Volatility Returns

• The FBM KLCI climbed back up from the negative territory and closed higher on Monday, boosted by buying-support in selected banking stocks and the slight recovery in crude oil prices and the Malaysian Ringgit. The lower liners also closed mostly higher, with the exception of the FBM Fledgling index. The broader market, meanwhile, was generally positive.

• Market breadth turned negative as the decliners overturned the advancers on a ratio of 428-to-365 stocks, while traded volumes thinned further by 14.3% to just 1.58 bln shares ahead of a public holiday.

• Significant advancers were Nestle (+80.0 sen), Public Bank (+38.0 sen), Petronas Dagangan (+26.0 sen), Hong Leong Financial Group (+24.0 sen) and Press Metal (+10.0 sen). Meanwhile, Allianz Malaysia (+44.0 sen), Panasonic Manufacturing (+30.0 sen), Apex Healthcare (+29.0 sen) and UWM Holdings (+28.0 sen) closed higher, alongside Pharmaniaga (+23.0 sen) after its 3Q2018 net profit more than quadrupled on lower operating expenses and tax expenses.

• Underperforming stocks on the broader market were Carlsberg (-24.0 sen), Harrisons (-20.0 sen), Lysaght Galvanised Steel (-20.0 sen), Shangri-La (-19.0 sen) and Time Dotcom (-17.0 sen). Notable decliners, meanwhile, were Malaysia Airports (-18.0 sen), Telekom Malaysia (- 12.0 sen), Hartalega (-10.0 sen), Petronas Chemicals (-9.0 sen) and Dialog (-6.0 sen).

• Asian equities were mostly downbeat after the Pan-Pacific summit came to an end without consensus on trade issues. The Nikkei fell 1.1%, dragged down by a wider-than-expected trade deficit last month. The Hang Seng index (-2.0%), meanwhile, erased earlier gains and closed lower, weighed down by weakness in tech stocks, alongside the Shanghai Composite (-2.1%). Similarly, the majority of the ASEAN equities were also splashed in red.

• U.S. key stockmarkets - the Dow (-2.2%), the S&P 500 (-1.8%) and the Nasdaq (- 1.7%) suffered heavy losses following an extended rout in tech stocks, hit by rising trade disputes after China uncovered evidence pointing to potential anticompetitive behaviors by three notable Korean chipmakers.

• Earlier, key European bourses was also splashed in red, in-tandem with the global selldown fueled by weakness in technology-related stocks and persistent trade worries. The FTSE (-0.8%) extended its losses for the third-straight session as geopolitical concerns remained at the center stage, while, its European counterparts - the DAX and the CAC also ended 1.6% and 1.2% lower respectively.

The Day Ahead

• Although the key index made headway on Monday, the market’s environment is set to reverse after global equities took a beating over the past two sessions that is likely to permeate to Malaysia stocks. As it is, conditions on Bursa Malaysian were already becoming more restrained two days ago as profit taking activities were setting in and only some last minute haul on selective index heavyweights allowed the key index to close in the positive.

• Hence, we see the profit taking and selling activities becoming more pronounced over the near term as market sentiment and confidence takes a fresh turn for the worse. The negativity on equities is likely to escalate and this is likely to set many stocks on the downward course again. The 1,700 points level could be retested again and if it gives way, the next support is at 1,690. The key resistance is at 1,720.

• The broader market is also set to endure another round of volatility in line with the wretched market conditions globally. Already, sentiments on the lower liners and broader market have stayed frail and the ongoing market malaise will add to the negativity over the near term.

COMPANY BRIEF

• Pharmaniaga Bhd’s 3Q2018 net profit surged 320.4% Y.o.Y to RM15.1 mln, mainly due to lower operating expenses. Revenue for the quarter added 2.3% Y.o.Y to RM588.0 mln.

• For 9M2018, cumulative net profit rose 18.8% Y.o.Y to RM38.0 mln. Revenue for the period grew 5.3% Y.o.Y to RM1.80 bln. A third interim dividend of 5.0 sen per share, payable on 3rd January 2019, was declared. (The Star Online)

• Sunway Construction Group Bhd’s 3Q2018 net profit rose 8.0% Y.o.Y to RM36.4 mln, driven by its construction and precast segments. Revenue for the quarter gained 13.4% Y.o.Y to RM557.3 mln.

• For 9M2018, cumulative net profit rose 4.6% Y.o.Y to RM108.1 mln. Revenue for the period added 22.8% Y.o.Y to RM1.63 bln. (The Star Online)

• Paramount Corp Bhd has entered into a strategic partnership with Australia’s University of Wollongong (UOW), to enhance its tertiary education business. The tie-up, worth RM28.5 mln, would see UOW’s wholly-owned subsidiary, UOW Global Enterprises, taking up a 65.0% stake in the business and operations of KDU University College and KDU Penang University College as well as a 70.0% stake in KDU College. (Bernama)

• Malaysian Resources Corp Bhd is planning a retail shopping mall at Penang Sentral, an integrated northern region transportation hub project by 2020. The total gross development value (GDV) of the whole Penang Sentral project is RM2.9 bln and phase two of the shopping mall project has begun. Work on the mall is currently ongoing and the first part of the piling work on phase two has just completed.

• The mall, with over 400,000 sq.ft. of retail space, will bring a fresh shopping experience to Butterworth residents and be a catalyst for the whole Penang Sentral project. Penang Sentral is an integrated transportation hub connecting KTM’s electric train service (ETS) and Komuter train services, intercity, express and stage bus services, taxi and ferry services. (Bernama)

• AirAsia Group Bhd is tapping into RHB Bank Bhd's expertise and reach to improve the services of its e-wallet, BigPay. Treasury services, foreign exchange services which offer better rates and remittances are some of the areas the two parties are considering. Targeted for launch in 1Q2019, the loyalty programme will later be extended to regional and international transactions. (The Edge Daily)

• MISC Bhd's 3Q2018 net profit sank 49.9% