Positive Undertone Stays

• The FBM KLCI (+0.3%) extended its gains after hovering mostly in the positive territory in line with the positive sentiment across regional markets yesterday. The lower liners – the FBM Small Cap, FBM Fledgling and the FBM ACE all rose 0.8% each, while the finance (-0.045%) and REITS (-0.02%) sectors underperformed the mostly positive broader market.

• Market breadth stayed positive as advancers outnumbered decliners on a ratio of 574-to-383 stocks. Traded volumes rose 6.9% to 3.35 bln shares on rotational play amongst the lower liners.

• Key winners on the local bourse were Petronas Dagangan (+30.0 sen), PPB Group (+28.0 sen), Nestle (+20.0 sen), Sime Darby Plantation (+17.0 sen) and Hong Leong Bank (+10.0 sen). Notable advancers on the broader market include Vitrox (+71.0 sen), Carlsberg (+44.0 sen) and Padini (+27.0 sen). Revenue Group jumped 30.0 sen on its debut in Bursa Malaysia, while CN Asia surged 27.0 sen on its uplift of PN17 status.

• Among the biggest decliners on the broader market were Heineken (-46.0 sen), Hong Leong Industries (-20.0 sen), United Plantations (-18.0 sen), Chin Teck Plantations (-15.0 sen) and MPI (-14.0 sen). Meanwhile, KLCC (-12.0 sen), Dialog (-7.0 sen), Maybank (-4.0 sen), Genting (- 3.0 sen) and IHH (-1.0 sen) were the big board losers.

• Asia benchmark indices advanced as the Nikkei (+0.5%) halted a three-day losing streak after the rally in Japanese Yen against the Greenback stalled. The Hang Seng Index jumped 1.4%, while the Shanghai Composite soared 1.6% to close above the 2,900 psychological level after China will increase spending on infrastructure to boost the country’s growth. ASEAN stockmarkets, meanwhile, closed mostly higher yesterday.

• Wall Street closed mostly on a positive noted overnight as the Dow (+0.8%) snapped a three-day losing streak, powered by strong corporate earnings from Alphabet Inc. On the broader market, the S&P 500 added 0.5%, but the Nasdaq (-0.01%) ended marginally lower after erasing all its intraday gains.

• Earlier European equities – the FTSE (+0.7%), CAC (+1.0%) and DAX (+1.1%), all recovered all their previous session losses, boosted by China’s stimulus plan. The positive sentiment was also driven by news that Theresa May will be taking personal control of Brexit talks with the European Union.

The Day Ahead

• The key index continues to head higher amid the ongoing global market positivity that is boosted by the spate of above expectation U.S. corporate earnings as well as few negative developments on the global trade war issue.

• As a consequence, we think Bursa Malaysia stocks will also continue to tip higher amid the sustained positivity on equities, setting aside the already toppish market conditions following the recent recovery from the selloff that followed the change in government. Still, we think the upsides will remain mild as the upsides could be met by the bouts of foreign selling and profit taking activities.

• Therefore, we see the 1,770 level likely to serve as the immediate resistance, followed by the 1,800 points level. On the downside, the supports are at 1,760 and 1,750 respectively.

• Elsewhere, the broader market environment will remain sanguine as retail players continue to bargain hunt beaten down lower liners amid their attractive valuations following their steep falls over the past six months. Therefore, we see the FBM Small Cap, Fledgling and ACE indices all making significant up moves over the near term.

COMPANY BRIEF

• Nextgreen Global Bhd has aborted its Memorandum of Understanding (MoU) with China Nuclear Industry Huaxing Construction Co Ltd to develop and manage the second and third phases of its Green Technology Park.

