Lingering Around 1,800

• Weak global sentiments continued to pressure the FBM KLCI which fell 0.4% - led by losses in selected banking and O&G heavyweights. The FBM Ace (-2.7%) took the heaviest beating, together with the rest of the lower liners which also closed on a similar tone. All the subsectors ended in the red, save for the Plantations (+0.1%) sector.

• Market breadth was bearish as losers still had the upper hand with more than 700 stocks falling against 216 winners. Traded volumes also trimmed 20.3% to just 1.94 bln shares due to the risk-off market environment.

• Petronas Gas (-38.0 sen) dragged down the key-index lower on Monday, followed by KLCC (-15.0 sen), Telekom Malaysia (- 13.0 sen), MISC (-12.0 sen) and Maybank (-10.0 sen) were there other lagging stocks. Top broader market losers, meanwhile, were Ajinomoto (-62.0 sen), Hengyuan Refining (-62.0 sen), KESM Industries (-60.0 sen), Aeon Credit (-40.0 sen) and Hartalega (-30.0 sen).

• On the opposite side, sin-stocks like Carlsberg (+20.0 sen) and BAT (+14.0 sen) rallied, alongside Malaysia Smelting Corporation (+61.0 sen), Allianz Malaysia (+50.0 sen) and Far East Holdings (+20.0 sen). The only five advancers on Main Board include Public Bank (+10.0 sen), PPB Group (+8.0 sen), Sime Darby Plantation (+5.0 sen), Kuala Lumpur Kepong (+2.0 sen) and Maxis (+2.0 sen).

• Major regional stockmarkets continued to spiral downwards, weighed down by the subdued performance on Wall Street last Friday. The Nikkei fell 0.3% amid a broadbased decline in its subsectors with the exception of the financials, materials and industrials-related sectors. Other key Asian bourses like the Hang Seng (-0.5%) and the Shanghai Composite Index (- 0.1%) also retreated amid the unrelenting weakness in tech stocks. Most ASEAN stockmarkets pulled back at Monday’s close.

• U.S. stockmarkets finished slightly in the red after paring earlier losses as ten-year Treasury yields approaches the 3.0% mark. The Dow inched lower on expectations of rising interest rates, while the Nasdaq erased 0.3% to close at 7,128.6 points. The S&P flatlined on Monday’s close.

• European equities rose to ten-week high, bolstered by gains in financial socks, ahead of the European Central Bank’s meeting this week. London’s key-index - the FTSE (+0.4%) extended its winning streak for the fifth session – led by St James’s Plc (+3.3%) and Old Mutual (+2.7%). The DAX (+0.3%) also logged-in gains after rebounding from its earlier losses in the eleventh hour, while the CAC ended 0.5% higher.

The Day Ahead

• Although the key index has found support at the 1,800 points level yesterday after retracing from its all-time high closing formed two sessions ago, we think the indifferent environment is likely to persist for longer as market interest is continuing to waver, as evidenced by the thinning market volumes of late that cumulated in trades falling below 2.0 bln shares yesterday.

• In the absence of significant market participation, we think any gains will be quickly met by profit taking activities and follow-through buying is unlikely to prevail with few available catalysts. Hence, we think the market could attempt to hold up around the 1,800 points level until a new trend is formed. The immediate resistance is around the 1,883 level, followed by 1890. The supports, meanwhile, are at 1,873 and 1,870 points.
• The lower liners and broader market shares are also likely to stay subdued with many retail players opting to stay on the sidelines amid a still cautious market environment that is likely to limit participation over the near term.

COMPANY BRIEF

• Malaysia Smelting Corp Bhd (MSC) has proposed two corporate exercises comprising a 2-for-1 share split and a 1- for-1 bonus issue to reward its shareholders as well as enhance its capital base. Pursuant to the completion of the proposed share split, the group is offering a bonus issue of up to 200.0 mln new subdivided shares on the basis of one bonus share for every one split share.

