• The FBM KLCI (+0.1%) ended higher for the fourth consecutive session ahead of the Lunar New Year break. The key-index (+1.0% W.o.W) also recovered some of its losses on a weekly basis, closing in the green at 1,838.3 points. All of the lower liners – the FBM Small Cap (+0.9%), the FBM Fledgling (+0.7%) and the FBM ACE (+1.0%) also finished higher amid a mostly positive broader market.

• Market breadth was positive as winners beat losers on a ratio of 544-to-213 stocks. Traded volumes, however, fell by 42.4% to 1.11 bln shares due to shortened trading session.

• Outperformers on the Main Board include Nestle (+RM2.10), Petronas Dagangan (+10.0 sen), Genting (+9.0 sen), Sime Darby Plantation (+9.0 sen) and Press Metal (+6.0 sen). Broader market winners, meanwhile, were sin stocks like BAT (+60.0 sen), Carlsberg Brewery (+50.0 sen), Vitrox (+29.0 sen), Dutch Lady (+28.0 sen) and HSS Engineers (+27.0 sen).

• On the flipside, Ajinomoto (-16.0 sen), Kossan Rubber (-15.0 sen), UEM Edgeta (- 9.0 sen), Malaysian Pacific Industries (- 7.0 sen) and Elsoft Research (-6.0 sen) slipped into the negative territory. Meanwhile, only four blue chip constituents – Public Bank (-20.0 sen), Hong Leong Financial Group (-6.0 sen), MISC (-4.0 sen) and Maybank (-2.0 sen) underperformed its peers.

• Asian stockmarkets finished mixed, as many markets were closed for the Lunar New Year holiday. The Nikkei rose 1.2% to 21,720.3 points on the back of gains in utilities-related stocks like Chubu Electric (+6.5%). Trading was halted in the Shanghai Composite index and the Hang Seng for holidays, while other ASEAN equities closed on a mixed note on Friday. ? U.S. stockmarkets came off their intraday highs despite closing in the green after Special Counsel Robert Mueller indicted Russian nationals for allegedly interfering with the 2016 Presidential election. The Dow gained 0.1% - led by gains in Pfizer (+1.5%). The S&P 500 (+0.04%) flatlined, while the Nasdaq (-0.2%) slipped into the red, ending its five-day winning streak.

• Earlier, major European bourses rallied, boosted by the recovery on Wall Street. The FTSE (+0.8%) closed in the green – led by gains in the telecom and utility sectors, as well as a weaker Pound. The DAX and CAC also finished higher with 0.9% and 1.1% gains respectively.

The Day Ahead

• We see limited upsides at the start of the week as many market participants are still on their Lunar New Year break. At the same time, the market is also devoid of significant corporate news to stir investor interest. Also, overseas stockmarkets are also marking time, thus providing few trading catalyst as well.

• Under the prevailing environment, we see the potential upsides finding resistance at around the 1,840 level, but if it gives way, the next resistance is located at the psychological 1,850 level. The supports, meanwhile, remain at the 1,830 and 1,820 levels respectively.

• Similarly, we also see interest on the lower liners and broader market shares to remain on the insipid side as many retail players are on an extended Lunar New Year break. Therefore, we see market breath to remain on the low-to-moderate level for longer and a mixed market environment is likely to dominate the broader market.

COMPANY BRIEF

• Uzma Bhd and Petra Energy Bhd have entered into an agreement to form a joint venture company called Khausar Energy Sdn Bhd. The joint venture was formed to undertake business development activities focusing on building a portfolio of production and development assets to operate under the various contractual regimes. The companies will have equal 50% stakes in Khausar. (The Star Online)

• TH Heavy Engineering Bhd (THHE) sees itself a step closer towards resolving its financial difficulties as its plan to novate its contract with JX Nippon Oil & Gas Exploration (M) Ltd.

• THHE has secured 100% approval from its shareholders on 15th February 2018 to novate the floating, production, storage, offloading (FPSO) facility charter contract with JX Nippon at the Layang gas field in Bintulu to Yinson Holdings Bhd for RM374.0 mln.

• The contract novation is a critical component in THHE's scheme of arrangement with its creditors. THHE will use 94.3% or RM352.8 mln from the proceeds of the novation agreement to pay its scheme creditors, which will reduce the outstanding settlement sum to RM211.2 mln. (The Edge Daily)

• Sunway Bhd plans to buy Brookvale Park in Clementi, Singapore for S$530 mln (RM1.59 bln) to be redeveloped into a new private residential development. The company and Singapore developer Hoi Hup Realty Pte Ltd inked a collective sale and purchase agreement with the collective majority of Brookvale Park.

• A proposed joint-venture (JV) company will be set up in which Hoi Hup, Sunway and Singapore-based investment holding company SC Wong Pte Ltd will have equity interest based on the ratio of 60:30:10. SDPL's cost of investment in the JV is estimated to be about S$70.0 mln (RM210.0 mln). Brookvale Park, located on a 999-year leasehold land in Clementi, Singapore, is currently a 160- unit private residential estate with a land area of 34,654 sq.m. (The Edge Daily)

• Sunsuria Bhd plans to jointly build a six-storey stratified commercial lot called Pusat Perdagangan ION Akses, with a gross development value of RM187.0 mln in Johor Bahru. It signed a joint development agreement with leaseowner, CI Medini Sdn Bhd to build the 355-unit project and dispose of individual parcels of shops within the development.

• The gross development cost is RM135 mln and Sunsuria would be entitled to a 20.0% share of profit of net sales revenue for all units sold, while CI Medini would be entitled to the balance of the profit.

• Sunsuria expects an estimated net development profit of RM52.0 mln from the project. The project is currently 20.3% completed and is expected to be completed by the 2Q2019. (The Edge Daily)  

Source: Mplus Research - 19 Feb 2018