Continuing Rebound

• The FBM KLCI flatlined after rebounding the last hour, on the back of buyingsupport in selected large caps. The lower liners – the FBM Small Cap (+0.3%), the FBM Fledgling (+0.3%) and the FBM Ace (+0.4%) recovered amid bargain-hunting activities, while the broader market ended mostly higher with the exception of the Trading/Services subsector.

• Market breadth turned positive as winners dethroned losers on a ratio of 442-to-349 stocks. Traded volumes also grew by 9.2% to 2.05 bln shares, lifted by bargain-hunting activities in the broader market.

• Key-index frontrunners were KLCC (+19.0 sen), Maybank (+10.0 sen), Digi (+8.0 sen), Hong Leong Financial Group (+6.0 sen) and Petronas Gas (+6.0 sen). Other gainers include consumer productsrelated stocks like Dutch Lady (+58.0 sen), Fraser & Neave (+28.0 sen), Carlsberg (+24.0 sen) and Ajinomoto (+22.0 sen). Meanwhile, giant rubber gloves maker Top Glove also logged a 41.0 sen gain at Thursday’s close.

• On the downside, broader market losers include United Plantations (-RM1.00), Allianz (-18.0 sen), Heineken Malaysia (- 18.0 sen) LPI Capital (-18.0 sen) and Caely Holdings (-12.5 sen). Significant decliners on the key index were Nestle (- RM2.60), Axiata (-14.0 sen), Public Bank (-12.0 sen), Genting (-9.0 sen) and MISC (-7.0 sen).

• Chinese and Hong Kong equities continued their slide, still hampered by the weakness in the tech sector amid uncertainties surrounding the U.S.-China trade conflicts. Losses in Apple parts supplier AAC Technologies (-4.1%) weighed on the Hang Seng (-1.1%) on slowing demand for smartphones. Meanwhile, the Shanghai Composite Index also finished lower by 1.4%, despite the Nikkei (+0.5%) closing in the positive territory. The bulk of the ASEAN stockmarkets ended higher at Thursday’s closing bell.

• U.S. equities finished on an upbeat tone, driven by a series of positive corporate earnings as investors temporarily set aside concerns over the potential rising interest rates. The Dow jumped 1.0% with more than half of its blue chip members in the green. Meanwhile, solid gains in Facebook propped the S&P (+1.0%) and the Nasdaq (+1.6%) higher after the social-media behemoth reported earnings that topped analysts’ expectation.

• Key European indices rallied, boosted by a weaker Euro after the European Central Bank (ECB) expectedly kept its monetary policies unchanged on Thursday. The FTSE (+0.6%) resumed its upwards momentum, albeit slightly capped by losses in mining stocks. The DAX and the CAC also added 0.6% and 0.7% respectively yesterday.

The Day Ahead

• After a choppy day yesterday, we think the key index could fare better and potentially end the week on a firmer note, riding on the back of the improved overnight global equity market sentiments. The FBM KLCI’s potential upsides could also be made easier by the base that was formed over the past two sessions around the 1,850 level.

• While we see further near term upsides, we continue to think that the gains may be limited by the lack of follow-through buying and quick profit taking actions. Therefore, we maintain our prognosis that the resistances at the 1,855 and 1,860 levels could well come into play. Also below the 1,850 level, the next support is at the 1,840 level. ? Despite the improved market environment, we think the following on that the lower liners and broader market could remain largely on the thin side as a sense of wariness still permeates as the country heads towards the General Election in two weeks. Therefore, their upsides will also be capped by little follow through buying interest.

Company Brief

• Vitrox Corporation Bhd 1Q2018 net profit rose 9.1% Y.o.Y to RM20.3 mln, boosted by strong demand for automated board inspection (ABI) machines. Revenue for the quarter rose 11.1% Y.o.Y to RM77.3 mln. (The Star Online)

• Frontken Corporation Bhd’s 1Q2018 net profit added 25.5% Y.o.Y to RM6.3 mln due to higher revenue and lower foreign exchange loss. Revenue for the quarter increased 5.8% Y.o.Y to RM70.9 mln. (The Star Online)

• PPB Group Bhd has agreed to acquire the Armed Forces Fund Board’s entire 16.8% stake in property developer Hillcrest Gardens Sdn Bhd for RM59.0 mln. The purchase price is a 76.0% premium over Hillcrest's audited consolidated net assets as at 31st December 2017.