• The group expects the proposed share split and bonus issue to be completed by 3Q2018(The Star Online)

• Caely Holdings Bhd is in talks with several China-based lingerie companies to expand its earnings and business prospects. Caely sells its products in Malaysia and it also exports to Europe, Canada, the US and other countries. The products are marketed under its own brand and as well as other companies under the OEM basis. (The Star Online)

• GuocoLand (Malaysia) Bhd’s 3QFY18 net profit surged 567.7% Y.o.Y to RM55.7 mln due to the gain of approximately RM104.8 mln arising from the disposals of its entire interests in JB Parade Sdn Bhd and PD Resort Sdn Bhd to GuocoLand Hotels Pte Ltd. Revenue for the quarter, however, declined 55.9% Y.o.Y to RM35.8 mln.

• For 9MFY18, its net profit dropped 51.7% Y.o.Y to RM57.7 mln. Revenue for the period, however, jumped 89.7% Y.o.Y to RM289.0 mln. (The Edge Daily)
• IGB Real Estate Investment Trust’s 1Q2018 net property income (NPI) rose 6.7% Y.o.Y to RM102.5 mln, thanks to higher rental income and lower operating expenses. Revenue for the quarter rose 2.3% Y.o.Y to RM136.8 mln. An income distribution of 2.48 sen per unit, payable on 31st May 2018 was announced. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) has signed a 21-year large-scale solar (LSS) photovoltaic power purchase agreement (PPA) with Halpro Engineering Sdn Bhd, whereby the latter will design, construct, own, operate and maintain a solar photovoltaic energy generating facility of 30MW to be located in Mukim Bebar, Daerah Pekan, Pahang.

• The PPA, which has an expected commercial operation date of 30th December 2019, is for a period of 21 years. (The Edge Daily)

• Axis Real Estate Investment Trust (Axis REIT) is adding a freehold industrial property in Shah Alam, Selangor for RM87.0 mln to its portfolio, which will raise its asset under management to RM2.64 bln. Its trustee, RHB Trustees Bhd, inked a sale and purchase agreement with Teraju Sinar Sdn Bhd (TSSB) to acquire the asset which comprises two adjoining parcels of land on which four warehouse blocks, a double-storey detached office building, a double-storey canteen building, and two guardhouses have been erected.

• On completion of the acquisition, the asset will be leased back to TSSB for six years. The acquisition has a starting net yield of 7.0% before Islamic financing cost and the agreed lease rental of the property has a contractual step up of 10.0% on year four onwards. The acquisition will be finance via debt financing, which will raise the REIT's gearing ratio to 35.3%. (The Edge Daily)

• Cycle & Carriage Bintang Bhd's 1Q2018 net loss stood at RM2.7 mln vs.. a net profit of RM0.3 mln in the previous corresponding quarter as the group continues to see its margin hurt by a demand shift to lower-priced models. Revenue for the quarter, however, added 10.2% Y.o.Y to RM388.6 mln. (The Edge Daily)

• Gadang Holdings Bhd’s 3QFY18 net profit fell 2.5% Y.o.Y to RM25.1 mln on lower contribution from its construction and utility divisions. Revenue for the quarter, however, gained 19.2% Y.o.Y to RM152.7 mln.

• For 9MFY18, cumulative net profit added 2.1% Y.o.Y to RM71.9 mln, Revenue for the period rose 8.8% Y.o.Y to RM412.3 mln. (The Edge Daily)

• Priceworth International Bhd is close to clinching an RMB192.0 mln (RM120.0 mln) deal to supply 60,000 cu.m per year of container flooring to Guangdong-based manufacturer Foshan Zhengsen Woodworking Co.

• Priceworth signed a Memorandum of Understanding (MoU) with Foshan Zhengsen on 21st April 2018 for the intended supply of container flooring. Priceworth is expecting to sign a definitive five-year supply agreement with Foshan within six months. (The Edge Daily)

• Pecca Group Bhd will see a delay in the utilisation of its initial public offering (IPO) proceeds of about RM2.6 mln, while RM6.6 mln will see some variation in its utilisation. The board of directors has approved the variation and extension of time for the utilisation of the proceeds raised. The extension will be for another 24 months from 19th April 2018.
• Some of the variation and delay of the utilisation of the proceeds include the purchase of new machineries for the production of car leather seat covers, as well as the establishment of a market presence in Thailand. (The Edge Daily)  

Source: Mplus Research - 24 Apr 2018