• The FBM KLCI (+0.6%) finished on a positive note for the second-straight day, alongside a stronger Ringgit and higher crude oil prices. The lower liners retreated, with the exception of the FBM Fledging which rose 0.2%. Meanwhile, the broader market was bullish on Tuesday.

• Market breadth turned positive as winners surpassed decliners by a ratio of 416-to-353. Traded volumes were marginally higher by 2.1% to 1.56 bln, amid buying-support in the broader market shares.

• Significant Main Board advancers were BAT (+RM1.96), PPB Group (+24.0 sen), Axiata (+12.0 sen), IHH Healthcare (+11.0 sen) and Hong Leong Financial Group (+10.0 sen). Meanwhile, the broader market outperformers include Ajinomoto (+22.0 sen), KESM Industries (+22.0 sen), Lafarge Malaysia (+15.0 sen), Petron Malaysia Refining & Marketing (+12.0 sen) and Genting Plantations (+10.0 sen).

• On the contrary, Dutch Lady (+22.0 sen), Aeon Credit Service (-10.0 sen), Sern Kou Resources (+10.0 sen), the Store Corporation (+10.0 sen) and United Plantations (-10.0 sen) were the main losers. Only four blue-chip counters declined on Tuesday – Telekom Malaysia (-3.0 sen), Sime Darby (-2.0 sen) and Hap Seng Consolidated (-1.0 sen). Tenaga Nasional fell 0.02% after it reported an 11.9% fall in its quarterly earnings.

• Most Asian currencies rallied against the Greenback on Tuesday, on the back of concerns over Donald Trump’s protectionist trade stance. The Nikkei (- 0.6%) extended its losses for the second consecutive day – led by losses in the financials (-1.7%) and consumer discretionary (-1.6%) sectors. The Hang Seng index (+0.2%) and the Shanghai Composite index (+0.2%) rallied. Meanwhile, ASEAN shares finished broadly on a positive note.

• Wall Street ended firmly in the green on Tuesday – led by better-than-expected corporate earnings. The Dow (+0.6%) advanced towards the 20,000 psychological level, buoyed by gains in materials (+4.5%) and technology (+1.5%) stocks, while the S&P 500 and the Nasdaq hit record highs, closing 0.7% and 0.9% respectively.

• Earlier, European equities finished higher as investors digest a slew of corporate earnings announcements. The FTSE (- 0.01%) flatlined, after the U.K. Supreme Court justice ruled that the government would require the Parliament’s approval before exiting from the European Union. The CAC (+0.2%) climbed after recovering from earlier losses in the eleventh hour, while German multinational software maker SAP (+0.4%) led the DAX (+0.4%) higher after the group raised its profit estimates for 2017.

The Day Ahead

• The market is again confounding expectations as it continues to ascend as market interest is staying firm ahead of the Lunar New Year celebrations. With the global stockmarkets still on a positive note, we expect the Malaysian stockmarket to also maintain its near term upsides with the key index potentially making a fresh stab at the 1,690 level.

• Still, we see market breadth remaining mixed as retail players might continue to lock-in profits ahead of the Lunar New Year break next week. Therefore, we think fresh buying among the lower liners and broader market shares could stay on the thin side and little changed.

Company Briefs

• Farm’s Best Food Industries Sdn Bhd (FBFI), a 53.0%-owned subsidiary of CAB Cakaran Corp Bhd, has entered into conditional sale and purchase agreements (SPAs) to acquire nine properties belonging to Farm’s Best Bhd for some RM58.5 mln in cash. These properties consist of 43 parcels of land with 26 broiler poultry farms.

• The proposed acquisition would be funded by a mixture of internally generated funds and bank borrowings. The purchase consideration of RM58.5 mln represents a 10.0% premium to the market value of seven properties and 5.0% to the remaining two properties. (The Star Online)

• Logistics firm Tasco Bhd is buying six tracts of leasehold land in Pulau Indah, Selangor and a 100.0% stake in cold storage firm Mils Gold Chain Logistics Sdn Bhd to expand its capacity. Tasco is buying the tracts with a combined area of approximately 16.0 ha. (39.5 ac.) for RM113.8 mln and the stake in Mils Gold Chain for RM29.9 mln from Swift Integrated Logistics Sdn Bhd. (The Edge Daily)

• Cypark Resources Bhd has secured a contract worth RM15.2 mln for a solid waste disposal project in Nilai, Negeri Sembilan. Cypark received a letter of award dated 18th January 2017 from National Solid Waste Management Department in respect of a contract for to design, build and complete a solid waste disposal site in Pajam, Nilai.

• The completion date of the project is 3rd April 2018, which is 60 weeks from the date of site possession on 7th February 2017. (The Edge Daily)

• Tenaga Nasional Bhd's (TNB) 1QFY17 net profit dropped 11.9% Y.o.Y to RM1.74 bln due to the strengthening of the U.S. Dollar against the Ringgit. Revenue for the quarter, however, grew 5.3% Y.o.Y to RM11.24 bln. (The Edge Daily)

• Capitaland Malaysia Mall Trust’s (CMMT) 4Q2016 net property income fell marginally lower by 0.3% Y.o.Y to RM60.4 mln on additional costs from the changes in tenant mix. Revenue for the quarter, however, was marginally higher by 0.2% Y.o.Y to RM93.5 mln.

• For 2016, cumulative net property income added 7.1% Y.o.Y to RM242.5 mln. Revenue for the year gained 8.1% Y.o.Y to RM372.6 mln. An income distribution per unit (DPU) of 4.23 sen per unit for 2H2016, payable on 28th February 2017 was declared. (The Edge Daily)

• Pharmaceutical dispensary chain operator Caring Pharmacy Group Bhd's 2QFY17 net profit climbed 44.5% Y.o.Y to RM2.8 mln, mainly due to higher sales generated from its existing outlets. Revenue for the quarter increased 15.9% Y.o.Y to RM113.9 mln.

• For 1HFY17, cumulative net profit increased 11.6% Y.o.Y to RM3.5 mln. Revenue for the period grew 17.8% Y.o.Y to RM224.8 mln. (The Edge Daily)

• WZ Satu Bhd’s 1QFY17 net profit jumped 91.4% Y.o.Y to RM8.5 mln on higher contribution from its civil engineering and construction segment. Revenue for the quarter rose 26.5% Y.o.Y to RM130.2 mln. (The Edge Daily)

• Sasbadi Holdings Bhd's 1QFY17 net profit surged 113.3% Y.o.Y to RM4.3 mln, on the back of an increase in revenue from its delivery of robotics sets and textbooks to schools under the Ministry of Education Malaysia’s programme. Revenue for the quarter improved 48.4% Y.o.Y to RM31.2 mln. (The Edge Daily)

• AirAsia X Bhd (AAX) has received clearance from the Federal Aviation Authority (FAA) to fly to the U.S. AAX will be the first Asian low-cost carrier to secure approval to operate scheduled passenger flights to the US.

• AAX is currently considering flights to several U.S. states, including Hawaii, as part of its route expansion plans. (The Edge Daily)

• Malaysia largest pharmaceutical company, Pharmaniaga Bhd expects more than 1,500 bids over the next two days under its latest tender exercise to facilitate the selection of medicalproduct suppliers to the Malaysian Government. The tender for 2017 to 2019 involves products listed in the Health Ministry's approved product purchase list (APPL).

• The company had done similar exercises every three years in the past; the last was in 2013. This exercise aims to provide a business avenue for pharmaceutical and non-pharmaceutical vendors to supply products required by the Government. (The Edge Daily)  

Source: Mplus Research - 25 Jan 2017