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Author: MalaccaSecurities   |   Latest post: Fri, 15 Feb 2019, 11:52 AM

 

Mplus Market Pulse - 24 Jan 2018

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More Upsides Seen

  • The FBM KLCI (+0.3%) sustained its upward momentum – led by buyingsupport in selected heavyweights and a stronger Ringgit ahead of Bank Negara’s meeting. The lower liners also rebounded – led by the FBM Ace (+1.5%), while the broader market closed mostly higher, with the exception of the Mining (-1.8%) sub-sector.
  • Market breadth was upbeat as gainers beat the losers on a ratio of 649-to-357 stocks. However, traded volumes fell 15.2% to 3.91 bln shares as investors retreat to the sidelines ahead of the Central Bank’s upcoming meeting this week that is speculated to include an interest rate hike.
  • Top key-index performers include banking giants like Hong Leong Financial Group (+20.0 sen) and Ambank (+5.0 sen), followed by Petronas Gas (+16.0 sen), Genting (+10.0 sen) and Sime Darby (+10.0 sen). Meanwhile, sin-stocks and glove manufacturers like BAT (+78.0 sen), Topglove (+64.0 sen), Hartalega (+32.0 sen) and Heineken Malaysia (+30.0 sen) led the broader market higher. KESM Industries also tracked higher, adding 30.0 sen to Tuesday’s close.
  • On the flipside, underperformers were Petron Malaysia (-40.0 sen), Ajinomoto (- 22.0 sen), Amway (-14.0 sen), Caring Pharmacy (-10.0 sen) and Genting Plantations (-10.0 sen). Main Board decliners, meanwhile, include Genting Malaysia (-4.0 sen), Astro (-3.0 sen), Hong Leong Bank (-2.0 sen), KLCC (-2.0 sen) and Press Metal (-1.0 sen).
  • Japanese equities advanced following the Bank of Japan’s decision to keep its monetary policy unchanged and gains in automakers. The Nikkei rose 1.3% to close above the 24,000 psychological level, with majority of its sectors in the green, except for the energy sector. The Hang Seng Index (+1.7%) also spiked, benefiting from Wall Street’s strong close overnight, alongside the Shanghai Composite (+1.3%). ASEAN stockmarkets also followed suit, closing mostly higher on Tuesday.
  • Major U.S. benchmark indices rallied, boosted by Netflix, after the streaming service provider’s quarterly performance topped analysts’ expectations. The Dow, however, pulled back slightly, weighed down by Johnson & Johnson (-4.3%). On the bright side, the S&P 500 added 0.2%, while the tech-heavy Nasdaq (+0.7%) advanced in-tandem with the gains in FAANG stocks, the grouping that included Facebook, Apple, Amazon and Alphabet.
  • European equities also ended mostly higher as investors digested a string of corporate earnings announcements. The FTSE logged gains of 0.2% after a volatile session, ahead of employment and GDP data announcements. The DAX (+0.7%) also gained traction, although the CAC declined 0.1% to close at 5,535.3 points.

THE DAY AHEAD

  • With the key index forcing gains at the end-of-day over the past three sessions, the market undertone has stayed positive and we expect the FBM KLCI to continue nudging higher over the near term. We also see the key index continuing to take small upwards strides as foreign funds are still nibbling at the heavyweights that are seen as regional laggards.
  • At the same time, the broader market is also benefitting from the positives among the index heavyweight, particularly after the recent consolidation of many lower liners which we think is already overdone. Therefore, the lower liners and broader market shares are also likely to head higher over the near term on the back of the recovery plays.
  • On the upside, the key index is likely to head towards the 1,840 resistance, followed by the psychological 1,850 level. The main supports remain pegged at 1,800-1,820 levels.

