• The FBM KLCI (+0.2%) gained traction on Tuesday – led by the bullish sentiment amongst its regional peers ahead of the earnings season in the U.S. The lower liners rebounded as the FBM Fledging (+0.3%) and the FBM Ace (+0.3%) rallied, while the FBM Small Cap finished marginally up by 0.1%. The broader market also ended mostly in the green, with the exception of losses in the technology, construction and property sectors.

• Market breadth stayed positive as advancers beat decliners by a ratio of 409-to-327. Traded volumes thinned by 16.5% to 1.3 bln ahead of the Chinese New Year celebrations.

• Key index outperformers were BAT (+10.0 sen), Petronas Gas (+10.0 sen), Hong Leong Financial Group (+8.0 sen), Telekom Malaysia (+8.0 sen) and Axiata (+7.0 sen). United Plantations (+70.0 sen), UMW Holdings (+26.0 sen), CCM Duopharma Biotech (+21.0 sen), United U-Li Corporation (+20.0 sen) and Caring Pharmacy Group (+12.0 sen) were the broader market gainers.

• Meanwhile, Panasonic Manufacturing Malaysia (-40.0 sen), Far East Holdings (- 24.0 sen), AEON Credit Service (-22.0 sen), Warisan TC Holdings (-13.0 sen) and Lafarge Malaysia (-10.0 sen) weighed on the broader market. The five constituents of the Main Board that decline yesterday include IHH Healthcare (-9.0 sen), Tenaga Nasional (-8.0 sen), Digi (-3.0 sen), Genting (-2.0 sen) and Hap Seng Consolidated (-2.0 sen).

• Japanese equities finished higher on Wednesday after Japan’s export data beat analysts’ expectations. The Nikkei was up by 1.4% with all of its sectors in the green. The Hang Seng index rose 0.4%, propped up by gains in the information technology (+1.5%) and consumer staples (+1.5%) sectors, while the Shanghai Composite index grew 0.2%. The majority of the ASEAN equities closed firmly in the positive territory on Wednesday’s closing.

• U.S. stockmarkets jumped to fresh record highs, buoyed by upbeat export data from Japan and stronger-than-expected corporate earnings. The Dow (+0.8%) broke through the 20,000 psychological level as investors cheered Donald Trump’s pro-growth policies, while the S&P 500 added 0.8% - led by robust corporate quarterly earnings report. The Nasdaq also surged 1.0% to closed above the 5,650.0 psychological level.

• European stockmarkets rallied on the back of solid corporate earnings updates and positive sentiments from global stockmarkets. The FTSE gained 0.2% - led by gains in banking giants like the Royal Bank of Scotland (+3.4%) and Standard Chartered (+3.4%). The CAC jumped 1.0%, while the DAX notched a 1.8% gain as Deutsche Bank (+4.9%) led the index higher.

The Day Ahead

• The market’s undercurrent remains firm amid the ongoing positivity in most global indices and we expect the upsides on Bursa Malaysia to sustain over the near term. The profit taking activities ahead of the Chinese New Year break could be milder as a consequence as we think market players might hold on to their open positions for longer amid the more positive market environment.

• Consequently, we think the key index will continue to register decent gains as it heads towards the 1,690-1,700 resistance levels over the near term, while the 1,680 level serves as the immediate support.

• While we expect the local market conditions to hold firm, market depth may continue to thin as many market players, particularly retail players, are already on their Lunar New Year break; thus we expect traded volumes to remain on the low-to-moderate side. We also think the lower liners and broader market shares will see limited following as a consequence.

Company Briefs

• Gadang Holdings Bhd’s 2QFY17 net profit jumped 57.5% Y.o.Y to RM27.9 mln on better margins from its construction activities and higher contributions from the property segment. Revenue for the quarter grew 45.0% Y.o.Y to RM147.9 mln.

