Seeking New Catalyst

• The FBM KLCI (+0.1%) inched into the positive territory yesterday, on the back of buying-support in banking heavyweights in the eleventh hour. The lower liners also rallied – led by the FBM Ace (+0.9%) amid a mostly bullish broader market.

• Market breadth was positive with 605 gainers against 330 decliners, while traded volumes were flattish at 2.28 bln shares amid the holiday-thinned trading.

• Nestle (+50.0 sen) led the key-index higher after announcing upbeat quarterly results. Meanwhile, other blue-chip gainers were Hong Leong Bank (+14.0 sen), Petronas Dagangan (+12.0 sen), Petronas Gas (+10.0 sen) and PPB Group (+10.0 sen). Semi-con manufacturers like Malaysian Pacific Industries (+46.0 sen) and KESM Industries (+42.0 sen) also continued to track higher, followed by other broader market winners - Ajinomoto (+70.0 sen), Hengyuan Refining (+50.0 sen) and BAT (+40.0 sen).

• On the other hand, Dutch Lady (-30.0 sen), Batu Kawan (-20.0 sen), UMS Holdings (-18.0 sen), DKSH Holdings (- 15.0 sen) and Innoprise Plantations (- 11.0 sen) closed in the red on Wednesday. Meanwhile, significant decliners on the blue-chip gauge include Genting Malaysia (-11.0 sen), IHH Healthcare (-10.0 sen), Sime Plantation (- 2.0 sen), Tenaga Nasional (-2.0 sen) and Ambank (-1.0 sen).

• Key regional stockmarkets erased earlier losses to close higher ahead of the reopening of U.S. and Chinese stockmarkets. The Nikkei tacked on 0.2% gains, despite a choppy trade. The Hang Seng also gained 1.8%, lifted by the rally in financials-related stocks, while the Shanghai Composite Index remained halted for the Chinese New Year holiday. Similarly, the majority of the ASEAN equities staged a turnaround, closing higher on Wednesday.
• U.S. equities came off intraday highs, closing lower in the eleventh hour, weighed down by hawkish monetary policies and increasing bond yields. The Dow (-0.7%) extended its losses for the second day in a row, hit by the continued weakness in Wal-Mart. On the broader market, the S&P 500 and the Nasdaq also declined by 0.6% and 0.2% respectively.
• The majority of European bourses finished on the upside amid the latest economic data releases and gains in mining and banking stocks. The FTSE (+0.5%) rallied, boosted by Lloyds Banking Group (+2.8%) and Glencore (+5.2%) following upbeat financial updates by the companies. The CAC also added 0.2%, but the DAX (-0.1%) lost ground as investors digested softer-thananticipated manufacturing and services data from the Eurozone.

THE DAY AHEAD

• Malaysian equities have defied the weakness on Wall Street yesterday and instead rode on the positivity of regional equity indices to head higher. Despite that, we think the market is still devoid of significant strength that could still leave the key index on the wayside. As it is, the buying interest is becoming indifferent after the recovery from the rout earlier in the month and many stocks remain fairly valued.

• At the same time, there is also little selling pressure and consequently, we see the key index attempting to build up a base around the 1,850 and 1,860 levels while awaiting for a new market course. The other support and resistance levels are at 1,820 and 1,880 respectively.

• We also think the lower liners and broader market shares may have reached a near term inflection point with fewer broad catalysts. Therefore, the buying interest will remain punctuated by bouts of profit taking activities that could limit their upsides.

COMPANY BRIEF

• Malakoff Corp Bhd's 4Q2017 net profit slumped 51.5% Y.o.Y to RM43.7 mln, impacted by lower capacity payment at the Segari Energy Ventures' gas plant and unscheduled plant outages at the Tanjung Bin Energy plant. Revenue for the quarter, however, grew 4.7% Y.o.Y to RM1.79 bln.
• For 2017, cumulative net profit slipped 12.8% Y.o.Y to RM310.0 mln. Revenue for the year, however, expanded 16.9% Y.o.Y to RM7.13 bln. A final single-tier dividend of 3.7 sen was declared. (The Star Online)

• The government has served a winding-up petition on Eden Inc Bhd as it seeking RM3.2 mln owed to the Inland Revenue Board for the years of assessments 2013 and 2014. Eden, which had transformed its core business from food and beverage to manufacturing and energy, is negotiating the payment terms with IRB and RM1.2 mln had been paid so far.

