Volatility To Return

• The FBM KLCI (+0.2%) extended its gains yesterday after trading mostly in the positive territory in the trading session. Gains were also in line with the positive sentiments across Asia stockmarkets. The lower liners – the FBM Small Cap (+0.6%), FBM Fledgling (+0.8%) and FBM ACE (+0.5%) all advanced, while the Mining (-0.9%) and REITS (-0.3%) sectors underperformed the positive broader market.

• Market breadth stayed positive as advancers overcame decliners on a ratio of 577-to-365 stocks. Traded volumes, however, slipped 38.1% to 2.05 bln shares amid the lack of fresh catalysts.

• Half of the key index constituents advanced, led by Hong Leong Financial Group (+42.0 sen), followed by Petronas Gas (+38.0 sen), MISC (+12.0 sen), KLCC (+9.0 sen) and Axiata (+8.0 sen). BAT jumped 72.0 sen, snapping a four-day losing streak while other notable gainers on the broader market were Heng Yuan (+52.0 sen), Panasonic (+48.0 sen) and United Plantations (+40.0 sen). Westports climbed 21.0 sen after reporting a strong set of quarterly earnings.

• Amongst the biggest decliners on the broader market were Hartalega (-32.0 sen), Chin Teck Plantations (-30.0 sen), Malaysia Airport Holdings (-20.0 sen), Batu Kawan (-20.0 sen) and Apex Healthcare (-18.0 sen). Meanwhile, key index losers include Petronas Dagangan (-12.0 sen), Genting Malaysia (-11.0 sen), Tenaga (-4.0 sen), Sime Darby (-4.0 sen) and Genting (-4.0 sen).

• Asia benchmark indices closed mostly higher yesterday as the Nikkei (+1.1%) extended its gains, lifted by auto manufacturers like Toyota Motor Corporation (+2.4%) and Subaru Corporation (+2.9%). The Hang Seng Index added 0.4%, but the Shanghai Composite sank 1.4% to close at sixmonth low despite trade data coming in above economists’ expectations. ASEAN stockmarkets, meanwhile, ended mostly higher yesterday.
• U.S. stockmarkets took a beating overnight as the Dow sank 4.2% to erase all its year-to-date gains and subsequently entered into a correction phase. The weakness stemmed from renewed concerns over rising interest rates that could slow down economic growth, coupled with lower crude oil prices. Similarly, the S&P 500 tumbled 3.8%, while the Nasdaq slipped 3.9%.
• Earlier, European benchmark indices all plunged. The FTSE declined 1.5% after Bank of England warned that the pace of interest rate rises could accelerate that sent the British Pound higher. Both the CAC (-2.0%) and DAX (+2.6%) reversed all their earlier gains, mirroring the weak sentiments on Wall Street.

THE DAY AHEAD

• With Wall Street enduring another wipeout overnight that also permeated to the global equity markets, stocks on Bursa Malaysia are poised to follow suit with the downside pressure returning that is likely to send Malaysian stocks in another tailspin to end the week.

• The volatility could also mean the recoveries in the past two sessions becoming undone with the return of the selling pressure as market participants will offload their positions in what is seen as profit taking activities. The renewed selling could send the key index back to around the 1,820 level, but if it fails to hold, the 1,800 points level will come into play.

• We also see retail players closing out their positions amid the increasingly uncertain market direction and ahead of the upcoming Lunar New year break. Hence, the lower liners and broader market shares will see choppy trades as the buying interest will be noticeably absent in the current market environment.

COMPANY BRIEFS

• Westports Holdings Bhd's 4Q2017 net profit jumped 36.1% Y.o.Y to RM211.0 mln, from RM155.0 mln a year ago, on lower tax expenses due to the availability of tax incentives, although revenue was flattish at RM574.0 mln, from RM573.3 mln in 4Q2016.
• Full year net profit was also up by 5.6% Y.o.Y to RM651.5 mln, from RM616.8 mln last year, while revenue grew marginally by 2.6% Y.o.Y to RM2.09 bln, from RM2.04 bln. (The Star Online)

• Maxis Bhd's 4Q2017 net profit rose 11.0% Y.o.Y to RM559.0 mln, compared to RM505.0 mln a year earlier – on higher postpaid revenue and lower business expenses including traffic, commission, network and finance costs. Quarterly revenue however, lost 2.9% Y.o.Y to RM2.15 bln, from RM2.21 bln in the same quarter last year.

