• The FBM KLCI managed to recover most of its intraday losses before closing relatively flat – falling 0.07 pts yesterday as the key index retreated for the fourth straight session. The lower liners – the FBM Small Cap (-0.9%), FBM Fledgling (- 0.7%) and FBM ACE (-0.8%), all extended their losses, while broader market ended mixed.

• Market breadth remained negative as losers outnumbered advancers on a ratio of 2-to-1 stocks. Traded volume fell 16.5% to 2.42 bln shares as investors retreated to the side-lines amid the negative market sentiment.

• Leading the big board decliners list was Petronas Gas (-26.0 sen), followed by MISC (-16.0 sen), Sime Darby (-11.0 sen) Astro (-7.0 sen) and RHB Bank (-6.0 sen). On the broader market, MSC (-46.0 sen), Nestle (-34.0 sen), Thong Guan (-30.0 sen) and Jaks Resources (-15.0 sen) were amongst the biggest losers after reporting weak sets of quarterly earnings, while Aeon slipped 24.0 sen.

• SHELL jumped 59.0 sen after reporting a strong quarterly earnings, while Aeon Credit (+54.0 sen), Time dotCom (+44.0 sen), MPI (+28.0 sen), and Yinson (+22.0 sen) were amongst the notable advancers of the day. Key winners on the big board were IHH (+13.0 sen), Genting (+8.0 sen), Axiata (+7.0 sen), Westports (+6.0 sen) and KLCC (+5.0 sen).

• Asian benchmark indices closed mostly higher yesterday. The Nikkei (+0.1%) rebounded, but pared off most of its intraday gains after the Japanese Yen strengthened against the U.S. Dollar. The Shanghai Composite added 0.4%, lifted by banking and insurance shares, but the Hang Seng Index (-0.8%) fell for the fourth consecutive session as it continues to retreat from its 18-months high. ASEAN stockmarkets, meanwhile, closed mixed.

• U.S. stockmarkets retreated overnight as the Dow (-0.1%) halted a streak of 12th consecutive session of gains on weakerthan-expected 4Q2016 GDP data that only grew 1.9% Y.o.Y – vs. economists’ forecast of 2.1% growth. On the broader market, the S&P 500 fell on weakness in consumer discretionary shares after Target (-12.2%) posted weaker-thanexpected quarterly earnings.

• Earlier, European equities – the FTSE (+0.1%), CAC (+0.3%) and DAX (+0.1%) all rose on optimism over U.S. President Donald Trump’s speech to a joint session of Congress. Notable advancers were defense stocks such as Meggitt PLC (+13.1%) and Thales SA (+3.7%) on potential budget plans to boost military spending.

The Day Ahead

• The consolidation trend is likely to remain a near term feature as fresh leads have become scarce as many key global stock indices have also hit a plateau. At the same time, odds are rising for a potential interest rate increase in the upcoming FOMC meeting as economic indicators continue to suggest a stronger-thanexpected recovery of the U.S. economy.

• The prospects of higher rates could see a reversal in the recent funds flow to emerging market and the consolidation trend could persist among Malaysian stocks over the near term. We see further profit taking activities among the recent gainers and this could see the key index trending within the 1,690-1,700 points level over the near term.

Company Briefs

• CIMB Group Holdings Bhd's 4Q2016 net profit was up by 3.5% Y.o.Y to RM854.4 mln, from RM825.7 mln last year – largely on improved net interest income, while revenue for the quarter gained 6.7% Y.o.Y to RM4.31 bln, from RM4.04 bln in 4Q2015. The group has also declared a second interim dividend of 12.0 sen per share.

• Full year net profit jumped 25.0% Y.o.Y to RM3.56 bln, compared to RM2.85 bln in 2015. Revenue meanwhile, rose 4.3% Y.o.Y to RM16.07 bln, from RM15.4 bln a year ago. (The Edge Daily)

• Felda Global Ventures Holdings Bhd (FGV) posted a 21.0% Y.o.Y decline in 4Q2016 net profit at RM110.6 mln, from RM140.7 mln in the previous corresponding period, mainly due to significantly higher taxes.

• Full-year net profit also dropped to RM29.6 mln, from RM188.8 mln a year earlier, dragged down by lower crude palm oil output, higher raw sugar cost and oil palm impairment losses. Revenue, however, increased about 11.1% Y.o.Y to RM17.28 bln against RM15.56 bln.

• Further, the group is planning to close down four oil mills, two rubber processing plants and one palm oil refinery that will generate annual cost savings of about RM13.5 mln. It will also result in 600 staff being terminated via a mutual separation scheme. (The Star Online)

• Mah Sing Group Bhd's 4Q2016 net profit decreased 24.0% Y.o.Y to RM85.6 mln, from RM112.9 mln in the same quarter last year, mainly due to lower contribution from its M City development in Jalan Ampang and Icon City in Petaling Jaya which were almost completed. Revenue also dropped 4.0% Y.o.Y to RM742.2 mln from RM773.1 mln in 4Q2015. The group is planning a final dividend of 6.5 sen per share.

