Still Looking Insipid

• The FBM KLCI eked-out a gain of 0.1%, supported by last-minute buying support in selected heavyweights despite the bearish sentiments in the offshore stockmarkets. The lower liners were splashed in red – led by the FBM Small Cap (-0.5%), alongside the majority of the broader markets constituents.

• Market breadth was negative as losers outpaced winners on a ratio of 535-to- 332 stocks. Traded volumes also lost 5.9% to 2.2 bln shares, dragged down by selling-pressure in the lower liners.

• O&G giants like Petronas Dagangan (+14.0 sen), Petronas Gas (+12.0 sen) and Dialog (+8.0 sen) were among the gainers on the Main Board, followed by Hong Leong Bank (+24.0 sen) and Press Metal (+10.0 sen). Other advancers, meanwhile, include Far East Holdings (+RM1.48), Dutch Lady (+92.0 sen), BAT (+76.0 sen), Panasonic Manufacturing (+44.0 sen) and Aeon Credit (+26.0 sen).

• On the losing team, BLD Plantation (-30.0 sen), Malaysian Pacific Industries (-30.0 sen), Heineken Malaysia (-22.0 sen), KESM Industries (-22.0 sen) and Supermax (-13.0 sen) declined, while banking heavyweights like Hong Leong Financial Group (-20.0 sen) and CIMB Bank (-5.0 sen) led the key-index decliners, together with IHH Healthcare (- 9.0 sen), Hap Seng Consolidated (-8.0 sen) and MISC (-5.0 sen).

• China equities remain downward-bound, after the Chinese Yuan fell to a fresh 13- month low against the Greenback. The Shanghai Composite (-0.2%) extended its losses for the fourth-straight session, owing to weakness in defensive sectors like healthcare and consumer staplesrelated stocks. The Nikkei (-0.7%) was also in the red as investors await fresh developments from the Bank of Japan’s two-day meeting today and more than 1,000 corporate earnings scheduled to be released this week. Meanwhile, the Hang Seng Index (-0.3%) and the majority of the ASEAN stockmarkets weakened on Monday.

• Wall Street also finished in the negative territory as investors continues to unwind their long positions in giant tech companies, sending the tech-heavy indices – Nasdaq (-1.4%) and S&P500 (- 0.6%) lower. The Dow (-0.6%) also ended in the red, owing to the losses in payment processors like Visa Inc and American Express.

• European stockmarkets retreated on Monday, following an extended sell-down in global tech counters due to disappointing corporate results. The FTSE flatlined, weighed down by a stronger Pound on expectations of higher interest rates ahead of the Bank of England’s meeting on Thursday. The DAX and the CAC, meanwhile, closed lower by 0.5% and 0.4% respectively.

The Day Ahead

• Once again, the FBM KLCI made headway on a last minute haul on selected index heavyweights to extend its uptrend. Despite the gains, which were largely superficial, the general market undertone is still insipid amid the lack of positive catalysts that saw most stocks on the downtrend.

• There remains no change to our immediate market view as the lack of leads will continue to dampen the market’s performance. As it is, the spate of above-expectation U.S. corporate results seems to be abating, while stocks’ rich valuations have largely priced-in the expected surge in corporate earnings. Barring a late push on selected index heavyweights to leave the key index again in the positive zone for the day, we think the near term upsides will still be difficult to come by due to lack of leads and the corresponding dwindling market interest. The 1,770 has now become the support, followed by the 1,760 level. The resistances are 1,780 and 1,790 respectively.

• Similarly, we think the lower liners and broader market shares are showing signs of fatigue after their recent gains and the near term upsides will also be curtailed by the reduced following due to the fewer available leads. Therefore, we think their consolidation spell is likely to prolong.

COMPANY BRIEF

• Malaysia Building Society Bhd's (MBSB) 2Q2018 net profit slipped 5.9% Y.o.Y to RM85.7 mln on lower income from financing activities due to cessation of conventional businesses since 1Q2018. Revenue for the quarter fell 2.4% Y.o.Y to RM794.1 mln.

