Still Looking Dour

• The FBM KLCI (-0.7%) continued to fall as investors retreated to the sidelines ahead of the long weekend. The lower liners - the FBM Small Cap (-0.3%), the FBM Fledgling (-0.7%) and the FBM Ace (- 1.0%) retreated, alongside the majority of the broader market stocks which were splashed in red.

• Market breadth continued to be southbound as losers maintain the upper hand, while traded volumes narrowed further by 9.9% to 2.36 bln shares ahead of several key central bank meetings to decide on interest rates.

• Blue-chip constituents like Genting (-20.0 sen), Maybank (-16.0 sen), Tenaga (-16.0 sen), Petronas Gas (-14.0 sen) and CIMB (-8.0 sen) fell. Plantations-linked counters like Far East Holdings (-50.0 sen) and United Plantations (-46.0 sen) weighed on the broader market, together with Top Glove (-74.0 sen), Heineken Malaysia (-36.0 sen) and KESM Industries (-32.0 sen).

• On the other side of the trade, BAT (+RM1.28), Fraser & Neave (+22.0 sen), Apex Healthcare (+19.0 sen), Kluang Rubber (+19.0 sen) and Magni-Tech (+14.0 sen) rallied. Among the Main Board winners were consumer products giant Nestle (+20.0 sen), Petronas Dagangan (+16.0 sen), Hap Seng Consolidated (+8.0 sen), Hong Leong Financial Group (+6.0 sen) and YTL Corporation (+5.0 sen).

• Chinese equities closed on an upbeat tone as the Shanghai Composite snapped three sessions' of losing streak to close 0.9% higher. The Nikkei and the Hang Seng Index also gained 0.3% and 0.1% respectively after North Korea pledged to work towards denuclearisation in return for U.S.'s security guarantees, although details were scarce. ASEAN indices, meanwhile, ended mostly positive at Tuesday's close.

• U.S. stockmarkets closed mostly higher on Wednesday, amid thin trading volume ahead of the Federal Reserve and the ECB meetings. The Dow inched lower despite clawing back earlier losses, dragged down by expectations of higher interest rates. On the broader market, however, the S&P 500 and the Nasdaq rose 0.2% and 0.6% respectively.

• London's blue-chip gauge was downward pressured as investors digested the latest Brexit debate between U.K. lawmakers and softer-than-expected labor data. The FTSE slipped 0.4%, weighed down by losses in home-builders amid rising building costs. The DAX flatlined, but the CAC fell 0.4% on worries that the ECB could start to unwind its bond-buying stimulus ahead of the ECB's meeting scheduled for this Thursday.

The Day Ahead

• While the FBM KLCI was largely rangebound as anticipated yesterday, the end-of-trading day selldown on selected index heavyweights has once again left the key index in a dour mode. Going into the Hari Raya break at the end of the week, we see little impetus for the market to head higher and the largely indifferent market environment is likely to remain.

• At the same time, there is still persistent selldown by foreign funds that has yet to show signs of abating. Until then, we also maintain our view that near term upsides will be difficult to come by as the upsides will provide the opportunity for the foreign players to sell into strength.

• Under the prevailing environment, there is still substantive downside risk and the 1,750 support level could come into play. Before that, there is a minor support at the 1,760 level. The resistances, meanwhile, are at the 1,780 and 1,800 levels.

• Elsewhere, we also think the broader market environment will remain lackluster ahead of upcoming break and stocks in the FBM Small Cap and other indices are likely to endure further selling pressure.

COMPANY BRIEF

• Media Prima Bhd (MPB) has proposed to acquire a 52.0% stake in Vocket Media Sdn Bhd for RM2.6 mln cash as it expands its digital business. MPB's indirect wholly-owned subsidiary, Rev Asia Holdings Sdn Bhd had entered into a conditional share sale purchase agreement with Jaffa Sany Mohd Afiffin to acquire 520,000 shares in Vocket.

• Vocket is involved in the business news media agency as online publishers and producer of books, bulletins of other allied publications on electronic media, website designer, copyright owner and to deal in all goods, articles and things necessary. It has a share capital of RM1.0 mln comprising 1.0 mln ordinary shares. (The Star Online)

• George Kent (M) Bhd's 1QFY19 net profit rose 16.4% Y.o.Y to RM21.5 mln as construction projects were executed as planned. Revenue for the quarter, however, slipped 22.9% Y.o.Y to RM99.8 mln, pulled down by its engineering division. (Bernama)

• Bermaz Auto Bhd's 4QFY18 net profit jumped 157.5% Y.o.Y to RM57.2 mln, largely due to higher domestic sales of its well-received Mazda CX-5 and CX-9 models. Revenue for the quarter grew 61.2% Y.o.Y to RM570.6 mln.
• For FY19, cumulative net profit rose 19.1% Y.o.Y to RM140.1 mln. Revenue for the year added 19.9% Y.o.Y to RM1.99 bln. A fourth interim dividend of 2.3 sen per share and a special dividend of 2.7 sen per share, payable on 26th July 2018, were declared. (The Edge Daily)

• Poh Kong Holdings Bhd's 3QFY18 net profit fell 41.8% Y.o.Y to RM4.3 mln due to fluctuation in gold prices. Revenue for the quarter, however, rose 17.2% Y.o.Y to RM240.4 mln.

• For 9MFY18, cumulative net profit fell 5.0% Y.o.Y to RM14.5 mln. Revenue for the period, however, gained 18.5% Y.o.Y to RM731.4 mln. (The Edge Daily)

• Tiger Synergy Bhd will undertake a RM22.3 mln mixed development property project in Sungei Kandis, Klang. Comprising either a residential or commercial development, the project will be carried out on a joint-venture basis with the group's wholly-owned units, Pembinaan Terasia Sdn Bhd and Harapan Handal Sdn Bhd. (The Edge Daily)

• Comintel Corp Bhd has been served with a statutory demand by U Television Sdn Bhd (UTV) to pay a sum of RM20.8 mln, together with an annual interest rate of 8.0%. The statutory demand was in relation to litigation action taken by Comintel Sdn Bhd, a wholly-owned subsidiary of Comcorp, against UTV and Tan Sri Vincent Tan Chee Yioun. (The Edge Daily)

• PUC Bhd has settled for a RM40.0 mln investment in e-commerce platform 11Street Malaysia, less than half the RM90.0 mln it had initially considered. Its has inked a share subscription agreement with Celcom Planet Sdn Bhd to subscribe to 12.3% equity interest in Celcom Planet for a total cash consideration of RM40.0 mln, instead of subscribing for up to 24.0% equity interest in Celcom Planet for a total cash consideration of up to RM90.0 mln. Celcom Planet, who owns and operates 11Street Malaysia, was lossmaking as at end-2017, incurring a net loss of approximately RM129.0 mln with net liabilities of some RM104.0 mln. (The Edge Daily)

• AppAsia Bhd is partnering with the Malaysian Institute of Accountants (MIA) to develop an industry-wide electronic bank confirmation platform which will facilitate the bank confirmation process in the country. The group said the collaboration agreement with MIA is valid over the next 10 years. (The Edge Daily)

• Sumatec Resources Bhd is confident that it will be declassified as a Practice Note 17 (PN17) company by 2019 as it looks to submit its regularisation plan to Bursa Malaysia. The regularisation plan includes a scheme to pay off its RM230.0 mln legacy debt as well as future business operations that will keep the company in the black for the next two financial quarters after the approval of the plan. (The Edge Daily)  

Source: Mplus Research - 13 Jun 2018