Quick Rebound Seen

• Despite opening higher at the start of the trading bell, quick profit taking in selective banking heavyweights sent the FBM KLCI (-0.2%) lower yesterday after the key index lingered mostly in the negative territory. The lower liners – the FBM Small Cap (-0.8%), FBM Fledgling (- 0.9%) and FBM ACE (-2.8%), all ended lower, while the broader market closed mostly in the red.

• Market breadth turned negative as decliners outnumbered advancers on a ratio of 663-to-256 stocks. Traded volumes slipped 10.7% to 1.98 bln shares amid the negative market sentiment.

• Genting (-16.0 sen) topped the big board decliners list, followed by Petronas Dagangan (-14.0 sen), Hong Leong Financial Group (-14.0 sen), RHB Bank (- 10.0 sen), KLK (-10.0 sen) and Hong Leong Bank (-8.0 sen). Among the biggest decliners on the broader market were ViTrox (-33.0 sen), Dutch Lady (- 28.0 sen), Heineken (-22.0 sen), Allianz (- 20.0 sen) and Kossan (-19.0 sen).

• Notable gainers on the broader market include Nestle (+64.0 sen), MPI (+44.0 sen), Triplc (+17.0 sen) and Far East (+11.0 sen). Supermax added 2.0 sen after reported to be in talks to acquire a contact lens maker in Japan. Key winners on the FBM KLCI were BAT (+48.0 sen), Hap Seng (+6.0 sen), IHH (+5.0 sen), IJM (+2.0 sen) and Petronas Gas (+2.0 sen).

• The Nikkei (-0.6%) retreated, dragged down by the stronger Japanese Yen against the Greenback, coupled with the weakness in semiconductor manufacturers and financial shares. The Hang Seng (+0.2%) extended its gains, while the Shanghai Composite (+0.3%) halted a fourth straight session of decline after recouping all its intraday losses. ASEAN stockmarkets, meanwhile, closed mostly lower.
• U.S stockmarkets rebounded as the Dow added 0.3% yesterday, lifted by gains in technology giants like Verizon (+1.7%) and IBM (+1.0%). On the broader market, the both S&P 500 and Nasdaq gained 0.1% after erasing their intraday losses with the former anchored by gains in the technology sector (+1.0%).
• European equities – the FTSE (+0.1%), CAC (+0.4%) and DAX (+0.5%) all advanced after recovering from their intraday losses, buoyed by the weaker Euro Currency against the Greenback. Meanwhile, Germany’s political uncertainty escalated after the probusiness Free Democratic Party pledged support for a minority government that could lead to another general election.

The Day Ahead

• The follow-through rebound failed to materialise yesterday as the general weakness among regional indices overwhelmed sentiments on the local stockmarket. However, we see a quick rebound after most key global indices rebounded overnight that could provide some mild catalyst for Malaysian stocks to resume its near term recovery.

• Nevertheless, we continue to think that the recovery will be mild as the buying interest remains insipid with the lack of sustainable catalyst. As it is, market players are still awaiting for the outcome of the U.S. tax reforms, while back home the ongoing results reporting season has not yield significant leads for market players to follow. Consequently, we think the key index will instead attempt to build up a base at around the 1,720 points level after its recent falls has left it oversold.

• The lower liners and broader market shares will also be seeing rotational interest in view of the slightly more positive market environment, albeit the upsides could be limited by the still cautious market environment.

Ccompany Brief

• Zecon Bhd has delayed the signing of its proposed disposal of a 49.0% equity stake in its wholly-owned subsidiary Zecon Medicare Sdn Bhd for RM155.0 mln, to a date to be determined later. Accordingly, the detailed announcement of the transaction will be made in due course once the agreement has been signed. (The Star Online)
• Ranhill Holdings Bhd is buying Australia's Northern Power Group Pty Ltd (NPG) for A$3.2 mln in order to procure participation in a new power project in Northern Territory, Australia. The latter owns 100.0% equity interest in Northern Power Opco Pty Ltd (NPO), a special purpose vehicle incorporated to undertake the proposed development of a 60-megawatt (MW) gas-fired power generating station in the Northern Territory. (The Edge Daily)

• Kronologi Asia Bhd is collaborating with Singapore’s Temasek Holdings to provide data backup services.

