Milder Upside

• The FBM KLCI (+1.0%) extended its gains for the fifth session in a row, taking cue from the bullish sentiments on Wall Street and stronger crude oil prices. The lower liners continued to rallied as well – led by the FBM ACE (+2.7%), FBM Small Cap (+1.8%) and the FBM Fledgling (+1.3%), amid an equally positive broader market.

• Market breadth stayed upbeat as advancers outweighed decliners by more than four-fold. Traded volumes also more than doubled to 2.36 bln shares, lifted by post-holiday buying-interest in the lower liners.

• Hong Leong-affiliated companies like Hong Leong Financial Group (+70.0 sen) and Hong Leong Bank (+26.0 sen) boosted the key-index higher. Meanwhile, other blue-chip gauge winners include Petronas Gas (+RM1.16), Nestle (+RM1.00) and Kuala Lumpur Kepong (+54.0 sen). Broader market gainers were crude oil refiners like Hengyuan Refining (+RM1.98) and Petron Malaysia Refining (+90.0 sen), followed by Dutch Lady (+86.0 sen), KESM Industries (+78.0 sen) and Panasonic Manufacturing (+74.0 sen).

• On the side of the play, Apex Healthcare (-18.0 sen), Heineken Malaysia (-14.0 sen), Hartalega (-12.0 sen), Padini (-11.0 sen) and Chin Teck Plantations (-10.0 sen) weighed on the broader market. There were no losers on the Main Board yesterday.

• Japanese stockmarkets closed higher despite a minor recovery in Greenback. The Nikkei (+2.0%) logged gains for the third consecutive session with all of its eleven sectors closing firmly in the green. Meanwhile, the China and Hong Kong stockmarkets remain closed for holiday celebrations. The majority of the ASEAN equities ended higher on Monday.

• U.S. stockmarkets was closed on Monday for the Presidents Day holiday.

• European equities slipped into the red amid thin trading volumes as major stockmarkets in Asia and the U.S. closed for public holidays. The FTSE (-0.6%) took a breather from last week’s rally, dragged down by Reckitt Benckiser Group (-7.5%) after its quarterly earnings missed analysts’ expectations amid escalating costs and tough competition. The DAX (-0.5%) also lost 0.5% - led by the weakness in German automaker Daimler AG, alongside the CAC which was also down 0.5%.

THE DAY AHEAD

• Yesterday’s strong uptrend confounded expectations as the foreign buying resumed to instigate a rally among the key index stocks. We think the selective buying could continue amid the sustained interest from foreign funds that could continue to help provide further lift to the key index. The renewed interest is seen as part of portfolio re-shuffling exercise on selective Asian equity markets after the recent selldown on regional shares that has provided some value buys.

• After the key index broke through the resistances at 1,840 and 1,850 points, the next targets are at 1,863 and 1,870 respectively. However, after yesterday’s hefty gains, we think the upsides could be milder as there could be some bouts of choppiness amid some quick profit taking that could also temper the upsides.

• With more retail players returning from their Lunar New Year break, we see some renewed interest on the lower liners and broader market shares as the calmer market conditions could encourage fresh trading plays, albeit the gains could again be intertwined with bouts of profit taking.

COMPANY BRIEF

• Bank Kerjasama Rakyat Malaysia has cancelled its non-binding letter of intent (LoI) with Microlink Solutions Bhd to improve the group's core banking system.

• To recap, the LOI had invited Microlink to take part in detailed discussions to enhance the bank’s core system. (The Star Online)

• Brite-Tech Bhd is being sued by a former Executive Director for allegedly divulging his personal data contained in a letter from the Internal Revenue Board to certain employees. Chan Ah Kien, in his suit, alleged that the content of the letter was also negligently divulged to a tax agent between 19th June 2017 and 20th June 2017.

• Also being sued is Brite-Tech’s whollyowned subsidiary, Hooker Chemical Sdn Bhd, in which Chan had served as a director. Chan is claiming for general damages for negligence, breach of duty of care to be assessed by the court, breach of confidence, and privacy. The estimated potential liability is dependent on the amount claimed together with the interest on the outstanding amount and legal cost that might be incurred by the group. (The Edge Daily)

• Rohas Tecnic Bhd’s 75%-owned subsidiary, HG Power Transmission Sdn Bhd has been awarded two contracts for the supply and installation of transmission lines by Tenaga Nasional Bhd, worth a combined RM249.6 mln. The first contract comprises works for 31.8 km of 500 KV double circuit transmission line from PMU Bentong South to PMU Lenggeng and 22.3 km of a 275 KV double circuit transmission line from PMU Lenggeng to PMU Mahkota Cheras. The contractvalue is RM126.9 mln and its completion period is 723 days.

• The second contract entails the supply of 31.9 km of 500 KV double circuit transmission line from PMU Bentong South to PMU Lenggeng and 32 km of 275 double circuit transmission line from PMU Lenggeng to PMU Makhota Cheras. It is worth RM122.8 mln with a completion period of 723 days. (The Edge Daily)

• Pansar Bhd has reported that it is not aware of reasons for active trading of its shares on 15th February 2018 other than that it is in the stage of formalising some contracts in response to the Unusual Market Activity (UMA) query. Pansar received an UMA query from Bursa Malaysia last week after the counter saw 5.1 mln shares traded during the day’s half-day trading session — over 14x its 200-day average daily traded shares of 349,761 shares and hitting its 15-year high of 80 sen, before settling up three sen at 79 sen. (The Edge Daily)

• Ranhill Holdings Bhd indirectly-owned subsidiary, AnuRAK Water Treatment Facilities Co Ltd has secured a 66.0 mln baht (RM8.2 mln) contract to upgrade Amata Water Co Ltd’s wastewater treatment plant (WWTP) in Amata City Industrial Estate, Rayong, Thailand. This follows the approval of the proposal by Amata to expand the capacity of the plant from 10 mln litres per day (MLD) to 15 MLD.

• The new upgrading project will cover the construction of an additional module of the existing wastewater treatment plant facilities built by AnuRAK to treat increasing volume of industrial wastewater at the industrial estate. The construction period for the project is estimated to take six months, starting from May 2018. (The Edge Daily)

• JAKS Resources Bhd has filed an injunction at the High Court to restrain two financial institutions from releasing a bank guarantee related to the acquisition of a piece of land from Star Media Group Bhd. The irrevocable and on demand bank guarantee was made as security to ensure JAKS Island Circle Sdn Bhd (JIC), a 51%-owned unit of JAKS — performs its obligations under the sale and purchase agreement (SPA) signed with Star Media in August 2011 for the purchase of land for RM135.0 mln.

• The SPA followed the joint development agreement (JDA) signed in 2010 for a mixed development project to be constructed on the piece of land in Section 13, Petaling Jaya, with an estimated gross development value of RM370.0 mln. The RM50.0 mln bank guarantee comprises guarantees of RM25.0 mln each from two financial institutions. One guarantee had expired on 15th February 2018, while the other will be expiring on 15th April 2018.

• JAKS has reported that Star Media has not granted an extension for the bank guarantee and has given notice to the two issuing financial institutions on 15th February 2018 to call on the bank guarantee, which means that JIC will have to pay the RM50 mln sum to the issuers. (The Edge Daily)

Source: Mplus Research - 20 Feb 2018