• For its full year, Mah Sing posted a net profit of RM361.4 mln, which is 6.5% Y.o.Y lower from RM386.7 mln in the previous year, while revenue declined 4.9% Y.o.Y to RM2.96 bln, vs. RM3.11 bln in 2015. (The Edge Daily)

• Press Metal Bhd is targeting to grow its output by an additional 20.0% this year to 760,000 tonnes, from 620,000 tonnes in 2016. The group is also planning to ramp up the growth rate of its value added products to 50.0%, from 20.0% currently.

• The group has earmarked an additional capex of approximately RM100.0 mln in order to double its billet production in Sarawak.

• Further, Press Metal has obtained shareholder approval for the proposed internal reorganisation which would see Press Metal Aluminum Sdn Bhd assume Press Metal's listing status. (The Star Online)

• Malaysia Airports Holdings Bhd registered net profit of RM33.2 mln in the 4Q2016 vs. a net loss of RM39.8 mln a year earlier, on the back of higher income from its Malaysian operations. Quarterly revenue rose to RM1.08 bln, from RM1.04 bln previously, while a final single-tier dividend of six sen a share was also declared by the group.

• For the full-year, the group’s net profit rose to RM70.4 mln, from RM40.9 mln last year, while revenue climbed to RM4.17 bln against RM3.87 bln. (The Star Online)

• Nestle (Malaysia) Bhd's 4Q2016 net profit shrank 33.0% Y.o.Y to RM66.9 mln, in comparison to RM99.8 mln in 4Q2015, although revenue climbed 4.0% Y.o.Y to RM1.25 bln, from RM1.20 bln a year ago.

• The weaker bottomline was mostly attributed to the increase in commodity prices and a weakening of the Ringgit. The group has proposed a final dividend of RM1.30 per share for 2016.

• Full year net profit, however, grew 8.0% Y.o.Y to RM637.1 mln from RM590.7 mln in the previous corresponding quarter, alongside a 5.0% Y.o.Y growth in revenue to RM5.06 bln, from RM4.84 bln previously. (The Edge Daily)

• Boustead Holdings Bhd's net profit in the 4Q2016 soared by 28 times to RM120.7 mln, from RM4.2 mln last year, on the back of a reduction in operating costs to RM2.25 bln (from RM2.43 bln) although, revenue was marginally lower by 0.8%Y.o.Y at RM2.42 bln vs. RM2.44 bln in 4Q2015. Boustead has declared a fourth interim dividend of 3.5 sen per share, payable on 28th March 2017.

• Its full year net profit also swelled by 28- fold to RM369.0 mln, from RM13.2 mln in 2015, despite a lower revenue of 3.4% Y.o.Y to RM8.37 bln, compared to RM8.66 bln previously. (The Star Online)

• Shell Refining Company (Federation of Malaya) Bhd’s 4Q2016 net profit jumped 115.0% Y.o.Y to RM207.8 mln, from RM96.5 mln a year earlier, as crude oil prices gained traction during the quarter under review. Revenue also expanded by 7.4% Y.o.Y to RM2.53 bln, from RM2.36 bln in 4Q2015.

• Net profit in 2016 however, shed 4.7% Y.o.Y to RM335.3 mln, from RM351.8 mln in 2015, dragged down by higher depreciation cost. Revenue also declined 7.9% Y.o.Y to RM8.37 bln, from RM9.08 bln previously. (The Edge Daily)

• Dutch Lady Milk Industries Bhd posted a 49.9% Y.o.Y growth in its 4Q2016 net profit to RM37.8 mln, from RM25.2 mln in 4Q2015, boosted by a gain on the revaluation of derivatives. Revenue for the quarter grew marginally by 0.3% Y.o.Y to RM271.7 mln, from RM270.9 mln a year earlier. The group has planned an interim dividend of 50.0 sen per share and a special interim dividend of 60.0 sen per share.

• For the full year, net profit expanded 5.7% Y.o.Y to RM149.1 mln, against RM141.0 mln in 2015, despite a 4.6% Y.o.Y fall in revenue to RM1.05 bln, from RM1.0 bln previously. The improved performance was mainly due to improved margins amid continuous efforts to maintain the “Dutch Lady” brand name. (The Edge Daily)

• Muhibbah Engineering (M) Bhd’s 4Q2016 net profit soared by 61.2% Y.o.Y to RM32.4 mln, from RM20.1 mln a year earlier, on the back of improvements in its construction division, export tax incentive allowance for the crane division and higher contribution from the airports concession division. Revenue also jumped 64.2% Y.o.Y to RM645.7 mln, from RM393.4 mln a year ago and the board proposed a first and final dividend of 5.5 sen for 2016.

• Meanwhile, full year net profit climbed 20.6% Y.o.Y to RM105.5 mln, from RM87.5 mln, in-tandem with 12.4% Y.o.Y gain in revenue to RM1.9 bln, from RM1.7 bln in 2015. (The Edge Daily)  

Source: Mplus Research - 1 Mar 2017