M+ Online Research Articles

Author: MalaccaSecurities   |   Latest post: Mon, 27 May 2019, 10:55 AM


Mplus Market Pulse - 16 Aug 2018

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Volatility To Return

  • The FBM KLCI (+0.1%) extended its gains after hovering mostly in the positive territory yesterday, taking cue from the positive sentiments on Wall Street overnight. The lower liners also edged mostly higher as the FBM Small Cap and FBM ACE rose 0.3% and 0.4% respectively, while the broader market ended mixed.
  • Market breadth, however, turned negative as decliners edged advancers on a ratio of 461-to-434 stocks. Traded volumes rose 4.9% with 2.40 bln shares on rotational play amongst the lower liners.
  • Key winners on the local bourse were Petronas Dagangan (+48.0 sen), Petronas Chemicals (+20.0 sen), Hartalega (+17.0 sen), Tenaga (+16.0 sen) and Hong Leong Bank (+14.0 sen). Significant gainers on the broader market include BAT (+24.0 sen), Elsoft (+23.0 sen), MPI (+22.0 sen) and Top Glove (+12.0 sen). Batu Kawan rose 8.0 sen after delivering a strong set of quarterly earnings.
  • Elsewhere, United Plantations (-52.0 sen) topped the broader market decliners list, followed by Hong Leong Industries (-26.0 sen), KESM Industries (-22.0 sen), Chin Teck Plantations (-20.0 sen) and Fraser & Neave (-20.0 sen). On the big board, Nestle (-RM1.10), Malaysia Airport Holdings (-21.0 sen), RHB Bank (-21.0 sen), Press Metal (-11.0 sen) and Axiata (-10.0 sen) were the major decliners.
  • Asia benchmark indices resume their slide on lingering concerns over Turkey’s economic and financial instability yesterday. The Nikkei fell 0.7%, while the Shanghai Composite (-2.1%) recorded its third straight session of decline after the Chinese Yuan depreciated to its lowest level, since May 2017, against the Greenback. The Hang Seng Index (-1.6%) closed at its lowest level since August 2017 after authorities stepped in to defend its currency peg against the U.S. Dollar for the first time in three months. ASEAN stockmarkets, meanwhile, closed mixed yesterday.
  • U.S. stockmarkets endured another round off volatility, erasing all their previous session gains as the Dow fell 0.5% overnight. On the broader market, the S&P 500 slipped 0.8%, dragged down by the energy sector (-3.5%) after crude oil prices slumped, while the Nasdaq tanked 1.2%.
  • Earlier, major European equities – the FTSE (-1.5%), CAC (-1.8%) and DAX (1.6%), all took a beating on weakness in commodity-related shares after copper prices entered into the bear market territory, whilst crude oil prices closed at two month low. Meanwhile, Qatar has pledged to invest US$15.0 bln in the Turkish economy to help the country avert a financial crisis, but failed to stem the region’s losses.

The Day Ahead

  • The global equity market environment is turning increasingly dour approaching to the end of the U.S. corporate results reporting season with the combination of Turkey’s financial crisis and lower commodity prices now sapping market confidence.
  • We see the global market volatility spreading to Malaysian stocks and this is likely to pressurise the key index once again. As it is, the buying interest remains mild of late amid the ongoing uncertainties over the market’s direction and it was largely the selective institutional support that is holding up the index heavyweights. With the uncertainties escalating, we see the volatility also returning that could send the key index lower again, potentially back to the 1,780 support, which is followed by the 1,770 level. The resistances remain at 1,790 and 1,800 respectively.
  • The cautiousness is also likely to spread to the broader market shares and lower liners that prompt fresh selling and quick profit taking activities over the near term.


