• The eleventh hour buying support on selected index heavyweights sent the FBM KLCI (+0.1%) higher yesterday after the key index lingered mostly in the negative territory. Similarly, the lower liners ended mostly higher as the FBM Small Cap and FBM Ace chalked-in 0.2% and 1.0% gains respectively, while the Industrial (-0.2%), Finance (-0.2%) and Mining (-0.8%) sector underperformed the positive broader market.

• Market breadth turned positive as advancers pipped decliners on a ratio of 433-to-414 stocks. Traded volumes continue to improve, rising 6.4% to 2.13 bln shares amid the more positive market sentiment.

• Half of the key index constituents advanced, led by IOI Corporation (+14.0 sen), followed by KLCC (+12.0 sen), IJM (+10.0 sen), Genting Malaysia (+5.0 sen) and Hong Leong Bank (+4.0 sen). Consumer products and technology stocks like Panasonic (+RM1.00), MPI (+26.0 sen), Oriental Holdings (+20.0 sen), Globetronics (+19.0 sen) and Fraser & Neave (+16.0 sen) were amongst the biggest gainers on the broader market.

• In contrast, United Plantations (-30.0 sen), Engkah (-14.0 sen), Bursa (-10.0 sen), Shangri-La (-10.0 sen) and Ajinomoto (-8.0 sen) were amongst the biggest decliners on the broader market. Meanwhile, Hong Leong Financial Group (-16.0 sen), AmBank (-7.0 sen), Sime Darby (-7.0 sen) Petronas Gas (-2.0 sen) and Hap Seng (-2.0 sen) topped the big board decliners list.

• Asian benchmark indices ended mostly lower yesterday as the Nikkei fell 0.4%, taking cue from the weakness on Wall Street overnight, coupled with the stronger Japanese Yen against the U.S. Dollar. The Shanghai Composite (-0.5%) extended its losses, but the Hang Seng Index added 0.4% after resuming trading following the shutdown due to a typhoon. ASEAN stockmarkets, meanwhile, ended mixed.

• U.S. stockmarkets extended their losses for the third straight session as the Dow fell 0.1% ahead of the central bankers meeting at Jackson Hole, Wyoming, while the weakness also stemmed from the weaker-than-expected new home sales data. On the broader market, the S&P 500 declined 0.2% with ten of-the-eleven main sectors in the red, while the Nasdaq closed 0.1% lower.

• European benchmark indices, however, closed mostly higher as the FTSE and DAX recorded 0.3% and 0.1% gains respectively as the former was boosted by the weaker Pound against the Greenback. Despite the Business Confidence Index rising to 111 in August 2017 – the highest in almost a decade, the CAC fell 0.04% after erasing all its intraday gains.

The Day Ahead

• We continue to think that the general market sentiments are still indifferent and the Malaysian stock market is likely to stay largely rangebound, hovering within the 1,770 and 1,780 levels over the near term.

• As we have noted, there are still few domestic catalysts to drive the market significantly higher, both from overseas and domestic sources of late and we expect the FBM KLCI to continue tethering near the psychological level of 1,780-1,800 points for the time being as it attempts to consolidate the gains that was attained in 1H2017. Therefore, we expect the sideway trend to persist for longer. ? The lower liners and broader market shares, meanwhile, could continue to see bargain hunting and rotational plays over the near term as retail players take advantage of the calmer market conditions to undertake short-term trades.

COMPANY UPDATES

• Oldtown Bhd‘s 1QFY18 net profit rose 20.8% Y.o.Y to RM16.8 mln, from RM13.9 mln in the same quarter last year, owing to a writeback of a provision for doubtful debts of RM3.1 mln, albeit slightly offset by unrealized forex loss (RM2.1 mln) and higher selling and distribution expenses. Quarterly revenue, meanwhile, gained 6.2% Y.o.Y to RM109.3 mln, from RM102.9 mln previously.

Comments

• The reported earnings were slightly below our expectations – accounting to 22.5% of our FY18 forecast net profit of RM76.5 mln, while quarterly revenue accounted for 22.5% of our full year revenue of RM486.5 mln. Even so, we expect better results in the coming quarters due to seasonality factors in 2HFY17, underpinned by festive seasons and promotional events like the double eleven (11/11) and double 12 (12/12) annual sale.

• Although the results were under our estimates, we leave our earnings forecast unchanged, pending an analyst briefing later and we maintain our HOLD recommendation on Oldtown with a higher target price of RM2.95 (from RM2.80). The lift was due to a higher target PER of 18.0x (from 17.0x) to its unchanged FY18 EPS of 16.3 sen, in tandem with the higher valuations of sector gains like Nestle and Dutch Lady.

