Still Due For A Pullback

• The FBM KLCI (-0.1%) finished in the red, following a volatile intra-day session amid selling pressure in selected heavyweights. All of the lower liners – the FBM Small Cap (-1.4%), the FBM Fledgling (0.9%) and the FBM ACE (-1.5%) were also splashed in red amid an equally negative broader market.

• Market breadth was sluggish as decliners outrun advancers on a ratio of 252-to-794 stocks. Traded volumes, however, continued to grow by 8.4% to 3.25 bln shares, boosted by profit-taking activities ahead of holiday-shortened week.

• The big losers were Malaysian Pacific Industries (-74.0 sen), Tasek (-40.0 sen) and Globetronics (-33.0 sen). Major glove-makers like Top Glove (-38.0 sen) and Hartalega (-34.0 sen) also slipped into the red on Tuesday’s closing bell. Meanwhile, blue chip constituents like Petronas Gas (-52.0 sen), Hong Leong Financial Group (-18.0 sen), Maybank (- 10.0 sen), Petronas Dagangan (-10.0 sen) and PPB Group (-10.0 sen) underperformed its peers.

• On the flipside, outperformers on the Main Board include Nestle (+20.0 sen), Petronas Chemicals (+11.0 sen), CIMB Bank (+9.0 sen), Public Bank (+8.0 sen) and Sime Darby (+7.0 sen). Broader market winners, meanwhile, were Malaysia Holdings Bhd (+30.0 sen), Lotte Chemical (+28.0 sen), BAT (+20.0 sen), Weida (+19.0 sen) and Hengyuan Refining (+10.0 sen).

• Chinese equities extended their selling momentum after the manufacturing data from China underperformed analysts expectation. The Shanghai Composite index (-1.0%) gave up earlier gains to close lower, alongside the Hang Seng (- 0.8%) – led by losses in Chinese-based firms. In contrast, the Nikkei (+1.7%) snapped six consecutive sessions in the red, lifted by the strength in banking stocks. Meanwhile, the majority of ASEAN stockmarkets ended in the positive territory on Thursday’s closing bell.
• Wall Street was broadly lower together with Treasuries, as investors digested the latest quarterly earnings from several major technology players like Apple and Amazon. The Dow (+0.1%), however, recovered earlier losses and closed with minute gains, supported by Exxon Mobil (+2.0%), in-tandem with bullish crude oil prices. The S&P 500 (-0.1%), however, sank alongside the Nasdaq (-0.4%) ahead of jobs data.
• European stockmarkets also traded lower on Thursday, weighed down by the negative sentiment spilled over from the U.S. stockmarkets amid expectations of higher interest rates. The FTSE dropped 0.6% - led by losses in Vodafone (-4.5%), following softer-than-expected 3QFY18 earnings from the giant mobile operator. Similarly, the DAX (-1.4%) and CAC (- 0.5%) also finished on weaker footing.

THE DAY AHEAD

• We continue to think that the Malaysian stockmarket is due for a consolidation spell after banking stocks pushed the key index significantly higher in the past three sessions that has also left the key index overbought. Last Tuesday’s losses were minute as there were again support on selected banking stocks, albeit the broader market environment remains in a dour mood.

• The near term market pullback will be partly due to the insipid equity market conditions overseas and as the weekend approaches, we think profit taking activities will escalate that could see the key index dipping back to 1,850-1,860 levels, while the 1,870-1,880 levels remain the resistances.
• Elsewhere, we see the broader market and lower liners shares to also sustain a lull trend with the fewer market leads and increased cautiousness that would see many retail players retreating to the sidelines.

