• The FBM KLCI (+0.3%) staged a mild recovery yesterday as investors digested the news from the aftermath of Donald Trump surprise victory in the U.S. presidential election. The lower liners also rebounded – the FBM Small Cap (+1.2%), FBM Fledgling (+1.0%) and FBM ACE (+1.7%) all rose, while Industrial and Consumer Products sectors underperformed the positive broader market, falling 0.3% and 0.1% respectively.
• Market breadth turned positive as gainers outpaced losers on a ratio of 650-to-207 stocks. Traded volumes normalised with 1.63 bln shares exchanging hands on some bargain hunting activities.

• Anchoring the advancers on the FBM KLCI were banking heavyweights like CIMB (+17.0 sen), Public Bank (+10.0 sen) and Maybank (+9.0 sen), while Petronas Dagangan and Genting added 6.0 sen each. Significant gainers of the day include Dutch Lady (+74.0 sen), Aeon Credit (+46.0 sen), KESM Industries (+35.0 sen) and Perusahaan Sadur Timah (+22.0 sen). WCT added 11.0 sen after bagging a viaduct gateway for the Klang Valley MRT 2 project.

• Meanwhile, Bintulu Port (-14.0 sen), Country View (-10.0 sen), MalPac Holdings (-10.0 sen), LPI Capital (-10.0 sen) and United Plantations (-10.0 sen) topped the broader market decliners list. Amongst the biggest decliners on the key index were BAT (-94.0 sen), KLK (-14.0 sen), Petronas Gas (-14.0 sen), Westports (-8.0 sen) and KLCC (-6.0 sen).

• Asia benchmark indices rebounded yesterday from the previous session’s heavy sell-off. The Nikkei recovered all of its previous session losses, jumping 1,092.88 pts, led by the rally in financial shares such as Nomura Holdings (+11.9%) and Mitsubishi UFJ Financial Group (+6.9%). The Hang Seng Index gained 1.9%, while the Shanghai Composite added 1.4% after the Chinese Yuan fell to a fresh six-year low against the U.S. Dollar. ASEAN stockmarkets, meanwhile, ended higher.

• Wall Street recorded its fourth straight session of gains overnight as the Dow jumped another 1.2% to close at a record high of 18,807.88 pts on hopes that the President elect will implement business friendly measures as well as lower taxes. On the broader market, the S&P 500 added 0.2%, lifted by gains from the financial sector (+2.7%), but the techheavy Nasdaq slipped 0.8% on profit taking.

• European benchmark indices, however, retreated as the FTSE declined 1.2% after gold-focused mining shares like Fresnillo (-10.9%) and Randgold Resources (- 10.1%) tanked. The CAC and DAX fell 0.3% and 0.2% respectively, erasing their intraday gains on profit taking activities.

The Day Ahead

• While we expected a relieve rally on Bursa Malaysia yesterday, the rebound was more measured as the buying support was milder-than-expected, albeit there were fresh impetus among the lower liner and broader market stocks.

• Still, we think the upsides could persist over the near term as there are still some buying support, but we think the near term upsides will be measured once again as market players are likely to lock-in some of their near term profits.

• On the upside, the 1,660 level is the immediate hurdle, followed by the 1,670 level. The 1,650 level, meanwhile, is the main support for now.

Company Update

• Barakah Offshore Petroleum Bhd has won a contract for the installation of an effluent discharge pipeline for the Labuan Crude Oil Terminal (LCOT) worth RM25.0 mln.

• The transportation and installation shore approach involves the stringing of the new pipeline in the beach area in the vicinity of LCOT. The estimate completion of the project is two years from October 2016. (The Edge Daily)

Comments

• The aforementioned contract marks the first major contract for Barakah Offshore in 4Q2016. With the aforementioned contract falling within our orderbook replenishment rate of RM400.0 mln – RM500.0 mln in 2016, we made no changes to our earnings estimates. Barakah Offshore’s outstanding orderbook of approximately RM1.15 bln will continue to provide earnings visibility over the next two years.

• We maintain our HOLD recommendation with an unchanged target price (TP) of RM0.70. We derive our target price by ascribing an unchanged PER of 15.5x to our unchanged fully diluted 2017 EPS estimate of 4.4 sen.

