Set For A Rebound

• The FBM KLCI (-0.6%) closed in the red yesterday, dragged down by selling pressure in selected telco and banking heavyweights as the key index bucked the mostly positive sentiment across key regional indices. The lower liners also ended mostly lower as the FBM Fledgling and FBM ACE fell 0.4% and 0.1% respectively, while the broader market closed mostly lower.

• Market breadth remained negative as decliners outdone advancers on a ratio of 514-to-411 stocks. Traded volumes, however, grew 23.9% to 2.88 bln shares.

• Nestle (-RM10.00) remain the key index’s biggest loser, followed by Hong Leong Bank (-52.0 sen), Hong Leong Financial Group (-36.0 sen), Axiata (-20.0 sen) and Genting (-15.0 sen). On the broader market, consumer products stocks – Dutch Lady (-RM2.46), Fraser & Neave (- RM1.82), Ajinomoto (-RM1.36), Carlsberg (-RM1.08) and Heineken (-76.0 sen) all remain under pressured.

• Among the biggest gainers on the broader market were petrochemical refineries like Heng Yuan (+61.0 sen) and Petron Malaysia (+33.0 sen), while MPI (+41.0 sen), Panasonic (+30.0 sen), and United Plantations (+30.0 sen) rose. On the big board, KLK (+18.0 sen), Petronas Gas (+10.0 sen), Genting Malaysia (+8.0 sen), PPB Group (+8.0 sen) and Petronas Chemicals (+4.0 sen) were the biggest advancers.

• Asia benchmark indices closed mostly higher after recouping all their intraday losses on Thursday as the Nikkei added 0.1%, supported by buying support in exchange traded funds. The Hang Seng Index (+0.5%) also rebounded, but the Shanghai Composite (-0.01%) continue to lose ground, declining for the third straight session. ASEAN stockmarkets, meanwhile, closed on a mixed note.

• U.S. stockmarkets closed mixed overnight as the Dow (+0.5%) halted a streak of three straight sessions of losses as market cheered on the appointment of Larry Kudlow as President Donald Trump’s top economic adviser. On the broader market, the S&P 500 fell 0.1% after erasing all its intraday gains on weakness in the basic material sector (-1.3%) on lingering concern over trade policies, while the Nasdaq finished 0.2% lower.

• Earlier, European benchmark indices – FTSE (+0.1%), CAC (+0.7%) and DAX (+0.9%) all advanced after both the British Pound and the Euro Currency retreated against the Greenback. Meanwhile, France’s inflation rate rose 1.2% Y.o.Y in February 2018 – in line with economists’ estimates.

The Day Ahead

• After a meek few sessions that cumulated in the key index slipping below the 1,850 level, we think the selling is already overdone and a rebound is due. The overnight positivity on major global equity indices will also provide some near term impetus for stocks on Bursa Malaysia to stage a decent rebound.

• Although we see a near term rebound, the broad market outlook remains uncertain with overseas developments in trade and the interest rate direction to cast a pall over the medium term global market direction. Back home, the upcoming General Election theme is also seeing some apprehension among market participants as the guessing game on the date of the election continues.

• Nevertheless, the near term recovery is likely to see the key index re-challenging the 1,850 level again and if it breaks, the next resistance is at the 1,860 level. On the downside, the 1,840 level is the immediate support.

• After a wretched period, we also think the lower liners and broader market shares are likely to post a rebound, albeit we also think the fresh buying could be tentative after the recent weakness that has left many retail players on the sidelines.

COMPANY BRIEF

• WZ Satu Bhd has secured two subcontract work from Hasrat Sedaya Sdn Bhd totalling RM63.0 mln for the construction and completion of mainline and other associated works of the Sungai Besi-Ulu Kelang Elevated Expressway (SUKE). The 12-month project has started on 28th February 2018. (The Star Online)

• Berjaya Food Bhd (BFood) slipped into the red following a 3QFY18 net loss of RM10.9 mln, from a net profit of RM4.7 mln last year due to a one-off loss amounting to RM15.4 mln from the disposal of its Kenny Rogers Roasters operations in Indonesia. Quarterly revenue. meanwhile, inched 0.6% Y.o.Y higher to RM164.4 mln, from RM163.5 mln in the same quarter last year.

