M+ Online Research Articles

Author: MalaccaSecurities   |   Latest post: Fri, 21 Sep 2018, 10:07 AM


Mplus Market Pulse - 16 Aug 2017

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  • The FBM KLCI (+0.1%) rebounded from earlier losses to finish higher for the second consecutive session after North Korea signaled that it is putting a hold on its plans to fire a missile towards Guam. The lower liners - the FBM Small Cap (+0.5%), the FBM Ace (+0.5%) and the FBM Fledgling (+0.4%), meanwhile, continued to trade higher amid a mostly positive broader market.
  • Market breadth was upbeat as advancers overtook decliners on a ratio of 523-to- 329 stocks. Traded volumes also jumped 17.9% to 1.80 bln shares as investors re enter the stockmarkets, following a momentary cease fire between Pyongyang and Washington.
  • BAT (+80.0 sen), KLCC (+12.0 sen), Digi (+8.0 sen) and Genting Malaysia (+6.0 sen) propped up the Main Board, while Petronas Chemicals (+4.0 sen) advanced for the second-straight day after reporting better-than-expected quarterly earnings. Charttoppers on the broader market, meanwhile, include Malaysian Pacific Industries (+RM1.02), Lotte Chemical (+42.0 sen), Far East Holdings (+30.0 sen), Hartalega (+22.0 sen) and HCK Capital (+21.0 sen).
  • Chin Teck Plantations (-44.0 sen), Dutch Lady (-18.0 sen), Hong Leong Industries (- 16.0 sen), PLB Engineering (-16.0 sen) and Bintulu Port (-15.0 sen) underperformed its peers on Tuesday. Meanwhile, Hong Leong-affiliated counters like Hong Leong Financial Group (-16.0 sen) and Hong Leong Bank (-8.0 sen) weighed on the Big Board, followed by Hap Seng Consolidated (-13.0 sen), MISCc (-8.0 sen) and Kuala Lumpur Kepong (-2.0 sen).
  • Asian equities rallied yesterday, on follow through buying-interest as risk aversion subsided following positive sentiments from U.S. stockmarkets the night before. The Nikkei gained 1.1% to 19,953.3 points as investors cheered a more bullish Greenback, while the Shanghai Composite index rose 0.4% on Tuesday’s close. The Hang Seng index, however, opposed the general positive sentiment to close 0.3% lower. Most ASEAN stockmarkets also ended broadly higher.
  • Wall Street ended mostly in the red on renewed speculation of a potential interest rate hike following higher-than-expected U.S. retail sales. The Dow flatlined, while the S&P 500 (-0.1%) inched into the red – led by the decline in telecom and consumer-discretionary related stocks. The Nasdaq also slipped and closed 0.1% lower on Tuesday.
  • European bourses continued its upward momentum, as investors shrugged off the negative sentiments from rising political risk despite North Korea aborting its plans to launch a missile attack on Guam. The FTSE (+0.4%) traded higher, boosted by a weaker Pound after U.K. inflation data came in below analysts’ expectations. The CAC also added 0.4%, on the back of gains in yogurt-maker Danone amid rumors of a potential takeover, while the DAX (+0.1%) inched higher.

The Day Ahead

  • With the upsides difficult to come by amid a still cautious market enviroment, we think the key index could return to a sideway trend over the near term as it attempts to build up a base around the 1,770 level. As it is, the buying interest is still tentative with market players slow to return to the market, albeit the geopolitical concerns between the U.S. and North Korea have abated temporarily.
  • With fresh buying still absent, we see the key index lingering within the 1,770 and 1,776 levels for now as there are also few fresh positive leads for the market to follow, including significantly above expectation corporate results in the ongoing results reporting season.
  • On the broader market, we also think tentativeness could prevail as market players could be quick to lock-in profits after some of the lower liners and broader market shares gained ground yesterday.

Company Update

  • AWC Bhd has been awarded a facility management contract worth RM32.9 mln for the maintenance of the buildings used by the Ministry of Rural and Regional Development in Putrajaya. The five-year contract, awarded by the Public Works Department (JKR), will commence from 16th August, 2017 to 31st July 2022.


