Sentiments Improving

• Investors brushed off the renewed volatility on Wall Street as the FBM KLCI (+0.7%) advanced for the third straight session on Monday, supported by buying interest in Petronas-related heavyweights. Similarly, lower liners – the FBM Small Cap (+2.3%), FBM Fledgling (+1.0%) and FBM ACE (+2.3%) all rebounded sharply, while the broader market closed in the positive territory.

• Market breadth turned positive as advancers trounced decliners on a ratio of 702-to-249 stocks. Traded volumes, however, fell 26.8% to 2.22 bln shares as selling pressure amongst the lower liners subsided.

• More than two-third of the key index constituents advanced, led by Petronas group of companies like Petronas Dagangan (+64.0 sen), Petronas Chemicals (+28.0 sen) and Petronas Gas (+22.0 sen), while Nestle and Press Metal added 60.0 sen and 53.0 sen respectively. Significant gainers on the broader market were Heng Yuan (+71.0 sen), Globetronics (+37.0 sen), Petron Malaysia (+33.0 sen), George Kent (+32.0 sen) and UMW Holdings (+25.0 sen).

• BAT (-16.0 sen) topped the broader market decliners list after declining for the sixth consecutive session, while other notable decliners include MyEG (-16.0 sen), Apex Healthcare (-13.0 sen), Allianz (-12.0 sen) and Bursa (-12.0 sen). Meanwhile, PPB Group (-34.0 sen), CIMB (-4.0 sen), Maybank (-2.0 sen), IOI Corporation (-1.0 sen) and Astro (-1.0 sen) were the only losers on the local bourse.

• Asia benchmark indices closed higher yesterday as the Nikkei (+0.5%) recovered all its intraday losses, boosted by gains in the defensive sector such as food, fish and forestry, paper and pulp and pharmaceuticals. The Hang Seng Index (+1.3%) surged to re-capture the 30,000 psychological level, while the Shanghai Composite (+0.2%) rebounded after enduring a choppy trading session. ASEAN stockmarkets, meanwhile, closed mostly higher yesterday.

• U.S. stockmarkets rebounded overnight as the Dow added 0.2% despite trimming most of its intraday gains after the FBI conducted a raid at the office of President Donald Trump’s long-time lawyer, Michael Cohen on investigations on Russian meddling on U.S’ election. On the broader market, the S&P 500 climbed 0.3%, while the Nasdaq rose 0.5%.

• Earlier, European stockmarkets – the FTSE (+0.2%), CAC (+0.1%) and DAC (+0.2%), all crept marginally higher after enduring a volatile trading session, lifted by ebbing concerns over trade war between China and U.S. Gains, however, were limited the fresh sanctions on Russia by U.S.

The Day Ahead

• Malaysian stocks have withstood the weak trend on Wall Street as the trade war concerns ebbed that has allowed the key index to climb in tandem with the positive regional indices. As the trade concerns continue to be watered down, market sentiments are likely to be on the mend and this could provide the near term impetus for Malaysian stocks to tip higher.

• In addition, the lower liners and broader market shares are staging a revival after their recent steep falls that has left many stocks oversold. Thus far, however, the recovery has been modest, but we think it could gain momentum as retail players take advantage of the more positive market undertone to undertake short- term trades on some of the beaten down stocks.

• With the upside likely to persist, the key index could be lifted past the 1,850 level to head towards its next resistance at 1,860 level. The immediate support, meanwhile, is at 1,840.

COMPANY BRIEF

• Serba Dinamik Holdings Bhd is reaching the conclusion of a discussion relating to a potential acquisition of a U.S. firm, which it expects to complete this year. The proposed acquisition will help it to achieve comprehensive geographic coverage.
• Meanwhile, the group is targeting a higher orderbook of RM7.5 bln this year with a tenderbook worth RM12.5 bln. (The Edge Daily)

• Felda Global Ventures Holdings Bhd's two subsidiaries have received a writ of summons and statement of claim for RM23.4 mln, filed by Fulle Technik Sdn Bhd – a mechanical components manufacturer and sheet metals fabricator due to a breach of contract to develop a prototype machine.

