• The renewed weakness in commodity prices sent jitters to global equities with the FBM KLCI (-0.6%) recording its fourth consecutive session of decline, closing below the 1,730 support level yesterday. The lower liners also ended mostly in the negative territory with the FBM Small Cap and FBM Fledgling shedding 0.7% and 0.5% respectively, while the broader market closed mostly red.

• Market breadth remained negative as decliners outstripped advancers on a ratio of 638-to-254 stocks. Amid the negative market sentiment, investors retreated to the sidelines resulting in the traded volumes declining 21.4% to 2.34 bln shares.

• Key decliners on the FBM KLCI were Petronas-related and banking stocks like Petronas Dagangan (-64.0 sen), Hong Leong Financial Group (-36.0 sen), Petronas Chemicals (-15.0 sen), Maybank (-13.0 sen) and Petronas Gas (-10.0 sen). Notable decliners on the broader market include Petron Malaysia (-42.0 sen), Heng Yuan (-40.0 sen), Carlsberg (-36.0 sen), Kim Loong Resources (-22.0 sen) and PMB Technology (-22.0 sen).

• On the flipside, consumer product giants like Panasonic (+98.0 sen), Nestle (+RM40.0 sen), Dutch Lady (+30.0 sen) and Ajinomoto (+20.0 sen) anchored the broader market advancers list, while Lafarge added 25.0 sen. There were only five gainers on the key index – IOI Corporation (+7.0 sen), Genting Malaysia (+6.0 sen), Astro (+3.0 sen), IJM (+3.0 sen) and Tenaga (+2.0 sen).

• Japanese equities extended their slide with the Nikkei (-1.6%) recorded its sixth consecutive session of losses after the Japanese Yen continues to appreciate against the Greenback. The Hang Seng sank 1.0% on weakness in property stocks, while the Shanghai Composite slipped 0.8% after the basic material index (-1.7%) declined on the weak industrial production data. ASEAN stockmarkets, meanwhile, closed mostly lower.

• Despite the stronger-than-expected retail sales data that rose 4.6% Y.o.Y in October 2017, U.S. stockmarkets extended their losses overnight as the Dow fell 0.6% on uncertainties over the prospects of a tax cuts. On the broader market, the S&P 500 declined 0.6%, while the Nasdaq fell 0.5%.

• Earlier, European benchmark indices – the FTSE (-0.6%), CAC (-0.3%) and DAX (- 0.4%) all remain in the red despite trimming most of their intraday losses. Market sentiment was dented by the downturn in commodity prices with the mining and energy shares being the worst performers.

The Day Ahead

• There is no change to our near term view as we continue to think that the market is still dour with few positive attributes to provide a lift. As it is, market players are quick to react to negative developments in commodity price as well as fresh uncertainties over the U.S’ tax cut plans to lock-in profits from the run-up earlier in the year. The continuously rich valuations is also leading to market players to lock-in their gains as prospects for further share price upsides dim.

• The continuing weakness is likely to see the FBM KLCI attempting to find support at the 1,720 level, but if it gives way, the 1,700 points level could serve as the major support. Although we think that a rebound is already due after the FBM KLCI’s incessant falls, any rebound is likely to be weak and likely to be overwhelmed by the ongoing selling pressure. Therefore, the 1,730 level will serve as the immediate hurdle for now.

• Elsewhere, we also see weak sentiments dominating the lower liners and broader market shares for the time being, in tandem with the insipid conditions among the index heavyweights.

Company Brief

• Pharmaniaga Holdings Bhd's 3Q2017 net profit plunged 72.6% Y.o.Y to RM3.6 mln, from RM13.1 mln last year, dragged down by lower off-take for in-house products, although revenue gained 11.5% Y.o.Y to RM574.5 mln, from RM515.22 mln in 3Q2016.

• Its cumulative 9M2017 net profit, meanwhile, weakened by 31.0% Y.o.Y to RM32.0 mln, from RM46.8 mln, due to the temporary closure of several manufacturing lines in 2Q2017. Revenue, however, gained 6.5% Y.o.Y to RM1.71 bln, from RM1.61 bln a year ago The group has also declared an interim dividend of 5.0 sen per share, payable on 15th December, 2017. (The Star Online)

• Amway (Malaysia) Holdings Bhd’s 3Q2017 net profit fell 21.0% Y.o.Y to RM15.0 mln, from RM18.9 mln in the same quarter last year, on lower sales and higher import costs primarily attributed to the weaker Ringgit, albeit partially offset by lower provision for sales incentives in line with lower sales. Quarterly revenue also narrowed 6.9% Y.o.Y to RM243.7 mln, from RM261.7 mln in 3Q2016.

• Cumulative 9MFY17 net profit dropped 9.2% Y.o.Y to RM39.2 mln, from RM43.1 mln in the same quarter last year, intandem with the 12.4% Y.o.Y fall in revenue to RM732.9 mln, from RM836.5 mln a year ago. (The Edge Daily)

• R&A Telecommunication Group Bhd is seeking a declaration from the High Court of Malaya that the notice of the extraordinary general meeting (EGM) issued by its founder Francis Tan Hock Leong on 1st November, 2017 is invalid and of no effect.

