Going Nowhere

• The FBM KLCI (-0.01%) extended its losses, dragged down by the eleventh hour selling pressure in selected index heavyweights yesterday. The lower liners also ended mostly lower as the FBM Small Cap and FBM Fledgling fell 0.04% and 0.2% respectively, while the Mining (+1.9%), Technology (+1.3%) and Consumer Products (+0.3%) sectors outperformed the generally negative broader market.

• Market breadth remained negative as decliners outnumbered advancers on a ratio of 407-to-382 stocks. Traded volumes fell 20.3% to 1.67 bln shares as investors retreated to the sidelines amid uncertainties surrounding the upcoming general election.

• Key losers on the big board were Petronas Gas (-42.0 sen), Hong Leong Bank (-18.0 sen), Telekom (-14.0 sen), Genting (-6.0 sen) and Public Bank (-6.0 sen). Notable decliners on the broader market were financial stocks like Aeon Credit (-26.0 sen), BIMB (-19.0 sen) and Allianz (-18.0 sen), while BAT and Carlsberg shed 72.0 sen and 44.0 sen respectively.

• Amongst the biggest gainers on the broader market were Kluang Rubber (+40.0 sen), Dutch Lady (+20.0 sen), Padini (+18.0 sen), Magna Prima (+14.0 sen) and Petron Malaysia (+10.0 sen). Topping the FBM KLCI winners list were Nestle (+RM2.80), Tenaga (+16.0 sen), KLCC (+13.0 sen), Petronas Dagangan (+12.0 sen) and Petronas Chemicals (+5.0 sen).

• Asia benchmark indices closed mostly lower yesterday as the Nikkei (-0.2%) extended its losses, while the Hang Seng Index sank 1.3% as traders booked recent profit and monitor for developments between U.S. and China on their trade talks. The Shanghai Composite (+0.6%), however, halted a four-day losing streak. ASEAN stockmarkets, meanwhile, closed mostly lower yesterday.

• U.S. stockmarkets ended mixed overnight as the Dow (+0.02%) claw its way to close in the positive territory overnight after enduring a volatile trading session. On the broader market, both the S&P 500 and Nasdaq shed 0.2% each after recovering most of their intraday losses, supported by gains in technology shares.

• Earlier, European benchmark indices – the FTSE (-0.5%), CAC (-0.%) and DAX (- 0.9%), all ended in the red amid the unexpected decline in the inflation rate to 14-month low at 1.2% in April 2018 vs. 1.3% recorded in March 2018. The stronger Euro Currency against the Greenback also dampened market sentiment.

The Day Ahead

• The key index did well to recoup most of its intraday losses on the back of the continuing institutional support to ensure that the key index stay above the 1,850 support yesterday. We think a similar trend will sustain to the end of the week’s trading on the back of the continuing local institutional support.

• The support will allow the key index to head higher, but we think the gains will be limited due to the lack of broad based buying. As it is, foreign funds have been locking-in their profits of late and this is likely to temper the potential gains to the around the 1,857-1,860 levels, in our view. The 1,850 level remains the main support for now, while the other support is at the 1,847 level.

• There remains scant following from retail players ahead of next Wednesday’s General Election and we think the cautiousness will prevail with market following remaining on the thin side in today’s session. Therefore, the lower liners and broader market shares are poised for another dull session to end the week.

Company Brief

• Puncak Niaga Holdings Bhd has secured a contract worth RM489.9 mln to undertake sub-contract works to build a new regional sewage treatment plant in Kuantan, Pahang.

• The group has inked a principal subcontract agreement with Jalur Cahaya Sdn Bhd to act as the principal subcontractor for the project, effective from 5th March 2018 until 19th February 2022. (The Edge Daily)

• T7 Global Bhd has proposed a private placement to raise a further RM39.7 mln to fund the cost of setting up a RM30.0 mln specialised metal treatment plant in Serendah, Selangor. To recap, the group raised RM13.6 mln in a cash call on 28th November last year.