COMPANY BRIEFS

• AmInvestment Bank Bhd has advised the minority shareholders of Hwang Capital Malaysia Bhd to accept the privatisation offer of RM2.94 a share through a selective capital repayment exercise as it is reasonable albeit deemed not fair. (The Edge Daily)

• AirAsia X Bhd‘s (AAX) 2Q2017 net profit jumped by more than 46 times to RM47.4 mln, from RM1.0 mln a year ago, underpinned by foreign exchange gains, while quarterly revenue grew 17.0% Y.o.Y to RM1.04 bln, from RM883.2 mln. (The Edge Daily)

• Cumulative 1H2017 net profit however, weakened by 68.0% Y.o.Y to RM57.8 mln, from RM180.5 mln, despite a 20.0% Y.o.Y gain in revenue growth to RM2.22 bln, from RM1.85 bln last year – due to rising fuel costs and a share of loss in a jointventure partner. (The Star Online)

• 7-Eleven Malaysia Holdings Bhd has announced that its second largest individual shareholder, the Johor Sultan has acquired another 729,200 shares between 16th August and 23th August this year, boosting his total shareholding to 99.1 mln shares (or 8.9% in direct interest). (The Edge Daily)

• Genting Bhd’s 2Q2017 net profit surged 57.0% Y.o.Y to RM456.3 mln, from RM289.8 mln, lifted by a gain on disposal of available-for-sale financial assets, while quarterly revenue rose 17.0% Y.o.Y to RM4.95 bln against RM4.23 bln previously.

• Meanwhile, 1H2017 net profit more than doubled to RM1.05 bln, from RM416.1 mln last year, alongside revenue, which grew 8.9% Y.o.Y to RM9.72 bln, from RM8.93 bln a year ago. The group has also declared an interim dividend of 8.5 sen, payable on 31st December 2017 (The Star Online)
   
• Genting Malaysia Bhd (GenM) posted a 60.0% Y.o.Y declined in 2Q2017 net profit to RM193.4 mln, from RM476.4 mln in 2Q2016, weighed down by unfavourable foreign exchange (forex) translation and higher operating costs. Revenue, however, rose to RM2.29 bln compared with RM2.23 bln previously.

• For the cumulative 1HFY17, the group’s net profit narrowed 19.0% Y.o.Y to RM516.9 mln, from RM638.0 mln, although revenue was 1.5% Y.o.Y higher at RM4.52 bln, from RM4.45 bln. (The Edge Daily)

• Yong Tai Bhd’s 4QFY17 net profit soared 45.0% Y.o.Y to RM3.4 mln, from RM2.4 mln in the last corresponding year, on the back of significantly stronger revenue, which grew 24 times to RM67.2 mln, from RM2.8 mln, due to the en-bloc sale of 262 retail lots in Terra Square at its Impression City development in Melaka.

• Consequently, full year FY17 net profit shot up 80.0% Y.o.Y to RM6.6 mln, from RM3.7 mln in 4QFY16, while revenue surged 388.4% Y.o.Y to RM87.6 mln vs. RM17.9 mln last year. (The Star Online)

• AMMB Holdings Bhd posted a marginal 1.6% Y.o.Y increase in 1QFY18 net profit to RM328.3 mln, from RM323.0 mln in the previous corresponding year, intandem with a 1.0% growth in revenue to RM2.08 bln from RM2.06 bln. (The Edge Daily)

• Hong Leong Financial Group Bhd’s 4QFY17 net profit slumped 34.0% Y.o.Y to RM258.8 mln, in comparison to RM393.5 mln a year earlier, dragged down by declining earnings in its banking-unit, despite a 5.0% Y.o.Y growth in revenue to RM1.27 bln, from RM1.21 bln.

• On the other hand, FY17 net profit climbed to RM1.51 bln, from RM1.36 bln a year earlier, on the back stronger revenue contribution at RM5.03 bln, from RM4.54 bln in FY16. (The Edge Daily)

• Matrix Concepts Holdings Bhd posted a 12.0% Y.o.Y fall in 1QFY18 net profit to RM45.6 mln, from RM51.9 mln last year, dampened by higher selling and marketing expenses, coupled with higher finance cost. Revenue for the quarter was also lower at RM172.9 mln, from RM196.2 mln in the same quarter last year, while the group proposed a 3.25 sen per share dividend. (The Edge Daily)

• WCT Holdings Bhd's 2Q2017 net profit slipped 33.0% Y.o.Y to RM21.5 mln, from RM32.1 mln a year ago, alongside weaker revenue contribution, which fell 34.0% Y.o.Y to RM383.3 mln, from RM581.1 mln previously.

• Cumulative 1H2017 net profit, however, gained 33.0% Y.o.Y to RM54.6 mln, from RM40.9 mln, although revenue declined 20.0% Y.o.Y to RM856.7 mln against RM1.07 bln in 1H2016. (The Edge Daily)

• PPB Group Bhd made a turnaround in its earnings with a 2Q2017 net profit of RM89.3 mln, from a net loss of RM78.7 mln a year ago on the back of positive contribution from its core associate, Wilmar International Ltd. Revenue for the quarter was flattish at RM1.06 bln.

• For 1H2017, PPB’s net profit more than doubled to RM447.6 mln, from RM167.5 mln in 1H2016, although revenue shed 4.2% Y.o.Y to RM2.09 bln, from RM2.18 bln in the preceding year. (The Edge Daily)

Source: Mplus Research - 25 Aug 2017