• For 1H2018, cumulative net profit jumped 109.2% Y.o.Y to RM402.5 mln. Revenue for the group, however, fell marginally by 0.6% Y.o.Y to RM1.61 bln. (Bernama)

• LKL International Bhd's unit has received a contract for the supply of medical/healthcare beds and peripherals from the Uganda government. The oneyear contract awarded by Uganada's Ministry of Health to LKL Advance Metaltech Sdn Bhd is worth US$2.8 mln (about RM11.4 mln). (The Star Online)

• The High Court in Kuala Lumpur has dismissed a Mareva application filed by Top Glove Corp Bhd and Top Care Sdn Bhd against Adventa Capital Pte Ltd and related parties citing “no good arguable case for the alleged fraudulent misrepresentations or for that matter, negligent misrepresentations”. Top Glove will be appealing the decision made by the High Court in Kuala Lumpur. (The Edge Daily)

• JAKS Resources Bhd has been granted an interim injunction by the Federal Court to restrain the pay-out of a RM50 mln bank guarantee to Star Media Group Bhd. The interim order is in effect until 1st August 2018, which is when the Erinford injunction application will be heard before the Federal Court. JAKS's application for the injunction was earlier dismissed by the Court of Appeal on 27th July 2018 and by the High Court on 23rd July 2018. (The Edge Daily)

• Barakah Offshore Petroleum Bhd has bagged a contract from Enquest Petroleum Production Malaysia Ltd to provide Pan Malaysia maintenance, construction and modification (MCM) services from July 2018 to July 2023.

• The total value of the contract is not fixed and will depend on the actual scope based on work orders to be issued by the client from time to time throughout the duration of the contract. (The Edge Daily)

• Handal Resources Bhd has announced that Sunildeep Singh Dhaliwal will be taking over the position of Group Managing Director effective immediately. Sunildeep replaces Mallek Rizal Mohsin, who has been redesignated to Executive Vice-Chairman. Mallek, was also appointed as the group’s Risk Management Committee Chairman.

• At the same time, its founder and Executive Chairman, Datuk Mohsin Abdul Halim has been redesignated as the group's Non-Independent Non-Executive Chairman. Handal also named three new Independent Non-Executive Directors, namely: Tan Sri Dr Mohd Munir Abdul Majid, Tengku Baderul Zaman Sultan Mahmud and Jacqueline Fong Yean Yee. (The Edge Daily)

• Fima Corp Bhd has launched a legal action against Datasonic Technologies Sdn Bhd, claiming RM25.0 mln for unpaid dues. The amount is for 1.5 mln Malaysian passport booklets which were supplied by Fima to Datasonic Technologies, a wholly-owned unit of Datasonic Group Bhd. (The Edge Daily)

• New Hoong Fatt Holdings Bhd's (NHF) 2Q2018 net profit rose 13.5% Y.o.Y to RM2.9 mln, thanks to lower foreign exchange losses that was partially offset by the higher raw material and other manufacturing costs. Revenue for the quarter gained 6.2% Y.o.Y to RM65.5 mln.

• For 1H2018, cumulative net profit dropped 52.5% Y.o.Y to RM4.7 mln. Revenue for the period, however, rose 1.2% Y.o.Y to RM125.6 mln. (The Edge Daily)

• Rev Asia Bhd signed a Memorandum of Understanding with its largest shareholder, Catcha Group Pte Ltd to look into acquiring a majority stake in a foreign group. The MoU is in respect of the proposed acquisition of a majority interest in a foreign-owned group of companies with foreign based operations. It is part of a plan to regularise Rev Asia’s Guidance Note 2 (GN2) condition so it could maintain its listing status. (The Edge Daily)

• Tadmax Resources Bhd has signed a Memorandum of Understanding with Selangor State-linked company, Worldwide Holdings Bhd for the development of a 1,000 MW-1,200 MW combined cycle gas turbine power plant in Pulau Indah, Selangor. The MoU was pursuant to a letter of intent from Worldwide dated 28th December 2017, with the view to acquire a 30.0% participation in Tadmax Indah Power Sdn Bhd (TIP)’s equity and also to be in compliance with the Majlis Tindakan Ekonomi Selangor decision dated 15th December 2017 for a State-owned company to own an equitable shareholding in the power plant project. Worldwide will be Tadmax’s strategic partner for the project, while its technical partner is Korean Electric Power Corporation. (The Edge Daily)  

Source: Mplus Research - 31 Jul 2018