Dour Outlook Remains

• The FBM KLCI fell 0.8% at Tuesday’s close on the back of follow-through selling-pressure in selected large caps. The lower liners continued to be southbound as well, with the exception of the FBM Ace (+0.5%). Meanwhile, on the broader market, the Technology (+1.8%) and Mining (+1.4%) subsectors bucked the general bearish sentiment and closed higher.

• Market breadth was negative as decliners beat advancers on a ratio of 574-to-291 stocks. Traded volumes, meanwhile, inched 0.8% lower to 1.93 bln shares as investors stayed on the sidelines awaiting for further trading impetuses.

• Significant losers include Petronas-linked stocks like Petronas Dagangan (-50.0 sen) and Petronas Gas (-26.0 sen), followed by other large caps like Nestle (- 50.0 sen), Press Metal (-31.0 sen) and Hong Leong Bank (-28.0 sen). Broader market underachievers, meanwhile, were Top Glove (-55.0 sen), Far East Holdings (-30.0 sen), Heineken Malaysia (-22.0 sen) and Kossan Rubber (-21.0 sen). BAT was lower by RM1.00, subdued by ongoing pressure from rising illicit cigarettes.

• On the green side, Allianz (+40.0 sen), United Plantations (+30.0 sen), Perusahaan Sadur Timah (+18.0 sen), Hong Leong Industries (+16.0 sen) and Pintaras Jaya (+16.0 sen) closed higher. Meanwhile, Petronas Chemicals (+3.0 sen) was the only counter out of Bursa Malaysia’s top thirty largest stocks to climb higher on Tuesday.

• Japanese equities took a breather, closing higher and spurred by the stronger U.S. Dollar. The Nikkei (+0.9%) rallied to close slightly above the 22,278 psychological level. Meanwhile, the Shanghai Composite Index grew 2.0% as investors shrugged off concerns of political uncertainties amid renewed efforts in government reforms. Similarly, the Hang Seng (+1.3%) was also positive – led by gains in energy-related stocks. ASEAN equities, meanwhile, finished mostly higher yesterday.

• Key benchmark U.S. equities tumbled, pressured by rising bond yields as U.S. Treasury yields hit the 3.0% psychological milestone, while upbeat corporate releases failed to lift sentiments. The Dow (-1.7%) booked its fifth consecutive session of losses, dragged down by 3M (-6.8%) after it cut its earnings forecast. Meanwhile, techladen indices like the Nasdaq (-1.7%) and the S&P (-1.3%) declined on losses in the technology stocks.

• U.K. stocks sustained its upward momentum, driven by the strength in the oil companies. The FTSE rose 0.4%, helped by Shire (+3.4%) after the latter received a fifth takeover bid from its Japanese counterpart – Takeda Pharmaceutical, while the CAC gained 0.1%. The DAX (-0.2%) however erased earlier gains, closing lower as rising bond yields diminishes the attractiveness of equities, while raising borrowing costs.

The Day Ahead

• The market indifference has turned into a rout amid the profit taking activities on the big caps following the key index’s venture into a new all-time high closing. As a consequence, market sentiments have turned weaker with the lack of follow through support and the downside bias looks to persist for now as market participation is also on the wane with few positive leads to shore-up the market.

• We also see a similarly dour market condition prevailing among the lower liners and broader market shares as the lack of leads, coupled with quick profit taking actions will keep a lid on their performance over the near term. At the same time, many retail players are staying on the sidelines on wariness over the upcoming General Election.

• With the successive supports breached, the 1,860 and 1,853 levels are now the near term supports. The resistances, meanwhile, are at 1,870 and 1,876 respectively.

COMPANY BRIEF

• Sumatec Resources Bhd has secured a US$20.0 mln (RM78.0 mln) contract financing from China's Talap Munai Service LLP for the development of its Rakushechnoye oil and gas field in Kazakhstan. The financing would cover eight well workovers on the upper Jurassic Reservoir, eight well workovers/side-tracks on the Triassic Reservoir and drilling two new wells plus an additional four new wells to be funded from oil revenue. The financing would also be to upgrade the surface, production and storage facilities; and installation of gas injection facilities for pressure maintenance and offtake.

