• Tracking the slump on Wall Street overnight coupled with the renewed weakness in crude oil prices, the FBM KLCI (-1.1%) endured another round of selling pressure last Friday. The key index subsequently snapped its 10 consecutive weekly winning streak, falling 2.7% W.o.W. The lower liners – the FBM Small Cap (-1.6%), FBM Fledgling (-1.2%) and FBM ACE (-1.8%) all erased their previous session’s gains, while the broader market were painted in red.

• Market breadth turned negative as decliners thumped advancers on a ratio of 9-to-2 stocks. Traded volumes, however, added 19.3% to 2.45 bln shares as the selling pressure intensified.

• More than two-thirds of the key index constituents were in the red with the main losers being Petronas Gas (-52.0 sen), followed by Hong Leong Financial Group (-28.0 sen), CIMB (-24.0 sen), Genting (-22.0 sen) and Maxis (-19.0 sen). Notable decliners on the broader market include consumer products stocks like Panasonic (-50.0 sen), Ajinomoto (-32.0 sen) and Carlsberg (- 32.0 sen), while petrochemical refineries like Petron Malaysia and Heng Yuan slipped 24.0 sen and 20.0 sen respectively.

• Significant gainers on the broader market include Dutch Lady (+22.0 sen), Enra Group (+21.0 sen), Top Glove (+18.0 sen), Ayer Holdings (+15.0 sen) and Scientex (+12.0 sen). There were only five gainers on the big board – Nestle (+RM1.10), Petronas Dagangan (+38.0 sen), KLCC (+7.0 sen), Petronas Chemicals (+4.0 sen) and IHH (+1.0 sen).

• Asia benchmark indices took another beating last Friday as the Nikkei sank 2.3%, taking cue from sharp selling pressure on Wall Street a day earlier. The Hang Seng Index tumbled 3.1% to close below the 30,000 psychological level, while the Shanghai Composite (-4.1%) extended its losses for the fourth straight session, pressured by property and oil & gas stocks. ASEAN stockmarkets, meanwhile, ended lower last Friday.

• U.S. stockmarkets rebounded last Friday with the Dow rising 1.4% after enduring a volatile trading session. Still, U.S. equities marked their worst weekly losses in two years with the Dow falling 5.2% W.o.W. On the broader market, the S&P 500 climbed 1.5% with only the energy sector (-0.4%) underperforming, while the Nasdaq closed 1.4% higher.

• European benchmark indices – the FTSE (-1.1%), CAC (-1.4%) and DAX (-1.3%) all extended their losses as concerns over the rising borrowing cost remain unabated. The weakness was also in tandem with the slump in Asian stockmarkets earlier, coupled with the renewed decline in commodity prices.

The Day Ahead

• The stockmarket’s gyrations look to persist with yet another likely recovery over the near term after Wall Street posted a rebound last Friday. Therefore, we see the key index making up some ground after its weakness at the end of the previous week with bargain hunting activities to come back to the fore again.

• Nevertheless, we think the upsides could be capped by the holiday-shortened week and the lack of new leads. At the same time, there is still substantive uncertainty over the market’s near term direction that could keep market players wary. Therefore, we think the upsides could be limited to around the 1,830 level in the near term, while the 1,810 level is still the support for now.

• Elsewhere, the lower liner and broader market shares are also likely to see limited following with the lingering uncertainties over the market’s near term direction and the upcoming Lunar New Year break. Therefore, the lull among the above stocks will persist for longer as many retail players will continue to stay on the sidelines.

Company Briefs

• Salutica Bhd's 2QFY18 net profit tanked 43.3% Y.o.Y to RM6.0 mln, from RM10.6 mln a year ago due to a change in product mix and higher costs, while revenue fell marginally by 3.6% Y.o.Y to RM87.6 mln, from RM90.8 mln previously.

• Cumulative 1HFY18 net profit also fell 22.7% Y.o.Y to RM12.5 mln, from RM16.1 mln in the same period last year due to the aforementioned reasons, despite a 4.6% Y.o.Y growth in revenue to RM171.4 mln, from RM163.9 mln a year earlier. The group has declared a third interim single-tier dividend of 0.6 sen per share, payable on 15th March 2018 (The Edge Daily)

• RHB Bank Bhd is buying the remaining 51.0% stake in Vietnam Securities Corp (VSEC) for VND121.63 bln (RM21.3 mln) cash. The banking group currently has a 49.0% stake in VSEC, which was acquired in November 2008. RHB has inked a conditional share purchase agreement (CSPA) with Chu Thi Phuong Dung, Truong Lan Anh and Viet Quoc Insurance Broker JSC for the proposed stake acquisition.

• The proposed acquisition, which is subject to the approvals of Bank Negara Malaysia and the State Securities Commission of Vietnam (Vietnam SSC), is expected to be completed by the 2Q2018. (The Edge Daily) ? Kuantan Flour Mills Bhd (KFM) has entered into a Memorandum of Understanding (MoU) with Shou Guang Chang Tai Economic And Trade Co Ltd (SGCT) to facilitate an expansion of the group’s starch and premix flour trade in China. SGCT, a company which specialise in the trading and retailing of corn, tapioca and food-related products, is based in Shouguang City, Shandong province and has a stable import and export business with trading partners within China and Southeast Asian countries.

• The MoU include a proposed collaboration through either a business collaboration arrangement between the parties or a direct acquisition of a majority equity interest in SGCT by KFM. (The Edge Daily)

• Amcorp Properties Bhd‘s (AmProp) 3QFY18 net profit jumped close to 19x to RM75.2 mln, from RM4.0 mln in the previous corresponding quarter on stronger contribution from its jointventures (JV), although revenue for the quarter lost 19.0% Y.o.Y to RM36.1 mln, compared with RM44.5 mln a year ago.

• Consequently, 9MFY18 net profit was also about 10x higher at RM102.7 mln, from RM10.3 mln a year earlier, despite a 25.0% Y.o.Y drop in revenue to RM106.3 mln, from RM141.3 mln in the last corresponding year. (The Edge Daily)

• KKB Engineering Bhd posted a 4Q2017 net profit of RM5.3 mln, from a net loss of RM4.1 mln a year ago, on the back of stronger revenue in the civil construction and steel pipe manufacturing divisions. This marks its second straight profitable quarter, after reporting four straight quarters of net losses. Quarterly revenue more than doubled to RM70.2 mln, from RM26.1 mln last year.

• For 2017, the group made a turnaround with a net profit of RM1.6 mln, from a net loss of RM5.8 mln in 2016, following a 103.0% growth in revenue to RM209.3 mln, from RM103.1 mln last year. The group declared a first and final single tier dividend of 2.0 sen per share, payable on 12th June 2018. (The Edge Daily)

• PUC Bhd has announced that Pictureworks (Hong Kong) Ltd has signed a four-year exclusive partnership with Hong Kong’s theme park operator, Ocean Park Corp to provide the latter end-to-end photo imaging products, services and systems. Pictureworks HK is whollyowned by Pictureworks Holdings Sdn Bhd.

• To recap, PUC has proposed to acquire 33.0% of Pictureworks Holdings shareholdings from a group of individuals, including PUC’s Managing Director and Chief Executive Officer (CEO) Cheong Chia Chou last December.

• The RM52.8 mln proposed acquisition which was expected to be funded via a combination of cash and new share issuance, is still pending authority and shareholders’ approvals. The exclusive four-year partnership is effective 1st June this year to 31st May 2022. (The Edge Daily)  

Source: Mplus Research - 12 Feb 2018