Still Firming Up

• The FBM KLCI notched 0.4% gains last Friday, in-tandem with the positive sentiments from regional stockmarkets and last-minute buying-support in Petronas Gas. The key-index also closed higher on a weekly basis (+0.3% W.o.W). All the lower liners – the FBM Small Cap (+0.3%), the FBM Fledgling (+0.5%) and the FBM Ace (+0.5%) also rebounded in the eleventh hour amid a mostly upbeat broader market.

• Market breadth turned positive as winners overtake the losers, on a ratio of 518-to-446 stocks. Traded volumes, however, fell 16.6% to 3.83 bln shares, as investors took a breather following the strong volumes recorded in the past week.

• Heavyweights outperformers were Petronas Gas (+88.0 sen), Tenaga (+22.0 sen), Ambank (+8.0 sen), RHB Bank (+8.0 sen) and Genting Malaysia (+7.0 sen). Other gainers include refineries like Hengyuan Refining (+RM2.30), Petron Malaysia (+RM1.92), Dutch Lady (+RM1.08), BAT (+62.0 sen) and KESM Industries (+40.0 sen).

• On the contrary, Ajinomoto (-32.0 sen), Lafarge Malaysia (-21.0 sen), Ayer Holdings (-20.0 sen), Aeon Credit (-18.0 sen) and Tasek (-16.0 sen) bucked the general market direction to closed lower. Meanwhile, Main Board laggards were Nestle (-90.0 sen), KLCC (-8.0 sen), Kuala Lumpur Kepong (-8.0 sen), Petronas Chemicals (-7.0 sen) and Petronas Dagangan (-6.0 sen).

• Asian stockmarkets were mostly higher, shrugging off the weakness on Wall Street, on the back of upbeat Chinese economic data. The Nikkei (+0.2%) tracked higher – led by gains in financials-related stocks. The Hang Seng Index (+0.4%), meanwhile, inched marginally higher – led by gains in Country Garden (+3.3%) and the Shanghai Composite added 0.4% as investors cheered stronger-thanexpected 4Q2017 China GDP. The majority of the ASEAN stockmarkets also followed suit, logging gains on Friday’s close.
• Major U.S. stockmarkets traded higher, as investors set aside a potential government shutdown and look ahead to the upcoming corporate earnings season. The Dow (+0.2%) rose, spurred by gains in Nike (+4.8%) and Goldman Sachs (+2.1%). On the broader market, the Nasdaq (+0.6%) and the S&P 500 (+0.4%) soared to fresh record close, the latter boosted by the rally in consumer staples.
• European equities rebounded last Friday– led by gains in exporters, in-tandem with a stronger Greenback. The FTSE ended higher at 7,730.8 points on the back of stronger metal prices, albeit slightly offset by the weakness in retailers like Next (+1.7%) amid tepid consumer spending. Similarly, both the CAC and the DAX was also 0.6% and 1.2% higher.

THE DAY AHEAD

• Market sentiments improved last Friday to reverse some of the negativity that permeated the market earlier in the week. Last Friday’s rebound is timely and will help to arrest some of the market’s negativity in the past week.

• Notwithstanding the improved sentiments, there continues to be some measure of cautiousness after the strong upshot from late last year that has seen the FBM KLCI climb back above the 1,800 points level. As it is, follow through buying is still tepid, judging by the moderating traded volumes with valuations on the rich side. Therefore, we think the near term upsides will be measured with the 1,830-1,840 levels being the resistances. The supports, meanwhile, remain at the 1,800-1,820 levels.
• The lower liners and broader market shares could see a mixed market environment amid the quick profit taking activities from last Friday’s gains.

COMPANY BRIEFS

• IOI Corporation Bhd is selling its 100% stake in IOI Lipid Enzymtec Sdn Bhd (IOILE) to Loders Croklaan Group BV for RM330.5 mln. The sale of IOILE was part of the proposed disposal its internal restructuring exercise.

