• The FBM KLCI (-0.4%) snapped twostraight days of gains to close in the red, as investors digested a slew of corporate earnings amid the lack of fresh catalyst as U.S. stockmarkets were closed on Monday to celebrate its President’s Day. The majority of the lower liners declined, with the exception of the FBM Ace (+1.4%). Only the finance and properties sectors rallied on the broader market.

• Market breadth turned tepid as underperformers beat advancers on a ratio of 552-to-364 stocks. Despite the bearish sentiment, traded volumes jumped 16.0% to 2.89 bln shares amid buying support on the FBM ACE counters.

• Main Board underperformers on Tuesday’s close were BAT (-RM1.78), Kuala Lumpur Kepong (-24.0 sen), Genting Malaysia (-18.0 sen) and Petronas Chemicals (-15.0 sen). IOI Corporation fell 12.0 sen after its quarterly earnings plunged 97.8% Y.o.Y. Significant broader market decliners include Dutch Lady (-26.0 sen), Petron Malaysia Refining & Marketing (-23.0 sen), Aeon Credit Service (-22.0 sen), Enra Group (-22.0 sen) and Innoprise Plantations (-16.0 sen).

• Broader market chart-toppers, meanwhile, were Fraser & Neave (+30.0 sen), Carlsberg (+28.0 sen), NPC Resources (+28.0 sen), Batu Kawan (+20.0 sen) and Apex Healthcare (+19.0 sen). Hong Leong-affiliated companies like Hong Leong Financial Group (+20.0 sen) and Hong Leong Bank (+4.0 sen) advanced, alongside other key-index members like IHH Healthcare (+5.0 sen), Astro (+4.0 sen) and Tenaga (+4.0 sen).

• Chinese equities finished on an upbeat tone on Tuesday, on the back of an inflow of fresh capital from local institutional funds. The Shanghai Composite index rew 0.4%, while the Nikkei advanced 0.7% to 19,381.4 points, with more than half of its sectors in green. The Hang Seng (-0.8%) however, was dragged down by HSBC (-5.0%) after the bank reported a 62.0% Y.o.Y fall in its 2016 pretax profit. ASEAN stockmarkets, meanwhile finished mostly positive.

• Wall Street rebounded from earlier losses to close at fresh new highs amid positive corporate earnings and hopes of a tax-cut plan by Donald Trump. Giant retailers like Wal-Mart Stores (+3.0%) and Home Depot (+1.4%) pushed the Dow (+0.6%) higher, on the back of better-than-expected quarterly results, while the S&P 500 rose 0.6%. The Nasdaq (+0.5%) also advanced – led by gains in Popeyes Lousiana Kitchen (+19.1%) after Burger King’s owner, Restaurant Brands International offered US$1.8 bln to buy the former.

• Earlier, European stocks also rallied on upbeat Eurozone manufacturing data. The DAX surged to 1.2% to 11,967.5 points – marking its highest closing since April 2015. The CAC (+0.5%) also finished highe, after snapping a three-day decline, although the FTSE ended down by 0.3%, pressured by losses in HSBC (-6.5%) ahead of corporate earnings reporting from several financial institutions later this week.

The Day Ahead

• Although most stocks on Bursa Malaysia consolidated yesterday, the general uptrend remains intact for now as the key index remains above the 1,700 points level, which will continue to serve as the major near term support for now.

• The strong overnight performances of key global equity indices overnight should provide some renewed market impetus for the market to resume its near term uptrend as the positivity in most equity markets will also spillover to Malaysian stocks. This could see the key index making another attempt at the 1,710- 1,720 resistance levels.

• Market interest is also firm judging by the strong daily traded volumes and this could provide the impetus for more near term gains on most Bursa Malaysia stocks.

Company Briefs

• Pharmaniaga Bhd's 4Q2016 net loss stood at RM836,000 vs. a net profit of RM16.1 mln recorded in the previous corresponding quarter, impacted by higher operating expenses and finance costs. Revenue for the quarter fell 14.3% Y.o.Y to RM582.8 mln.

• For 2016, cumulative net profit declined 45.7% Y.o.Y to RM45.6 mln. Revenue for the year, however, was flat at RM2.19 bln. (The Star Online)

• Serba Dinamik Holdings Bhd is taking a 40% stake in Konsortium Amanie JV Sdn Bhd which was awarded a RM1.31 bln contract for the design and build of 120 mln litres per day (MLD) and 28 MLD membrane water treatment plant under the Kuala Terengganu Utara water supply scheme.

