• The final hour profit taking from foreign funds due to the semi-annual portfolio rebalancing sent FBM KLCI (-0.2%) to close in the red at the eleventh hour ahead of the holiday-shortened weekend break last Thursday. The lower liners also ended mostly lower as the FBM Small Cap and FBM Fledgling fell 0.5% and 1.3% respectively, while the Industrial Products (-0.3%) and Technology sector underperformed the positive broader market .

• Market breadth stayed negative as decliners outnumbered advancers on a ratio of 500-to-367 stocks. Traded volumes, however, added 26.2% to 2.47 bln shares.

• Sime Darby Plantation and Sime Darby Property sank 58.0 sen and 30.0 sen on their debut on Bursa Malaysia following the demerger exercise, while Public Bank (-36.0 sen), Petronas Gas (-28.0 sen) and Hong Leong Bank (-18.0 sen) topped the big board decliners list. IQ Group (-82.0 sen) hit limit down after reporting a weak set of quarterly earnings, while other notable losers on broader market were Hong Leong Industries (-54.0 sen), Success Transformer (-51.0 sen), Petron Malaysia (-34.0 sen), Globetronics (-11.0 sen) and Tasek Corporation (-30.0 sen).

• In contrast, consumer-products giants like Nestle (+RM2.80), Panasonic (+50.0 sen) and Carlsberg (+36.0 sen) advanced, while Cahya Mata Sarawak and Time dotCom gained 42.0 sen and 24.0 sen respectively. Key winners on the big board were BAT (+RM1.46), Sime Darby (+50.0 sen), Hong Leong Financial Group (+42.0 sen) Petronas Dagangan (+32.0 sen) and Hap Seng (+19.0 sen).

• Asia benchmark indices ended mostly higher last Friday as the Nikkei (+0.3%) recorded its third straight session of gains. The Shanghai Composite added 0.01%, but the Hang Seng Index (-0.4%) gave up all its intraday gains to record its biggest weekly lost YTD (-2.7% W.o.W). ASEAN stockmarkets, meanwhile, closed mixed.

• U.S. stockmarkets managed to recoup most of their intraday losses as the Dow fell 0.2% amid the renewed political uncertainty after former national adviser, Michael Flynn would testify that on the contact with Russian counterpart during the Presidential election in 2016. On the broader market, the S&P 500 declined 0.2%, dragged down by the weakness in Industrial sector (-1.2%), while the Nasdaq ended 0.4% lower.

• Earlier, European benchmark indices – the FTSE (-0.4%), CAC (-1.0%) and DAX (- 1.3%), all ended in the red, spooked by the earlier selloff in Wall Street. The weakness on FTSE also stemmed from the stronger British Pound that rose to a two-month high against the U.S. Dollar on hopes that U.K. and European Union would strike a deal on Brexit.

The Day Ahead

• The key index appears to be finding it difficult to mount a sustainable recovery despite hovering in the oversold zone as the buying interest remains insipid and the selective selling pressure still prevalent. Still, the wholesale selling may have ebbed and we think the key index is attempting to find support around the 1,710 and 1,720 levels after the key index’s decline from the 1,790-1,800 levels earlier.

• The ongoing base building exercise is crucial as it could help to break the downtrend spell and a stronger base could be set the market towards a mild recovery towards the 1,750 level, which is where we think the FBM KLCI could end the year at, in addition to where the key index is fairly valued on 2017 earnings.

• Meanwhile, interest among the broader market shares and lower liners could start to ebb ahead of the year-end holiday season and the continuing lack of new leads following the conclusion of the 3Q results reporting season.

Company Brief

• Malayan Banking Bhd‘s 3Q2017 net profit improved 12.9% Y.o.Y to RM2.03 bln, on a pickup in business and loan growth as well as market sentiment. Revenue for the quarter increased 2.7% Y.o.Y to RM11.59 bln.

• For 9M2017, cumulative net profit added 23.0% Y.o.Y to RM5.39 bln. Revenue for the period grew marginally by 1.1% Y.o.Y to RM33.79 bln. (The Star Online)

• Affin Holdings Bhd’s 3Q2017 net profit sank 47.5% Y.o.Y to RM73.3 mln, dragged down by increase in both overhead expenses and allowance for a loan impairment of RM232.3 mln and RM66.0 mln respectively. Revenue for the quarter, however, rose 8.4% Y.o.Y to RM546.7 mln.