• At the same time, R&A is also seeking a declaration that any meeting to be held on 22th November 2017 is not a meeting of the shareholders of R&A and is not binding on R&A’s shareholders and R&A’s directors. (The Edge Daily)

• Sapura Energy Bhd was awarded five contracts worth a combined RM1.47 bln for works on the Pan Malaysia Transportation and Installation of Offshore Facilities for Petronas Carigali Sdn Bhd and Sarawak Shell Bhd. (The Star Online)

• Nakamichi Corp Bhd will be delisted on 27th November 2017 after Bursa Malaysia rejected the timber group’s regularisation plan that was submitted in April, although it has been given until 22th November to submit an appeal against the delisting from the Main Market, or face suspension of securities trading on 23th November 2017. (The Star Online)

• Xidelang Holdings Ltd is planning to undertake a bonus issue on the basis of one bonus share-for-every Xidelang share to make its shares more affordable and appealing to investors. (The Edge Daily)

• Lion Diversified Holdings Bhd's (LDHB) shareholders have been advised by independent adviser, SJ Securities Sdn Bhd to approve the group's proposal to give Lion Tin Sdn Bhd the right to undertake mining activities on 800 ac. of land in Kuala Langat, Selangor, as the land would otherwise be nonincome generating. SJ Securities also said that the contract-to-work agreement between both parties is fair and reasonable.

• Under the proposed deal, Lion Tin will be appointed as an independent contractor and granted exclusive right to process and sell minerals mined on six pieces of land beneficially owned by the group. (The Star Online)

• Hup Seng Industries Bhd's 3Q2017 net profit fell 5.0% Y.o.Y to RM9.5 mln vs. RM10.0 mln a year ago on higher promotional expenses, despite a 9.0% Y.o.Y growth in quarterly revenue to RM70.3 mln, from RM64.6 mln a year earlier.

• For its cumulative 9M2017, its net profit shrank 11.5% Y.o.Y to RM30.1 mln against RM34.0 mln in the previous corresponding period, while revenue rose 5.2% Y.o.Y to RM213.5 mln from RM202.9 mln last year. (The Edge Daily)

• Tenaga Nasional Bhd (TNB) is collaborating with Indonesian stateowned utility company PT PLN (Persero) to build a 2x200MW coal-fired power plant in Kalimantan, Indonesia. The project is in-line with its global expansion plan to secure new overseas generation capacity and its efforts to meet the rising demand for electricity in Sabah.

• Both parties have signed a Memorandum of Understanding (MoU) for the proposed project that would include the supply and export of electricity from the proposed power plant to Sabah. (The Edge Daily)

• Privasia Technology Bhd has secured a RM2.1 mln contract for the supply, delivery, implementation, testing and commissioning of a port management information system by Lumut Maritime Terminal Sdn Bhd. The project will take around six-to-twelve months to complete. (The Edge Daily)

• Omesti Bhd is proposing a private placement of up to 10.0% (or 51.4 mln shares) of its shares to independent third party investors at an issue price to be identified later, in a bid to raise up to RM25.7 mln for bank repayments and working capital.

• At an indicative issue price of 50.0 sen apiece, the share placement represents a discount of approximately 2.6% to its volume weighted average market price for the five market days immediately preceding the price fixing dates. (The Edge Daily)

• Boustead Heavy Industries Corp Bhd's (BHIC) shaved 47.9% Y.o.Y off its 3Q2017 net profit to RM7.8 mln, from RM14.9 mln a year ago, due to higher operating costs and lower share of profit from its joint-venture (JV) partnership, while revenue came in flat at RM64.3 mln.

• Cumulative 9M2017 net profit, however, gained 63.0% Y.o.Y to RM34.4 mln, from RM21.1 mln, lifted by weaker finance costs and higher share of profits from its JV and associates. Revenue fell 6.2% Y.o.Y to RM184.9 mln, from RM197.1 mln last year. The group declared a second interim dividend of two sen per share, payable on 19th January, 2018. (The Edge Daily)

• Amcorp Properties Bhd‘s 2QFY18 net profit surged nearly 15 times to RM26.1 mln, from RM1.8 mln last year - due mainly to stronger contribution from its share of JV results, although revenue lost 40.1% Y.o.Y to RM31.7 mln, from RM53.0 mln.

• Consequently, the upbeat quarterly results boosted cumulative 1HFY18 net profit higher by more than two-fold to RM32.4 mln, from RM11.3 mln in 1HFY17. Revenue, however, declined 27.5% Y.o.Y to RM70.1 mln, from RM96.8 mln last year. (The Edge Daily)

• TH Heavy Engineering Bhd and three subsidiaries have been given a further three-month extension to finalise a scheme of arrangement to repay creditors. This is the third extension of the court order restraining creditors from taking legal action against TH Heavy and its 70.0%-owned THHE Fabricators Sdn Bhd and THHE Offshore Services Sdn Bhd, and whollyowned O&G Works Sdn Bhd.

• The group also said that the latest extension will take effect on 23th November 2017 when the previous extension expires. To recap, the restraining orders were first issued by the High Court on 23th February 2017. (The Star Online)    

Source: Mplus Research - 16 Nov 2017