• Under the partnership, Kronologi’s Singapore subsidiary will provide private data backup services to Temasek’s subsidiaries. (The Edge Daily)

• Heng Huat Resources Group Bhd has note that the fire incident at its production plant in Gua Musang, Kelantan on 17th November 2017, has no material impact on its operations as the majority of its production lines were not affected by the fire and remained functional. (The Edge Daily)

• Sunway Construction Group Bhd‘s (SunCon) 3Q2017 net profit gained 11.1% Y.o.Y to RM34.6 mln, from RM31.1 mln a year ago, on higher contribution from the construction segment, while revenue increased 28.9% Y.o.Y to RM491.4 mln, from RM381.1 mln previously.

• Cumulative 9M2017 net profit was up by 15.9% Y.o.Y to RM106.0 mln, from RM91.5 mln in the same period last year, while revenue rose 7.5% Y.o.Y to RM1.33 bln vs RM1.24 bln in 9M2016. (The Star Online)

• Malton Bhd‘s 1QFY18 net profit surge four times to RM25.9 mln, from RM6.3 mln last year, on a gain of RM23.8 mln from a subsidiary due to the revocation of a joint-development agreement, although revenue fell marginally by 4.0% Y.o.Y to RM125.1 mln, from RM130.0 mln in the same quarter previously. (The Edge Daily)

• IOI Properties Group Bhd‘s net profit spiked 28.1% Y.o.Y to RM242.9 mln, from RM189.6 mln last year, buoyed by improved operating profit across all three of its core businesses, although revenue for the quarter slipped 3.3% Y.o.Y lower to RM870.0 mln, from RM899.5 mln previously. (The Star Online)

• GD Express Carrier Bhd’s (GDex) 1QFY18 net profit lost 2.6% Y.o.Y to RM7.9 mln, from RM8.1 mln a year ago, weighed down by higher operating expenses incurred for the expansion of network and infrastructure, in a bid to cater to higher demand of express delivery by its e-commerce business. Quarterly revenue, however, rose 18.5% Y.o.Y to RM68.8 mln, from RM58.0 mln in 1QFY17. (The Edge Daily)

• Daibochi Plastic and Packaging Industry Bhd's 3Q2017 net profit rose 20.2% Y.o.Y to RM7.2 mln, from RM6.0 mln a year ago, on contribution from its Malaysian and Myanmar plants, while revenue expanded 8.5% Y.o.Y to RM102.0 mln, from RM94.1 mln in the preious corresponding quarter.

• On the other hand, cumulative 9M2017 net profit fell 3.0% Y.o.Y to RM18.0 mln, from RM18.6 mln in 9M2016, while revenue flatlined at RM283.0 mln. The group also declared an interim dividend of 1.15 sen per share, payable on 28th December, 2017. (The Edge Daily)

• Mieco Chipboard Bhd saw its 3Q2017 net profit surged 3.7x to RM15.6 mln, compared to RM4.2 mln in the third quarter last year, on higher selling price of plainboard and improved production efficiency. Revenue, meanwhile, also gained 11.1% Y.o.Y to RM101.1 mln vs. RM91.0 mln a year ago.

• For 9M2017, net profit fell 4.6% Y.o.Y to RM34.6 mln, from RM36.2 mln last year, although revenue increased 18.2% Y.o.Y to RM273.9 mln, from RM231.7 mln a year earlier. (The Edge Daily)

• AYS Ventures Bhd has posted a 25.0% Y.o.Y gain in its 2QFY18 net profit to RM6.6 mln, from RM5.2 mln a year ago, in-tandem with a 22.0% Y.o.Y increase in revenue to RM154.9 mln and lower impairment loss of trade receivables recorded during the quarter.

• Its 1HFY18 net profit, however, dropped 21.2% Y.o.Y to RM12.6 mln, from RM16.0 mln in 1HFY17 on lower sales volume and higher costs of goods sold, while revenue improved slightly by 3.0% Y.o.Y to RM279.9 mln, from RM271.6 mln a year ago. (The Edge Daily)

• Kelington Group Bhd‘s 94.0%-owned subsidiary, Ace Gases Sdn Bhd has signed a 15-year supply agreement to purify and liquefy carbon dioxide (CO2) waste gas for Petroliam Nasional Bhd (Petronas).
• Under the contract, Petronas’ Gas Processing Plant in Kerteh, Terengganu, will supply CO2 waste gas in excess of 50,000 tonnes per year to a new neighbouring gas plant which will be established by Kelington. The group will also purify and liquefy the waste gas to produce liquid CO2, which will be sold to end users. (The Edge Daily)
• Nonetheless, the agreement is on a call-out basis whereby the orders will be issued at the discretion of Petronas based on the schedule of rates set forth in the agreement, and the construction of the new plant is estimated to cost around RM50.0 mln-RM60.0 mln

Source: Mplus Research - 21 Nov 2017