Lower Liners Poised For A Rebound

• The eleventh hour buying support on selective index heavyweights allowed the FBM KLCI to recover all its intraday losses before climbing 0.1% higher yesterday. The lower liners, however, ended mostly lower as the FBM Small Cap (-0.9%) and FBM Fledgling (-0.8%) extended their losses, albeit the FBM ACE added 0.4%. Meanwhile, the Finance (+0.3%) and Trading/Services (+0.04%) sectors outperformed the negative broader market.

• Market breadth remained negative as decliners outstripped advancers on a ratio of 678-to-321 stocks, while 387 stocks closed flatlined. Traded volumes fell 24.3% to 4.97 bln shares as the negative market sentiment sapped investors’ trading interest.

• Key winners on the FBM KLCI were Hong Leong Bank (+58.0 sen), Nestle (+50.0 sen), Genting (+13.0 sen), Telekom (+11.0 sen) and Genting Malaysia (+8.0 sen). Glove manufacturers like Hartalega (+36.0 sen), Top Glove (+24.0 sen) and Supermax (+9.0 sen) advanced, while Denko Industrial Corporation and UMS Holdings rose 23.0 sen and 13.0 sen respectively.

• Notable decliners on the broader market were BAT (-60.0 sen) that fell to fresh 10- year low, followed by Heng Yuan (-54.0 sen), United Plantations (-24.0 sen), Magni-Tech Industries (-18.0 sen) and Vitrox (-15.0 sen). On the big board, Petronas Gas (-42.0 sen), Press Metal (- 12.0 sen), Tenaga (-6.0 sen), KLCC (-5.0 sen), and Astro (-5.0 sen) were among the biggest losers.

• Asia benchmark indices closed mostly higher yesterday as the Shanghai Composite added 0.2%, while the Hang Seng Index (+0.3%) closed in the positive territory on late buying support in financial shares. The Nikkei fell 0.4%, but managed to recoup most of its intraday losses. ASEAN stockmarkets, meanwhile, ended mixed.
• U.S. stockmarkets rallied overnight as the Dow (+1.3%) surpassed the 26,000 psychological level, buoyed a series of stronger-than-expected earnings. On the broader market, the S&P 500 (+0.9%) was powered beyond the 2,800 psychological level with all eleven major sectors closed in the green, while the Nasdaq jumped 1.0%.
• European stockmarkets – the FTSE (- 0.4%), CAC (-0.4%) and DAX (-0.5%), however, all ended in the red, dragged down by the weakness in healthcare and commodity stocks. The disappointing earnings report from fashion house Burberry Group PLC (-9.3%) and a warning of layoffs at Swedish construction company Skanska AB (- 8.1%) also dampened the market sentiment.

THE DAY AHEAD

• Yesterday saw the continuing two-tone market environment with selective support on the index heavyweights helping the key index to close higher, but the lower liners and broader market shares still mired in profit taking activities.

• After the consolidation spell, however, we think the lower liners and broader market shares are poised for a rebound as some value is emerging following some of the steep falls over the past few sessions. There are also bargain hunting opportunities that will also aid the recovery of the above listed stocks.

• On the big board, we also think the key index will head higher despite staying in the overbought region, taking cue from the positive Wall Street performance overnight. Nevertheless, the toppish market conditions could limit the gains and the upsides may be capped around the 1,830-1,840 levels, while the supports are at the 1,820-1,825 levels.

COMPANY BRIEF

• Vizione Holdings Bhd is proposing a private placement of up to 406.7 mln shares at an indicative price of 16.5 sen per share to raise as much as RM67.1 mln which will be used to fund its construction projects.
• Up to RM32.9 mln of the proceeds will be earmarked for Vizione's construction of affordable housing in Gombak, while a maximum of RM32.9 mln would be allocated towards the construction of four office blocks in Semenyih, Selangor. (The Star Online)

• D'nonce Technology Bhd's Group Managing Director, CEO and single largest shareholder, Law Kim Choon is planning to sell a substantial block of his shares in the company, confirming a previous news report that Law is in the midst of negotiations with potential investors to dispose of a substantial block of his shares. (The Star Online)

• Dataprep Holdings Bhd has inked a Memorandum of Collaboration (MoC) with URC E-Commerce (M) Sdn Bhd to coordinate the provision of e-commerce services and solutions. The contract entails training, consultancy and business services in areas where both companies can leverage and benefit from each other. The MoC is effective for three years. (The Edge Daily)

• Adventa Bhd is proposing to undertake a three-for-five existing shares rights issue together with free warrants on the basis of one warrant-for-every two rights shares subscribed, raising RM50.4 mln for its future business expansion.
• The medical devices manufacturer plans to issue 91.7 mln new rights shares at 55.0 sen apiece, as well as some 45.8 mln free warrants with a five-year tenure, each convertible to one Adventa share at an exercise price of 65.0 sen per warrant. (The Star Online)
• Fajarbaru Builder Group Bhd’s (FBG) was awarded a RM12.9 mln contract to upgrade the satellite building at the Kuala Lumpur International Airport (KLIA) Complex. The 14-month contract will commence on 1st February 2018 until 31st March 2019, and will include works for the mezzanine, passenger and ground floors. (The Star Online)

• Mah Sing Group Bhd is collaborating with EduCity Iskandar Malaysia Sdn Bhd (EduCity) to provide student accommodation at Phase 2 of Mah Sing's Meridin@Medini Executive Suites in Iskandar Puteri, Johor.

• On that note, Mah Sing and Educity have entered into an agreement to offer 183 fully-furnished apartment units, which would cater to 370 students, out of the 583 available units. (The Edge Daily)

• Eversendai Corp Bhd has bagged two contracts worth RM272.0 mln for the structural steel works for One Za'abeel mixed development and the Address Tower Residence IL Primo luxury highend residential tower.

• The first contract was awarded by Dubai’s ALEC Engineering and Contracting LLC, while the IL Primo Address Tower contract was awarded by Turkey’s TAV Construction. Both contracts are expected to be completed in 2020. (The Edge Daily)

• Tatt Giap Group Bhd’s founder and Executive Chairman, Datuk Siah Kok Poay has ceased to be a substantial shareholder in the group after selling another 8.4 mln shares (or 4.9% equity stake) in the company to an unknown buyer.

• Datuk Siah disposed his shares via his private vehicle Giapxin Sdn Bhd, leaving him with a 3.4% stake in the group. The 8.4 mln shares crossed in a single transaction worth RM1.0 mln (or 12.0 sen per share). (The Edge Daily)

Source: Mplus Research - 18 Jan 2018