Consolidation To Continue

• The FBM KLCI (-0.1%) ended its five-day winning streak despite rebounding from earlier losses as sentiments turn sour in the regional stockmarkets. Similarly, the lower liners also retreated, while the broader market ended mostly lower on Tuesday’s closing bell.

• Market breadth turned stale as losers overtook winners on a ratio of 556-to-409 stocks. Traded volumes also fell marginally by 3.4% to 2.28 bln shares – due to quick profit-taking activities in the broader market.

• Notable decliners on the Main Board were Petronas Gas (-86.0 sen), Telekom Malaysia (-12.0 sen), Genting (-8.0 sen), RHB Bank (-7.0 sen) and Hong Leong Financial Group (-6.0 sen). Meanwhile, broader market constituents like Hengyuan Refining (-90.0 sen), BAT (- 34.0 sen), Panasonic Manufacturing (- 30.0 sen), Petron Refining (-26.0 sen) and Enra (-18.0 sen) were also splashed in red yesterday.

• On the opposite side, broader market gainers were Hong Leong Industries (+70.0 sen), Malaysian Pacific Industries (+55.0 sen), KESM Industries (+38.0 sen), Magni-Tech (+36.0 sen) and Ayer Holdings (+30.0 sen). Meanwhile, bluechip gauge outperformers include Public Bank (+10.0 sen), PPB Group (+8.0 sen), Kuala Lumpur Kepong (+6.0 sen) and Petronas Dagangan (+6.0 sen). Nestle also rallied, boosted by buying-support in the eleventh hour, ahead of the release of its quarterly earnings results.

• Asian stockmarkets were painted red as investors retreated to the sidelines due to the Presidents Day public holiday in the U.S. that provided few leads. The Nikkei narrowed 1.0% - led by losses in Yamaha Motor (-3.0%) despite upbeat quarterly results, while the Hang Seng lost 0.8%, weighed down by losses in banking stocks. The Shanghai Composite Indexremained closed for the Chinese New Year holid ay. ASEAN equities were broadly lower at yesterday’s close.
• Wall Street closed in the red, hit by fresh concerns of a slowdown in the retail sector. The Dow (-1.0%) snapped its sixday winning streak, dragged down by Wal-Mart (-10.2%) after the retial giant retailer’s latest earnings report missed analysts’ expectations. The S&P 500 was also down by 0.6%, while the Nasdaq (- 0.1%) inched into the red, slightly offset by the recovery in Qualcomm.
• European stockmarkets, however, closed mostly in the positive territory as investors digested the latest corporate quarterly earnings. The FTSE finished virtually unchanged, pressured by losses in HSBC following lower-than-expected quarterly results. However, the DAX (+0.8%) and the CAC (+0.5%) staged a recovery, lifted by weaker Euro.

THE DAY AHEAD

• With the weak overnight closing on Wall Street, coupled with the availability of few leads, we see the profit taking activities continuing on Bursa Malaysia as the fresh buying interest, particularly from foreign sources, is showing signs of tapering. As it is, the buying spurt that permeated the market when the market resumed after the Lunar New Year break may have run its course for now.

• With few leads we see the pullback persisting that could result in the key index rolling back to around the 1,850 level. This level should provide some support for now, but if the profit taking activities escalate, the next supports at the 1,820-1,840 levels will come into play. On the upside, the resistances are at the 1,870-1,880 levels.

• We also see tapering interest among the lower liners and broader market shares with retail players likely to undertake quick profit taking activities amid the potential market weakness over the near term.

COMPANY BRIEF

• Philippines' Ayala Land has raised its stake in property company MCT Bhd to 72.3% or 669.9 mln shares at the end of the takeover offer which ended on 19th February 2018. Ayala Land had received acceptances for 295.3 mln shares or 22.1% stake.

• Ayala Land launched an unconditional mandatory takeover offer when it emerged with 50.2% following a corporate exercise. It had made an offer of 88 sen a share to the minority shareholders. To recap, Ayala Land first emerged in MCT in April 2015, soon after MCT’s listing on Bursa Malaysia. It took up 9.2% stake, which was part of a placement of shares at a price of RM1.28 per share. (The Star Online)

• Bina Darulaman Bhd posted a 4Q2017 net loss of RM10.4 mln compared with earnings of RM23.3 mln in the previous corresponding quarter, dragged down by the slowdown in sales due to lower recognition of its ongoing medium-tohigh-end residential projects. Revenue for the quarter sank 64.5% Y.o.Y to RM54.7 mln.

• For 2017, cumulative net loss stood at RM7.8 mln vs. a net profit of RM34.0 mln. Revenue for the year fell 29.4% Y.o.Y to RM251.7 mln. (The Star Online)

• Petronas Chemicals Group Bhd’s (Petchem) 4Q2017 net profit climbed 1.8% Y.o.Y to RM1.01 bln, lifted by higher average product prices in line with firmer crude oil prices. Revenue for the quarter climbed 20.1% Y.o.Y to RM4.74 bln.
• For 2017, cumulative net profit expanded by 42.7% Y.o.Y to RM4.18 bln. Revenue for the year grew 25.6% Y.o.Y to RM17.41 bln. A second interim single tier dividend of 15 sen, payable on 21st March 2018 was declared. (The Edge Daily)
• Nestle (M) Bhd’s 4Q2017 net profit jumped 99.5% Y.o.Y to RM133.5 mln on sustained cost management coupled with continuous innovation and renovation initiatives, successful marketing and trade promotions. Revenue for the quarter gained 2.5% Y.o.Y to RM1.28 bln.

• For 2017, cumulative net profit added 1.4% Y.o.Y to RM645.8 mln. Revenue for the year climbed 3.9% Y.o.Y to RM5.26 bln. A final dividend of RM1.35, payable on 31st May 2018 was proposed. (The Edge Daily)

• Halex Holdings Bhd’s 4Q2017 net loss narrowed 70.6% Y.o.Y to RM6.2 mln, from RM21.2 mln in the previous corresponding quarter due to RM7.53 mln gain on disposal of its associate company, Kensington Development Sdn Bhd coupled with higher revenue contribution from the agriculture supplies and trading segment. Revenue for the quarter grew 56.2% Y.o.Y to RM18.4 mln.

• For 2017, cumulative net loss narrowed by 43.5% Y.o.Y to RM12.4 mln. Revenue for the quarter improved marginally by 0.6% Y.o.Y to RM69.0 mln. (The Edge Daily)

• UEM Edgenta Bhd’s 4Q2017 net profit surged 19.7x Y.o.Y to RM324.8 mln, after booking in a gain of RM274.9 mln from the disposal of its 61.2% stake in OIC. Revenue for the quarter grew 31.1% Y.o.Y to RM672.3 mln.

• For 2017, cumulative net profit soared 422.3% Y.o.Y to RM418.2 mln. Revenue for the quarter grew 34.2% Y.o.Y to RM2.12 bln. A special dividend of 18 sen per share, together with a second interim dividend of 5.0 sen per share, payable on 18th April 2018 and 17th May 2018 respectively was declared. (The Edge Daily)

Source: Mplus Research - 21 Feb 2018