• The company has unaudited net assets of RM250.9 mln as at 30th September 2017 and is confident it will be able to resolve the outstanding amount prior to 8th May 2018 based on the proposed sources of fund. (The Star Online)

• UCrest Bhd has sold 40,000 user licences of the iMedic cloud hospital platform for one year and its configuration for US$838,993 (RM3.3 mln). The contract for the sale was entered into with Key Asic Pte Ltd. (The Star Online)

• MSM Malaysia Holdings Bhd’s 4Q2017 net profit declined 9.1% Y.o.Y to RM13.1 mln due to reduction in the overall sugar tonnage sold for the local market, coupled with higher finance cost and taxation. Revenue for the quarter decreased 21.7% Y.o.Y to RM656.1 mln.

• For 2017, cumulative net loss stood at RM32.6 mln vs. a net profit of RM120.7 mln in the previous year. Revenue for the year, however, improved marginally by 0.3% Y.o.Y to RM2.67 bln. (The Edge Daily)

• UOA Development Bhd's 4Q2017 net profit fell 44.6% Y.o.Y to RM191.8 mln, mainly due to the absence of fair value adjustments in the current quarter. Revenue for the quarter decreased 26.4% Y.o.Y to RM199.3 mln.

• For 2017, cumulative net profit declined 27.4% Y.o.Y to RM491.2 mln. Revenue for the year, however, climbed 8.4% Y.o.Y to RM1.08 bln. A first and final dividend of 15.0 sen was proposed. (The Edge Daily)

• Malaysia Airports Holdings Bhd's (MAHB) 4Q2017 net profit was down by 16.4% Y.o.Y to RM27.9 mln on higher total operational costs. Revenue for the quarter, however, gained 15.4% Y.o.Y to RM1.25 bln.

• For 2017, cumulative net profit soared 236.0% Y.o.Y to RM236.5 mln. Revenue for the year rose 11.5% Y.o.Y to RM4.65 bln. A final single-tier dividend of 8.0 sen per share was declared. (The Edge Daily)

• Hibiscus Petroleum Bhd’s 2QFY18 net profit rose 3.4% Y.o.Y to RM11.0 mln on higher revenue and lower expenses. Revenue for the quarter climbed 21.1% Y.o.Y to RM76.16 mln.

• For 1HFY18, cumulative net profit sank 76.0% Y.o.Y to RM21.83 mln. Revenue for the period, however, rose 14.2% Y.o.Y to RM134.3 mln. (The Edge Daily)

• Gopeng Bhd has proposed to undertake a one-for-two bonus issue entailing the issuance of up to 89.7 mln new shares to be credited as fully paid-up on an entitlement date to be determined later. The oil palm group expects to complete the exercise by 2Q2018. (The Edge Daily)

• AirAsia X Bhd’s (AAX) 4Q2017 net profit jumped 116.4% Y.o.Y RM84.4 mln, supported by growth in passenger volume. Revenue for the quarter increased 4.3% Y.o.Y to RM1.22 bln.

• For 2017, cumulative net profit expanded 120.5% Y.o.Y to RM98.9 mln. Revenue for the period added 16.9% Y.o.Y to RM4.56 bln. (The Edge Daily)

• Brahim’s Holdings Bhd has proposed a private placement of up to 23.6 mln new shares — representing 10.0% of its share capital, to raise cash for working capital purposes and to repay borrowings. Assuming an indicative price of 42.0 sen per placement share, the exercise could potentially raise up to RM9.9 mln, out of which RM9.2 mln has been earmarked for repayment of bank borrowings and RM485,000 for working capital. (The Edge Daily)

• D&O Green Technologies Bhd's 4Q2017 net profit rose 82.7% Y.o.Y to RM6.9 mln, thanks to an improved profit margin arising from a favourable change in sales mix and increased production efficiencies. Revenue for the quarter grew 3.0% Y.o.Y to RM132.5 mln.

• For 2017, cumulative net profit jumped 98.5% Y.o.Y to RM22.4 mln. Revenue for the period climbed 7.7% Y.o.Y to RM463.3 mln. (The Edge Daily)

Source: Mplus Research - 22 Feb 2018