Headed For A Rebound

• The FBM KLCI rebounded from its intraday low, albeit still closing in the negative territory amid the prevailing cautious sentiment globally. The lower liners – the FBM Small CAP (-0.4%), the FBM Fledgling (-0.2%) and the FBM Ace (- 1.3%) also declined at Monday’s close, while all-of-the ten sub-sectors on Bursa Malaysia were painted red.

• Market breadth stayed negative as losers outperformed winners on a ratio of 589- to-334 stocks. Traded volumes also fell further by 5.2% to 1.98 bln, in-line with the extended selling-pressure in the lower liners.

• Main Board underperformers were Nestle (-2.00), which snapped three-straight days’ of gains on the back of mild profittaking, followed by Hong Leong Bank (- 16.0 sen), Astro Malaysia (-12.0 sen), Press Metal (-10.0 sen) and Public Bank (-8.0 sen). Broader market’s bottom five meanwhile, include KESM Industries (- 46.0 sen), Heineken Malaysia (-44.0 sen), Aeon Credit (-38.0 sen), Bursa Malaysia (- 28.0 sen) and Kossan Rubber (-28.0 sen).

• On the other hand, Ajinomoto (+60.0 sen), Hengyuan Refining (+40.0 sen), Scientex (+28.0 sen), Muda Holdings (+22.0 sen) and United Plantations (+20.0 sen) outperformed its broader market peers. Telco-stocks like Axiata (+3.0 sen) and Maxis (+3.0 sen) were the main key-index gainers, alongside Hap Seng Consolidated (+4.0 sen), PPB Group (+4.0 sen) and Hong Leong Financial Group (+2.0 sen).

• Japanese stocks staged a rebound, lifted by easing trade war concerns as the Nikkei (+0.7%) climbed higher on lastminute buying-support in Oji Holdings (+4.0%) and Shiseido (+3.2%). The Hang Seng Index also gained 0.8%, ahead of the scheduled quarterly results releases of several Hong Kong-listed companies, although the Shanghai Composite (-0.6%) continued to trade in the red. The majority of the ASEAN stockmarkets closed higher yesterday.
• Major benchmark indices in the U.S. closed sharply higher on Monday amid a bargain-hunting euphoria following recent declines. The Dow ended its threeday losing streak, closing 2.8% higher on gains in technology titans like Microsoft (+0.2%). On the broader market, techladen indices - the Nasdaq and the S&P 500 also rebounded adding 3.3% and 2.7% respectively.
• Earlier, U.K. equities closed mostly lower on rising geopolitical tensions with Russia. The FTSE (-0.5%) fell to its lowest level since December 2016 after several European Union countries, the U.S. and Canada expelled dozens of Russian diplomats in a coordinated response against Moscow’s alleged role in the poisoning of a former spy. Its regional peers followed suit as the DAX (-0.8%) and the CAC (-0.6%) also ended in the red on Monday.

THE DAY AHEAD

• After a run of a consolidation trend, the FBM KLCI looks to stage a rebound over the near term, taking cue from the positivity of key global equity indices overnight that followed the concessionary tone of U.S. trade officials on the imposition of tariffs on China made goods.

• We also see the positivity extending to the lower liners and broader market shares as well, after many stocks in those categories have retreated of late that have also resulted in many stocks lingering in the oversold territory. However, we view the upsides as a rebound from oversold and the gains could be limited by quick profit taking/selling into strength activities amid the lack of sustainable catalysts.
• On the key index, the rebound could lead it to the 1,870 resistance level, followed by the 1,880 level. On the downside, meanwhile, the main support is located at the 1,850 level.

COMPANY BRIEF

• Serba Dinamik Holdings Bhd is taking up a 25.0% stake in a joint-venture company in Tanzania to set up and run a chloralkali plant. The JV company with Junaco (T) Ltd Sufini Holding Ltd is a special purpose vehicle to hold 100.0% equity in Msufini (T) Ltd. The plant will have a capacity to produce 45 tonnes of chlorine skid mounted chlor-alkali per day in a plant located at the Msufini area of Tanzania. (The Star Online)

• Uchi Technologies Bhd has proposed a capital repayment of 20.0 sen a share to the shareholders amounting up to RM90.4 mln. The corporate exercise would involve a reduction of the share capital from RM157.5 mln to between RM68.1 mln and RM72.1 mln.

• The company is returning excess cash in the company after taking into consideration its current financial standing (including its cash and cash equivalents, reserves and zero gearing), future financial obligations and operational requirements. (The Star Online)

• myNEWS Holdings Bhd’s 1QFY18 net profit fell marginally by 0.3% Y.o.Y to RM6.3 mln on higher operating expenses. Revenue for the quarter, however, rose 18.2% Y.o.Y to RM90.1 mln. (The Edge Daily)

• Vivocom International Holdings Bhd has teamed up with Shanghai Civil Engineering Group Co Ltd (CREC Shanghai) to explore opportunities in property development, mixed development, infrastructure, water treatment plant and other development projects. Vivocom has entered into a Heads of Agreement (HoA) with CREC Shanghai for the purpose. (The Edge Daily)

• Prolexus Bhd’s 2QFY18 net profit contracted 42.8% Y.o.Y to RM4.4 mln, dragged down by lower sales, weaker U.S. Dollar and unrealised foreign exchange losses. Revenue for the quarter declined 21.8% Y.o.Y to RM85.1 mln.

• For 1HFY18, cumulative net profit decreased 52.3% Y.o.Y to RM6.7 mln. Revenue for the period fell 23.4% Y.o.Y to RM150.4 mln. (The Edge Daily)

• Sapura Energy Bhd has announced additional new deals after bagging six contracts worth some RM3.00 bln since the beginning of 2018. The group has cemented its foray into New Zealand with a series of farm-in agreements to five offshore exploration permits in the oil and gas region of Taranaki Basin. The contract was secured with the New Zealand government's approval for agreements with OMV New Zealand Ltd and Mitsui E&P Australia Pty Ltd. (The Edge Daily)

• Progressive Impact Corp Bhd is undertaking a health laboratory project in Jeddah, Saudi Arabia for 18.0 mln Riyal (RM18.7 mln). The contract was awarded by the Jeddah Municipality for the duration of three years.

• Separately, Progressive Impact’s wholly-owned unit, Alam Sekitar Malaysia Sdn Bhd (ASMA) is being sued by Oval Engineering Sdn Bhd. This came after ASMA failed to acquire a set of equipment from Oval Engineering despite a letter of understanding inked by the two companies to facilitate the supply and acquisition. (The Edge Daily)

• UMW Holdings Bhd has hit a snag in its proposed acquisition of MBM Resources Bhd as the latter's shareholders have turned down its takeover offer. Med-Bumikar Mara Sdn Bhd and its wholly-owned subsidiary, Central Shore Sdn Bhd (CSSB) have separately rejected the conditional offer made by UMW for their collective 50.1% equity interest in MBM Resources.

• UMW intends to continue to engage Med-Bumikar, CSSB, their respective shareholders and key principals as it is of the opinion that the conditional offer is reasonable. The group has therefore notified the parties of the extended validity of its offer to 30th April 2018. (The Edge Daily)

Source: Mplus Research - 27 Mar 2018