• Similarly, cumulative 9MFY18 net profit plunged 97.9% Y.o.Y to RM0.3 mln, from RM14.7 mln a year earlier, although revenue grew 5.6% Y.o.Y to RM479.6 mln, from RM454.0 mln in the previous corresponding period. The group also declared a third interim dividend of one sen per share, payable on 27th April this year. (The Sun Daily)

• OKA Corp Bhd is planning to buy a piece of 3.6 ha. land in Senai, Johor for RM10.1 mln to build a new factory in anticipation of future business growth in the southern region. The vacant freehold land is located adjacent to its present factory and will be funded by internallygenerated funds and bank borrowings. (The Edge Daily)

• Magni-Tech Industries Bhd’s 3QFY18 net profit increased 5.4% Y.o.Y to RM31.1 mln, from RM29.6 mln a year ago, in-tandem with 8.4% growth in revenue to RM313.3 mln, from RM289.1 mln.

• Cumulative 9MFY18 net profit, however, narrowed by 12.7% Y.o.Y to RM71.2 mln vs. RM81.6 mln in the previous corresponding period, despite a 2.3% Y.o.Y increase in revenue to RM859.3 mln, compared with RM840.3 mln in 9MFY17. The group declared a third interim dividend of three sen per share and a special dividend of four sen per share, payable on 12th April 2018. (The Edge Daily)

• Trading in the shares of MWE Holdings Bhd will be suspended today pending the release of a material announcement. (The Edge Daily)

• Pestech International Bhd has terminated its plans to jointly-explore the setting-up of a power supply infrastructure to the Dongphosy Specific Economic Zone (DSEZ) in Laos with Vientiane-based developer UPL Lao Co Ltd.

• Moving forward, the group will continue to explore business potential in Laos and look out for other business opportunities in the country. The termination of the joint-venture is not expected to have any material effect on the group's FY18 performance. (The Edge Daily)

• Texchem Resources Bhd's President And Group Chief Executive Officer ,(CEO) Datuk Brian Tan Guan Hooi will be re-designated as Deputy Chairman, effective 23th March 2018. Meanwhile, its Executive Director, Yap Kee Keong is set to replace Datuk Brian as group CEO. (The Edge Daily)
• NetX Holdings Bhd has proposed a new share placement to third party investors, in a bid to raise up to RM8.1 mln to fund the collaboration project of its 60.0%-owned unit Payallz Sdn Bhd.
• The funds for the collaboration project will be for customisation, integration and deployment of a mobile payment system, expansion and maintenance of Wi-Fi coverage and marketing and promotional expenses. As the proposed private placement may be implemented in several tranches within six months, NetX said there could be several pricefixing dates and issue prices. (The Edge Daily)
• Zecon Bhd has entered into a Memorandum of Understanding (MoU) with Universiti Tun Hussein Onn Malaysia to set a framework for both parties' activities in academic programmes and cooperation in areas of education, research and social services.

• The five-year MOU will remain in-force until it is terminated by either party giving three months' notice to the other,and will be reviewed at the end of the third year.

• In the event of termination, the provisions would continue to apply to ongoing activities until their completion. (The Edge Daily)

• Ewein Bhd’s 89.0%-owned unit, Ewein Ecommerce Sdn Bhd has inked a MoU with two Thai businessmen for the establishment of a joint-venture company for a coffee-vending machine project in Bangkok, Thailand. Ewein Ecommerce will hold about 40.0% stake in the JV while Yingyos Charubusapayon and Chai Yangruay will hold 32.5% and 27.5% stake respectively.

• Under the contract, Ewein Ecommerce will provide the use of 30 units of smart mobile coffee-vending machines, facilitate installations at all 30 locations identified and assist with the technical aspects of the vending machines.

• Ewein’s participation in the project will be financed through internallygenerated funds. (The Sun Daily)  

Source: Mplus Research - 16 Mar 2018