  • Public Bank Bhd's 2Q2018 net profit grew 4.9% Y.o.Y to RM1.40 bln, from RM1.33 bln a year earlier, on the back of higher net interest income, higher income from Islamic banking business, lower loan impairment allowance and higher net fee and commission income, which were partially offset by the lower investment and other operating income. Quarterly revenue also gained around 5.2% Y.o.Y to RM5.44 bln, from RM5.17 bln a year earlier.
  • For 1H2018, net profit rose 8.5% Y.o.Y to RM2.80 bln vs. RM2.58 bln in the previous corresponding year, while revenue was 5.8% Y.o.Y higher to RM10.79 bln, from RM10.2 bln previously. (The Edge Daily)
  • Press Metal Aluminium Holdings Bhd recorded a 7.0% Y.o.Y gain in 2Q2018 net profit to RM160.6 mln, from RM150.2 mln last year, mainly due to higher aluminium price and stronger U.S. Dollar against the Ringgit. Revenue for the quarter, meanwhile, jumped 24.7% Y.o.Y to RM2.44 bln, from RM1.96 bln.
  • Cumulative 1H2018 net profit inched higher by 4.3% Y.o.Y to RM311.1 mln, compared to RM298.2 mln in 1H2017, while revenue jumped to RM4.56 bln (+17.3% Y.o.Y), from RM3.89 bln previously. (The Edge Daily)
  • KLCCP Stapled Group, which includes KLCC Property Holdings Bhd (KLCCP) and KLCC Real Estate Investment Trust (REIT), saw its 2Q2018 net profit flatline at RM179.2 mln (+0.7% Y.o.Y), from RM178.0 mln a year ago, underpinned by the full occupancy in Menara ExxonMobil since April 2017 as well as higher rental rates and occupancy rates. Quarterly revenue also rose 2.2% Y.o.Y to RM345.0 mln, from RM337.5 mln previously.
  • For 1H2018, net profit inched higher by 1.4% Y.o.Y to RM359.8 mln, from RM354.7 mln a year ago, while revenue eked-out a 2.4% Y.o.Y growth to RM690.1 mln, from RM674.2 mln in the same period last year. (The Star Online)
  • Petronas Chemicals Group Bhd's 2Q2018 net profit spiked 42.0% Y.o.Y to RM1.37 bln, from RM964.0 mln a year ago, in-line with higher EBITDA, higher interest income and lower tax expenses. Quarterly revenue also rose 19.6% Y.o.Y to RM4.73 bln, from RM3.96 bln previously.
  • Meanwhile, cumulative 1H2018 net profit expanded about 8.0% Y.o.Y to RM2.44 bln, from RM2.26 bln a year ago, while revenue grew 11.9% Y.o.Y to RM9.68 bln, from RM8.65 bln earlier. (The Star Online)
  • Petronas Gas Bhd's (PetGas) 2Q2018 net profit added 20.0% Y.o.Y to RM509.3 mln, from RM425.3 mln a year earlier – helped by higher revenue and lower tax expenses, albeit offset by higher finance cost. Revenue for the quarter also climbed to RM1.36 bln, from RM1.17 bln in the same quarter in 2017.
  • For 1H2018, net profit expanded to RM992.6 mln (+11.7% Y.o.Y), from RM888.6 mln a year ago, boosted by higher revenue contribution, which was about 15.8% Y.o.Y higher to RM2.71 bln vs. RM2.34 bln in the previous year.
  • Moving forward, PetGas will continue its discussions with the Energy Commission to finalise the tariff guidelines for gas transportation and regasification services beyond 2018. (The Star Online)
  • Sam Engineering & Equipment (M) Bhd's 1QFY19 net profit saw a significant 87.0% Y.o.Y growth to RM17.6 mln, from RM9.4 mln a year earlier, attributed to better performance of both its aerospace and equipment segments. Revenue for the quarter also grew 27.0% Y.o.Y to RM178.8 mln, from RM141.3 mln in 1QFY18. (The Star Online)
  • Oriental Interest Bhd is planning to acquire a parcel of agricultural land measuring 61.75 ha. in Bandar Kulim, Kedah, from MBAS Jaya Sdn Bhd for RM36.5 mln (or RM5.50 per sq ft), to increase its landbank. The proposed acquisition is in-line with its strategy to focus on development in the northern region of Peninsular Malaysia and to continuously replenish and expand its landbank in strategic locations. (The Edge Daily)
  • Scientex Bhd is buying two contiguous pieces of freehold agriculture land measuring a combined 208.9 ac. in Alor Gajah, Melaka for RM68.3 mln which will be used as a mixed property development. While it is too early to ascertain the related costs and values, the group believes the proposed acquisition will provide it with adequate landbank to sustain its property development over the medium and longer term. (The Edge Daily)
  • Mudajaya Group Bhd (MCB) has announced that the RM118.6 mln contract to build a 16-storey office complex called Hevea Tower in Sungai Buloh, Selangor, has been terminated by KLIA Consortium on 13th August 2018. The contract was part of a proposed development spanning over 2,330 ac. of land owned by the Malaysian Rubber Board (Lembaga Getah Malaysia) – which was supposed to be completed by September 2019.
  • Moving forward, the group will submit the claims for the outstanding amount including any other costs incurred to close the project’s account within the stipulated time. (The Edge Daily)
  • MK Land Holdings Bhd is partnering Menteri Besar Inc (Perak) (MB Inc) to jointly-develop a piece of land totalling 226 ac. in Kampar and Kinta, belonging to the Perak State government, into a mixed development consisting of affordable housing and commercial units.
  • Both parties have entered into a Memorandum of Understanding (MoU) to facilitate the joint-venture where MB Inc will hold a 15.0% stake in the proposed development. Meanwhile, MK Land will carry out evaluations, technical assessments and financial feasibility study and is responsible for the entire development financing, which will be funded by internal funds and/or bank borrowings.
  • The proposed development is expected to be completed in phases over a period of 10 years with an extension of five years. (The Edge Daily)  

Source: Mplus Research - 16 Aug 2018

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