• Consequently, the proposed private placement will include up to 92.3 mln new T7 shares, representing up to 20.0% of its enlarged issued share capital to third-party investors to be identified later.

• Based on the issue price of 42.0 sen per placement share, the proposed private placement is expected to raise gross proceeds under the minimum scenario and maximum scenario of RM35.9 mln and RM39.7 mln respectively.

• The construction for the plant started in February and is expected to be completed by the end of 2018, with operations slated to commence by the 1Q2019. (The Edge Daily)

• Fraser & Neave Holdings Bhd’s 2QFY18 net profit fell 13.6% Y.o.Y to RM92.6 mln vs. RM107.1 mln a year ago, dragged down by higher input costs, especially for dairy products. Quarterly revenue, however, inched higher by 2.2% Y.o.Y to RM1.01 bln, from RM992.7 mln in the previous corresponding period.

• Cumulative 1HFY18 also lost 14.9% Y.o.Y to RM199.4 mln, from RM234.4 mln last year, while revenue was flat at RM2.08 bln. The group declared an interim dividend of 27.0 sen per share, payable on 7th June 2018. (The Star Online)

• Berjaya Assets Bhd (Basset) has increased its shareholdings in 7-Eleven Malaysia Holdings Bhd (SEM) to 5.2%, stoking further speculation about a potential privatisation of the 24-hour convenience store chain operator. Basset acquired a 1.1% stake (or 11.8 mln shares) in SEM for a sum of RM17.8 mln. The internally-funded transactions were made between 23th January 2018 and 2th May 2018 at RM1.52 per share.

• Basset first bought 3.2 mln shares in the open market for a cash consideration of about RM4.9 mln, and later another 8.5 mln shares via direct business transactions for RM12.9 mln. (The Star Online)

• Priceworth International Bhd has announced that Forest Management Unit 5 (FMU5), a timber concession area which it is acquiring in Sabah, has been valued at RM433.8 mln. However, the group holds a cash option that, if exercised, could further reduce the acquisition price to RM235.0 mln.

• The valuation is about RM173.8 mln or 66.9% higher than the RM260.0 mln it is paying for FMU5, which has a net concession area of 88,920 ha.

• Separately, Priceworth has also proposed a renounceable two-for-one rights issue with bonus shares to raise proceeds of RM102.4 mln, which will be used to repay bank borrowings and working capital. (The Edge Daily)

• Sunway Real Estate Investment Trust's (Sunway REIT) 3QFY18 net property income (NPI) was 5.1% Y.o.Y higher at RM105.3 mln, compared to RM100.2 mln a year ago, driven by improved financials in all segments. Consequently, Sunway REIT has declared an interim distribution per unit (DPU) of 2.4 sen, totalling RM69.8 mln, payable on 5th June, 2018.

• Its 3QFY18 net profit, however, flatlined at RM70.4 mln, while revenue for the quarter rose 5.2% Y.o.Y to RM141.5 mln, from RM134.6 mln in the previous year. (The Star Online)

• AirAsia X Bhd (AAX) has declared that it will be filing a defense against Malaysia Airports Holdings Bhd's claims of RM34.9 mln in outstanding airport charges, rent and late payment charges. This followed the law suit filed against AAX by the latter 27th April 2018. (The Edge Daily)

• DGB Asia Bhd is proposing to undertake a one-for-two bonus issue of warrants to reward shareholders and to provide the group with additional working capital when the warrants are exercised in the future.

• The proposed exercise includes up to 474.4 mln DGB warrants (Warrants B) with an exercise price of 12.0 sen, which represents a premium of 10.7% to the five-day volume-weighted average market price of DGB shares as at 2th May, 2018.

• Assuming full exercise of up to 474.4 mln Warrants B, the company will raise gross proceeds of RM56.9 mln. The proposed bonus issue of warrants is slated to be completed by the 3Q2018. (The Edge Daily)  

Source: Mplus Research - 4 May 2018