Gains To Taper On Profit Taking

• Tracking the gains on Wall Street overnight, the FBM KLCI (+0.5%) extended its gains after trading in the positive territory for the entire trading session, buoyed by strong buying interest on selected blue chips. The lower liners – the FBM Small Cap (+1.0%), FBM Fledgling (+0.4%) and FBM ACE (+0.2%), also extended their gains, as with most of the broader market shares.

• Market breadth stayed positive as advancers outstripped decliners on a ratio of 597-to-357 stocks. Traded volumes rose 16.0% to 4.06 bln shares on rotational play amongst the lower liners.

• Among the biggest blue chip advancers were Petronas Dagangan (+34.0 sen), Maybank (+28.0 sen), Telekom (+21.0 sen), Tenaga (+20.0 sen) and CIMB Bank (+13.0 sen). Notable gainers on the broader market include KESM Industries (+60.0 sen), United Plantations (+50.0 sen), Ajinomoto (+34.0 sen), SAM Engineering & Equipment (+21.0 sen) and Tasek Corporation (+20.0 sen),

• Significant losers on the broader market were Hong Leong Industries (-14.0 sen), UMW Holdings (-13.0 sen), Dutch Lady (- 10.0 sen), MPI (-10.0 sen) and Lafarge (- 9.0 sen). Key losers on the big board were Hong Leong Financial Group (-28.0 sen) Petronas Gas (-26.0 sen), Hong Leong Bank (-24.0 sen) and Nestle (-20.0 sen). Astro slipped 18.0 sen after reporting a weak set of quarterly earnings.

• Asian benchmark indices closed mostly higher yesterday as the Nikkei (+0.9%) advanced for the fourth straight session, taking cue from the positive sentiment on Wall Street. The Hang Seng Index (+0.7%) ascended for the sixth straight session, but the Shanghai Composite fell 0.2%., dragged down by weakness in banking stocks. ASEAN indices, meanwhile, ended mostly higher yesterday.

• Wall Street ended on a mixed noted as the Dow gained 0.4% overnight as sentiment was lifted by easing concern over potential trade war after purchase of parts restrictions of Chinese handset maker ZTE Corp from the U.S. would be lifted. On the broader market, the S&P 500 slipped 0.1% after erasing all its intraday gains, while the Nasdaq (-0.7%) retreated from its all-time high level.

• European benchmark indices closed mostly higher after recovering from their intraday losses as the FTSE and DAX climbed 0.3% each, taking cue from the gains on Wall Street and Asian stockmarkets. The CAC, however, slipped 0.1% after erasing all its intraday gains, dragged down by losses in utilities, consumer and healthcare sector.

The Day Ahead

• We continue to think that the calmer market undertone will provide the impetus for Malaysian stocks to recover further over the near term. Although foreign funds are still trimming their shareholding on Malaysian stocks, local market players are providing the necessary support to lift the FBM KLCI on bargain hunting activities as valuations are still

• The positivity is also extending to the lower liners and broader market shares that have endured a wretched period over the past few months due to the lack of following and cautiousness over the market’s direction. This has resulted in their valuations tipping their attractive levels and provides ample bargain hunting opportunities to pick-up beaten down industry leaders for further recovery plays
• Nevertheless, we think the gains for the day could be more muted ahead of the weekend as we expect profit taking activities to set in, coupled with the continued selldown by foreign funds. Therefore, we think the upsides could be limited to the 1,790 level. The supports, meanwhile, are at 1,780 and 1,770 level.s

COMPANY BRIEF

• Astro Malaysia Holdings Bhd’s Group Chief Executive Officer, Datuk Rohana Rozhan has tendered her resignation and will be replaced by Henry Tan, effective from 31st January 2019. However, Datuk Rohana will remain on the board as a Non-Executive Director. (The Star Online)

• Straits Inter Logistics Bhd is buying a 55.0% equity stake in Tumpuan Megah Development Sdn Bhd, which has similar core business activities as Straits, for RM35.8 mln. The proposed acquisition will be funded by a combination of RM7.8 mln in cash and an issuance of 116.5 mln new shares at an issue price of 24.0 sen per share for RM28.0 mln. (The Star Online)

• Utusan Melayu (Malaysia) Bhd has appointed Umno politician Datuk Abdul Aziz Sheikh Fadzir as its Executive Chairman effective immediately. The appointment follows the voluntary resignation of four directors — Chairman Tan Sri Mohamad Fatmi Che Salleh, Datuk Seri Tengku Sariffuddin Tengku Ahmad, Jamalul Kiram Mohd Zakaria and Mohd Yusof Abu Othman. Datuk Abdul Aziz is also currently the executive Chairman of Kretam Holdings Bhd. (The Star Online)

• Aluminium Company of Malaysia Bhd expects aluminium prices to linger above US$2,000 per tonne for the next six months. The group believes that aluminium prices are fluctuating more than fundamentally justified mainly due to geo-political influence currently.

• Moving forward, the aluminium sheet and foil products maker foresees a strong year in 2018 despite geopolitical risks and external headwinds. (The Edge Daily)

• Johan Holdings Bhd fell into the red with a 1QFY18 net loss of RM4.5 mln vs. a net profit RM9.1 mln last year, dragged down by lower fair value gain derived from investment securities. Revenue for the quarter was also 15.4% Y.o.Y lower to RM26.4 mln, from RM31.1 mln last year. The weaker earnings were also affected by lower revenue from its hospitality and card services businesses. (The Edge Daily)

• Axis REIT Managers Bhd, the manager of Axis Real Estate Investment Trust, is planning to acquire two freehold industrial properties with land area of about 1.8 ha and 0.5 ha. in Iskandar Malaysia, Johor for RM38.7 mln.Both properties include single-storey detached factories, mezzanine offices and ancillary buildings, and is priced at RM31.5 mln and RM7.2 mln respectively.

• The premises, which are located at iPark, Indahpura are also a gated and guarded industrial park at one of the main development corridors of Iskandar Malaysia. The proposed acquisition is targeted to be completed by 3Q2018. (The Edge Daily)

• CCM Duopharma Biotech Bhd has obtained a revolving credit-i murabahah of US$20.0 mln from Oversea-Chinese Banking Corp (OCBC) to finance the acquisition of a 8.4% equity interest in South Korea-based PanGen Biotech Inc, which will enable CCM to gain the rights to market biosimilar products developed by PanGen Malaysia, Brunei and Singapore, with the first right of refusal to extend it to other Asean countries. The revolving credit facility will also be used to finance general working capital requirement and other investments. (The Edge Daily)

• PUC Bhd is planning a private placement to raise about RM29.1 mln, mainly to fund its intended investment in Celcom Planet Sdn Bhd (11Street Malaysia). The amount to be raised is based on an indicative issue price of 18.3 sen per placement share and 159.2 mln placement shares.

• The placement will be submitted within one month and is expected to be completed by 4Q2018, subject to the relevant approvals obtained. (The Edge Daily)  

Source: Mplus Research - 8 Jun 2018