  • The aforementioned contract came on the heels of another facilities contract secured earlier this month. The project, however, is relatively small given its fiveyear duration, but it falls within our orderbook replenishment estimates and hence, there is no change to our earnings estimates. Consequently, we reiterate our BUY recommendation on AWC with an unchanged target price of RM1.20.
  • Our target price is derived from ascribing an unchanged target PER of 14.0x to its FY18 EPS of 8.7 sen, which we think is justified due to its strong earnings growth potential – as reflected in its low PEG of 0.4x in FY17.

Company Briefs

  • Petronas Gas Bhd’s (PetGas) 2Q2017 net profit grew 5.6% Y.o.Y to RM425.9 mln, mainly due to higher contribution from the gas transportation and regasification segments as well as higher other income and share of profit from joint ventures. Revenue for the quarter added 4.9% Y.o.Y to RM1.17 bln.
  • For 1H2017, cumulative net profit gained 4.5% Y.o.Y to RM889.1 mln. Revenue for the period increased 4.1% Y.o.Y to RM2.34 bln. A second interim dividend of 16 sen per share was declared. (The Star Online)
  • Malaysian Resources Corp Bhd (MRCB) has bagged a RM369.0 mln contract for the construction and other associate works under the Damansara-Shah Alam Elevated Highway (DASH) project from Projek Lintasan Kota Holdings Sdn Bhd’s (Prolintas) unit, Turnpike Synergy Sdn Bhd. The works are anticipated to commence by end August 2017 and will be completed by October 2019. (The Star Online)
  • OSK Ventures International Bhd’s (OSKVI) 2Q2017 net profit soared 12.4x Y.o.Y to RM29.5 mln on higher income and net fair value gain on financial instruments. Revenue for the quarter surged 116.5% Y.o.Y to RM26.8 mln.
  • For 1H2017, cumulative net profit stood at RM44.3 mln vs. a net loss of RM2.5 mln recorded in the previous corresponding period. Revenue for the period jumped 189.8% Y.o.Y to RM51.1 mln. (The Edge Daily)
  • Batu Kawan Bhd’s 3QFY17 net profit dropped 45.6% Y.o.Y to RM80.8 mln, mainly due to substantially lower profit in its manufacturing segment. Revenue for the quarter, however, rose 24.0% Y.o.Y to RM5.01 bln. ? For 9MFY17, cumulative net profit declined 29.9% Y.o.Y to RM441.6 mln. Revenue for the period, however, gained 33.1% Y.o.Y to RM16.25 bln. (The Edge Daily)
  • Kuala Lumpur Kepong Bhd's (KLK) 3QFY17 net profit slipped 53.8% Y.o.Y to RM263.7 mln due to losses in its manufacturing segment. Revenue for the quarter, however, grew 24.2% Y.o.Y to RM4.87 bln.
  • For 9MFY17, cumulative net profit reduced 37.5% Y.o.Y to RM801.0 mln. Revenue for the period, however, increased 32.4% Y.o.Y to RM15.84 bln. (The Edge Daily)
  • Xidelang Holdings Ltd’s 2Q2017 net profit soared 170.0% Y.o.Y to RM4.3 mln, lifted by higher sales performance. Revenue for the quarter gained 19.0% Y.o.Y to RM139.6 mln.
  • For 1H2017, cumulative net profit jumped 170.6% Y.o.Y to RM8.1 mln. Revenue for the period added 19.8% Y.o.Y to RM273.3 mln. (The Edge Daily)
  • Tenaga Nasional Bhd (TNB) has secured RM339.0 mln financing for its first Large Scale Solar (LSS) project in Malaysia. TNB’s unit TNB Sepang Solar Sdn Bhd (TSS) had secured the amount through Affin Islamic Bank Bhd, who will be providing funding and working capital requirements for the said project.
  • TSS was set up as a special purpose vehicle to undertake the project, which was awarded by the Energy Commission through a competitive bidding exercise, TNB said. (The Edge Daily)  

Source: Mplus Research - 16 Aug 2017

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