• FGV had appointed Fulle Technik via a service agreement dated 30th September 2014, to develop a prototype machine known as Subsoil Fertilizer Machine.

• Fulle Technik now alleges that FGV R&D has breached its contractual obligations by appointing a third party via an open tender to build and supply the machine. The legal suit may have a material financial impact on the company, at a total amount including but not limited to the claimed amount plus legal fees and costs. (The Edge Daily)
• Ikhmas Jaya Group Bhd was awarded two construction projects with a combined value of RM257.7 mln. The group was appointed as a turnkey contractor for the first contract from Naluri Rezeki Sdn Bhd, being responsible for the design, construction, test, commissioning, maintaining and complete upgrading works of a hospital within 36 months, on a design-and-build basis.

• The second contract includes demolition works of an existing threestorey office building with two basement levels and a two-storey bungalow on Lot 155, Jalan Ampang, Kuala Lumpur, awarded by Putrajaya Ventures Sdn Bhd.

• Ikhmas Jaya will then construct and complete the substructure works comprising two basement car park levels, as well as, partially, the first floor and associated works there, all within 18 months. (The Edge Daily)

• Ireka Corp Bhd is partnering Hankyu Hanshin Properties Corp to jointlydevelop the Dwi@Rimbun Kasia project in Nilai. The 45:55 joint-venture (JV) company, Meadowfield Sdn Bhd will undertake a development consisting of 382 residential units in a nine-storey block, and another parcel of land which will have 465 residential units in two blocks of 29- and 19-storeys.

• These projects will have a combined Gross Development Value (GDV) of over RM400.0 mln. (The Star Online)

• Symphony Life Bhd is planning to undertake a renounceable rights issue of up to 417.4 mln new shares to raise funds to repay bank borrowings and finance its ongoing property development project. The proposed rights issue will be undertaken on the basis of one rights share for every existing share, at an issue price of 35.0 sen per share, raising gross proceeds of up to RM146.1 mln.

• The issue price is at a 39.1% discount to the theoretical ex-rights price of 58.0 sen, based on the five-day volume weighted average market price of 80.0 sen as at 30th March 2018. (The Edge Daily)

• UCrest Bhd has secured two contracts totaling RM6.1 mln, for the development of digital platforms for Key Asic Pte Ltd. (The Star Online)

• Cypark Resources Bhd has earmarked up to RM200.0 mln for capital expenditure (capex) in FY18 to fund projects related to the concession business that it had secured recently.

• The projects include a RM260.5 mln contract for works related to a largescale solar photovoltaic (PV) plant, as well as its Ladang Tanah Merah wasteto-energy (LTM WTE) project, a 25- megawatt power plant Both projects are in Negeri Sembilan. The capex will be used to fund the building the plants. (The Edge Daily)

• Kumpulan Perangsang Selangor Bhd (KPS) is collaborating with China-based Honda Printing Holdings Ltd to produce offset carton boxes for the manufacturing sector.

• The 40:60 JV company, Imej Harmoni Sdn Bhd, which is held by Honda Printing and KPS will have a combined investment of RM2.9 mln, and will operate from a factory in Johor Bahru that has a built-up area of 18,000 sq ft, with a total production capacity of 16.0 mln pieces per year. Operations are expected to commence in the 2Q2018. (The Star Online)
• Gamuda Bhd’s 40.0%-owned unit, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) is bringing Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) to court for outstanding receivables amounting to RM4.22 bln.

• Splash is also seeking interest on the outstanding sum of each invoice, costs and any other reliefs deemed fit and just by the Kuala Lumpur High court. (The Edge Daily)  

Source: Mplus Research - 10 Apr 2018