• With the positivity permeating in many global indices, we expect the recovery on Bursa Malaysia to extend over the near term, building up strength from last Friday’s gains. As it is, the market’s undertone is still firm and after the short consolidation in the past few sessions, we think the upsides should resume.

• Nevertheless, many Bursa Malaysia indices are still tethering in the overbought region, hence some measure of cautiousness may still persist and the upsides could still be limited. On the upside, there are resistances at the 1,830-1,840 levels, while the 1,800-1,820 levels are still the main supports for now.

• We also see a revival of interest among the lower liners and broader market shares as retail players will still be taking a keen interest on trading activities and this will again keep market breath on a high which is a key indicator of market strength.

COMPANY BRIEF

• AirAsia X Bhd expects 2018 to be the strongest year for the group, on the back of several growth strategies like reallocation plans for routes, involving the transfer of more-than-four-hour-long routes from AirAsia to AirAsia X, which could reduce overall costs. (The Edge Daily)
• Top Glove Corp Bhd has inked a conditional share purchase agreement with Adventa Capital Pte Ltd to buy the entire equity interest in glove manufacturer Aspion Sdn Bhd for RM1.37 bln.

• About RM1.23 bln will be paid in cash, funded entirely from a combination of conventional term loan and Islamic term financing, while the remaining RM137.0 mln will be satisfied via the issuance of some 20.5 mln new Top Glove shares at about RM6.68 apiece.

• The group also plans to buy two more companies this year and is on the lookout to acquire four more companies by 2019. (The Star Online)

• ACE Market-listed Guidance Note 3 (GN3) company, G Neptune Bhd has aborted its plan for a private placement exercise to raise some RM3.0 mln to support its working capital. The group has decided to drop the proposed exercise announced three years ago and is looking into formulating a plan to regularise its financial condition after it slipped into the GN3 status. (The Edge Daily)

• T7 Global Bhd is collaborating with a unit of China's largest construction and real estate conglomerate to bid for railrelated projects in Malaysia. The 51:49 joint-venture (JV) company, T7 China Construction Third Engineering Sdn Bhd (T7CCTE) owned by T7 and China Construction Third Engineering (M) Sdn Bhd will also take up other infrastructure and construction projects in the country.

• China Construction Third Engineering (M) Sdn Bhd is a unit of China Construction Third Engineering (M) Sdn Bhd, which is in turn a subsidiary of China State Construction Engineering Corp Ltd. (The Star Online)

• Paramount Corp Bhd is acquiring about 41.1 ac. of land in Cyberjaya for RM149.7 mln to build a gated and guarded landed residential development.

• The group is buying the freehold land from Makmur Asiamaju Sdn Bhd, which is jointly-owned by Areca Holdings Sdn Bhd (70%) and Setia Haruman Sdn Bhd (30%). (The Star Online)

• Axiata Group Bhd has appointed Khazanah Nasional Bhd Deputy Managing Directo,r Tengku Datuk Seri Azmil Zahruddin Raja Abdul Aziz as Non-Independent Non-Executive Director of the group, effective 12th January 2018 – replacing Kenneth Shen, who served on the board as Khazanah's nominee since 2011. (The Edge Daily)

• Hovid Bhd‘s Managing Director, David Ho Sue San and private equity group TAEL Partners Ltd have managed to accumulate 645.2 mln shares (or a 78.6% equity stake) in the company at the closing date of acceptance.

• About 44.9% (or 368.4 mln shares) of its total share capital have been received by the joint-offerors, bringing their shareholding to 78.6%, from 33.7% equity stake on 9th October last year when the offer document was dispatched.

• Further, the joint-offerors also received additional acceptances of 7.7 mln shares (or 0.9% stake), subject to verification. (The Edge Daily)

Source: Mplus Research - 15 Jan 2018