• Late buying in selected index heavyweights shored the FBM KLCI (+0.1%) higher yesterday and allowing the key index to snap a three-day losing streak. The lower liners trended mostly lower as the FBM Small Cap and FBM Fledgling slipped 1.0% and 0.2% respectively, while the broader market closed mostly in the negative territory.

• Market breadth stayed negative as decliners outpaced advancers on a ratio of 564-to-314 stocks. Traded volumes, however, added 8.3% to 2.21 bln shares amid rotational play among the lower liners.

• Topping the FBM KLCI winners list was Nestle (+RM1.40), followed by Hong Leong Financial Group (+20.0 sen), Petronas Dagangan (+20.0 sen), Tenaga (+12.0 sen) and Maybank (+10.0 sen). Amongst the biggest advancers on thebroader market include BAT (+98.0 sen), Panasonic (+34.0 sen), Tasek Corporation (+25.0 sen), and Eksons Corporation (+18.0 sen). Air Asia added 18.0 sen after unveiling their plan not to participate in the Airport REIT.

• In contrast, notable decliners on the broader market were plantation stocks like United Plantations (-28.0 sen), Negri Sembilan Oil Palms (-22.0 sen), FGV (- 16.0 sen) and MHC Plantations (-8.5 sen) after crude palm oil prices tanked to fresh three-year low. Meanwhile, Hartalega (-15.0 sen), Petronas Chemicals (-14.0 sen), Dialog (-13.0 sen), Public Bank (-12.0 sen) and Malaysia Airport Holdings (-9.0 sen) led the big board’s decliners list.

• Asian benchmark closed mostly lower yesterday as the Shanghai Composite fell 0.9% after the retail sales in October2018 rose 8.6% Y.o.Y – the weakest growth since May 2018, while the Hang Seng Index slipped 0.6%. The Nikkei (+0.2%), however, outperformed its peers, despite Japan’s industrial production in September fell 2.5% Y.o.Y – the worst decline since July 2016. ASEAN equities, meanwhile, closed mixed yesterday.

• U.S. stockmarkets trended lower again overnight as the Dow (-0.8%) extended its losses after erasing all its intraday gains after the Democrats raised concern over the revamped NAFTA deal. Likewise, the S&P 500 slipped 0.8% with nine major sectors in the red, while the Nasdaq finished 0.9% lower.

• Earlier, major European equities – the FTSE (-0.3%), CAC (-0.7%) and DAX (- 0.5%) all retreated after Italy’s populist government stood pat on the -2.4% GDP deficit target in 2019, defying European Union’s advice. On a positive note, U.K. and the European Union revealed they have reached a draft Brexit deal.

THE DAY AHEAD

• Expectedly, the key index managed to close in the positive yesterday as it approaches the oversold territory. However, the gains were superficial with the broad market environment still reeling from the lack of confidence and market sentiments are still weak.

• Therefore, we think that the gains could be shortlived, particularly as major global stock indices are still in the red and could still dampen the performance of Malaysian stocks. While the buying interest is still scant, we also think that the selling could be abating and this could allow the key index to attempt a base building at around the 1,680-1,700 points level. The base could prove to be crucial to allow stocks to mount apotential window dressing activity towards the end of the year. The other support and resistance levels are at 1,670 and 1,710 respectively.

• Although the key index is finding support, the lower liners and broader market shares are still experiencing low following and this is likely to keep the FBM Small Cap index near its year low for longer. The lack of firm catalysts, coupled with the market wariness, is keeping many retail players on the sidelines and this trend is likely to persist for now.

COMPANY BRIEF

• Gas Malaysia Bhd’s 3Q2018 net profit jumped 22.1% Y.o.Y to RM41.0 mln, from RM33.6 mln a year ago, on higher volume of natural gas sold and higher income arising from asset contribution from customers. Meanwhile, revenue was also higher by 11.8% Y.o.Y to RM1.56 bln from, RM1.39 bln previously.

