On The Wayside

• The FBM KLCI (-0.7%) started off the week on a feeble note as the key index gapped down and subsequently lingered in the negative territory before recording its fourth straight losing streak yesterday. The lower liners – the FBM Small Cap (-1.3%), FBM Fledgling (-1.0%) and FBM ACE (-2.2%) all took a beating, while the broader market was splashed in red.

• Market breadth remained negative as decliners trounced advancers on a ratio of 750-to-187 stocks. Traded volumes, however, added 19.6% to 1.92 bln shares as selling pressure on both the key index and lower liners escalated.
• Petronas Dagangan (-40.0 sen) topped the FBM KLCI decliners list, followed by Hong Leong Financial Group (-26.0 sen), Petronas Gas (-18.0 sen), Hong Leong Bank (-16.0 sen) and Telekom (-16.0 sen). On the broader market, consumer products stocks like BAT (-54.0 sen), Dutch Lady (-46.0 sen), Panasonic (-36.0 sen) and Carlsberg (-24.0 sen) remain under pressured, while MHB sank 4.5 sen after reporting a weak set of quarterly results.
• In contrast, amongst the biggest advancers on the broader market include Allianz (+18.0 sen), Rapid Synergy (+10.0 sen), Vitrox (+7.0 sen), 7-Eleven (+6.0 sen) and Opcom (+4.5 sen). Meanwhile, Digi (+2.0 sen) and Press Metal (+1.0 sen) were the only two gainers on the big board.

• Asia benchmark indices closed mostly higher yesterday, taking cue from the positive developments on Wall Street last Friday as the Hang Seng Index rose 0.2% to close marginally below the 30,000 psychological level, while the Shanghai Composite jumped 1.5%, driven by optimism over positive economic data. Japanese stockmarkets resume trading as the Nikkei (-0.03%) closed marginally lower after trimming most of its intraday losses. ASEAN stockmarkets, meanwhile, closed mostly higher yesterday.

• U.S. stockmarkets extended their gains overnight as the Dow added 0.4%, lifted by rally in energy and technology shares after the WTI crude oil price rose above the US$70 per barrel level for the first time since 2014. On the broader market, both the S&P 500 rose 0.4%, while the Nasdaq closed 0.9% higher after Apple Inc (+0.7%) closed at its fresh all-time high level.

• Earlier, European benchmark indices also extended their gains as the CAC and DAX added 0.3% and 1.0% respectively, lifted by the weaker Euro Currency coupled with a string of strong corporate earnings reports. The FTSE, meanwhile, was closed for the Early May Bank public holiday.

The Day Ahead

• There was little reprieve for Malaysian stocks as the selling remained unabated yesterday amid jitters over the upcoming General Election outcome that remains too close to call. The uncertainties are prompting many market players, particularly foreign funds, to close out their positions and await for the election results before determining their next course of action.

• Under the prevailing cautious environment, we think the downside bias on Bursa Malaysia will remain ahead of tomorrow’s election as the wariness will continue to keep market players on the sidelines. This means the immediate support around the 1,823 level could be retested. If it gives way, the supports then move to 1,820 and 1,815 respectively. The near term resistances, meanwhile, are at the 1,835-1,840 levels.

• The lower liners and broader market shares have borne the brunt on recent selldown, but there is still little reprieve to their downside pressure as the selling is still continuing. Therefore, their near term outlook remains clouded for another session.

Company Brief

• SP Setia Bhd's 50.0%-owned subsidiary will be undertaking a mixed development in Cheras known as the Quality Sustainable People Housing (QSPH) project for Kuala Lumpur City Council (DBKL). In return, the latter will transfer 52.5 ac. of leasehold land, free from encumbrances, to its 50.0%-controlled unit Retro Highland Retro Highland Sdn Bhd, in which Tradewinds Corp Bhd owns the other 50.0% stake.

• The total value of the land is RM1.19 bln, based on the RM344.8 mln construction of the first phase of the QSPH project, RM835.1 mln for its second phase, and a RM15.0 mln cash consideration.

• The proposed mixed development project will comprise of residential and commercial components and is expected to have an estimated gross development value (GDV) of RM11.03 bln with a development period of 11 years. (The Edge Daily)

• Tan Chong Motor Holdings Bhd is planning to set up an automotive hub in Bagan Datuk, Perak with an estimated long-term investment of RM500.0 mln, to serve the expansion needs of the local and export markets.

• The new auto hub, Tan Chong Automotive & Commercial Vehicle Hub, will be located on a 338-ac.piece of freehold land in Bagan Datuk. The initial stage of the project is expected to cost about RM100.0 mln for the land acquisition and the construction of a bus and truck plant. (The Star Online)

• Ranhill Holdings Bhd posted a 15.6% Y.o.Y growth in 1Q2018 net profit to RM18.1 mln, from RM15.7 mln in the same period last year, mainly contributed by higher revenue (+2.4% Y.o.Y) of RM360.3 mln, up from RM352.0 mln previously.

• The improved quarterly performance was also driven by higher income from its environment as well as power segment. (The Edge Daily)

• Three-A Resources Bhd’s 1Q2018 net profit tanked 39.6% Y.o.Y to RM6.2 mln, compared to RM10.3 mln last year, dragged down by lower profit margin as a result of higher raw material prices as well as higher net foreign exchange (forex) losses. Revenue (-0.7% Y.o.Y), however, was flattish at RM102.5 mln in 1Q2018. (The Edge Daily)

• Trading of shares in Practice-Note 17 (PN17) company Bertam Alliance Bhd will be suspended from 10th May 2018 following its failure to submit its 2017 annual report on or before the 30th April 2018 deadline.

• The group, however, is in the midst of finalising its annual financial statements and targets to issue the report on or before 31st May 2018. (The Edge Daily)

• GFM Services Bhd is planning to raise up to RM20.7 mln via a private placement of up to 10.0% of its issued shares in tranches to partly finance its acquisitions of KP Mukah Development Sdn Bhd (KPMD).

• KP Mukah, a profitable facilities management company, currently holds a concession awarded by the Government and Universiti Teknologi MARA which is valid from 17th September, 2012 to 17th September 2035. (The Edge Daily)

• The auditors of Eden Inc Bhd have raise concerns over the latter’s ability to continue as going concern after reporting a 2017 net loss of approximately RM18.6 mln and weak balance sheet, whereby the current liabilities of the group had exceeded its current assets by RM62.8 mln. In addition, Eden had also reported operating cash outflows of RM11.0 mln. (The Edge Daily)  

Source: Mplus Research - 8 May 2018