• The FBM KLCI (+0.3%) rallied alongside the regional stockmarkets amid buyinginterest in selected heavyweights. All the lower liners ended in green – led by the FBM Small Cap (+0.4%) amid a mostly positive market environment.

• Market breadth was positive as winners managed to edged losers on a ratio of 466-to-452 stocks. Traded volumes also rose 9.5% to 2.49 bln shares amid improved risk appetite on the back of increasing inflow of foreign funds in pursuit of higher returns.

• Key-index chart-toppers include BAT (+RM1.92), Petronas Dagangan (+28.0 sen), Genting (+17.0 sen), Genting Malaysia (+13.0 sen) and Hong Leong Bank (+8.0 sen). Meanwhile, broader market advancers were Dutch Lady (+38.0 sen), AEON Credit Service (+28.0 sen), Oriental Interest (+27.0 sen), Ajinomoto (+24.0 sen) and KESM Industries (+21.0 sen).

• On the other hand, Fraser & Neave (-40.0 sen), Petron Malaysia Refining & Marketing (-30.0 sen), Apex Healthcare (- 24.0 sen), Genting Plantations (-16.0 sen) and Shell (-14.0 sen) declined. The five losers on the blue-chip gauge include Hong Leong Financial Group (-20.0 sen), Westports Holdings (-5.0 sen), Kuala Lumpur Kepong (-4.0 sen) and Maybank (- 4.0 sen). Petronas Chemicals lost 2.0 sen amid mild profit-taking activities despite its improved quarterly earnings.

• Key regional benchmark indices rebounded on Monday with the Nikkei rising 0.1% after reversing earlier losses to close at 19,251.1 points. Meanwhile, the Shanghai Composite index jumped 1.2% following reports that local pension funds will begin to flow into China’s stockmarket as early as this week. The Hang Seng rose 0.5% as six out-of-nine of its sectors advancing, alongside the ASEAN stockmarkets which finished broadly in green.

• US stockmarkets, however, was closed for the President’s Day holiday celebration.

• U.K. stockmarkets pared its gains – weighed down by Unilever (-6.6%) after Kraft Heinz aborted its offer to buy the Anglo-Dutch consumer giant. The FTSE flatlined, while the CAC finished 0.1% lower amid rising political uncertainties in its Presidential election. The DAX, however, ended up by 0.6% on the back of gains in RWE (+1.5%) and Deutsche Telekom (+1.2%).

The Day Ahead

• The near term uptrend remains intact after the key index ended on a positive note yesterday. We also see the FBM KLCI now attempting to pull away from the 1,710 level and head towards the 1,720 level over the near term as the general market undertone is still healthy and will continue to draw in market participants, in our view. This is likely to sustain the encouraging market breadth and depth conditions for the time being, which is a critical gauge of investors’ interest.

• On the way up, however, we continue to think that choppiness will be feature as market participants could adopt quick profit taking activities and switch to laggards, particularly among the lower liners and broader market shares.

• This is likely to keep a lid on the respective indices ascend, but the gradual climb is preferred as it would prevent the market from becoming overheated as well as potentially prolonging the uptrend duration.

Company Briefs

• Petronas Chemicals Bhd’s (PetChem) 4Q2016 net profit increased 40.2% Y.o.Y to RM987.0 mln. Revenue for the quarter climbed 14.4% Y.o.Y to RM3.95 bln on the back of higher production and sales volumes - due to improved plant reliability and higher methane supply to its methanol facilities.

• For 2016, cumulative net profit rose 5.4% Y.o.Y to RMRM2.93 bln. Revenue for the year gained 2.4% Y.o.Y to RM13.86 bln. A dividend of 12.0 sen per share was declared. (The Star Online)

• Malakoff Corp Bhd’s 4Q2016 net profit declined 15.0% Y.o.Y to RM90.2 mln, mainly due to additional depreciation on the estimated residual values of its gasfired power plants and lower contribution from Port Dickson Power Bhd. Revenue for the quarter, however, rose 23.9% Y.o.Y to RM1.71 bln.

• For 2016, cumulative net profit decreased by 21.4% Y.o.Y to RM355.5 mln. Revenue for the year, however, improved 14.9% Y.o.Y to RM6.09 bln. (The Star Online)

• Kanger International Bhd has signed a Memorandum of Understanding (MoU) with the Forest Research Institute Malaysia (FRIM) to jointly establish a bamboo plantation on a commercial scale in Malaysia for three years. The two parties will also work together on the research and development, manufacturing and production of bamboo products. The MoU is in line with the group’s objective of diversifying its earnings base and exploring new markets by developing new bamboo-related products and plantations. (The Edge Daily)

• Tiong Nam Logistics Holdings Bhd’s 3QFY17 net profit fell 21.7% Y.o.Y to RM17.3 mln on lower contribution from core logistics and warehouse services segment. Revenue for the quarter dropped 19.9% Y.o.Y to RM139.3 mln.

