More Minor Gains

• The FBM KLCI (+0.6%) extended its gains last Friday, taking cue from the recovery on Wall Street overnight as the key index trimmed its weekly losses (-1.3% W.o.W. The lower liners ended mostly higher as the FBM Small Cap and the FBM ACE added 0.5% and 0.6% respectively, while the Mining sector (-0.9%) was the sole decliner on the broader market.

• Market breadth stayed positive as advancers outpaced decliners on a ratio of 452-to-338 stocks. Traded volumes, however, slipped 20.4% to 1.63 bln shares as investors opt to stay at the sidelines ahead of the upcoming general election.

• More than two-thirds the key index constituents advanced, led by Nestle (+RM1.90), followed by KLCC (+19.0 sen), Axiata (+14.0 sen), Genting (+13.0 sen) and Genting Malaysia (+10.0 sen). Significant gainers on the broader market were Fraser & Neave (+48.0 sen), Globetronics (+31.0 sen), Air Asia (+13.0 sen) and Carlsberg (+22.0 sen). Vitrox added 12.0 sen after delivered a strong set of quarterly results.

• Consumer products stocks like BAT (- 38.0 sen), Ajinomoto (-28.0 sen), Dutch Lady (-18.0 sen) and Panasonic (-10.0 sen) were among the broader market biggest decliners, while Allianz sank 48.0 sen. There were only three decliners on the big board – Public Bank (-12.0 sen), Petronas Gas (-2.0 sen) and Hong Leong Bank (-2.0 sen).

• Asia benchmark indices closed on a positive note last Friday amid the positive developments between North and South Korea with both parties agreeing for denuclearisation. The Nikkei (+0.7%) extended its gains to close at its highest level since early February 2018, while the Shanghai Composite added 0.2% after recovering all its intraday losses. The Hang Seng Index climbed 0.9% to fortify its position above the 30,000 psychological level. ASEAN stockmarkets, meanwhile, closed higher.

• U.S. closed on a mixed note last Friday as the Dow slipped 0.1% after 1Q2018 GDP expanded 2.3% Y.o.Y – the slowest pace compared to the past three quarters offset the solid corporate earnings. On the broader market, the S&P added 0.1%, while the Nasdaq closed 0.02% higher.

• Earlier, European indices extended their gains amid a string of stronger-thanexpected corporate earnings, coupled with the depreciation of Euro Currency against the Greenback. The FTSE jumped 1.1% higher to close above the 7,500 psychological level. The CAC rose 0.5%, while the DAX finished 0.6% higher.

The Day Ahead

• With a generally positive end to the previous week, we think there will be sustained near term upside on the back of the continuing bargain hunting. While we see sustained near term upsides, we also think the upsides could be limited as the buying will remain selective, particularly on the big cap stocks.

• As it is, market participation is still scant as many investors and traders are still staying on the sidelines amid the still cautious environment and awaiting for the outcome of the upcoming general election. The lack of participation also extends to the lower liners and broader market shares and this will also keep a lid on their performance over the near term.

• Under the prevailing environment, we expect the resistances at 1,870 and 1,880 to remain in play, while the supports are at the 1,860 and 1,850 levels.

COMPANY BRIEF

• Petronas Dagangan Bhd (PetDag) has appointed former Proton Holdings Bhd Group Managing Director (MD), Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir to be the MD and Chief Executive Officer (CEO) of (PetDag) effective on 1st June 2018. He will be replacing Datuk Mohd Ibrahimnuddin Mohd Yunus. (The Edge Daily)

• AirAsia Group Bhd saw its 1Q2018 passengers volume rise 16.0% Y.o.Y to 10.7 mln, from 9.2 mln a year ago, in line with the added capacity (+19.0% Y.o.Y). However, passenger load factor fell 2.0% to 87.0% in the same quarter.

• Further, AirAsia Group’s total fleet size grew to 123 aircraft, comprising 87 in Malaysia, 15 in Indonesia (PT AirAsia Indonesia Tbk) and 21 in the Philippines (Philippines AirAsia Inc). In 1Q2018, Thai AirAsia (TAA) added three aircraft to bring its total fleet to 59 aircraft.

• Meanwhile, AirAsia India and AirAsia Japan’s (AAI) 1Q2018 fleet size stood at 16 aircrafts and two aircrafts respectively. (The Star Online)

• Sinmah Capital Bhd has announced that the Inland Revenue Board (IRB) remains steadfast that the RM5.6 mln in additional income taxes and penalties for years of assessment 2008 to 2013, cannot be settled through the dispute resolution proceeding (DRP).

