Possibly Minor Gains

• Tracking the recovery on Wall Street overnight, the FBM KLCI (+0.2%) extended its gains yesterday as the key gapped up and subsequently lingered in the positive territory the entire trading session. The lower liners closed mostly higher as the FBM Small Cap and FBM ACE gained 0.7% and 0.4% respectively, while the Properties (-0.3%) and Trading/Services (-0.1%) sectors underperformed the positive broader market.

• Market breadth turned positive as advancers pipped decliners on a ratio of 495-to-409 stocks. Traded volumes fell 10.4% to 1.62 bln shares as the festive break approaches.

• More than half of the key index constituents advanced, led by Nestle (+50.0 sen), followed by Hong Leong Financial Group (+14.0 sen), KLCC (+9.0 sen), Hap Seng (+8.0 sen) and Maxis (+6.0 sen). Amongst the biggest gainers on the broader market include BAT (+76.0 sen), Heineken (+32.0 sen), Hartalega (+28.0 sen) and Ajinomoto (+24.0 sen). CSC Steel climbed 7.0 sen after reporting a strong set of quarterly earnings.

• Significant losers on the broader market include Malaysia Airport Holdings (-72.0 sen), Tasek Corporation (-23.0 sen), Panasonic (-20.0 sen) and Sungei Bagan Rubber (-15.0 sen). Hexza slipped 3.0 sen after reported a weak set of quarterly results. Meanwhile, Telekom (-6.0 sen), PPB Group (-2.0 sen), MISC (-5.0 sen), Press Metal (-4.0 sen) and YTL (-3.0 sen) topped the big board decliners list.

• Despite opening higher at the start of the trading bell, the eleventh hour selling pressure sent the Nikkei (-0.7%) to close at four-month low yesterday amid the stronger Japanese Yen against the Greenback. The Hang Seng Index, however, jumped 1.2%, while the Shanghai Composite (+1.0%) also rose, taking cue from the recovery on Wall Street overnight. ASEAN stockmarkets, meanwhile, closed mostly higher yesterday.
• U.S. stockmarkets recouped all their intraday losses as the Dow (+0.2%) advanced for the third straight session ahead of the inflation data. On the broader market, the S&P 500 added 0.3%, helped by gains in consumer staples (+0.5%) and real estate (+0.6%) sectors, while the Nasdaq (+0.5%) reclaimed the 7,000 psychological level.
• Earlier, European benchmark indices erased some of their previous session gains after the Euro Currency appreciated against the U.S. Dollar. The FTSE slipped 0.1% as inflation data came in at 3.0% in January 2018. Meanwhile, the CAC and DAX shed 0.6% and 0.7% respectively.

THE DAY AHEAD

• With the buying interest on Bursa Malaysia still on the low side, we think there will be limited upside as the follow through buying interest will remain meek ahead of the upcoming Lunar New Year break. Therefore, we see limited near term gains with most market participants remaining on the sidelines.

• Any gains will again be selective amid some mild bargain hunting activities, while market breadth will stay mixed with the waning buying interest. Hence, we see the FBM KLCI finding resistance at the 1,840 level, followed by the psychological 1,850 level. On the downside, there is support at 1,830 and 1,820 levels.

• Similarly, there will be limited following among the lower liners and broader market shares ahead of the Chinese New Year break on Friday. Also, there are also few positive leads for retail players to follow and this will further reduce the investor interest.

COMPANY BRIEFS

• MISC Bhd's 4Q2017 net profit tumbled 87.1% Y.o.Y to RM68.2 mln from RM529.8 mln in the previous corresponding year, dragged mainly by higher impairment loss of RM553.9 mln, while revenue was marginally lower by 3.3% Y.o.Y to RM2.43 bln, from RM2.52 bln in 4Q2016.
• Consequently, cumulative full-year net profit dropped 23.2% Y.o.Y to RM1.98 bln, from RM2.58 bln last year, despite a 4.6% Y.o.Y increase in 2017 revenue at RM10.04 bln. (The Edge Daily)

• The Securities Commission Malaysia has charged two individuals, including ThreeA Resources Bhd Chairman, Datuk Mohd Nor Abdul Wahid with insider trading in relation to 3A’s joint-venture (JV) with Singapore-listed Wilmar International Ltd in 2009. Mohd Nor is charged for allegedly acquiring 500,000 3A shares through Azuzay Zamani's central depository system account, while in possession of non-public information relating to the JV.(The Star Online)

• Seacera Group Bhd planning to acquire a 70.0% (or 7.7 mln shares) controlling stake in builder Teras Sari Resources Sdn Bhd, which is undertaking a RM338.1 mln project to upgrade the public road from Bandar Pekan to Kampung Sungai Miang in Pekan, Pahang.