• Nextgreen also said that it has not entered into any definitive or cooperative agreement with China Nuclear pursuant to the MoU. Phase 2 of the Green Technology Park involved a factory with the capacity to produce 100,000 tonnes of box liner paper and 120,000 tonnes of corrugated paper, while Phase 3 would involve another factory with capacity to produce 65,000 tonnes of tissue paper. (The Edge Daily)

• Scomi Group Bhd has appointed Sammy Tse Kwok Fai as Executive Director of the group, with immediate effect. Sammy is from Hong Kong and is a fellow member of The Institute of Directors, the UK and the Hong Kong Institute of Directors. (The Edge Daily)

• Kwantas Corp Bhd has re-designated its Co-founder Director and Executive Director, Kwan Ngen Wah as the Chief Executive Officer (CEO) of the group after former CEO Kwan Ngen Chung passed away. Ngen Wah was Ngen Chung's elder brother and together they had established Kwantas in 1995. (The Edge Daily)

• Tan Sri Richard Koh Kin Lip, Chow Dai Ying and SCH Group Bhd's directors Koh Chen Foong and Liew Fook Meng have ceased to be substantial shareholders of the quarry-based products and machinery group after selling off 68.0 mln shares (or 13.2% equity stake) for RM11.6 mln on 24th July, 2018.

• Koh Chen Foong is the son of Tan Sri Richard, while Liew Fook Mengis is the Executive Director of Cocoaland Holdings Bhd. The disposal was made through their private investment vehicle, Thianjing Holdings Sdn Bhd via an off market transaction. (The Edge Daily)

• Dagang NeXchange Bhd (DNeX) has inaugurated its GoHalal platform in the Philippines as part of a key initiative under an agreement which was signed last month between the company and the Local Government of Naga City of the Philippines and the Department of Education Division of Naga City.

• Consequently, DNeX will have the opportunity to implement the overall initiatives for a halal hub in the Philippines, including the development of blueprint, systems and framework for the halal hub. (The Edge Daily)

• The highest civil appeal court in Dubai has ruled in favour of WCT Holdings Bhd in a civil suit brought against it by Dubai-based Meydan Group LLC and the court has dismissed the appeal filed by Meydan. The latter had filed the suit against WCT Bhd (Dubai Branch), as well as Arabtec Construction LLC, for a sum of 3.5 bln UAE dirham (RM3.89 bln).

• To recap, WCT (Dubai) had initiated the arbitration proceedings against Meydan in 2009, with regards to the cancellation of the Nad Al Sheba race course project in Dubai. (The Edge Daily)

• JAKS Resources Bhd filed a fresh injunction in the Court of Appeal today to restrain two banks from releasing a RM50.0 mln guarantee to Star Media Group Bhd following the High Court’s dismissal of a similar injunction application earlier.

• This comes amid the ongoing legal suit between the aforementioned parties in relation to an agreement between Star Media and JAKS for the latter to develop a 15-storey tower within the Pacific Star development in Section 13, Petaling Jaya, which was delayed by more than 28 months. (The Star Online)

• I-Bhd's 2Q2018 net profit increased by 5.6% Y.o.Y to RM22.3 mln, from RM21.1 mln a year ago, due to a jump in profit margin, in-tandem with the cost adjustment as a result of changes in the national tax regime. Revenue for the quarter, however, fell 18.8% Y.o.Y to RM107.2 mln, from RM131.9 mln last year.

• For 1H2018, net profit rose 11.1% Y.o.Y to RM 46.8 mln, from RM42.1 mln previously, in-line with a 10.9% Y.o.Y growth in revenue to RM266.5 mln, from RM240.4 mln. (The Star Online)

• Caring Pharmacy Group Bhd’s 4QFY18 net profit jumped 35.0% Y.o.Y to RM5.9 mln, from RM4.4 mln a year earlier, on higher sales due to aggressive promotional campaigns, while revenue was 8.0% Y.o.Y higher at RM129.4 mln, from RM119.5 mln previously.

• Full-year net profit, meanwhile, spiked 41.0% Y.o.Y to RM18.6 mln vs. RM13.1 mln in FY17, while revenue gained 11.0% Y.o.Y to RM508.3 mln, from RM460.0 mln a year earlier. The group has proposed a first and final dividend of 5.0 sen per share for FY18. (The Edge Daily)  

Source: Mplus Research - 25 Jul 2018