• The scope of work proposed by Talap Munai is anticipated to increase production by an additional 3,500 barrels of equivalent (boe) a day in January 2019 and thereafter targeted to increase to an additional 7,200 boe/day by August 2019. (The Star Online)

• Syarikat Takaful Malaysia Bhd's 1Q2018 net profit rose 23.3% Y.o.Y to RM70.0 mln on higher contributions from its general takaful division. Revenue for the quarter grew 13.1% Y.o.Y to RM86.3 mln. (The Star Online)

• Unisem (M) Bhd’s 1Q2018 net profit plunged 86.6% Y.o.Y to RM6.0 mln, mainly due to depreciation of the U.S. Dollar, coupled with lower profit margins arising from change in product mix as well as the recognition of foreign exchange losses of RM10.0 mln. Revenue for the quarter fell 10.7% Y.o.Y to RM321.6 mln. (The Star Online)

• Nestlé (Malaysia) Bhd’s 1Q2018 net profit improved marginally by 0.2% Y.o.Y to RM231.2 mln on the back of higher revenue that offset the impact of slightly higher commodity prices as well as increased marketing investments during the Chinese New Year (CNY) period. Revenue for the quarter rose 4.2% Y.o.Y to RM1.43 bln. (The Edge Daily)

• Globetronics Technology Bhd’s 1Q2018 net profit surge 225.3% Y.o.Y to RM15.2 mln, on higher volume loadings of products from certain customers in the group. Revenue for the quarter grew 73.6% Y.o.Y to RM86.5 mln. (The Edge Daily)

• Minetech Resources Bhd's 70%-owned subsidiary, Coral Power Sdn Bhd has bagged a contract to build a large-scale solar photovoltaic (PV) plant of 10.0 MW of capacity in Manjung, Perak at the offer price of 37.5 sen per kWh for a period of 21 years. Coral Power has accepted the letter of award from the Energy Commission for the proposed project and the commercial operation date will not be later than 31st August 2020. (The Edge Daily)

• Lotte Chemical Titan Holding Bhd (LCT) final decision on its integrated petrochemical facility project in Indonesia could be reached by end- 2018 or early-2019, depending on completion of the feasibility study and environmental impact assessment which are now at the tail-end. LCT is looking to construct a naptha cracker with a capacity of 1.0 mln tonnes next to its existing plant in Merak, Cilegon in Indonesia’s Banten province. The mega project, which is estimated to cost about US$3.00 bln (RM11.72 bln), will take 3-4 years to complete. (The Edge Daily)

• Sarawak Consolidated Industries Bhd has terminated its share sale agreement (SSA) to acquire the owner and operator of an industrialised building system (IBS) factory named Carlton Gardens Sdn Bhd for RM9.5 mln. In return, it is claiming for yet-tobe-quantified losses and damages suffered due to what it alleged were the sellers' breach of contract. (The Edge Daily)

• Westports Holdings Bhd, which expects to register weak performance in container volume in 1H2018, anticipates container traffic to pick up in 2H2018, driven by normalisation in the realignment of shipping alliances. For 2018, Westports expects to have a slight modest growth of low single digit. (The Edge Daily)

• Capitaland Malaysia Mall Trust's (CMMT) 1Q2018 net property income fell 4.5% Y.o.Y to RM57.1 mln, dragged by lower contribution from its Klang Valley shopping malls and an office tower. Revenue for the quarter declined 2.9% Y.o.Y to RM89.7 mln. (The Edge Daily)

• Tasek Corp Bhd’s 1Q2018 net loss stood at RM4.4 mln vs. a net profit of RM3.6 mln in the previous corresponding quarter due to intense price competition which continued to negatively affect the average net selling price for both cement and ready-mixed concrete segments. Revenue for the quarter, however, grew 3.0% Y.o.Y to RM136.3 mln. (The Edge Daily)

• IHH Healthcare Bhd has submitted a revised proposal to participate in Fortis Healthcare Ltd and its affiliates with a binding offer (without any due diligence) that will see an immediate injection of primary equity of INR650 crores or RM382.6 mln into Fortis, at a valuation of INR160 per share or RM9.42 per share. The injection will be done by way of a preferential issue and allotment of equity shares, with IHH given the right to appoint two directors on the board of Fortis.

• Meanwhile, a non-binding proposal to infuse up to INR3,350 crores or RM1.97 bln through a subsequent preferential issue and allotment of equity shares, subject to satisfactory completion of the due diligence and execution of mutually binding definitive documents. (The Edge Daily)

• The court has ruled against Eka Noodles Bhd in its judgement favouring Bank Pertanian Malaysia Bhd in relation to a lawsuit filed against it and whollyowned unit Kilang Bihun Bersatu Sdn Bhd, involving claims of at least RM7.1 mln plus interest. Eka Noodles has decided not to appeal against the judgement. (The Edge Daily)  

Source: Mplus Research - 25 Apr 2018