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Author: MalaccaSecurities   |   Latest post: Fri, 25 May 2018, 04:20 PM

 

Mplus Market Pulse - 14 Nov 2017

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  • Despite hovering mostly in the positive territory, the FBM KLCI (-0.3%) succumbed to quick profit taking as the key index ended at an intraday low of 1,737.49 pts yesterday. The lower liners also ended mostly lower as the FBM Fledgling and FBM ACE slipped 0.7% and 0.6% respectively, while the Trading/Services (+0.1%) and REITS (+0.1%) sectors outperformed the negative broader market.
  • Market breadth remained negative as decliners overpowered advancers on a ratio of 594-to-319 stocks. Traded volumes declined 6.9% to 2.89 bln shares amid the negative market sentiment.
  • Petronas Gas (-36.0 sen) topped the big board decliners list, followed by KLK (- 14.0 sen), IJM (-10.0 sen), Hong Leong Financial Group (-10.0 sen) and Tenaga (- 8.0 sen). Notable decliners on the broader market were Kim Loong (-24.0 sen), Genetec (-13.0 sen), DKLS Industries (-11.0 sen) and Apex Healthcare (-10.0 sen). MSC, meanwhile, slipped 11.0 sen after reporting a weak set of quarterly earnings.
  • Significant advancers on the broader market include Heng Yuan (+60.0 sen), Vitrox (+22.0 sen), Shangri-La (+19.0 sen), SAM Engineering & Equipment (+19.0 sen) and Hong Leong Industries (+18.0 sen). Meanwhile, Petronas Dagangan (+RM2.10), BAT (+10.0 sen), Westports (+8.0 sen), MISC (+7.0 sen) and Hap Seng (+3.0 sen) topped the FBM KLCI gainers list.
  • Japanese equities extended their losses for the fourth straight session yesterday as the Nikkei sank 1.3% on weakness in financial and technology shares. The Hang Seng gained 0.2%, while the Shanghai Composite (+0.4%) advanced for the sixth straight session on easing foreign ownership rules in the financial sector. ASEAN bourses, meanwhile, closed mostly lower.
  • Despite opening lower at the start of the trading bell, U.S. stockmarkets staged a quick recovery to close on a positive note overnight. Both the Dow and S&P 500 added 0.1% each ahead of the release of inflation data that could dictate the U.S. Federal Reserve’s decision on future rate hikes, while the latter’s performance was lifted by gains in the consumer products sector.
  • Earlier, European benchmark indices – the FTSE (-0.2%), CAC (-0.7%) and DAX (- 0.4%), all extended their losses for the fifth consecutive session on concern over Eurozone’s growth prospects due to the Brexit move. A string weak corporate earnings from Electricide de France (- 7.5%), Sonova Holding AG (-6.3%) and Coca-Cola HBC (-5.1%) also added to the weakness.

The Day Ahead

  • With the key index slipping below the 1,740 level yesterday, the near-term outlook is likely to stay dour with the selling looking to persist after a near term technical support is breached. The insipid market environment is also spreading to the broader market and lower liners, which is seeing increased profit taking activities.
  • The ongoing results reporting season is barely providing any sustainable leads for the market to stage a meaningful recovery, further denying the opportunity for the market to gain ground. Therefore, we see near term weakness remaining in play that could push the key index to its recent low of 1,733 points, before finding further support at the 1,730 level. ? Similarly, the broader market and lower liners are also expected to see further profit taking as retail players could remain wary over the market’s near term direction. 

