Looking For New Leads

• After lingering in the positive territory for the entire trading session, the FBM KLCI (+0.2%) extended its gains yesterday, in tandem with the positive sentiments across its regional peers. The lower liners – the FBM Small Cap (-0.4%), FBM Fledgling (-0.3%) and FBM ACE (-1.2%), however, all retreated as with the broader market that closed mostly lower.

• Market breadth turned negative as decliners outnumbered advancers on a ratio of 685-to-378 stocks, while 376 stocks closed flatlined. Traded volumes, however, gained 37.2% to 5.40 bln shares as signs of profit taking on the broader market emerged.

• Once again, Nestle (+20.0 sen) anchored by big board advancers list, followed by Genting Malaysia (+11.0 sen), Petronas Chemicals (+10.0 sen), KLK (+6.0 sen) and DIGI (+5.0 sen). Amongst the biggest winners on the broader market were Chin Teck Plantations (+28.0 sen), Ajinomoto (+22.0 sen), BAT (+20.0 sen) and UMW (+20.0 sen). Air Asia added 11.0 sen after reporting several strategies to streamline its operations in 2018.

• Meanwhile, Heng Yuan (-RM1.74) topped the broader market decliners list, followed by Panasonic (-94.0 sen), United Plantations (-48.0 sen), Petron Malaysia (-46.0 sen) and Kluang Rubber (-25.0 sen). On the FBM KLCI, Petronas Gas (- 10.0 sen), Hong Leong Bank (-6.0 sen), Telekom (-5.0 sen), MISC (-5.0 sen), and Petronas Dagangan (-4.0 sen) fell.

• Japanese equities rebounded, following three consecutive sessions of decline as the Nikkei climbed 0.3% after Softbank unveiled its mobile IPO plan to raise US$18.0 bln. The Hang Seng Index (- 0.2%) retreated for the first time in 2018, snapping a streak of fourteen straight winning days, while the Shanghai Composite (-0.5%) halted a streak of eleven sessions of gains on weakness in technology shares. ASEAN stockmarkets, meanwhile, ended mostly higher.
• U.S. stockmarkets was closed in conjunction with the Martin Luther King Jr. public holiday. Meanwhile, European stockmarkets – the FTSE (-0.1%), CAC (- 0.1%) and DAX (-0.3%) all retreated, dragged down by the strength in Euro Currency that rallied to its highest level since 2014 against the Greenback. The weakness on the London’s FTSE came amid the collapse of construction giant Carillion Ltd that will leave its 43,000 staff unemployed.

THE DAY AHEAD

• Two distinct market conditions appeared yesterday with the key index still on a positive mode, while profit taking took hold among the lower liners and broader market shares. In the absence of fresh leads, coupled with the prospects of more profit taking activities after the recent strong gains, we think the two tone market conditions could still prevail.

• Key index stocks could still head higher amid the selective buying by institutional players, albeit we think the near term gains could be limited as the key index is still in overbought conditions. Therefore, we maintain our view that the upsides could be limited to the 1,830-1,840 levels over the near term. Meanwhile, the supports are still at the 1,800-1,820 levels.

• The lower liners and broader market shares, however, could still see profit taking activities taking hold as the combination of fewer new leads and pricier valuations could prompt some retail players to take some of their gains off the table.

COMPANY BRIEF

• Kinsteel Bhd’s new regularisation plan involves a proposed debt restructuring scheme for its RM800.0 mln outstanding borrowings to bankers, while courting new investors to inject fresh funds into the group. The group has submitted its regularisation plan to Bursa Malaysia, which is pending approval. (The Edge Daily)

• Shareholders of T7 Global Bhd has approved the oil and gas (O&G) outfit’s plan to dispose of its property in the United Kingdow for a cash consideration of £5.8 mln (RM31.5 mln), as the group refocuses on its core operations and new ventures. Meanwhile, the disposal proceeds will be used to fund some of its ongoing projects. (The Edge Daily)

• Moody's Investors Service lifted its ratings outlook on Malaysia Airports Holdings Bhd (MAHB) to stable (from negative), mainly due to the strengthening of the airport operator's credit profile amid stabilisation in its overseas operations and continued resilience in its domestic market.

• It also retained MAHB’s A3 issuer rating on the back of continued robust traffic growth in Malaysia which supports its stable outlook. (The Star Online)

• Hubline Bhd has signed a preliminary agreement with Petronas Chemical Marketing (Labuan) Ltd (PCML) to provide a framework of cooperation for any future term arrangement in relation to dry bulk and liquid chemicals logistic services.

• Both parties will cooperate and collaborate into looking at Hubline’s fiveyear plan for Hubline to develop its chemical vessel technical capability for PCML logistic requirements. (The Edge Daily)

• Ajiya Bhd was publicly reprimanded by Bursa Malaysia for the significant difference in the group’s FY16 unaudited and audited profit after tax and minority interest (PATMI) amounting to RM4.2 mln (or 22.5% variance) reported in the financial statements. (The Star Online)

• Amtek Holdings Bhd, which recently sold off its core business, has slipped into PN17 status on 15th January 2018 after its shareholders' equity on a consolidated basis fell to below RM40.0 mln and is not more than 25.0% of its issued and paid-up capital. (The Edge Daily)

• Perisai Petroleum Teknologi Bhd, which is in a dispute with Emas Offshore Ltd (EOL), has demanded that EOL sells its 49.0% stake in Emas Victoria (L) Bhd to Perisai for US$1.00.

• To recap, EOL's restructuring exercise last year has allowed Perisai to terminate a 2013 shareholders' agreement between the two parties, and the notice was served to Emas Victoria recently. (The Edge Daily)

• Vizione Holdings Bhd‘s 2QFY18 net profit jump about 46x to RM6.6 mln from RM141,000 in the previous corresponding quarter – led by the maiden contribution of its newly acquired construction subsidiary, Wira Syukur Sdn Bhd (WSSB). Meanwhile, revenue for the quarter also soared almost 15x to RM147.3 mln, from RM9.8 mln a year ago. (The Edge Daily)

• Tasco Bhd has sold a warehouse and industrial land in Port Klang, Selangor to Onostatic Sdn Bhd for RM17.5 mln and is expected to reap a one-off gain of RM5.5 mln. Following the disposal, Tasco will move its warehousing business to another location in due course. (The Edge Daily)

• Efficient E-Solutions Bhd has proposed to work together with two other companies, Portcullis Technologies Pte Ltd and Mr Secure Pte Ltd, to jointly promote and market its managed security business in the Indochinese market. (The Edge Daily)

Source: Mplus Research - 16 Jan 2018