Meek Start To The Week

• The FBM KLCI (+0.2%) extended its winning streak for a fifth day last Friday, lifted by the eleventh hour buying support in selected blue chips. The key index consequently rose 0.8% W.o.W – marking its third weekly gain. The lower liners also ended modestly higher as the FBM Fledgling and FBM ACE added 0.1% each, while the broader market ended mostly positive.

• Market breadth stayed negative as decliners overcame advancers on a ratio of 511-to-382 stocks. Traded volumes fell 23.0% to 2.34 bln shares amid the negative market sentiment.

• Chart-toppers on last Friday were Petronas Gas (+46.0 sen), Hong Leong Bank (+14.0 sen), Hap Seng (+12.0 sen), Nestle (+10.0 sen) and Telekom (+10.0 sen). Consumer products stocks like Panasonic (+34.0 sen), BAT (+30.0 sen) and Ajinomoto (+18.0 sen) advanced, while Vitrox added 18.0 sen. Ancom jumped 12.5 sen after reporting a strong set of quarterly earnings.

• In contrast, notable decliners on the broader market include KESM Industries (-28.0 sen), Riverview Rubber (-24.0 sen), Top Glove (-18.0 sen), Ipmuda (-10.0 sen) and Mintye (-10.0 sen). Amongst the biggest losers on the FBM KLCI were Dialog (-9.0 sen), Digi (-6.0 sen), Genting Malaysia (-5.0 sen), Maybank (-2.0 sen) and Sime Darby Plantation (-2.0 sen).

• Asia benchmark indices ended mostly higher as the Nikkei (+0.6%) advanced ahead of next week’s Bank of Japan monetary policy review. The Hang Seng Index (+0.1%) managed to recover all its intraday losses, but the Shanghai Composite (-0.3%) retreated for the third straight session on lingering U.S.-Sino trade concern. ASEAN stockmarkets, meanwhile, closed mostly higher last Friday.

• U.S. stockmarkets extended their losses last Friday as the Dow fell 0.3%, dragged down by a string on weaker-thanexpected corporate earnings from Twitter, Exxon Mobil and Intel. On the broader market, the S&P 500 slipped 0.7% on weakness in technology sector (- 2.0%), while the Nasdaq sank 1.5%

• Earlier, European equities – the FTSE (+0.5%), CAC (+0.6%) and DAX (+0.4%), all extended their gains after hovering in the positive territory for the entire trading session. Gains were underpinned by the cooling trade tariff concerns between the European Union with the U.S., coupled with stronger-than-expected corporate earnings with 40% of the companies that had reported their results saw an average improvement of 6.0% Y.o.Y growth.

The Day Ahead

• Once again, the end-of-day lift pushed the key index into the positive territory in an otherwise lackluster session where leads were far-and-in between. The lack of leads is also sending more market players to the sidelines as trade volumes continue to thin.

• Notwithstanding last Friday’s gains, we think the broad market environment is still insipid as domestic factors are still left wanting, thus providing few reasons for the sustained upside as valuations are inching closer to the expensive zone.

• Furthermore, market players are waiting for more corporate results to be reported to determine the quality and sustainability of the earnings of Malaysian companies going forward. Therefore, we think there is still downside in play as there is still cautiousness over the market’s direction. We continue to think the 1,770 level will serve as the immediate resistance, followed by the 1,780 level. The supports, meanwhile, are at 1,760 and 1,750 respectively.

• We also see the lower liners and broader market shares finding little headway after the recent gains have left many stocks in tethering in the expensive zone, thus providing fewer short-term buying opportunities.

COMPANY BRIEF

• Dayang Enterprise Holdings Bhd has been awarded a five-year contract from Murphy Sarawak Oil Co Ltd and Murphy Sabah Oil Co Ltd for the provision of Pan Malaysia maintenance, construction and modification. The five years contract is effective from 17th July this year with an option to extend for another year. There is no firm value on the contract, as it depends on work orders issued by client. (The Edge Daily)

• Syarikat Takaful Malaysia Keluarga Bhd (Takaful Malaysia) posted a 11.9% Y.o.Y gain in its 2Q2018 net profit to RM50.4 mln, from RM45.1 mln a year ago, on higher net wakalah fee income. Revenue also rose 11.8% Y.o.Y to RM542.4 mln from, RM485.3 mln in the last corresponding period.

