1Q2018 Ended Positively

• The FBM KLCI staged a rebound last Friday as the key index trimmed its weekly losses to close 0.1 W.o.W lower. Still, with the strong rally at the start of the year, the FBM KLCI added 3.7% Q.o.Q in 1Q2018. The lower liners also ended mostly green last Friday as the FBM Fledgling and FBM ACE gained 0.3% and 1.5% respectively, while the Construction (-0.3%) and Technology (-0.1%) sector underperformed its peers.

• Market breadth turned positive as gainers outnumbered losers ratio of 476-to-384 stocks. Traded volumes, however, fell 3.4% to 1.82 bln as foreign participants dwindled ahead of the extended Easter break.

• More than two-third of the key index components advanced, led by Nestle (+RM3.50), followed by Petronas Dagangan (+18.0 sen), Hap Seng (+14.0 sen), Petronas Chamicals (+11.0 sen) and Hong Leong Bank (+10.0 sen). Notable advancers on the broader market were consumer products stocks like Dutch Lady (+RM1.50), Ajinomoto (+20.0 sen) and Apollo Food (+16.0 sen), while Yinson added 24.0 sen after reporting a strong set of quarterly earnings.

• Key losers on the broader market include Far East Holdings (-53.0 sen), United Plantations (-28.0 sen), BHIC (-23.0 sen) and Apex Healthcare (-20.0 sen. Comfort Gloves sank 9.0 sen after reporting a weak set of quarterly earnings. There were only three decliners on the local bourse – Press Metal (-22.0 sen), Astro (- 4.0 sen) and Axiata (-1.0 sen).

• Asia benchmark indices closed on a positive note last Friday as the Nikkei gained 1.4% after the Japanese Yen retreated against the Greenback. Shanghai Composite added 0.3% after trading in a lackluster manner, while the Hang Seng Index was closed for the Good Friday public holiday. ASEAN stockmarkets, meanwhile, closed mostly positive.
• Both the U.S. and European stockmarkets were closed on last Friday in conjunction with the Good Friday public holiday. On the previous close, U.S. equities advanced to trim their quarterly losses as the Dow (-2.5% Q.o.Q) halted its eighth straight quarterly winning streak in 1Q2018. Similarly, European benchmark indices – the FTSE (-8.2% Q.o.Q), CAC (- 2.7% Q.o.Q) and DAX (-6.4% Q.o.Q), all edged lower in 1Q2018 after enduring a volatile quarter.

THE DAY AHEAD

• The key index has performed relatively well to hold above the 1,860 level, backed by some fresh buying last Friday from institutional investors amid window dressing activities. With the key index finding stability above the 1,860 level, the FBM KLCI will now attempt to shore up its position but gains are likely to be capped by the lack of fresh leads.

• We expect the key index to continue hovering between the 1,840 and 1,870 levels over the foreseeable future. On the upside, a breach above the 1,870 level will shore the FBM KLCI towards the 1,880 and 1,890 levels. On the flipside, the immediate support is located towards the 1,840 level.

• Although there was bout of positive signs on the local bourse, the lower liners, however, are expected to endure further selling activities as market participants will continue to trim their holdings ahead of the upcoming General Election.

COMPANY BRIEF

• Enra Group Bhd has paid a payment claim of RM10.2 mln against Gemula Sdn Bhd for outstanding amounts due and payable. The claim is in relation to the outstanding amounts due and payable by Gemula for works completed by Enra to undertake construction of a main garage project in Kuantan, Pahang. (The Edge Daily)

• Chin Hin Group Bhd is planning to sell its loss-making metal roof and structural steel system manufacturing unit Formino Metal Sdn Bhd for RM11.0 mln, to Frontscape Sdn Bhd. The disposal is expected to reduce operational costs used to maintain the loss-making unit and is part of the group's portfolio rebalancing strategy. Proceeds from the sale are intended for general corporate purposes and the repayment of existing debt while the proposed disposal is expected to be completed by 2Q2018. (The Edge Daily)

• KKB Engineering Bhd has secured an engineering, procurement, construction and commissioning of wellhead platforms contract from Petronas Carigali Sdn Bhd. The nine-month contract, which comes together with a 12-month warranty period will commence in March 2018. (The Edge Daily)

• Sumatec Resources Bhd was awarded the rights to build a condensate extractions plant for the Rakushechnoye oil and gas field in Kazakhstan. It won the rights from Markmore Energy (Labuan) Ltd (MELL), which through its whollyowned subsidiary Markmore Central Asia BV, holds the entire participatory interest in Caspi Oil Gas LLP. Caspi Oil, in turn, is the concession owner and operator of the Rakushechnoye oil and gas field.

