Consolidation To Set In Again

• The FBM KLCI inched forward, in-tandem with the recovery in its regional peers although trading volume was thin ahead of the U.S. Federal Reserve’s two-day meeting scheduled this week. All the lower liners retreated, while the FBM Fledgling (+0.7%) took the worst beating amid a mostly negative broader market.

• Market breadth was subdued as decliners continue to gain the upper hand over the advancers on a ratio of 574-to-332 stocks. Traded volumes also shrunk 32.5% to 1.94 bln amid elevated risk-off sentiment, ahead of the U.S. Federal Reserve’s meeting.

• Banking and telco large caps which dominated the Main Board include Public Bank (+10.0 sen), Hong Leong Bank (+8.0 sen), Digi (+6.0 sen) and CIMB Bank (+4.0 sen). Genting also added 4.0 sen to close higher on Monday. Meanwhile, broader market gainers were BAT (+32.0 sen), Panasonic Manufacturing (+24.0 sen), Lotte Chemical Titan (+21.0 sen), Shangri-la Hotels (+21.0 sen) and KESM Industries (+20.0 sen).

• Heineken Malaysia (-68.0 sen), Hengyuan Refining (-39.0 sen) and Petron Malaysia (-34.0 sen) extended its descent downwards, followed by other broader market losers like Fraser & Neave (-80.0 sen) and Malaysian Pacific Industries (- 32.0 sen). Major key-index decliners were Nestle (-RM1.40), KLCC (-20.0 sen), MISC (-16.0 sen), Petronas Gas (-14.0 sen) and RHB Bank (-6.0 sen).

• Key regional stockmarkets closed mostly in the green, although the Nikkei continued to slide, weighed down by the alleged scandal related to Prime Minister Shinzo Abe over the sale of a state land. On the bright side, the Hang Seng Index (+0.04%) inched higher while healthcarerelated stocks pushed the Shanghai Composite (+0.3%) up a notch despite a mostly negative ASEAN stockmarkets.
• Wall Street started the week on a subdued tone, as major bourses ended deep in the negative territory on Monday, dragged down by losses in Facebook (- 7.0%). The Dow (-1.4%) narrowed, with all of its blue chips constituents in the red, with the exception of Boeing (-0.4%). Meanwhile, technology-heavy indices like the S&P 500 and Nasdaq also erased 1.4% and 1.8% after concerns on Facebook’s alleged data misuse sparked a broad selldown in the technology stocks.
• European stockmarkets also took a beating earlier, on the back of lingering worries of global trade wars and geopolitical uncertainty. The FTSE (- 1.7%) ended sharply lower, dragged down by giant software maker Micro Focus International (-46.4%) following its CEO’s resignation and wider-than-expected fall in its annual results. Germany’s DAX also slid 1.4%, alongside the CAC (-1.1%).

THE DAY AHEAD

• With the general market condition still unconvincing, coupled with the renewed volatility on Wall Street and other key global equity markets, we expect similar conditions to sustain on the Malaysian stockmarket over the near term. Already, there are few noteworthy leads on the local market to entice fresh buying and sentiments will be further aggravated by the lingering uncertain global market outlook as well as the timing of the next General Election.

• The difficult market conditions is also sending more market participants to the sidelines, particularly retail players and this trend is set to continue under the prevailing conditions with market breadth thinning considerably of late. Market depth is also diminishing as a result of the reduced investor participation and this will continue to leave Malaysian equities on the wayside for longer.
• After failing to take out the 1,850 level yesterday, coupled with lingering market uncertainty, we see the key index consolidating further with the 1,840 support now in play, followed by the 1,820-1,830 levels. The 1,850 level remains the immediate resistance, followed by the 1,860 level.

COMPANY BRIEF

• Boustead Holdings Bhd has reached settlement agreements with Petronas Carigali Sdn Bhd and several other parties over the early termination of its subsidiary's contract to supply five helicopters.

• Aside from Petronas Carigali, the other parties which it had reached the settlements were the joint operators ExxonMobil Exploration and Production Malaysia Inc (ExxonMobil), EnQuest Petroleum Production Malaysia Ltd, as well as Sapura Exploration and Production (PM) Inc. (The Star Online)

• Malaysian Resources Corporation Bhd (MRCB) is selling a piece of prime freehold land measuring 1.9 ac. along Jalan Kia Peng to the Social Security Organisation (Socso) for RM323.0 mln, which could see it recording a profit of RM56.0 mln.