• The group has inked a heads of agreement (HoD) with LT Century Development Sdn Bhd and LTC Holdings Sdn Bhd for the proposed acquisition in Teras Sari Resources at a price to be determined later. (The Edge Daily)

• Damansara Realty Bhd posted a net profit of RM14.7 mln in 4Q2017, a turnaround from a net loss of RM12.6 mln a year ago, on the back of higher revenue contribution (+34.2% Y.o.Y) at RM67.2 mln vs. RM50.1 mln a year earlier.

• Full-year net profit came to RM17.0 mln against a 2016 net loss of RM27.1 mln, while revenue rose 36.0% Y.o.Y to RM249.4 mln, from RM183.2 mln a year ago. Moving forward, the group expects to sustain its earnings growth momentum in 2018, and targets a topline growth of up to 15.0% Y.o.Y.

• It is also eyeing several contracts under its integrated facilities management division this year and expects two large contracts that could potentially contribute more than RM10.0 mln per month in revenue each and several smaller contracts. (The Edge Daily)

• Southern Steel Bhd's 2QFY18 net profit almost doubled to RM70.0 mln, from RM36.6 mln in the same quarter last year, boosted by higher sales and margins. Meanwhile, quarterly revenue was 30.7% Y.o.Y higher at RM956.4 mln, from RM731.6 mln previously.

• Similarly, cumulative 1HFY18 net profit also grew more than two-fold to RM123.4 mln, from RM55.9 mln in 1HFY17, while revenue increased 40.9% Y.o.Y to RM1.86 bln, from RM1.32 bln in previous corresponding period. (The Star Online)

• Goldis Bhd’s 4Q2017 net profit has tripled to RM59.9 mln, from RM16.3 mln in 4Q2016, underpinned by better performance from its retail property investments and a disposal gain. Revenue for the quarter, meanwhile gained 16.0% Y.o.Y to RM362.7 mln, from RM312.2 mln previously. (The Star Online)

• Borneo Oil Bhd is buying a parcel of quarry land in Lahad Datu, Sabah for RM47.0 mln cash, amid its ongoing expansion into limestone mining and related activities. The sublease of the land is fixed for 30 years with an automatic renewal for a further 30 years, with no further consideration. The proposed acquisition will be funded via internally-generated funds.

• The quarry will see the extraction of marble blocks for export purposes, while the remaining resources will be used for limestone aggregates and related products. (The Edge Daily)

• Denko Industrial Corp Bhd has appointed major shareholder, Datuk Fong Chiu Wan as Group Chief Executive Officer effective 13th February 2018. The appointment follows the acquisition of Integrated Manufacturing Solutions Sdn Bhd (IMS) by Denko in November last year.

• Fong is IMS' co-owner and director, who hold a 24.1% equity stake in Denko, after acquiring 53.5 mln shares on 2th February this year. (The Edge Daily)

• British American Tobacco (Malaysia) Bhd (BAT) posted a 74.0% Y.o.Y drop in its 4Q2017 net profit to RM78.2mln, from RM299.1 mln a year earlier – mainly due to the absence of land sale related income and higher operating expenses on the back of a provision of impairment for prepaid excise duties. Quarterly revenue, meanwhile, declined 17.0% Y.o.Y to RM700.12 mln, from RM840.6 mln previously.

• The group’s provision for impairment of prepaid excise duties of RM21.0 mln is pending refund from the Royal Malaysian Customs, but BAT decided to be prudent by recording the provision due certain uncertainties pertaining to the refund. (The Star Online)

• Pansar Bhd has been appointed by construction equipment manufacturer, JCB as its official dealer in Sabah and Sarawak. Moving forward, the former will provide its customers in plantations, construction, infrastructure and mining access to a broad choice of JCB's products, as well as delivering maintenance services and comprehensive spare part availability to local businesses. (The Edge Daily

Source: Mplus Research - 14 Feb 2018