• Cumulative 9M2018 net profit added 29.6% Y.o.Y to RM129.3 mln, compared to RM99.8 mln last year, while revenue rose 16.4% Y.o.Y to RM4.49 bln, from RM3.86 bln earlier. (The Edge Daily)

• Malaysia Smelting Corp Bhd (MSC) posted a 52.5% Y.o.Y jump in 3Q2018 net profit to RM11.7 mln, from RM7.7 mln a year ago on stronger earnings from both its tin smelting and tin mining divisions. Quarterly revenue, however, narrowed by 23.2% Y.o.Y to RM309.4 mln, from RM403.2 mln in 3Q2017.

• The group said that the tin business achieved a turnaround in 3Q2018 due to a reversal of impairment losses, gain on disposal of joint-venture (JV), lead sales and higher other income. (The Edge Daily)
• GHL Systems Bhd has signed an agreement with Visa Worldwide Pte Ltd, enabling the former to offer electronic payment services and VISA card acceptance in Malaysia. The group expects the agreement to contribute positively to its earnings from 2019 onwards. (The Edge Daily)

• Advancecon Holdings Bhd was awarded a contract worth RM43.4 mln from Sime Darby Serenia Development Sdn Bhd to undertake earthworks and appurtenance works for Phase 2 of the Serenia City township development in Sepang, Selangor.

• The 15-month contract will commence from 27th November 2018 until 26th February 2020. (The Edge Daily)

• S P Setia Bhd’s 3Q2018 net profit took a beating as it plunged 81.3% Y.o.Y to RM65.2 mln, from RM348.9 mln a year ago following the completion of Phase 1 of the Battersea Power Station in the preivous corresponding quarter. Quarterly revenue also declined 6.1% Y.o.Y to RM993.0 mln from RM1.06 bln a year ago. (The Edge Daily)

• IGB Bhd's 3Q2018 net profit surged 90.9% Y.o.Y to RM68.3 mln vs. RM35.8 mln in the same quarter last year, mainly due to higher contribution from the group's property development and investments in both retail and commercial properties. Revenue also climbed 23.5% Y.o.Y to RM353.2 mln, from RM285.9 mln a year earlier. (The Edge Daily)

• Batu Kawan Bhd and Kuala Lumpur Kepong Bhd (KLK) both saw their 4QFY18 net profits weaken on the back of weaker crude palm oil (CPO) and palm kernel prices.

• Batu Kawan’s earnings more than halved to RM71.2 mln (-50.9% Y.o.Y), fromRM145.0 mln a year ago, while revenue fell 18.5% Y.o.Y to RM4.32 bln, from RM5.3 bln in the corresponding quarter in FY17.

• KLK’s net profit also plunged by 58.8% Y.o.Y to RM101.5 mln, from RM242.1 mln a year earlier, while revenue narrowed 18.8% Y.o.Y to RM4.19 bln, from RM5.16 bln a year ago.

• Moving forward, earnings growth prospects for both firms remain dull, inview of the depressed CPO prices currently. (The Star Online)

• Tatt Giap Group Bhd has appointed its two new substantial shareholders, Khoo Song Heng and Woon Kok Kee as its Executive Directors.

• Separately, the group has also appointed Lim Peng Tong as an Independent NonExecutive Director while former Chairman, Datuk Siah Kok Poay retired as a Non-Independent and Non Executive Director. (The Edge Daily)

• The Court of Appeal has dismissed Jaks Resources Bhd’s appeal to restrain a payout of a RM50.0 mln bank guarantee to Star Media Group Bhd, and upheld the High Court’s judgement on 12th July 2018 that the payment must be made within five working days.

• The bank guarantee was in relation to an agreement between Star Media and JAKS's subsidiary Jaks Island Circle Sdn Bhd (JIC) for the latter to develop a 15- storey tower within the Pacific Star development in Section 13, Petaling Jaya. (The Edge Daily)

• Amway (M) Holdings Bhd‘s 3Q2018 net profit rose 14.7% Y.o.Y to RM17.2 mln, from RM15.0 mln a year ago, boosted by higher sales, lower cost of sales due to forex fluctuation and lower operating expenses. Revenue also grew 6.8% Y.o.Yto RM260.2 mln, from RM243.7 mln previously. Subsequently, the group has declared an interim dividend of 5.0 sen per share, payable on 12th December 2018. (The Edge Daily)

Source: Mplus Research - 15 Nov 2018