Measured Gains Seen

• The resumption of buying support in selected index heavyweights sent the FBM KLCI 0.2% higher on Monday after the key index recouped all its intraday losses. The lower liners – the FBM Small Cap (+1.3%), FBM Fledgling (+0.2%) and the FBM ACE (+0.7%) all advanced, while the broader market closed positively, led by the construction sector (+3.3%) after MIDA outlined a total of 402 projects worth RM75.0 bln in the pipeline.

• Market breadth turned positive as advancers overpowered decliners on a ratio of 551-to-354 stocks. Traded volumes rose 8.4% to 3.13 bln shares amid the more positive market sentiment.

• Nestle (+60.0 sen) topped the key index advancers list, followed by Petronas Dagangan (+20.0 sen), KLCC (+19.0 sen), IHH (+8.0 sen) and Petronas Chemicals (+7.0 sen). Amongst the biggest gainers on the broader market were BAT (+48.0 sen), Vitrox (+34.0 sen), Heinekan (+32.0 sen) and Heng Yuan (+29.0 sen). Gamuda added 22.0 sen on positive progress on the Selangor water restructuring scheme.

• On the flipside, notable losers on the broader market were Ajinomoto (-14.0 sen), Hong Leong Industries (-14.0 sen), Country View (-10.0 sen) and Carlsberg (- 10.0 sen). Iskandar Waterfront City slipped 4.0 sen after announcing it will not participate in future projects under Bandar Malaysia. Key decliners on the FBM KLCI were Malaysia Airport Holdings (-9.0 sen), RHB Bank (-7.0 sen), Hong Leong Bank (-6.0 sen), Petronas Gas (-6.0 sen) and Genting (-4.0 sen).

• Japanese stockmarkets retreated for the third straight session as the Nikkei sank 1.3% after Bank of Japan could make changes to its monetary policy. The Hang Seng index (+0.1%) extended its gains, while the Shanghai Composite jumped 1.1% higher on expectation over looser financial regulation. ASEAN stockmarkets, meanwhile, closed mostly higher yesterday.

• U.S stockmarkets closed on a mixed note overnight as the Dow (-0.1%) retreated for the third straight session on weakness in selected large cap stocks. On the broader market, the S&P 500 gained 0.2%, powered by the financial and information technology sectors, while the Nasdaq (+0.3%) closed at 7,841.87 level, marginally below its alltime high at 7,855.12 level.

• Earlier European equities – the FTSE (- 0.3%), CAC (-0.4%) and DAX (-0.1%), all extended their losses after finance ministers and central bankers of G20 made little progress on trade tension over the weekend meeting. Meanwhile, Fiat Chrysler slipped 1.5% after CEO Sergio Marchionne stepped down due to health concern, while Ryanair sank 6.7% on lower average fares due to stiff market competition.

The Day Ahead

• After a brief pullback in the morning session, the key index resumed its uptrend amid the selected support on key index heavyweights. The gains fortify the market’s recovery trend, albeit we think the upsides are seeing valuations tipping closer to the expensive range.

• Nevertheless, we think there will be continued gains as local funds are seen supporting the key index as the foreign selling continues to abate. However, we also think the upsides will be more measured as there remains few significant leads and the trade war concerns still lingers that will place a lid on the potential upsides. Also, valuations are already mostly fair, providing fewer opportunities for the market to climb significantly higher.

• The lower liners and broader market shares, however, will continue to see increased buying interest amid the calmer market conditions. As it is, the FBM Small Cap’s steep falls over the past six months have given rise to significant buying opportunities as valuations have become attractive.

COMPANY BRIEF

• Sime Darby Property Bhd has appointed former Bank Negara governor, Tan Sri Zeti Akhtar Aziz as its new NonIndependent and Non-Executive Chairman with immediate effect. She will replace Tan Sri Abdul Wahid Omar who had retired from the position at the end of June.