• Cumulative 1H2018 net profit was also 18.2% Y.o.Y higher to RM120.4 mln, from RM101.8 mln previously, while revenue improved 12.5% Y.o.Y to RM1.29 bln, compared with RM1.15 bln in a year ago. (Th Star Online)

• Velesto Energy Bhd has secured a US$25.0 mln (or RM101.5 mln) project to provide drilling rig services for Sarawak Shell Bhd and Sabah Shell Petroleum Company Ltd (SSB/SSPC). The tentative commencement date for the contract will be between 1st August and 30th September 2018. (The Edge Daily)

• Sunway Construction Group Bhd has snagged the bid for a 30-year lease of a piece of land measuring 38,421.8 sq m. in Pulau Punggol Barat, Singapore, from the island state's Building and Construction Authority, to build a fully mechanised, state-of-the-art integrated precast plant on the land, with an expected annual production capacity of 100,000 cu. m. of concrete products.

• The total consideration for the land is S$25.7 mln, including the land price and administrative fees, which will be proportionally borne by the joint-venture parties, i.e. Sunway Concrete Products (S) Pte Ltd and Hong Leong Asia's precast concrete unit, HL Building Materials Pte Ltd. (The Edge Daily)

• Uzma Bhd is planning to issue RM1.0 bln worth of Islamic Medium Term Notes (Sukuk Wakalah) with tenure of up to 15 years. The funds raised from the unrated Sukuk Wakalah will be used to re-finance its outstanding financing facilities, fund its working capital and capital expenditure for the general corporate purpose. The proceeds will also cover the payment of all fees, costs, and expenses in relation to the Syariah principle of Wakalah Bi Al-Istithmar (Sukuk Wakalah Programme). (The Edge Daily)

• Sapura Energy Bhd has announced that President and Group Chief Executive Officer (CEO) Tan Sri Shahril Shamsuddin is no longer part of the group's board remuneration committee following a revision of the composition on 27th July 2018.

• Moving forward, the board remuneration committee will now consist of Chairman Datuk Hamzah Bakar, who is also a NonIndependent Non-Executive Director, and three other Independent Non-Executive Directors, namely Mohamed Rashdi Mohamed Ghazali, Datuk Muhamad Noor Hamid and Datuk Ramlan Abdul Rashid. (The Edge Daily)

• Axiata Group Bhd is expected to record a non-cash financial loss of RM1.5 bln to RM3.0 bln following the approval by the Department of Telecommunications (DoT) of India on the merger between India Cellular Ltd (Idea), Vodafone India Ltd and Vodafone Mobile Services Ltd.

• This follows the reclassification of Idea from an associate to simple investment upon completion of the scheme, resulting in the dilution of Axiata Group’s shareholding in the merged enlarged Idea-Vodafone entity from 16.3% to 8.2% and loss of certain shareholder’s rights as provided under the subscription agreement dated 25th June 2008 between Axiata Group and Idea. The estimated loss is expected to have a material impact on the financial quarter ended 30th June 2018. (The Sun Daily)

• Gabungan AQRS Bhd has filed two separate suits to several parties for the breach of contract for the provision of accommodation to Petronas Chemicals Fertiliser Sabah Sdn Bhd. The aforementioned cases have been filed by two of its subsidiaries, namely Trusvest Sdn Bhd and Gabungan Strategik Sdn Bhd respectively, against Seri Wilayah Engineering Sdn Bhd a

• Further, the High Court in Kota Kinabalu had granted an order in terms of Trusvest's application for an interim injunction on 16th July 2018. Subsequently, both suits and six others and Imaprima Sdn Bhd and six others, respectively.  

Source: Mplus Research - 30 Jul 2018