• For 1HFY17, cumulative net profit added 15.6% Y.o.Y to RM44.6 mln. Revenue for the period rose marginally by 0.4% Y.o.Y to RM252.5 mln. (The Star Online)

• Hua Yang Bhd has acquired a 10.8% equity interest in construction and property development firm Magna Prima Bhd (MPB) for RM66.6 mln, or RM1.85 a share through a direct business transaction on 25th January 2017. The purchase was part of Huayang’s objective to invest in strategic landbank or companies which hold such landbank located in areas which were easily accessible and surrounded by ready amenities. The price of RM1.85 per share was 19.0 sen above 24th January 2017’s closing price. (The Star Online)

• CCM Duopharma Biotech Bhd’s whollyowned subsidiary, CCM Pharmaceuticals Sdn Bhd, has been awarded a RM300.0 mln contract by the Health Ministry to supply human insulin to all government hospitals and clinics in Malaysia. The contract is valid for three years, which had commenced from 2nd December 2016, and will last until 1st December 2019. CCM Pharmaceutical is the reseller of human insulin which is manufactured by Biocon Sdn Bhd in Nusajaya, Johor. (The Edge Daily)

• Spritzer Bhd’s 2QFY17 net profit stood at RM5.3 mln on the back of revenue of RM81.1 mln. There is no comparison as the company changed its financial yearend from 31st May to 31st December.

• For 1HFY17, cumulative net profit stood at RM11.9 mln on the back of revenue of RM159.7 mln. (The Edge Daily)

• Zhulian Corp Bhd’s 4QFY16 net profit jumped 63.4% Y.o.Y to RM20.5 mln, mainly due to a net foreign exchange gain of RM20.7 mln recorded during the quarter. Revenue for the quarter, however, fell 19.8% Y.o.Y to RM51.9 mln.

• For FY16, cumulative net profit declined 21.6% Y.o.Y to RM41.6 mln. Revenue for the year decreased declined 15.3% Y.o.Y to RM191.3 mln. (The Edge Daily)

• Genting Plantations Bhd (GenP)’s 73.7% indirect unit in Indonesia, Palma Citra Investama Pte Ltd, plans to dispose of a 95.0% stake in PT Permata Sawit Mandiri to PT Suryaborneo Mandiri (PT SM) for US$3.2 mln.

• Palma Citra plans to use the proceeds to partly settle amounts owing to holding company Palmindo Holdings Pte Ltd, which in turn would utilise the sum to fund a proposed joint venture plantation development.

• The proposed disposal to the Sepanjang Group will allow GenP, through Palma Citra to recover all sums invested in PT SM. The disposal is expected to be completed in 1Q2017. (The Edge Daily)

• IGB Real Estate Investment Trust’s (IGB REIT) 4Q2016 net property income rose 12.6% Y.o.Y to RM91.5 mln, on higher rental income and lower utilities and property upgrade expenses. Revenue for the quarter rose 3.5% Y.o.Y to RM125.7 mln.

• For 2016, cumulative net property income added 5.3% Y.o.Y to RM361.1 mln. Revenue for the year gained 3.8% Y.o.Y to RM507.3 mln. For 2H2016, the trust declared an income distribution of 4.3 sen per unit, payable on 28th February 2017. (The Edge Daily)

• Stone Master Corp Bhd has reported that it will be unable to release its annual report for the year ended 30th September 2016 (FY16) by end January 2017 as it was unable to finalise the consolidation of its audited accounts.

• The delay, said the loss-making marble and granite products manufacturer, was due to the substantial outstanding issues it faced in consolidating the financial accounts with one of its subsidiaries, S.P. Granite Sdn Bhd, as well as other auditing matters.

• If Stone Master is unable to file the report within five days after 31st January 2017, then its shares will be suspended beginning 10th February 2017. Stone Master is targeting to issue the report on 8th February 2017. (The Edge Daily)  

Source: Mplus Research - 26 Jan 2017