More Gains In the Offing

• The FBM KLCI (+0.6%) started off the week on a solid footing after lingering in the positive territory the entire trading session yesterday as the gains were in line with the positive sentiment across regional markets. The lower liners, however, closed relatively flat after erasing most of their intraday gains, while the Technology (-1.8%), REITS (- 0.7%) and Industrial Products (-0.1%) sector underperformed its peers.

• Market breadth stayed negative as decliners edged advancers on a ratio of 484-to-453 stocks. Traded volumes declined 26.5% to 1.80 bln shares as the holiday shortened trading week beckons.

• Petronas Gas (+28.0 sen) led the recovery on the key index, followed by Telekom (+22.0 sen), Nestle (+20.0 sen), Axiata (+16.0 sen) and Public Bank (+14.0 sen). Notable gainers on the broader market were Ajinomoto (+34.0 sen), United Plantations (+30.0 sen), Kluang Rubber (+27.0 sen), Aeon Credit (+16.0 sen) and Country Heights Holdings (+16.0 sen).

• On the flipside, among the biggest loses on the broader market were Panasonic (- 40.0 sen), BAT (-26.0 sen), Petron Malaysia (-22.0 sen), SAM Engineering & Equipment (-14.0 sen) and Inari (-13.0 sen). Salutica slipped 11.0 sen after reported a weak set of quarterly results. There were only five decliners on the big board – Hong Leong Financial Group (- 44.0 sen), Sime Darby (-4.0 sen), Press Metal (-3.0 sen), AmBank (-3.0 sen) and Petronas Chemicals (-2.0 sen).

• Asia benchmark indices closed on a mixed noted yesterday as the Hang Seng Index (-0.2%) extended its losses after succumbing to an eleventh hour selling pressure, while the Shanghai Composite (+0.8%) halted a streak of four straight session of losses on bargain hunting activities. Japanese stockmarkets were closed for the National Foundation Day public holiday, while ASEAN stockmarkets closed mostly higher yesterday.
• U.S. stockmarkets extended its gains, showing signs of stability from the previous week selloff after the 10-year treasury yield retreated from four-year high. The Dow added 1.7% while the S&P 500 climbed 1.4% with all ten major sectors in the green. The Nasdaq, meanwhile, jumped 1.6% higher to close marginally below the 7,000 psychological level.
• Earlier, European benchmark indices – the FTSE (+1.2%), CAC (+1.2%) and DAX (+1.5%) all rebounded in tandem with the recovery across global stockmarkets. Basic resources and energy stocks like Rio Tinto (+2.8%), Anglo American (+2.4%) and BHP (+2.0%) advanced amid the uptick in commodity prices.

THE DAY AHEAD

• We see further near term upsides following the recovery in U.S. stockmarkets overnight that will also permeate to stocks on Bursa Malaysia. Still, the buying interest is expected to be selective and largely confined to the index-linked stocks amid the lack of new leads.

• We see the key index making another stab at the 1,840 level on bargain hunting activities and if it is taken out, the next target will be the psychological 1,850 level. Meanwhile, the immediate support lies at 1,820 level.

• While we also see some renewed buying on the lower liners and broader market shares, we anticipate that the market following to stay on the thin side ahead of the Lunar New Year break at the end of the trading week. Already, most retail players have retreated to the sidelines and this trend is expected to continue, save for the pockets of trading activities that will also prompt quick profit taking actions.

COMPANY BRIEFS

• CSC Steel Holdings Bhd’s 4Q2017 net profit jumped more than two-fold to RM14.8 mln, from RM6.2 mln a year ago, on higher margins for its steel products, while revenue gained 28.0% Y.o.Y to RM367.2 mln, from RM286.9 mln.
• For 2017, however, the group’s net profit fell 13.0% Y.o.Y to RM59.8 mln vs. RM68.7 mln last year, despite a 28.0% Y.o.Y growth in revenue to RM1.32 bln, from RM1.04 bln a year earlier. The group also proposed to pay a final dividend of 5.0 sen per share for 2017. (The Star Online)

• Hektar Real Investment Trust's (Hektar REIT) 4Q2017 net property income climbed 12.0% Y.o.Y to RM20.9 mln, from RM18.7 mln, on the back of the 1Segamat Shopping Centre acquired in September 2017. Revenue was also higher by 7.0% Y.o.Y to RM33.4 mln, from RM31.2 mln, although net income was flattish at RM12.1 mln, in comparison to RM12.0 mln previously.

