• Tracking the weakness on Wall Street overnight, coupled with the renewed selling pressure in selective index heavyweights, the FBM KLCI (-0.1%) trended lower yesterday. The lower liners, however, ended mostly higher as the FBM Fledgling and FBM ACE added 0.5% and 0.8% respectively, while the Properties (+0.1%), Plantations (+0.2%) and REITS (+0.4%) sector outperformed the negative broader market.

• Market breadth turned positive as gainers overtake losers on a ratio of 420-to-383 stocks. Traded volumes gained 2.5% to 2.53 bln shares on rotational play amongst the lower liners.

• Key decliners on the FBM KLCI were BAT (-42.0 sen), IHH (-14.0 sen), Petronas Chemicals (-5.0 sen), MISC (-5.0 sen) and CIMB (-5.0 sen). Significant losers on the broader market were Batu Kawan (-20.0 sen), Inari (-12.0 sen), MPI (-10.0 sen), Petron (-10.0 sen) and POS Malaysia (- 10.0 sen).

• In contrast, Aeon Credit (+32.0 sen), Edaran (+24.0 sen), Perusahaan Sadur Timah (+18.0 sen), Petron Refining & Marketing (+20.0 sen) and Theta (+15.5 sen) were amongst the biggest gainers on the broader market. Willowglen MSC rose 4.0 sen after securing a contract from Samsung C&T Corp. Meanwhile, Petronas Gas (+8.0 sen), Hong Leong Bank (+4.0 sen), Maxis (+4.0 sen), Axiata (+3.0 sen) and IJM (+3.0 sen) topped the big board advancers list.

• Japanese equities rebounded as the Nikkei gained 0.2% after the Japanese Yen weakened against the U.S. Dollar. The Shanghai Composite (+0.3%) registered its fifth straight day of winning streak to close above the 3,400 psychological level, underpinned by gains in the consumer staple shares, but the Hang Seng Index fell 0.4%. ASEAN stockmarkets, meanwhile, closed mixed.

• U.S. stockmarkets closed mostly higher overnight as the Dow gained 0.3%, lifted by the strong batch of latest quarterly earnings, whilst White House passed the budget resolution that could unlock the process to cut taxes by end-2017. On the broader market, the S&P 500 added 0.1%, but the Nasdaq fell 0.1%.

• European benchmark indices – the FTSE (+0.5%), CAC (+1.5%) and DAX (+1.4%) all staged a sharp recovery after the European Central Bank extended its asset-purchase program at a reduced amount of €30.0 bln starting January 2018. The aforementioned move was anticipated as the Eurozone economy continues to recover, although inflation remains fairly low.

The Day Ahead

• There appears to be little reprieve for the key index as it continues to be routed by the selective sale of index heavyweights, compounding the over 50-points drop in the past month. At this juncture, there are also few signs of a meaningful recovery as yet, even though the FBM KLCI is already oversold, with foreign funds still offloading some of their winning positions from earlier in the year.

• Hence, we see the insipid market environment still abound over the near term amid the feeble attempts to shore up the market. Meanwhile, we also see few portfolio positioning ahead of the Budget announcement later today due to the indifferent market environment.

• As a consequent, the market heading to the 1,730 level support remains a possibility with the ongoing market condition, while the 1,740 and 1,745 levels are still the near term resistances.

• Meanwhile, the lower liners and broader market shares will continue to see heightened trading activities, but profit taking might set-in ahead of weekend.

Company Briefs

• Public Bank Bhd‘s 3Q2017 net profit rose 13.5% Y.o.Y to RM1.4 bln, from RM1.24 bln a year ago, on the back of higher net interest income and net fee and commission income as well as lower loan impairment allowance. Quarterly revenue, meanwhile, grew 5.6% Y.o.Y to RM5.3 bln, from RM5.03 bln in the same quarter last year.