• For 9MFY17, cumulative net profit rose 1.6% Y.o.Y to RM43.8 mln. Revenue for the period, however, slipped 7.8% Y.o.Y to RM411.7 mln. Meanwhile, Tiong Nam has spent RM96.8 mln in CAPEX over 9MFY17 as part of its ongoing expansion programme. (The Edge Daily)

• Kumpulan Jetson Bhd’s joint venture (JV) with a Chinese firm has bagged a RM201.9 mln sub-contract for the Sungai Besi-Ulu Kelang (SUKE) elevated expressway. The unincorporated JV is together with The Fifth Branch of CCCC Third Highway Engineering Co Ltd, which is affiliated with the China Communications Construction Company Ltd. (The Edge Daily)

• IOI Corp Bhd's 2QFY17 net profit sank 97.8% Y.o.Y to RM15.6 mln, mainly due to some RM330.0 mln in net foreign currency translation loss on its foreign currency borrowings. Revenue for the quarter, however, climbed 23.6% Y.o.Y to RM3.67 bln.

• For 1HFY17, cumulative net profit stood at RM120.4 mln vs. a net loss of RM40.7 mln recorded in the previous corresponding period. Revenue for the period gained 14.9% Y.o.Y to RM6.96 bln. A first interim dividend of 4.5 sen for the quarter was announced. (The Edge Daily)

• Signature International Bhd’s 2QFY17 net profit declined 40.6% Y.o.Y to RM3.4 mln on lower project revenue from its kitchen and wardrobe segment. Revenue for the quarter fell 26.0% Y.o.Y to RM40.7 mln.

• For 1HFY17, cumulative net profit decreased 36.5% Y.o.Y to RM6.7 mln. Revenue for the period slipped 16.4% Y.o.Y to RM83.5 mln. (The Edge Daily)

• Dagang Nexchange Bhd's (DNeX) 4Q2016 net profit surged 707.9% Y.o.Y to RM30.6 mln, largely due to contribution from its 30.0%-owned associate, Ping Petroleum Ltd (PPL). Revenue for the quarter jumped 141.2% Y.o.Y to RM67.3 mln.

• For 2016, cumulative net profit soared 11.0x Y.o.Y to RM133.7 mln. Revenue for the year grew 86.8% Y.o.Y to RM178.5 mln. A second interim dividend of 0.5 sen per share, payable on 28th February 2017 was declared. (The Edge Daily)

• WCE Holdings Bhd’s 3QFY17 net profit stood at RM5.7 mln vs. a net loss of RM0.9 mln recorded in the previous corresponding quarter on higher construction revenue recognised, pursuant to the IC interpretation 12 (IC12) Service Concession arrangements pertaining to its West-Coast Expressway project. Revenue for the quarter grew 20.9% Y.o.Y to RM181.2 mln.

• For 9MFY17, cumulative net profit decreased 7.9% Y.o.Y to RM23.0 mln. Revenue for the period, however, added 56.1% Y.o.Y to RM583.9 mln. (The Edge Daily)

• Padini Holdings Bhd's 2QFY17 net profit climbed 64.7% Y.o.Y to RM54.5 mln on improved gross profit margins as there were lesser write-downs during the quarter under review. Revenue for the quarter grew 25.4% Y.o.Y to RM426.7 mln.

• For 1HFY17, cumulative net profit increased 28.0% Y.o.Y to RM83.1 mln. Revenue for the period added 20.8% Y.o.Y to RM736.7 mln. A third interim dividend of 2.5 sen per share, payable on 27th March 2017, was declared. (The Edge Daily)

• Ho Hup Construction Co Bhd's 4Q2016 net profit fell 52.4% Y.o.Y to RM9.2 mln on higher operating cost from interest subsidy for purchasers and facility fees for loans undertaken during the current quarter. Revenue for the quarter dropped 48.1% Y.o.Y to RM44.7 mln.

• For 2016, cumulative net profit declined 7.2% Y.o.Y to RM65.9 mln. Revenue for the period declined 18.3% Y.o.Y to RM243.9 mln. (The Edge Daily)  

Source: Mplus Research - 21 Feb 2017