• For 2017, however, Hektar REIT's NPI narrowed slightly (-1.0% Y.o.Y) to RM73.7 mln, from RM74.3 mln in the last corresponding year, despite marginally higher revenue (+1.0% Y.o.Y) at RM125.5 mln, from RM124.6 mln. Net income meanwhile, also decreased 24.0% Y.o.Y to RM32.7 mln, from RM43.2 mln a year ago. Hektar has declared a final income distribution of 3.3 sen per unit (+22.0%), from 2.7 sen per unit in 4Q2016, payable on 15th March 2018. (The Edge Daily)

• Kuala Lumpur Kepong Bhd (KLK)’s 1QFY18 net profit slumped by 11.0% Y.o.Y to RM320.6 mln, from RM360.7 mln in the same quarter last year, following weaker performance from its plantation and property segments. Its revenue for the quarter was also down 6.0% Y.o.Y to RM5.19 bln, from RM5.5 bln previously. (The Star Online)

• Batu Kawan Bhd posted a 9.9% Y.o.Y fall in 1QFY18 net profit to RM177.9 mln, from RM197.5 mln a year earlier – due to lower contribution from the plantation and property development segments. Quarterly revenue slipped 5.1% Y.o.Y to RM5.34 bln, from RM5.63 bln a year ago. (The Edge Daily)

• Tomei Consolidated Bhd‘s 4Q2017 net profit soared by 18x to RM4.4 mln, from RM226,000 last year, boosted by higher retail sales amid the year-end holidays, while revenue rose 17.5% Y.o.Y to RM150.1 mln, from RM127.8 mln.

• Cumulative 2017 net profit more than tripled to RM16.2 mln, from RM4.7 mln in 2016, in-tandem with higher revenue of RM617.0 mln (+36.0% Y.o.Y), from RM472.2 mln in the previos corresponding period. The jeweller has also proposed a one sen dividend per share. (The Edge Daily)

• Hexza Corp Bhd’s 2QFY18 net profit plunged 84.0% Y.o.Y to RM1.5 mln, from RM9.5 mln a year earlier, dampened by lower contributions from its resins and investment divisions, although revenue only fell a meagre 2.3% Y.o.Y to RM26.2 mln, from RM26.9 mln.

• For 6MFY18, Hexza was in the red with a net loss of RM23.8 mln, compared to a net profit of RM24.3 mln in 6MFY17, while revenue narrowed 16.2% Y.o.Y to RM51.3 mln vs. RM61.2 mln previously. (The Edge Daily)

• Ranhill Holdings Bhd has finally received a conditional letter of award (CLOA) from the Energy Commission (EC) to build a 300-megawatt (MW) combined cycle gas turbine power plant in Sandakan, Sabah, two years after announcing the proposal. The CLOA was issued to the consortium including SM Hydro Energy Sdn Bhd, a whollyowned subsidiary of Ranhill Capital Sdn Bhd, which in turn is wholly-owned by Ranhill.

• SM Hydro Energy is evaluating the terms and conditions of the CLOA and will make a decision whether to accept the award is made by SM Hydro Energy. (The Star Online)

• MBM Resources Bhd is planning to raise its shareholding in wheels producer, Oriental Metal Industries Sdn Bhd (OMI) to 100.0% by buying up the remaining 22.0% stake ownership for RM1.8 mln in a bid to facilitate the decision-making process,and open up opportunities and flexibility by OMI in choosing and initiating new working relationships with other parties. (The Edge Daily)

Source: Mplus Research - 13 Feb 2018