• Cumulative 9M2017 net profit increased 7.0% Y.o.Y to RM3.98 bln, from RM3.72 bln last year on a marginal 3.3% Y.o.Y increase in revenue to RM15.51 bln, from RM15.02 bln in 9M2016. (The Star Online)

• Lotte Chemical Titan Holding Bhd’s (LCT) 3Q2017 net profit plunged by 33.9% Y.o.Y to RM230.3 mln vs. RM348.3 mln last year, dragged down by lower sales volume and higher unit production cost. Revenue for the quarter, however, was flat at RM2.02 bln, compared with RM2.01 bln a year ago.

• Consequently, cumulative 9M2017 net profit also dropped 33.0% Y.o.Y to RM686.1 mln, from RM1.02 bln in 9M2016, while revenue shrunk 4.7% Y.o.Y to RM5.71 bln, from RM5.99 bln a year ago. (The Star Online)

• Sumatec Resources Bhd is moving on with its plan to take full control of the Rakushechnoye oil and gas (O&G) field in Kazakhstan, despite hinting that it could potentially abort the proposal four months earlier. The group will be paying RM1.55 bln to for the full ownership of the O&G field.

• To recap, the plan was initially announced in July 2016, involving the acquisition of Markmore Energy (Labuan) Ltd, which is owned by businessman Tan Sri Halim Saad, who is also a substantial shareholder of Sumatec, for US$205.0 mln (RM867.2 mln). (The Star Online)

• Tenaga Nasional Bhd (TNB) posted a 2.4% Y.o.Y decrease in its 4QFY17 net profit to RM1.72 bln, from RM1.76 bln last year, mainly due to increased operating expenses. Quarterly revenue, however, gained 10.9% Y.o.Y to RM12.46 bln, from RM11.24 bln in 4QFY16.

• For the full year of FY17, cumulative earnings fell 6.3% Y.o.Y to RM6.9 bln, from RM7.37 bln a year ago, despite a 6.5% increase in revenue to RM47.42 bln, in comparison to RM44.53 bln in FY16.

• The group has also proposed a final dividend of 44.0 sen per share, bringing the total payout for the year to 61.0 sen per share — a record-high annual dividend payout. (The Edge Daily)

• GD Express Carrier Bhd (GDex) is acquiring three properties located in Ipoh, Perak and Mont Kiara and QSentral, from Abric Bhd for RM19.3 mln to generate rental income for the group as well as for business expansion purposes. (The Edge Daily)

• Cocoaland Holdings Bhd has been told to pay an additional tax of RM4.1 mln plus a 45.0% penalty of RM1.8 mln, due to a rejected reinvestment allowance it claimed for the years of assessment 2010 to 2014. The group has been slapped with a letter from the Inland Revenue Board of Malaysia (IRB) dated 19th October 2017. (The Star Online)

• Ancom Bhd’s 1QFY17 net profit jumped 60.2% Y.o.Y to RM1.1 mln, from RM692,000 – led by improved performance from its agriculture and industrial chemical businesses. Quarterly revenue also increased 17.8% Y.o.Y to RM419.5 mln, from RM356.2 mln in the last corresponding year. (The Edge Daily)

• WZ Satu Bhd is proposing to undertake a bonus issue of up to 159.0 mln new shares on the basis of one bonus sharefor-every three existing shares held by the shareholders on an entitlement date to be determined later.

• The corporate exercise will be implemented after the completion of the proposed disposal by the company of its wholly-owned subsidiary Weng Zheng Trading Sdn Bhd (WZ Trading) to Tan Jing Xin for RM22.8 mln cash. (The Edge Daily)

• TRIplc Bhd’s 1QFY18 net profit surged more than threefold to RM6.2 mln, from RM1.6 mln last year, mainly due to two concessions' income on maintenance activities, while revenue grew slightly over two times to RM22.4 mln, from RM10.9 mln in 1QFY17. (The Edge Daily)

• Guocoland (M) Bhd’s 1QFY18 net profit jumped fourfold to RM1.1 mln, from a mere RM265,000 last year, boosted by contributions from its residential project in Damansara City. Revenue for the quarter, meanwhile, nearly tripled to RM157.6 mln, from RM53.5 mln a year ago. (The Edge Daily)  

Source: Mplus Research - 27 Oct 2017