• Proceeds from the sale would be used for the group's working capital. (The Star Online)

• Lafarge Malaysia Bhd's subsidiary has secured a RM270.0 mln contract to supply cement to China Communications Construction (ECRL) Sdn Bhd (CCC) for the proposed East Coast Rail Link (ECRL) project.
• Lafarge Cement Sdn Bhd would supply cement from present to 31st December 2019, to all eight packages of work for the ECRL project. The agreement is renewable for a further two years subject to mutually agreed renewal terms and conditions. (The Star Online)
• Eco World International Bhd (EWI) has completed Stage 1 acquisitions of six sites in the U.K. for £63.8 mln (RM348.5 mln) under EWI and UKbased Willmott Dixon Holdings Ltd's planned joint development of 12 sites in Greater London and the South East of England.

• In terms of the number of projects, this has increased from three projects to nine with the completion of the Stage 1 acquisitions and once the Stage 2 acquisitions are completed, EWI will have 15 projects in the United Kingdom. (The Edge Daily)

• George Kent (Malaysia) Bhd's 4QFY18 net profit rose 23.5% Y.o.Y to RM51.9 mln on improved performance in the engineering division. Revenue for the quarter, however, fell 8.6% Y.o.Y to RM172.9 mln.

• For FY18, cumulative net profit added 22.9% Y.o.Y to RM124.4 mln. Revenue for the year grew 3.0% Y.o.Y to RM617.0 mln. A third interim dividend of 5.0 sen per share, payable on 25th April 2018 was declared. (The Edge Daily)

• YTL Power International Bhd is acquiring Dutch company Bel Air Den Haag Beheer BV, which owns the 306- room Mariott The Hague, for €60.3 mln (RM289.6 mln). (The Edge Daily)

• TRC Synergy Bhd's subsidiary and another firm are jointly suing the Brunei Economic Development Board for B$13.0 mln (RM38.2 mln) with regard to an airport project. TRC’s whollyowned unit, Trans Resources Corp Sdn Bhd and Swee Sdn Bhd initiated the suit in the High Court of Brunei to recover the amount in relation to the modernisation of the Brunei International Airport Terminal. (The Edge Daily)

• The Public Works Department (JKR) has accepted Leweko Resources Bhd’s RM34.5 mln tender to replace old bridges in Peninsular Malaysia. The contract is for a period of 24 months. (The Edge Daily)

• Cabnet Holdings Bhd has proposed a bonus issue of warrants on the basis of one warrant for every two shares held, alongside a three-for-eight bonus issue of its shares. The proposals will entail an issuance of 65.0 mln bonus warrants as well as 48.8 mln bonus Cabnet shares. Both the bonus warrants and shares are expected to be completed in 2Q2018. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) has signed two large-scale solar power purchase agreements (PPAs) with special purpose companies (SPC). The two bidders are TNB itself for a facility in Kuala Muda, Kedah and Gebeng Sdn Bhd for a facility in Kuantan, Pahang.

• The two SPC will each design, construct, own, operate and maintain a solar photovoltaic energy generating facility. TNB Bukit Selambau Solar Sdn Bhd's plant will have a capacity of 30.0MW while Gebeng's is 29.9MW. Their scheduled commercial operation date is 31st December 2020 and 3rd February 2020, respectively. (The Edge Daily)

• Willowglen MSC Bhd has proposed a one-for-one bonus issue to increase liquidity of its counter. The proposal entails 248.0 mln bonus shares and is expected to be completed by 2Q2018. (The Edge Daily)

• Parkson Holdings Bhd’s indirect Chinese subsidiary has successfully bid for part of a property in Wuxi, China that the unit is currently renting, for RMB200.0 mln (RM124.0 mln) cash.

• Parkson's Hong Kong-listed 55.0% subsidiary, Parkson Retail Group Ltd (PRGL) has reported that its 60.0%- owned Wuxi Sanyang Parkson Plaza Co Ltd (WSPP) succeeded in the judicial auction in bidding for the property from Sanyang Yinhui Properties Development Company Ltd, which has been declared bankrupt.

• The minimum bidding price was RMB 189.6 mln yuan. PRGL expects full payment of the acquisition to be satisfied by 25th March 2018. However, completion of the acquisition is still subject to the final confirmation of the Wuxi Intermediate Court. (The Edge Daily)

• Poh Huat Resources Bhd’s 1QFY18 net profit plunged 64.7% Y.o.Y to RM6.2 mln due to margin compressions in both its Malaysian and Vietnamese operations. Revenue for the quarter fell marginally by 1.0% Y.o.Y to RM161.9 mln. (The Edge Daily)

Source: Mplus Research - 20 Mar 2018