Company Briefs

• Petronas Chemicals Group Bhd (PetChem) has awarded a US$328.0 mln engineering, procurement, construction and commissioning (EPCC) contract for Package 27 within the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor, to a consortium led by Italian firm Tecnimont S.p.A. The consortium includes Tecnimont, Beijing-based China Huanqiu Contracting & Engineering Co Ltd, Tecnimonthqc Sdn Bhd and Tecnimonthqc S.c.a.r.l. of Italy, while the contract works encompasses the construction of a polypropylene unit, which will have a capacity of 400,000 tonnes per year. (The Edge Daily)

• Westports Holdings Bhd registered a 16.1% Y.o.Y growth in its 3Q2016 net profit to RM151.0 mln, from RM130.0 mln a year ago, in-tandem with stronger revenue, which was 18.4% Y.o.Y higher at RM474.4 mln, from RM400.8 mln in 3Q2015.

• The company's aggregate 9M2016 net profit stood at RM482.0 mln against RM372.3 mln in the previous corresponding period, while its revenue rose to RM1.46 bln, from RM1.2 bln previously. (The Star Online)

• KKB Engineering Bhd narrowed its 3Q2016 net loss to RM135,000, compared to RM3.4 mln in 3Q2015 - due to increased revenue contribution as well as improved gross profit margin by the group’s steel pipes manufacturing business. Meanwhile, revenue grew more than three-fold to RM27.7 mln, from RM8.3 mln in 3QFY15.

• Cumulative 9M2016 net loss, meanwhile, stood at RM1.7 mln vs. a net profit of RM30.0 mln in 9MFY15, as revenue declined 33.1% Y.o.Y to RM77.0 mln from RM115.1 mln a year ago. (The Edge Daily)

• Scientex Bhd is planning to invest some U$25.0 mln (RM106.7 mln) to build a new stretch film manufacturing plant in Arizona, the United States, in-line with its plans to expand worldwide.

• To embark on this project, Scientex has established a new subsidiary called Scientex Phoenix LLC along with manufacturing facilities to produce quality stretch film to serve the immediate market within the U.S., which is in line with its long-term expansion plans to continuously expand its geographical reach worldwide. (The Star Online)

• Orion IXL Bhd (formerly CWorks Systems) has aborted its agreement with PPYC Logistic (M) Sdn Bhd, in relation to the supply and maintenance of a computerised logistic and stock management control system worth RM8.0 mln as both parties were unable to agree on the detailed specifications of the system to be developed. (The Edge Daily)

• Daibochi Plastic and Packaging Industry Bhd posted an 11.2% Y.o.Y decrease in its 3Q2016 net profit to RM6.0 mln, from RM6.8 mln in the previous corresponding period – dragged down by lower foreign exchange gain as well as a minor loss suffered by one of its associate companies. Quarterly revenue, however, rose 9.4% Y.o.Y to RM94.1 mln against RM86.0 mln in 3Q2015.

• For the cumulative 9M2016, net profit shed 7.7% Y.o.Y to RM18.6 mln, in comparison to RM20.1 mln last year, attributed to substantial expenses incurred for air freight costs of a new product launch, although revenue gained 7.2% Y.o.Y to RM280.8 mln from RM261.8 mln a year ago. The revenue gain was on the back of a 14.6% increase in export sales from new clients secured in Australia and New Zealand. The group also declared a dividend of 1.3 sen, which is payable on 22th December, 2016. (The Edge Daily)

• Sapura Industrial Bhd’s net profit was higher by 17.3% Y.o.Y to RM1.6 mln for the 3QFY17 net profit, from RM1.4 mln in the same period last year, despite only a 0.3% Y.o.Y marginal increase in revenue from RM56.0 mln, to RM56.1 mln in 3QFY16. ? Cumulative 9MFY17 earnings, however, slipped slightly by 1.9% Y.o.Y to RM2.6 mln – mainly due to lower domestic volume for certain vehicle models, while revenue declined 7.5% Y.o.Y to RM150.9 mln, from RM163.2 mln a year earlier.

• The group has announced a single-tier interim dividend of three sen per share, payable on 14th December, 2016. (The Edge Daily)

• Shangri-La Hotels (M) Bhd’s 3Q2016 net profit plunged 28.0% Y.o.Y to RM29.9 mln vs. RM41.7 mln last year, contributed by unfavourable foreign exchange rates. Quarterly revenue, however, rose 4.5% Y.o.Y to RM142.3 mln, from RM136.1 mln in 3QFY15.  

Source: Mplus Research - 11 Nov 2016