• Subsequently, Rizal Rickman Ramli, who is also a Non-Independent and NonExecutive Director on the board, will cease to be Acting Chairman. Tan Sri Zeti is also currently Group Chairman of Permodalan Nasional Bhd and serves as a member of the Council of Eminent Persons. (The Edge Daily)

• Kwantas Corp Bhd has announced the demise of its group Chief Executive Officer (CEO) and co-founder Kwan Ngen Chung at the age of 58, following a short illness. (The Edge Daily)

• Steel storage tank manufacturer CN Asia Corp Bhd has received regulatory approval for its Practice Note 17 (PN17) status to be lifted, effective 24th July 2018. To recap, the company slipped into PN17 in June 2015, after its auditors expressed concern about its ability to continue as a going concern as its shareholders’ equity on a consolidated basis was 50.0% or less of the issued and paid-up capital. (The Star Online)

• IJM Land Bhd is planning to launch affordable housing project Suria Pantai, a part of its Pantai Sentral Park mixed-use development at Pantai Dalam, in 4Q2018 with units going for RM275,000 each.

• Suria Pantai is a joint-development by IJM Land and Amona Group. The Federal Territories Affordable Houses (Rumawip) development will offer 896 units of leasehold apartments within a 34-storey building.

• Meanwhile, another one of the group’s housing projects, Bandar Rimbayu, is also rolling out affordable homes project — Halaman 11, which offers 180 units of walk-up apartments priced at RM42,000 for 721 sq. ft. units and RM100,000 for 764 sq. ft units. (The Edge Daily)

• Bumi Armada Bhd has announced that neither the company nor its 95.0%-owned subsidiary Bumi Armada Navigation Sdn Bhd (BAN) has been served with any official court documents in relation to the Aircel-Maxis case in India. The companies are not aware of any of the allegations against the latter and thus, are unable to comment on the matter. (The Edge Daily)

• Telekom Malaysia Bhd and Tenaga Nasional Bhd have mutually agreed to terminate the Memorandum of Understanding (MoU) to jointly-develop an implementation plan to deliver on the government's Nationwide Fiberisation Plan (NFP), with immediate effect. The MoU was signed on 16th January 2018 (The Star Online)

• Cycle & Carriage Bintang Bhd’s (C&C) 2QFY18 net profit doubled to RM18.0 mln from RM9.0 mln a year ago, mainly due to a compensation insurance claim of RM12.0 mln, and dividend income of RM11.2 mln from Mercedes Benz Malaysia. Revenue for the quarter also jumped 11.4% Y.o.Y to RM395.8 mln, from RM355.4 mln previously.

• C&C’s cumulative 1HFY18 net profit also spiked 65.1% Y.o.Y to RM15.3 mln, from RM9.3 mln in the previous corresponding period, mainly due to the aforementioned dividend income, while revenue was up by 10.8% Y.o.Y to RM784.4 mln from RM708.2 mln a year ago. (The Edge Daily)

• The High Court has dismissed an Erinford injunction application filed by a subsidiary of JAKS Resources Bhd, JAKS Island Circle Sdn Bhd (JIC) to restrain two financial institutions from releasing a RM50.0 mln bank guarantee to Star Media Group Bhd.

• The RM50.0 mln guarantee is in relation to an agreement between Star Media and JAKS for the latter to develop the 15- storey “Tower A” within the Pacific Star development in Section 13, Petaling Jaya, by end-July. (The Edge Daily)

• Malaysia Airports Holdings Bhd (MAHB) has denied forcing AirAsia Group Bhd to move to Terminal 1 of the Kota Kinabalu International Airport in Sabah. The group had noted that Terminal 2 was supposed to serve as a temporary terminal catering to low-cost carriers, until a bigger and better facility at Terminal 1 was completed.

• Following its completion in 2010, all other low-cost carriers had moved to Terminal 1 with the exception of AirAsia Group, who moved in December 2015, driven by their own need for capacity and growth. This comes following the remarks by AirAsia group CEO Tan Sri Tony Fernandes last Thursday, who said that the airline was forced out of Terminal 2 three years ago, and was never in favour of moving into Terminal 1. (TheEdgeDaily)  

Source: Mplus Research - 24 Jul 2018