COMPANY BRIEFS

  • Green Packet Bhd had secured a contract to supply digital set-top boxes to MYTV Broadcasting Sdn Bhd, the company that was award a concession by the Government to operate the infrastructure and network facilities for digital terrestrial TV services. The contract potentially be worth up to RM300.0 mln and involves the supply of up to 3.6 mln set-top boxes.
  • A total of 4.2 mln BR1M (1Malaysia People’s Aid) households will receive free MYTV decoders. Besides winning the contract to supply these devices, Green Packet was also said to be looking to operate a few of the many channels that would run on the new digital free to air system. (The Star Online)
  • Crest Builder Holdings Bhd has secured a contract by Perdana Parkcity Sdn Bhd for the construction of main building works in Desk ParkCity, Kuala Lumpur, for RM328.8 mln. The construction of main building works consists of two blocks of 40-storey residential apartments and a car park podium.
  • The contract is for a period of 33 months from 9th February 2018 to 8th November 2020 and will bring the company's order book to about RM1.30 bln. (The Star Online)
  • Caring Pharmacy Bhd’s 2QFY18 net profit jumped 54.7% Y.o.Y to RM4.3 mln on higher revenue and improved margins. Revenue for the quarter improved 8.4% Y.o.Y to RM123.5 mln.
  • For 1HFY18, cumulative net profit soared 116.0% Y.o.Y to RM7.5 mln. Revenue for the period climbed 10.6% Y.o.Y to RM248.7 mln. (The Star Online)
  • Singapore-based private equity firm Quadria Capital Investment Management Pte Ltd is investing RM119.9 mln to take up a 49.0% stake in KPJ Healthcare Bhd's diagnostics unit, Lablink (M) Sdn Bhd. (The Edge Daily)
  • DiGi.Com Bhd's 4QFY18 net profit fell 3.9% Y.o.Y to RM360.1 mln on higher finance cost from adverse fair value changes on interest rate swaps of RM12.0 mln and settlement costs of RM6.0 mln. Revenue for the quarter decreased 1.5% Y.o.Y to RM1.64 bln.
  • For FY18, cumulative net profit declined 10.1% Y.o.Y to RM1.48 bln. Revenue for the year fell 3.9% Y.o.Y to RM6.34 bln. A fourth interim dividend of 4.6 sen per share, payable on 23rd March 2018 was declared. (The Edge Daily)
  • IGB Real Estate Investment Trust's 4QFY18 net property income (NPI) rose 4.1% Y.o.Y to RM95.2 mln as rental income improved. Revenue for the quarter rose 6.9% Y.o.Y to RM134.4 mln.
  • For FY18, cumulative NPI added 3.4% Y.o.Y to RM373.6 mln. Revenue for the year gained 4.6% Y.o.Y to RM413.2 mln. A distribution per unit of 4.9 sen, payable on 28th February 2018, was announced. (The Edge Daily)
  • Hengyuan Refining Co Bhd has secured US$430.0 mln (RM1.70 bln) financing facilities from three banks to partly refinance its existing term loan and its planned capital expenditure (capex).
  • The bilateral agreements were signed with Ambank (M) Bhd — Labuan Offshore Branch, China Construction Bank (Malaysia) Bhd (CCB) and Maybank International Labuan Branch.
  • The facilities consist of a term loan and a revolving credit line. The term loan will be used to refinance the company's existing term loan and planned capex, while the revolving credit facility is for working capital.(The Edge Daily)
  • Seacera Group Bhd is now qualified to participate in government tenders allocated for bumiputera companies, after being granted bumiputeracontrolled public listed company status by the government.
  • To qualify for the status, the company is required to maintain a minimum of 35.0% of its voting rights by bumiputera shareholders. (The Edge Daily)
  • Pos Malaysia Bhd has appointed AlIshsal Ishak as its Group Chief Executive Officer effective from 2nd February 2018 after the resignation of its former chief, Datuk Mohd Shukrie Mohd Salleh that had sparked some selling pressure on the postal group's shares.
  • Additionally, Datuk Azlan Shahrim, who had been Acting Group CEO will also cease the position and continue as Group Chief Pperating Officer of postal & courier of Pos Malaysia. (The Edge Daily)
  • Lotte Chemical Titan Holding Bhd (LCT) has signed a deal with one of its biggest suppliers, Abu Dhabi National Oil Company (Adnoc), for the purchase of refined products and paraffinic naphtha. It signed a three-year sales contract effective 1st January 2018 until 31st December 2020 with Adnoc.
  • According to the contract, pricing will be based on market prices as at loading month, while the estimated quantity to be supplied to LCTM will be between 600,000 tonnes and one mln tonnes per year. (The Edge Daily)
  • Samchem Holdings Bhd is exploring the possibility of listing its indirect 63.3%-owned subsidiary, Samchem Sphere JSC on the Ho Chi Minh Stock Exchange.
  • The proposed listing will enable it to capitalise on the fast-growing Vietnamese economy and the potential growth of the industrial chemical sector there. (The Edge Daily)
  • DRB-Hicom Bhd's subsidiary, Proton Holdings Bhd has terminated its equity joint venture (JV) contract with China's Goldstar Heavy Industrial Co Ltd to produce and sell Lotus cars in China.
  • The contract, signed in 2015, was terminated because the JV company Goldstar Lotus Automobile Co Ltd had failed to obtain the required manufacturing licence in China in time. (The Edge Daily)
  • Asiamet Education Group Bhd has obtained valuation reports for all six assets it has put up for sale, including its main campus in Cheras, Selangor. The group is selling all six of its assets in Selangor, Perak, Sabah and Kelantan as part of Asiamet’s asset-light policy, which could fetch as much RM135.0 mln. (The Edge Daily)
  • Cabnet Holdings Bhd has won a RM7.0 mln contract to supply and maintain security systems at a commercial building in Johor Bahru.
  • The contract involves the supply, installation, testing, commissioning and maintenance of the SMATV, CCTV, lift access, door access, vehicle access, intercom and FTTH systems for the building developed by Trident Success Sdn Bhd. (The Edge Daily)

Source: Mplus Research - 24 Jan 2018

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