• Meanwhile, cumulative net profit in 2017 gained 8.9% Y.o.Y to RM2.19 bln, from RM2.01 bln, despite only a 1.0% Y.o.Y rise in revenue at RM8.7 bln, from RM8.61 bln previously. (The Star Online)

• Hup Seng Industries Bhd's 4Q2017 net profit declined 5.0% Y.o.Y to RM14.4 mln, from RM15.4 mln a year ago, on escalating input cost and marketing expenses, despite a 4.0% Y.o.Y growth in revenue to RM86.2 mln, from RM82.8 mln in the last corresponding year.

• Meanwhile, cumulative net profit narrowed to RM44.5 mln (-10.0% Y.o.Y), from RM49.4 mln in 2016, although revenue increased 5.0% Y.o.Y to RM299.7 mln, from RM285.7 mln last year. (The Edge Daily)

• Gabungan AQRS Bhd’s 4Q2017 net profit doubled to RM15.2 mln vs. RM7.5 mln a year earlier, on higher revenue and higher progress billings, while quarterly revenue spiked 74.5% Y.o.Y to RM150.2 mln, from RM86.1 mln in the same quarter a year ago.

• For the full year, the group’s net profit surged 112.0% Y.o.Y to RM48.0 mln, from RM22.6 mln, in-tandem with higher revenue at RM469.4 mln (+42.2% Y.o.Y), in comparison to RM330.1 mln previously. (The Star Online)

• Atrium Real Estate Investment Trust (REIT) posted a 13.6% Y.o.Y gain in 4Q2017 net property income to RM4.02 mln, from RM3.5 mln recorded last year, mainly due to the full rent-out of its Atrium Shah Alam 2, Selangor. Revenue also expanded by 9.8% Y.o.Y to RM4.3 mln, from RM3.9 mln in 4Q2016. Consequently, the REIT has also declared a fourth and final dividend per unit (DPU) of 1.85 sen, bringing its DPU for the year to 7.4 sen, payable on 16th March 2018.

• For the full FY17, Atrium REIT’s net property income rose 23.1% Y.o.Y to RM15.2 mln, from RM12.3 mln a year ago, following stronger revenue contribution at RM17.3 mln (+19.2% Y.o.Y), from RM14.5 mln in the previous corresponding year. (The Edge Daily)

• Censof Holdings Bhd has secured a RM6.4 mln contract from the Inland Revenue Board of Malaysia (IRB) to undertake an accounting system upgrade. The 18-month contract will commence from 1st February 2018 until 31st July 2019. (The Edge Daily)

• Daya Materials Bhd has inked into a Memorandum of Understanding (MoU) with Papua New Guinea’s national O&G company, Kumul Petroleum Holdings Ltd, after scouting for opportunities in Papua New Guinea over the last few years. The MoU will allow Daya Materials and Kumul Petroleum to participate in O&G projects in Papua New Guinea as a joint-venture and is valid for a year from 8th February 2018. (The Edge Daily)

• Petronas Chemicals Group Bhd (PetChem) and Petronas Hartabina Sdn Bhd have entered into a land lease agreement (LLA) in relation to PetChem’s participation in the petrochemicals project under the Refinery and Petrochemicals Integrated Development (RAPID) project in Pengerang, Johor.

• PetChem has signed the LLA with Petronas Hartabina for a plot of land measuring 91.0 ac. with an annual lease fee of RM2.71 per square foot, located in Pengerang. The 30-year lease, beginning from 14th June, 2016 will enable PetChem to construct, develop, install and operate the polymer plants and equipment on the land for the duration of the lease. (The Edge Daily)

• Astro Malaysia Holdings Bhd has inked a conditional joint-venture (JV) agreement with Grup Majalah Karangkraf Sdn Bhd (GMK) as part of its plan to invest in the latter’s whollyowned unit Karangkraf Digital 360 Sdn Bhd (KK30).

• To recap, Astro initially signed a binding term sheet with GMK on 6th December 2017 to form a JV where the former would invest RM100.0 mln for a 51.0% equity stake in KK30.
• The JV aims to pursue monetisation strategies for the KK360’s content intellectual properties across multiple platforms, leveraging on Astro’s capabilities, growing reach and engagement. It would also expand Astro’s online presence among the Malay-language audience and boost its combined monthly unique visitors to approximately 10.0 mln. (The Star Online)

Source: Mplus Research - 9 Feb 2018