Company Brief

  • Guan Chong Bhd’s 3Q2017 net profit leapt 92.0% Y.o.Y to RM29.7 mln, from RM15.5 mln in last year – due to lower cocoa bean prices, while revenue dropped 9.1% Y.o.Y to RM542.9 mln, from RM597.5 mln in 3Q2016.
  • Cumulative 9M2017 net profit also jumped 46.0% Y.o.Y to RM58.3 mln, from RM39.8 mln last year, despite a 6.5% Y.o.Y fall in revenue to RM1.66 bln, from RM1.77 bln recorded in the same period a year ago. The group expects the business environment to remain challenging, weighed down by uncertain demand for cocoa solids and volatile cocoa bean prices. The group has also declared a second interim single-tier dividend of one sen per share, payable on 27th December 2017. (The Edge Daily)
  • United Plantations Bhd posted 18.8% Y.o.Y growth in its 3Q2017 net profit to RM98.8 mln, lifted by stronger contributions by both its plantations and refinery segments. Revenue for the quarter gained 26.3% Y.o.Y to RM370.8 mln, from RM293.7 mln previously.
  • For 9M2017, net profit improved 33.0% Y.o.Y to RM286.2 mln, compared to RM215.2 mln previously, in-tandem with the higher revenue that rose 33.0% Y.o.Y to RM1.11 bln, from RM831.0 mln posted in the same period last year. The group foresees a slowdown in the overall palm oil production, due to slight moderation in 3Q2017 production figures. The company has also announced an interim dividend of 20.0 sen per share, together with a special dividend of 10.0 sen per share, payable on 14th December 2017. (The Edge Daily)
  • IJM Corp Bhd and Hong Kong-listed NewOcean Energy Holdings Ltd have signed a land sublease and terminalling agreements for the development of NewOcean’s oil refinery complex in Kuantan Port.
  • The project is estimated to cost approximately RM5.1 bln and include an oil refinery with an annual production capacity of 3.5 mln tonnes, a tank farm serving as a storage depot for entreport trade purposes and a blending plant for various grades of petroleum products.
  • The project’s first phase is expected to be completed within 24 months and will yield 1.5 mln tonnes annually, while the second phase will yield an additional two mln tonnes and will take 18 months to be completed.
  • Separately, IJM has also secured a RM378.0 mln design-and-build contract for a corporate office tower in Damansara Uptown, from See Hoy Chan Sdn Bhd Group's subsidiary Damansara Uptown Retail Centre Sdn Bhd.
  • The Uptown 8 corporate office tower encompassed 31 floors with a net floor area of about 480,000 sq. ft., including two levels of commercial space and 1,387 parking bays that will be completed in in 39 months. (The Star Online)
  • Trive Property Group Bhd has inked a joint-venture agreement (JVA) with Jiangxi Fujing New Energy Technology Co Ltd to collaborate in the manufacturing and sale of solar energy products, including solar cells and panels. The JV company, Daima Fujing New Energy Technology Sdn Bhd, will provide an opportunity for Trive to develop its solar business, which is expected to provide an additional source of earnings and improve its financial performance. (The Edge Daily)
  • Tadmax Resources Bhd will be partnering South Korea's state-owned utility company, Korea Electric Power Corporation (KEPCO) to jointly- develop its combined cycle gas turbine (CCGT) power plant project in Pulau Indah.
  • Under the terms of the agreement, Tadmax's project company, Tadmax Indah Power Sdn Bhd (TIP), will be the leading member of the consortium and will be responsible for the negotiation of project, preparation and submission of the complete proposal and liaison with related authorities.
  • It will also be in charge of the engineering procurement and construction (EPC), operations and maintenance (O&M) and gas supply agreement, power purchase agreement (PPA), besides contractors and advisers.
  • Meanwhile, KEPCO will provide technical reviews of the EPC and longterm supply agreement, preparation of the O&M plan and strategy, technical assistance and consultants, as well as support to achieve successful financial closing. Upon the successful implementation of the agreement, KEPCO intends to secure a 25% equity interest in TIP. (The Star Online)
  • Rohas Tecnic Bhd‘s 75.0%-owned subsidiary, HG Power Transmission Sdn Bhd has secured a turnkey contract from Power Grid Company of Bangladesh Ltd to install new power transmission lines and reinforce existing ones in Bangladesh for a contract value of RM54.0 mln. ? The 24-month contract involves the design, supply, installation, testing and commissioning of 34.5 km of new transmission lines and reinforcement on 125 km of the existing 132 kilovolt (KV) transmission line that will be funded by KfW Development Bank in Germany. (The Edge Daily)
  • Scicom (MSC) Bhd has announced that the expiry of its five-year tax incentive on its statutory business process outsourcing (BPO) income derived in Malaysia is not expected to significantly impact the group’s bottom line or its dividend payout ratio.
  • To recap, the group was granted customised incentive of 100.0% income tax exemption on statutory income derived from outsourcing income between 7th November 2012 to 6th November 2017. The tax incentive, however, was reduced to 70.0%, from 100.0% in August 2016, which was applicable for the incentive period from the same period.
  • Scicom also dismissed the possibility that the higher tax expenses for the group would translate into lower dividend payouts to its shareholders, as the group has declared an average payout of approximately 71.0% of its earnings in the last five years, despite not having a fixed dividend policy. (The Edge Daily)
  • Malayan Banking Bhd (Maybank) expects its mobile-banking transaction value reaching RM22.0 bln by end- 2017, from RM16.0 bln last year, mainly boosted by higher adoption of its maybank2u.com mobile-banking application. Meanwhile, YTD transaction value currently stands at RM19.0 bln. (The Edge Daily)
  • My E.G. Services Bhd‘s Group Managing Director, Wong Thean Soon dismissed rumours that the group is planning to acquire diversified entity Malayan United Industries Bhd (MUI), following his purchase of MUI shares earlier, as a passive investment. He added that he had since disposed of all of his shareholdings in MUI and Palette and will refrain from making any passive investments in listed equities in the future. (The Star Online)
  • Dutch Lady Milk Industries Bhd has appointed Tarang Gupta as its new Managing Director, replacing Saw Chooi Lee, effective 1st January 2018. Saw, who had helmed the company for the last three years, will remain on Dutch Lady’s board, serving as its NonIndependent Non-Executive Director. (The Edge Daily)  

Source: Mplus Research - 14 Nov 2017

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