• The FBM KLCI notched a 0.4% gain yesterday, in-tandem with the bullish sentiment on the regional stockmarkets as the Ringgit also strengthened. The FBM Ace (-1.1%) and the FBM Fledging (- 0.3%) indices lost momentum, however, although the FBM Small Cap closed marginally up by 0.1%. The broader market was mixed, with the Industrial products (-0.2%), Properties (-0.3%) and Plantations (-0.3%) sectors losing ground.

• Market breadth was negative as decliners outweigh advancers by a ratio of 467-to- 322 as profit taking on the lower liners escalated ahead of the Chinese New Year holidays. Traded volumes were down 3.3% to 1.53 bln.

• Chart-toppers on the blue chip gauge include BAT (+32.0 sen), Sime Darby (+18.0 sen), Telekom Malaysia (+13.0 sen), Hong Leong Financial Group (+10.0 sen) and MISC Bhd (+8.0 sen). Broader market winners were Panasonic Manufacturing Malaysia (+40.0 sen), LPI Capital (+34.0 sen), Aeon Credit Service (+22.0 sen), Fraser & Neave (+12.0 sen) and The Store Corporation (+12.0 sen).

• Meanwhile, UMS Holdings (-28.0 sen), Dutch Lady (-20.0 sen), Hong Leong Industries (-19.0 sen), Air Asia (-14.0 sen) and Suiwah (-13.0 sen) declined on Monday’s close. Key laggards on the Main Board were Westports Holdings (- 6.0 sen), IOI Corporation (-5.0 sen) and Astro Malaysia (-2.0 sen). Meanwhile, Petronas Chemicals (-6.0 sen) and Petronas Dagangan (-2.0 sen) fell alongside the weaker crude oil prices.

• Asian equities finished broadly in the green as investors look forward to greater clarity on Donald Trump’s economic policies. The Nikkei, however, tanked 1.3%, dragged down by exporters amid the higher Yen vs. the US Dollar. The Hang Seng index (+0.1%) finished slightly up, despite coming down from its intraday high, while the Shanghai Composite index rose 0.4%, ahead of China’s week-long Lunar New Year holidays. ASEAN stockmarkets ended mostly positive on Monday.

• U.S stockmarkets recovered earlier losses, albeit closing in the red on Monday’s close amid uncertainties surrounding U.S. President Donald Trump’s economic policies. The Dow retreated 0.1%, while the S&P 500 was 0.3% lower – dragged down by the energy and industrials sector. The Nasdaq (- 0.04%), however, finished flattish at 5,552.9 points.

• U.K. shares narrowed amid a surge in the demand for safe-haven assets on expectations of Donald Trump’s protectionist policies. The FTSE retraced 0.7% - led by losses in Paddy Power Betfair (-4.4%) after the group cut its fullyear profit estimates. The DAX also lost 0.7%, although the CAC beat the general dampened market sentiment and closed 0.6% higher.

The Day Ahead

• Although the key index performed betterthan-expected yesterday, we continue to think that the general market undertone is still relatively indifferent ahead of the Lunar New Year break that should see further profit taking activities. Hence, we think that the market is likely to extend rangebound trend over the near term between the 1,660 and 1,680 levels.

• As it is, traded volumes are already thinning as many market participants have closed out their short term positions and retreated to the sidelines and we think fresh buying will be limited.

• Therefore, the downside risk among the broader market and lower liner shares are likely to continue, while there should be some mild support on index linked stocks to keep the key index rangebound.

Company Briefs

• Digi.Com Bhd’s 4Q2016 net profit fell 2.0% Y.o.Y to RM374.6 mln on slower topline growth coupled with higher spending to accelerate 4G+ network expansions. Revenue declined 3.5% Y.o.Y to RM1.66 bln.

• For 2016, cumulative net profit decreased 5.2% Y.o.Y to RM1.63 bln. Revenue for the year slipped 4.6% Y.o.Y to RM6.59 bln. A fourth interim dividend of 4.8 sen per share, payable on 31st March 2017, was declared. (The Star Online)

• Aemulus Holdings Bhd plans to invest RM25.0 mln in research and development (R&D) over the next three years following the purchase of a 1.6-ac. land in the Bayan Lepas industrial estate, Penang for RM9.9 mln.

• It had signed a sale and purchase agreement with the Penang Development Corporation to buy the land, which works out to RM140 psf. The corporate office and design centre with built-up area of 50,000 sq.ft. is expected to be ready by December 2018.

• The move enables Aemulus and its subsidiary to build and have its own corporate office building in Bayan Baru and Batu Maung under one roof. With the new building, Aemulus could expand its R&D, attraction and retention of talents based on its strategic location as well as enhancement of the supply chain management. (The Star Online)

• Eco World Development Group Bhd (EW Bhd) and the Employees Provident Fund Board (EPF) will jointly develop 375-ac. of prime land in Batu Kawan, Penang into two townships. The combined gross development value of both townships is about RM7.76 bln.

• EW Bhd inked a conditional subscription and shareholders’ agreement (SSA) with the EPF on 23rd January 2017 for the two complementary townships, known as Eco Horizon and Eco Sun.

• Eco Horizon Sdn Bhd (EHSB or JVCo) is currently a unit of EW Bhd. Under the agreement, the EPF will subscribe for 4.0 mln shares or 40.0% in Eco Horizon and will provide shareholders advances to the JVCo to fund the proposed developments. EW Bhd will own 60% of the JVCo and Eco World Project Management Sdn Bhd (EWPM), a unit of EW Bhd, will be appointed as the development manager for the projects.

• This will be the third venture together for both parties after two successful projects in the Klang Valley, namely the iconic Bukit Bintang City Centre at the heart of Kuala Lumpur’s shopping & tourism district and Eco Grandeur + Eco Business Park V in Ijok in the North-Western Klang Valley emerging corridor. (The Star Online)

• Ecofirst Consolidated Bhd's 2QFY17 net profit fell 55.5% Y.o.Y to RM5.2 mln on lower billings from the Upper East @ Tiger Lane project, coupled with higher marketing costs incurred for the early stages of Phase 1 of the Ampang Ukay project. Revenue for the quarter slipped 48.9% Y.o.Y to RM12.1 mln.

• For 1HFY17, cumulative net profit shrank 53.4% Y.o.Y to RM6.6 mln. Revenue for the period fell 36.9% Y.o.Y to RM29.6 mln. (The Edge Daily)

• Medical beds supplier, LKL International Bhd is buying a fully automated laser tube cutting machine for €830,000 (RM4.0 mln) as part of its efforts to expand its business in the healthcare industry.

• The local medical device market was estimated to be worth US$1.70 bln (RM7.54 bln) in 2015 and this represents 25.0% of the total healthcare expenditure in Malaysia. (The Edge Daily)

• Greenyield Bhd has proposed to acquire a six-storey shop office in Kajang for RM5.7 mln from Serba Sentosa Sdn Bhd, a property development firm owned by MKH Bhd. The property is intended to be used as a new corporate head office for the company and its subsidiaries. (The Edge Daily)

• TMC Life Sciences Bhd’s 1QFY17 net profit increased 32.9% Y.o.Y to RM4.4 mln, boosted mainly by higher patient load and supported by additional bed capacity, additional consultants recruited and higher growth in the fertility business. Revenue for the quarter gained 15.5% Y.o.Y to RM36.2 mln. (The Edge Daily)  

Source: Mplus Research - 24 Jan 2017