COMPANY BRIEF

• Pintaras Jaya Bhd was awarded a contract worth RM68.5 mln by Bina Puri Holdings Bhd to undertake piling and substructure works on a project located in Brickfields, Kuala Lumpur. The contract would involve piling and substructure works for a 54-level office suites with rooftop recreational facilities, two blocks of 63-level service apartments with rooftop recreational facilities, a food court, commercial lots and car parks. Works commenced on 29th January 2018 with a completion period of 31 months. (The Star Online)

• Malaysia Building Society Bhd’s (MBSB) 4QFY17 net profit surged 172.0% Y.o.Y to RM124.0 mln, driven by lower cost of funds and lower allowances for impairment losses on financing, loans and advances. Revenue for the quarter, however, declined marginally by 0.1% Y.o.Y to RM818.3 mln.

• For FY17, cumulative net profit jumped 107.1% Y.o.Y to RM417.1 mln. Revenue for the quarter, however, declined 0.5% Y.o.Y to RM3.26 bln. A single-tier final dividend of five sen per share was announced. (The Star Online)

• Amcorp Properties Bhd and joint venture partner, Grosvenor Europe Investments Ltd, have acquired a residential development project in the sought-after Chamberi district of Madrid, Spain. The 0.1-ac. Site would be developed into 15 apartment units and two penthouses.
• Meanwhile, Amcrop will seek shareholders’ consent in an EGM to be held on 9th February 2018 to undertake a rights issue to raise gross proceeds of between RM350.0 mln and RM597.2 mln with the reference price of the Redeemable Convertible Preference Shares expected to be about 80 sen per share. Proceeds from the rights issue will be used for existing property development projects and investments and for future property development projects and working capital. (The Star Online)
• Ikhmas Jaya Group Bhd has won a contract valued at RM38.5 mln from Mudajaya Corp Bhd to undertake bored piling works for the Light Transit Rail Line 3 (LRT3). The contract involves the LRT3 package from Bandar Utama to Johan Setia and includes the guideway, station, park and ride, ancillary buildings and other associated works for the project delivery partner MRCB George Kent Sdn Bhd. (The Star Online)

• Ecofirst Consolidated Bhd’s 2QFY18 net profit soared 426.2% Y.o.Y to RM27.5 mln on higher contribution from its property development division and a land sale worth RM28.4 mln. Revenue for the quarter surged 235.0% Y.o.Y to RM40.4 mln.

• For 1HFY18, cumulative net profit jumped 374.4% Y.o.Y to RM31.1 mln. Revenue for the quarter added 187.8% Y.o.Y to RM85.2 mln. (The Edge Daily)

• The Malaysian Institute of Accountants (MIA) has appointed AppAsia Bhd’s unit as the service provider for the development of a platform to facilitate the audit company's bank accounts confirmation process. The contract sum and period for the platform — dubbed Electronic Bank Confirmation Platform, however, was not disclosed. AppAsia will fund the contract through internal funds and/or external borrowings. (The Edge Daily)

• Sunway Construction Group Bhd has signed a joint-venture (JV) agreement with HL Building Materials Pte Ltd, a subsidiary of Hong Leong Asia Ltd. The JV company has been set up to tender for the lease of land in Singapore from Building and Construction Authority. (Bernama)

• Genetec Technology Bhd plans to set up a consortium with China Rainbow International Investment Co Ltd (CRIIC) and India-based VBC Fertilisers & Chemicals Ltd (VBC) to develop an ammonia and urea manufacturing plant with annual capacity of 2.5 mln tonnes in India. The three companies inked a Memorandum of Understanding (MoU) with Genetec facilitating CRIIC’s participation in the project, which will provide funding totalling 30.0% of the project costs. (The Edge Daily)

• Mudajaya Group Bhd’s wholly-owned unit has issued Green Sustainable and Responsible investment (Green SRI) Sukuk Wakalah worth RM245.0 mln to fund its proposed 49MW solar photovoltaic (PV) plant in Kuala Kangsar, Perak. The sukuk — rated AAIS by Malaysian Rating Corp Bhd has a tenure of up to 18 years from the issue date, with coupon rates between 5.0% and 6.4%, payable semi-annually. (The Edge Daily)

Source: Mplus Research - 2 Feb 2018