• For 9M2017, cumulative net profit declined 12.9% Y.o.Y to RM341.8 mln. Revenue for the period, however, added 16.8% Y.o.Y to RM1.64 bln. (The Star Online)

• DRB-Hicom Bhd’s 2QFY18 net profit stood at RM736.6 mln vs. a net loss of RM309.6 mln recorded in the previous corresponding quarter, mainly due to the grant to the 50.1%-owned national carmaker and better financial performance of its operating companies. Revenue for the quarter rose 26.4% Y.o.Y to RM3.34 bln.

• For 1HFY18, cumulative net profit stood at RM566.9 mln vs. a net loss of RM478.9 mln in the previous corresponding period. Revenue for the period gained 29.8% Y.o.Y to RM6.68 bln. (The Star Online)

• Nestle (M) Bhd and Press Metal Bhd will be added to the FBM KLCI list of 30 component stocks following a semiannual review on Bursa Malaysia’s index series. Meanwhile, British American Tobacco (M) Bhd (BAT) and IJM Corp Bhd will be dropped from the benchmark index effective 18th December 2017. (The Edge Daily)

• Hengyuan Refining Company Bhd’s 3Q2017 net profit stood at RM361.8 mln, as opposed to a net loss of RM80.9 mln registered in the previous corresponding quarter as it enjoyed better refining margins, coupled with the gradual recovery of traded crude prices. Revenue for the quarter expanded 51.0% Y.o.Y to RM2.96 bln.

• For 9M2017, cumulative net profit soared 469.3% Y.o.Y to RM725.7 mln. Revenue for the period grew 45.6% Y.o.Y to RM8.49 bln. (The Edge Daily)

• Iskandar Waterfront City Bhd’s (IWCity) 3Q2017 net profit stood at RM89.6 mln vs. a net loss of RM3.6 mln in the previous corresponding quarter, helped by gains from land sales in Johor. Revenue for the quarter jumped soared 13.3x Y.o.Y to RM220.2 mln.

• For 9M2017, cumulative net profit stood at RM33.3 mln, against a net loss of RM12.2 mln in the previous corresponding period. Revenue for the period surged 436.0% Y.o.Y to RM246.4 mln. (The Edge Daily)

• Carlsberg Brewery Malaysia Bhd’s 3Q2017 net profit declined 1.7% Y.o.Y to RM42.9 mln as earnings were dragged down by trade offer adjustments in Singapore. Revenue for the quarter, however, increased 7.8% Y.o.Y to RM423.5 mln.

• For 9M2017, cumulative net profit added 8.4% Y.o.Y to RM171.2 mln. Revenue for the period grew 8.1% Y.o.Y to RM1.34 bln. (The Edge Daily)

• Tropicana Corp Bhd's 3Q2017 net profit rose 2.0% Y.o.Y to RM35.5 mln, mainly due to cost savings and higher progress billings from its ongoing projects in the Klang Valley and northern region. Revenue for the quarter gained 29.8% Y.o.Y to RM463.5 mln.

• For 9M2017, cumulative net profit expanded 45.1% Y.o.Y to RM120.9 mln. Revenue for the period grew 28.7% Y.o.Y to RM1.29 bln. A first interim dividend of two sen per share was announced. (The Edge Daily)

• Vivocom International Holdings Bhd's 3Q2017 net profit sank 48.4% Y.o.Y to RM6.3 mln, as higher cost offset revenue gains. Revenue for the quarter grew 9.9% Y.o.Y to RM61.5 mln.

• For 9M2017, cumulative net profit weakened 67.5% Y.o.Y to RM17.2 mln. Revenue for the period contracted 53.5% Y.o.Y to RM148.4 mln. (The Edge Daily)

• Lafarge Malaysia Bhd reported a net loss of RM42.0 mln in 3Q2017 vs. a net profit of RM3.7 mln in the previous corresponding quarter on weak demand and stiff competition. Revenue for the quarter dipped marginally by 1.5% Y.o.Y to RM578.9 mln.

• For 9M2017, cumulative net loss stood at RM135.0 mln, compared to a net profit of RM42.7 mln in the previous corresponding period. Revenue for the period declined 13.0% Y.o.Y to RM1.67 bln. (The Edge Daily)  

Source: Mplus Research - 4 Dec 2017