• The FBM KLCI (-0.2%) trended down for the third straight session yesterday as the key index gave up all its intraday gains to close lower yesterday. The lower liners – the FBM Small Cap (-0.5%), FBM Fledgling (-0.4%) and FBM ACE (-1.6%), all ended in the negative territory, while the broader market ended mixed.

• Market breadth stayed negative as decliners outnumbered advancers on a ratio of 2-to-1 stocks. Traded volumes, however, added 2.9% to 2.98 bln shares as profit taking amongst the lower liners escalated.

• More than half of the key index constituents fell, dragged down by Petronas Gas (-46.0 sen), followed by Genting (-27.0 sen), Telekom (-11.0 sen), Genting Malaysia (-11.0 sen) and Westports (-9.0 sen). Amongst the biggest decliners on the broader market were Panasonic (-90.0 sen), Petron Malaysia (-44.0 sen), Ajinomoto (-42.0 sen) and KESM Industries (-32.0 sen). PMB Technology sank 40.0 sen to record its sixth straight losing streak.

• Nestle (+RM2.66) topped the broader market advancers list after its inclusion into the MSCI Global Standard Indexes, followed by Pentamaster (+39.0 sen), Far East (+20.0 sen), SP Setia (+17.0 sen) and Dayang (+16.0 sen). Key winners on the big board were Maybank (+18.0 sen), BAT (+14.0 sen), IHH (+7.0 sen), Hap Seng (+3.0 sen) and IJM (+3.0 sen).

• Asia benchmark indices ended on a negative tone after the Nikkei closed marginally lower, reversing all its intraday gains. The Hang Seng fell 0.3%, while the Shanghai Composite (-0.5%) snapped a streak of sixth consecutive sessions of gains amid the sluggish industrial production and retail sales data. ASEAN stockmarkets, meanwhile, closed mostly lower.

• U.S. stockmarkets retreated as the Dow fell 0.1% after General Electric (-5.9%) sank to its lowest level since 2011, coupled with concerns over the slowdown in China’s economic performance. On the broader market, the S&P 500 slipped 0.2%, dragged down by the energy sector (-1.5%) after crude oil prices slumped, while the Nasdaq ended 0.3% lower.

• European benchmark indices remain in the red for the sixth consecutive session – the FTSE (-0.01%), CAC (-0.5%) and DAX (-0.4%) all trended lower after reversing their intraday gains. The weakness came in after the Euro Currency hit its highest level in three weeks against the U.S. Dollar, coupled with the softer commodity prices.

The Day Ahead

• The near term outlook remains dour as market sentiments are showing few signs of improving as the lack of fresh leads continues to hamper the market’s recovery prospects. Fresh concerns over the state of the global economic recovery, coupled with the lack of progress on President Trump’s tax cut proposals are also keeping market sentiments on the guarded side.

• Therefore, there is still substantive trepidation among market participants and the downside bias looks to sustain over the near term, especially after the key index slipped below the 1,750 and 1,740 levels that is also leaving it at a seven-month low. Under the prevailing environment, the key index could slip further and potentially to the 1,720 level as buying support is still absent.

• The lower liners and broader market shares are unlikely to fare better as the weaker market sentiments will continue to entice retail players to adopt quick profit taking strategies as well as to trim their positions.

Company Brief

• Eastern & Oriental Bhd's (E&O) 2QFY18 net profit soared more than five times to RM19.7 mln, from RM3.8 mln in the same period last year, lifted by its core property segment's earnings which more than doubled. Meanwhile, revenue more than doubled to RM195.9 mln, from RM79.3 mln a year earlier.

• Consequently, cumulative 1HFY18 earnings grew 5.8 times to RM40.9 mln, from RM7.1 mln previously, while revenue was 52.2% Y.o.Y higher at RM369.3 mln, from RM242.6 mln in 1HFY17.

• The strong performance was underlined by higher revenue recognition from ongoing projects in Seri Tanjung Pinang (STP), namely The Tamarind, the Amaris Terraces and the Ariza Seafront Terrace. Higher sales of completed properties such as the Andaman condominiums in STP and Princes House in London, also led to higher sales. (The Star Online)

• Petra Energy Bhd has been awarded a contract from Petronas Carigali Sdn Bhd to provide maintenance, construction and modification (MCM) services offshore of Sabah. There is no fixed contract value stated in the letter of award as the contract is on a 'call-out' basis, based on the work orders issued by Petronas Carigali and will include any or all other work and services which is generally related to the scope of works in this contract at a fixed schedule of rates.