• The plant is expected to have a capacity of 80.0 mln standard cubic feet per day of natural gas supplied from the Rakushechnoye oil and gas field, which produces light crude oil.
• The entry cost of US$155.0 mln (RM620.0 mln) will be paid to Markmore via a combination of cash, the issuance of redeemable convertible preference shares (totaling US$25.0 mln) and new Sumatec shares (worth up to US$100.0 mln). (The Star Online)
• Berjaya Corp Bhd (BCorp) posted a 3QFY18 net loss of RM92.5 mln for a third consecutive quarter, from a net profit of RM22.9 mln a year ago due to provisions for impairment related to the sale of the Great Mall of China (GMOC) project and loss from the partial disposal of an associate company. Revenue was also lower by 2.3% Y.o.Y to RM2.17 bln.

• For the cumulative 9MFY18, net loss was at RM281.9 mln, from a 9MFY17 net profit of RM136.7 mln, while revenue fell short by 5.0% Y.o.Y to RM6.6 bln, from RM6.9 bln a year ago. (The Star Online)

• Kumpulan Perangsang Selangor Bhd (KPS) is planning to undertake a one-for-13 bonus issue which includes the issuance of up to 38.4 mln new shares at an entitlement date yet to be determined. The proposed bonus issue is expected to be completed by 2Q2018. Separately, the group has proposed a final dividend of 4.25 sen per share which will be paid on 20th July, 2018. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) has inked a 21-year large-scale solar (LSS) photovoltaic power purchase agreement (PPA) with Redsol Sdn Bhd, pursuant to a bidding exercise organised by the Energy Commission in 1Q2017. Under the agreement, Redsol will design, construct, own, operate and maintain a solar photovoltaic energy generating facility of 30MWac to be located in Kerian, Perak. The PPA, which has an expected commercial operation date of 31st December, 2019, include obligations of the parties involved to sell and purchase energy generated by the facility for a period of 21 years from then. (The Star Online)

• Minetech Resources Bhd’s 70.0%- owned subsidiary Coral Power Sdn Bhd has also signed a 21-year power purchase agreement (PPA) with TNB. The PPA is in relation to the generation and sale of solar photovoltaic (PV) energy to TNB’s grid system at PPU Pantai Remis.

• The solar PV energy generating facility, which has a capacity of 10.0 MW will be located in Manjung, Perak. Subsequently, the group has earmarked a total of RM62.0 mln for the project, which will be financed through a combination of borrowings and shareholders’ equity at a proportion yet to be finalised. (The Edge Daily)

• Nylex (M) Bhd is selling its logistics subsidiary, NYL Logistics Sdn Bhd for RM14.4 mln, as the group does not foresee NYL delivering high returns. Together with Bon Kok Meng, Nylex entered into a share sale agreement to dispose of 2.2 mln shares (or 100.0% of the issued and paid-up share capital) in NYL to Astachem Holdings Sdn Bhd. The proposed disposal is expected to reap a gain of RM1.0 mln and proceeds will be used for Nylex's working capital. Further, the sale is slated to be completed within 90 days. (The Edge Daily)

• Automotive manufacturer Sapura Industrial Bhd is acquiring a piece of vacant industrial land measuring 35,332 square metres in Bandar Sri Sendayan, Negeri Sembilan for RM16.0 mln. Consequently, the group has signed an agreement with landowner Menteri Besar Negeri Sembilan and Matrix Concept Holdings Bhd for the proposed acquisition. (The Edge Daily)

Source: Mplus Research - 2 Apr 2018