• Serba Dinamik paid RM34.0 mln in cash to FCA Capital Sdn Bhd and Mirmas Holdings Sdn Bhd for the stake and it will provide working capital/standby line of up to RM30.0 mln for preliminary cost, mobilisation and other relevant costs for the aforementioned project. The working capital shall be fully settled within one year from the issuance of the senior financing of the project. (The Star Online)

• Hong Leong Bank Bhd’s 2QFY17 net profit gained 59.8% Y.o.Y to RM549.9 mln, underpinned by strong revenue growth, healthy margins, higher gross loans and financing. Revenue for the quarter rose 9.8% Y.o.Y to RM1.18 bln.

• For 1HFY17, cumulative net profit added 28.9% Y.o.Y to RM1.09 bln. Revenue for the period increased 8.5% Y.o.Y to RM2.27 bln. An interim dividend of 15 sen per share was declared. (The Star Online)

• CME Group Bhd has filed a lawsuit against its former executive director, Chin Fook Kheng to recover A$3.5 mln (RM11.9 mln) from him over alleged breach of director and fiduciary duties that caused the company to suffer losses in Australia. On 31st January 2017, CME’s associate, CME Properties (Australia) Pty Ltd has agreed to pay more than A$3.7 mln (RM12.4 mln) in settlement to Prime Capital Securities Pty Ltd, marking the end of a legal entanglement between the two Australian companies.

• Prime Capital had, in August 2016, issued a winding-up application to CME Properties for a failed repayment of A$2.5 mln mortgage loan meant for a mixed-use development in Mandurah, West Australia. CME Properties subsequently received A$2.1 mln in settlement from its partner for the development project for spending the loan without CME Properties’ approval. (The Edge Daily)

• Carlsberg Brewery Malaysia Bhd’s 4Q2016 net profit fell 36.8% Y.o.Y to RM47.1 mln, impacted by its share of loss in an associate, one-off tax adjustments and deferred tax expense. Revenue for the quarter, however, rose 2.9% Y.o.Y to RM434.64 mln.

• For 2016, cumulative net profit slipped 5.1% Y.o.Y to RM205.0 mln. Revenue for the year, however, grew 1.2% Y.o.Y to RM1.68 bln. (The Edge Daily)

• Mercury Industries Bhd’s 70%-owned construction unit, Paramount Bounty Sdn Bhd has won a mixed development project worth RM238.0 mln in Gombak, Selangor. The project comprises 1,632 units of small-office home-office (SOHO) and 32 shop lots.

• The contract was awarded by Pujian Development Sdn Bhd, which in turn is the turnkey contractor for EcoFirst Hartz Sdn Bhd. Both Pujian Development and EcoFirst Hartz are wholly-owned subsidiaries of EcoFirst Consolidated Bhd. (The Edge Daily)

• IOI Properties Group Bhd’s 2QFY17 net profit fell 11.0% Y.o.Y to RM273.5 mln as the share of results from joint ventures decreased in the current quarter. Revenue for the quarter rose 33.6% Y.o.Y to RM1.19 bln.

• For 1HFY17, cumulative net profit increased 9.6% Y.o.Y to RM463.1 mln. Revenue for the quarter added 40.6% Y.o.Y to RM2.09 bln. (The Edge Daily)

• Parkson Holdings Bhd’s 2QFY17 net profit stood at RM72.7 mln vs. a net loss of RM31.4 mln recorded in the previous corresponding quarter, lifted by a gain on disposal of a subsidiary in China. Revenue for the quarter improved marginally by 1.0% Y.o.Y to RM1.05 bln.

• For 1HFY17, however, cumulative net profit sank 68.3% Y.o.Y to RM10.1 mln. Revenue for the period declined 2.5% Y.o.Y to RM1.92 bln. (The Edge Daily)

• Ann Joo Resources Bhd’s 4Q2016 net profit stood at RM45.9 mln vs. a net loss of RM47.7 mln recorded in the previous corresponding quarter, driven by higher contributions from its manufacturing and trading divisions. Revenue for the quarter rose 14.2% Y.o.Y to RM472.1 mln.
   
• For 2016, cumulative net profit stood at RM166.8 mln against a net loss of RM135.5 mln in 2015. Revenue for the year grew 6.2% Y.o.Y to RM1.87 bln. A final dividend of nine sen per share, payable on 19th May 2017, was declared. (The Edge Daily)

• Perdana Petroleum Bhd’s 4Q2016 net profit stood at RM2.5 mln compared with a net loss of RM80.2 mln in the previous corresponding quarter. Revenue for the quarter, however, dropped 2.5% Y.o.Y to RM47.4 mln.

• For 2016 cumulative net loss narrowed to RM29.9 mln against RM118.9 mln in 2015. Revenue for the year declined 16.0% Y.o.Y to RM191.7 mln. (The Edge Daily)  

Source: Mplus Research - 22 Feb 2017