• In 2017, IOI Corp inked a sale and purchase agreement with US-listed Bunge Ltd to sell 70.0% of IOI Loders Croklaan Group BV and its related businesses for RM3.94 bln cash consideration.

• IOI Corp will record a gain on disposal of RM2.50 bln. It is allocating 50.0% of the RM3.94 bln in proceeds to pare down its debts over the next 24 months. It is also allocating some RM788.2 mln for cash dividends, which it is looking to pay out over the 12 months. Meanwhile, RM1.17 bln is allocated for future investments. (The Star Online)

• The external auditor of NWP Holdings Bhd have issued their qualified opinion on the timber company’s purchase of a RM1.6 mln yacht and a RM100,000 donation made to a community service centre in Sabah controlled by one of its directors. The external auditor also said it was unable to ascertain whether NWP would be able to recoup some RM10.6 mln worth of receivables and an investment of RM1.7 mln made in an associate company. (The Star Online)
• APFT Bhd has fallen into Practice Note 17 (PN17) status after its former external auditors expressed concern over the company’s ability to continue as a going concern based on its audited financial statements for its financial year ended 31st July 2016.
• The company’s auditors, Messrs SJ Grant Thornton, also highlighted that its shareholders’ equity on a consolidated basis stood at 34.6%, which was below 50.0% of its issued and paid-up capital as at 30th September 2017. (The Edge Daily)

• ACME Holdings Bhd is looking to raise up to RM7.0 mln via a private placement to expand its manufacturing segment with a new furniture production line. The group has proposed a private placement of up to 21.9 mln new shares, or 10.0% of its total issued shares, at an indicative issue price of 32 sen per share. (The Edge Daily)

• Berjaya Land Bhd's 51%-owned unit, Berjaya (China) Great Mall Co Ltd (GMOC) has submitted a notice of arbitration against Beijing SkyOcean International Holdings Ltd to seek recovery of an outstanding payment of RMB974.1 mln (RM599.0 mln).

• Under the terms of its disposal of the Berjaya (China) Great Mall Recreation Centre to Beijing SkyOcean for RMB2.08 bln, the purchaser was supposed to pay a balance RMB1.02 bln by November 2017, which has not been remitted as at December 2017. (The Edge Daily)

• Comintel Corp Bhd has entered into talks with Thanh Cong Cooperative to install its green waste management waste-to-energy system at the Xuan Son municipal solid waste treatment plant in Hanoi, Vietnam.
• The group had entered into a letter of intent with Thanh Cong for the project, which sees it appointed as the engineering, procurement and construction contractor for the supply, installation and commission of the system.
• The plant has a design capacity to treat 600 tonnes of municipal solid waste per day and generate approximately five megawatts of electric energy. (The Edge Daily)

• Atta Global Group Bhd has proposed to diversify into property development, construction and property investment in anticipation of the commencement of a property development project by a subsidiary in 2018.

• The company reported that its 55.0%- owned unit, Tetap Gembira Development Sdn Bhd (TGDSB) intends to undertake a mixed development project, consisting of a 23-floor building in Penang. (The Edge Daily)

• Freight Management Holdings Bhd (FMH) has been granted a special incentive package from the Malaysian Investment Development Authority (Mida) for development of an eCommerce fulfilment hub in Shah Alam, Selangor.

• The special incentive will enable it to qualify for income tax exemption via Investment Tax Allowance (ITA) of 60.0% of qualifying capital expenditure within a five-year period and the ITA can be utilised to deduct up to 70.0% of the statutory income for each year of assessment. (The Edge Daily)

• British American Tobacco (M) Bhd (BAT) refuted allegations that the industry's proposal to reintroduce small cigarette packs aims to increase the number of smokers in Malaysia.
• BAT said the proposal is a pragmatic measure to merely provide a legal alternative to illegal cigarettes and views with concern that the industry's intention to support the proposal has been taken out of context. (The Edge Daily)

Source: Mplus Research - 22 Jan 2018