• The five-year contract will expire on 19th September, 2022, with an option to extend for another one year. (The Edge Daily)

• Apex Healthcare Bhd’s 3Q2017 net profit rose 29.0% Y.o.Y to RM11.3 mln, compared to RM8.7 mln in the previous corresponding year – due to stronger contributions from its consumer products division as well as pharmaceutical sales to Malaysia and Singapore’s public sector. Quarterly revenue, meanwhile, also gained 10.3% Y.o.Y to RM157.7 mln, from RM143.0 mln.

• For the cumulative 9M2017, net profit expanded 12.3% Y.o.Y to RM31.7 mln, from RM28.2 mln, mainly contributed by reinvestment allowance tax incentives provided, while revenue climbed 7.0% Y.o.Y to RM467.7 mln, from RM437.1 mln in 9M2016. (The Star Online)

• Scomi Energy Services Bhd's jointventure (JV) company, Ophir Production Sdn Bhd has successfully extracted oil from the development plan of the Ophir Field located offshore of the east coast of Peninsular Malaysia.

• To recap, Scomi Energy holds a 30.0% equity stake in Ophir, which was granted a risk service contract (RSC) by Petronas in 2014 to develop the Ophir Field. The other shareholders of the JV company include Australia-based Octanex Ltd and Vestigo Petroleum Sdn Bhd, which holds 50.0% and 20.0% respectively. The Ophir Field is developed via three production wells, a wellhead platform, and a floating, production, storage and offloading vessel. (The Edge Daily)

• Paramount Corp Bhd’s 3Q2017 net profit spiked over seven times to RM87.8 mln, from RM11.2 mln in the previous corresponding, mainly on the disposal of its Sri KDU campus, which generated a gain of RM77.8 mln. Revenue also expanded 42.0% Y.o.Y to RM191.1 mln, from RM134.8 mln a year ago.

• Consequently, 9M2017 net profit surged 143.0% Y.o.Y to RM108.7 mln, from RM44.8 mln a year earlier, while revenue improved 32.0% Y.o.Y to RM518.6 mln, from RM393.4 mln in 9M2016 – due to record property sales of RM633.0 mln, which has exceeded FY16’s property sales of RM403.0 mln and by the new income stream from REAL Education that the group acquired earlier this year. (The Edge Daily)

• Lay Hong Bhd's 2QFY18 net profit more than tripled to RM12.2 mln, from RM3.5 mln a year ago, boosted by stronger sales from its livestock division. Revenue grew 20.0% Y.o.Y to RM204.6 mln, from RM171.0 mln in the same quarter last year.

• Cumulative 1HFY18 net profit also increased fourfold to RM16.6 mln, from RM4.0 mln in the previous year, on the back of an 18.0% Y.o.Y growth in revenue to RM387.6 mln, from RM329.9 mln in the previous corresponding period. Meanwhile, its plans to increase its production capacity are on schedule. The group’s current egg production rate stands at 2.3 mln eggs per day to-date.

• Lay Hong also aims to raise its boiler capacity to cater to new requirements for food processing. As part of this expansion, it has identified a piece of industrial land in Selangor Halal Hub, Pulau Indah, to set up a plant. (The Star Online)

• Sunway Construction Group Bhd’s (SunCon) JV with Taisei Corp of Japan has secured a RM139.8 mln contract from Nippon Express (M) Sdn Bhd to build a new warehouse in Shah Alam. Following the latest contract, SunCon’s outstanding book is now stands at RM6.8 bln.

• Taisei and SunCon will enter into a detailed 50:50 JV agreement, where Taisei will be the lead partner for the 22-month project, which is expected to be completed by the 3Q2019. (The Star Online)

• Ho Wah Genting Bhd is proposing a four-to-one share consolidation as well as plans to diversify into the travel retail business.

• The group is also looking to raise gross proceeds of up to RM20.2 mln via a cash call of up to 30.0% of its issued shares (or 77.6 mln shares), after the proposed share consolidation exercise.

• The proceeds will be used as shareholder's equity and shareholder's loan into a new business venture with Dufry International AG for the operation of a duty and tax free shop in Genting Highlands Resort, Pahang, and for the group's working capital. (The Edge Daily)  

Source: Mplus Research - 15 Nov 2017