• Following an appeal session which was held on 15th February 2018, the IRB maintained that the case cannot be settled through DRP and had forwarded the case to the Special Commissioner of Income Tax for registration for trial. Sinmah will make further announcements as and when there are fresh developments arising from the matter. (The Edge Daily)
• Aeon Credit Service (M) Bhd's 4QFY18 net profit inched up marginally by 2.8% Y.o.Y to RM82.3 mln, from RM80.1 mln a year ago, mainly driven by higher revenue (+6.3% Y.o.Y) that came in at RM309.2 mln, from RM290.8 mln last year. The group has also declared a final dividend of 20.0 sen per share, payable on 19th July, 2018. (The Edge Daily)

• Genting Malaysia Bhd is planning to establish a Medium-Term Note (MTN) programme of RM3.0 bln in nominal value through its 100.0%-owned subsidiary, GENM Capital Bhd. The MTN programme, which was assigned an initial long-term rating of AAA(s) by RAM Rating Services Bhd, will have a tenure of 20 years and is irrevocably and unconditionally guaranteed by Genting Malaysia.

• Meanwhile, net proceeds from the MTN Programme will be used to fund operating expenses, capital expenditure, investment, refinancing, working capital requirements and/or general funding requirements, including to finance the group’s development and/or re-development of the properties and/or resorts. (The Edge Daily)

• Inta Bina Group Bhd is planning to transfer its listing to the Main Market after the group has satisfied the Main Market listing’s profit requirement and also met the mandated public shareholding spread of having at least 25.0% of total listed shares in the hands of a minimum of 1,000 public shareholders. The group was listed in the ACE market for less than a year. (The Edge Daily)

• Uzma Bhd has secured a two-year umbrella contract from Petronas Carigali Sdn Bhd to provide well abandonment integrated services. There is no fixed value for the umbrella contact, as it is dependent on work orders to be issued to it from time to time at the discretion of Petronas Carigali. The contract will commence from 29th March 2018 until 29th March 2020, with an extension option period of one year. (The Star Online)

• EcoFirst Consolidated Bhd‘s 3QFY18 net profit more than tripled to RM4.5 mln vs. RM1.3 mln in the same period last year, mainly due to contributions from two development projects - Phase 1 of Ampang Ukay known as Liberty @ Ampang Ukay and Upper East @ Tiger Lane in Ipoh, Perak. Revenue for the quarter also grew 10.1% Y.o.Y to RM35.3 mln from RM32.1 mln in the last corresponding year. (The Edge Daily)

• UMW Holdings Bhd has extended the validity of its takeover offer for control over MBM Resources Bhd (MBMR) for another six months, ahead of a crucial shareholders’ vote to decide on the offer on Monday. UMW’s offer to acquire a 50.1% equity stake MBMR is now valid until 31st October 2018, its second extension after UMW previously extended the validity to 30th April.

• To recap, UMW is offering RM2.56 per share to Med-Bumikar Mara Sdn Bhd for the latter’s 50.1% shareholding in MBMR. UMW also intends to undertake a mandatory general offer and take MBMR private if it successfully acquires Med-Bumikar’s 50.1% stake in MBMR.

• Although Med-Bumikar’s board had rejected the offer, some of its shareholders keen to take UMW’s offer had called for an Extraordinary General Meeting (EGM) to vote on the deal. The EGM is scheduled for next Monday. (The Star Online)
• TH Heavy Engineering Bhd’s independent auditor had expressed a disclaimer of opinion in the company’s 2017 audited financial statements thus, indicating significant doubt on the ability of the group to continue as a going concern.

• Independent auditor Messrs Deloitte PLT said that they were unable to ascertain the ability of the group and of the company to achieve sustainable and viable operations to generate adequate cash flows from their operating activities and the timely and successful formulation and implementation of the entire proposed regularisation plan. (The Edge Daily)

• S P Setia Bhd has purchased 57 ac. of freehold land in Cyberjaya, Selangor from Setia Haruman Sdn Bhd, the master developer of Cyberjaya, for RM177.5 mln.

• The land will be developed into a residential project with an expected gross development value (GDV) of RM650.0 mln via a 70:30 joint-venture (JV) company held by SP Setia and Setia Haruman.

• The project is expected to commence in the 2H2019 pending approvals and is expected to take about six years to complete. It would be developed into an eco-themed sanctuary, emulating Setia Eco Glades in Cyberjaya. (The Edge Daily)  

Source: Mplus Research - 30 Apr 2018