• After trading in a tight range, the FBM KLCI extended its losses by 0.02% ahead of the Thaipusam public holiday. The lower liners, however, edged higher as the FBM Small Cap (+0.4%) registered its ninth consecutive day of winning streak while the FBM Fledgling gained 0.2%. The FBM ACE, however, fell 0.2%, while the broader market closed mixed.

• Market breadth remained positive as advancers outnumbered decliners by a ratio of 471-to-389 stocks. Traded volumes gained 6.8% to 2.29 bln shares on the positive market sentiment.

• Leading the key index decliners list was BAT (-36.0 sen), followed by Public Bank (-22.0 sen), MISC (-15.0 sen), PPB Group (-10.0 sen) and DIGI (-7.0 sen). Significant decliners on the broader market were United Uli-Corporation (-13.0 sen), Aeon Credit (-12.0 sen) and Advanced Packaging (-7.0 sen). Both Fraser & Neave and SAM Engineering & Equipment slipped 20.0% and 17.0 sen respectively after reporting a weaker set of quarterly report.

• Meanwhile, notable advancers on the broader market include Allianz (+36.0 sen), TAHPS Group (+22.0 sen), Heineken (+16.0 sen) and MPI (+15.0 sen), Microlink Solutions (+14.0 sen). Key winners on the FBM KLCI were Petronas Dagangan (+58.0 sen), Hap Seng (+22.0 sen), Genting (+14.0 sen) and Tenaga (+8.0 sen). Maxis gained 4.0 sen after reporting a strong set of quarterly earnings.

• Japanese equities retreated as the Nikkei fell 0.5%, pressured by the stronger Japanese Yen against the Greenback. Both the Shanghai Composite and the Hang Seng Index, however, added 0.5% and 0.2% respectively as the former was supported by the ongoing rally in commodities like copper and iron ore. ASEAN stockmarkets, meanwhile, closed mostly positive.

• U.S. stockmarkets rallied overnight to close at their record high levels after President Donald Trump announced that tax cut plans would be unveiled in coming weeks. Both the Dow and the S&P 500 closed 0.6% higher as the latter was led by the banking sector (+1.4%).

• Earlier, European benchmark indices – the FTSE (+0.6%), CAC (+1.3%) and DAX (+0.9%) also advanced for the third straight session, lifted by gains in banking and oil & gas shares. Meanwhile, Germany’s trade surplus hit a record high of €252.9 bln in 2016; also boosting the Eurozone’s positive market sentiment.

The Day Ahead

• We think the tide could turn positive following the strong overnight performances in overseas stockmarkets overnight and this could lift the FBM KLCI to re-engage the 1,690 level, before making another stab at the 1,700 points level amid the continuing positive market environment.

• As it is, stocksmarkets could continue to be buoyed over the near term by President Trump’s impending tax cuts that are expected to spur economic activities in the U.S. which could also translate to a stronger recovery in global economies, despite his threats of protectionist trade practices.

• In view of the sustained near term positivity, we also think the lower liners and broader market shares on Bursa Malaysia will continue to garner speculative and trading interest from retail players and this will keep the market breadth and depth at respectable levels.

Company Briefs

• Tanco Holdings Bhd is disposing all the unit parcels in Duta Vista Executive Suites in Kuala Lumpur to Penang-based real estate company, Eternal Village Sdn Bhd for RM50.0 mln.

• The group’s indirect wholly-owned subsidiaries, Tanco Properties Sdn Bhd and Tanco Resorts Bhd have inked a sales and purchase agreement (SPA) with Eternal Village for the proposed en-bloc sale of the 68 units of apartments and seven common area unit parcels with 75 car park bays within a six-storey building.

• The gain on disposal amounting to RM4.9 mln will be used to fund Tanco Resorts’ obligations on the dissolution of the DVVO timeshare scheme and the repayment of bank loans. (The Edge Daily)

• StemLife Bhd, which will be delisted soon, made a turnaround after posting a 2QFY17 net profit of RM405,000, from a net loss of RM1.2 mln a year earlier. The improved earnings were due to stronger revenue contribution, which was 22.9% Y.o.Y higher at RM6.0 mln, from RM4.9 mln in 2QFY16 and lower administrative expenses.

• Meanwhile, cumulative 1HFY17 net profit jumped more than eight-fold to RM1.4 mln, from RM175,000 in the previous corresponding period, mainly due to higher gross profit margin. Similarly, revenue rose 23.9% Y.o.Y to RM11.9 mln against RM9.6 mln a year ago. (The Edge Daily)

• Kotra Industries Bhd’s 2QFY17 net profit soared more than nine times to RM5.8 mln, from RM591, 000 last year, attributed to higher export sales. Quarterly revenue also increased 14.6% Y.o.Y to RM45.1 mln, from RM39.3 mln in 2QFY16.

• Cumulative 1HFY17 net profit gained 39.3% Y.o.Y to RM5.9 mln, compared to RM4.2 mln – led by improved sales revenue and lower finance costs. Revenue grew marginally by 2.4% Y.o.Y from RM77.2 mln to RM79.0 mln in 1HFY16.

• Going forward, Kotra will aim to secure new tenders to utilise its available production capacity while carrying out research and development activities for new products. (The Edge Daily)

• SCGM Bhd is planning to commence the construction of its factory in Kulai, Johor worth RM54.0 mln. The enlarged production floor space and new machinery at the new factory is expected to boost the group’s extrusion capacity by 73.0% to 62.6 mln kg per year, from the current 36.0 mln kg and will be completed in December 2018.

• The capex is expected to be funded via internally generated funds, bank borrowings and proceeds from the ongoing private placement. The group foresees the new factory to begin contributing positively to the group in FY19. (The Star Online)

• Maxis Bhd posted a 7.7% Y.o.Y growth in its 4Q2016 net profit to RM504.0 mln, from RM468.0 mln in the previous corresponding period, mainly due to higher service revenue. Quarterly revenue also grew 1.7% Y.o.Y to RM2.21 bln, from RM2.18 bln last year.

• For the full year, Maxis’s net profit gained 15.2% Y.o.Y to RM2.01 bln, against RM1.74 bln a year earlier, partly due to lower network operation costs. Revenue, however, was flat at RM8.61 bln, from RM8.6 bln previously.

• Maxis have also announced a tax-free dividend of five sen a share, payable on 28th March 2017. This dividend brings full-year dividends to 20.0 sen a share. (The Star Online)  

Source: Mplus Research - 10 Feb 2017