• Hillcrest owns 147.8 ac. of freehold land in Taman Seri Gombak and Taman Puchong Utama, both in Selangor. LTAT original cost of investment in the company was RM1.2 mln in 1976. The Kuok Brothers owns a 49.0% stake in Hillcrest Gardens. (The Star Online)

• Ikhmas Jaya Group Bhd’s audited financial results for its year ended 31st December 2017 (2017) has a variance of RM7.4 mln or 51.5% from its unaudited 4Q2017 results. The major cause of the variance in profit attributable to owners of Ikhmas Jaya was mainly due to the consolidation adjustment made for the capitalisation of depreciation charge on plant and machinery into the project costs. The depreciation amount eligible for capitalisation was revised and a consolidation entry superseding the initial entry was recorded. (The Edge Daily)

• Ireka Corporation Bhd has secured a contract worth RM92.0 mln to build an additional structure at Pantai Hospital Ayer Keroh in Melaka. The job has a contract period of 24 months and should be completed by 15th April 2020. (The Edge Daily)

• LPI Capital Bhd's 1Q2018 net profit rose 2.8% Y.o.Y to RM72.5 mln, driven mainly by improved performance in Lonpac Insurance Bhd (Lonpac). Revenue for the quarter climbed 9.6% Y.o.Y to RM381.0 mln. (The Edge Daily)

• Pavilion Real Estate Investment Trust ’s (Pavilion REIT) 1Q2018 net property income (NPI) rose 12.7% Y.o.Y to RM89.0 mln on higher contribution from Pavilion Kuala Lumpur Mall's tenants following a repositioning exercise and higher occupancy rate at the Intermark Mall. Revenue for the quarter grew 10.6% Y.o.Y to RM131.5 mln. Distributable income for the quarter totaled RM69.7 mln or 2.3 sen per unit. (The Edge Daily)

• Choo Bee Metal Industries Bhd has proposed to undertake a bonus issue of up to 22.0 mln bonus shares on the basis of one-for-five existing shares held to reward shareholders, while enhancing its marketability and trading liquidity. The entitlement date will be determined later. (The Edge Daily)

• Atlan Holdings Bhd’s 4QFY18 net profit jumped 109.3% Y.o.Y to RM26.4 mln, mainly owing to the reversal of provision of guarantees amounting to RM14.9 mln. Revenue for the quarter rose 13.8% Y.o.Y to RM223.6 mln.

• For FY18, however, cumulative net profit fell 10.1% Y.o.Y to RM49.0 mln. Nevertheless, revenue for the year added 2.1% Y.o.Y to RM826.3 mln. (The Edge Daily)

• Nexgram Holdings Bhd has fixed the issue price of its first tranche of placement shares at 5.9 sen per share, which is at a 9.2% Y.o.Y discount to its closing price of 6.5 sen on 27th April 2018. The issue price also represents a discount of 8.8%, compared with the five-day weighted average market price of Nexgram from 19th April 2018 to of 6.47 sen per share. (The Edge Daily)

• Tatt Giap Group Bhd’s 3QFY18 net profit stood at RM1.4 mln vs. a net loss of RM3.6 mln in the previous corresponding quarter, on higher gross profit margin and a RM3.9 mln gain from the disposal of a 41.0% interest in Tatt Giap Steel Centre. Revenue for the quarter gained 8.4% Y.o.Y to RM22.5 mln.

• For 9MFY18, however, cumulative net loss stood at RM2.1 mln vs. a net profit of RM12.5 mln in the previous corresponding period. Revenue for period dropped 11.9% Y.o.Y to RM62.1 mln. (The Edge Daily)

• AirAsia X Bhd (AAX) carried 1.6 mln passengers in 1Q2018 compared with 1.4 mln a year ago, on the back of increased capacity as the airline catered to increased travel demand arising from the festive seasons and school holidays during the period.

• AAX’s capacity in 1Q2018 increased 14.0% Y.o.Y, while passenger load factor remained static at 84%. The fleet size of AAX Malaysia stood at 22 Airbus A330s as at end-March 2018. (The Edge Daily)

• Poh Huat Resources Holdings Bhd has reported that compensation for the losses arising from the fire which broke out at one of its factories in Muar, Johor in January, amounted to RM4.3 mln after due assessment by and negotiation with the insurers.

• The total net book value of the assets affected by the fire, comprising part of the factory building, machinery and inventories, has been ascertained to be RM3.0 mln, which means the group will recognise a gain of RM1.3 mln, arising from insurance compensation in the quarter ending 30th April 2018. (The Edge Daily)  

Source: Mplus Research - 27 Apr 2018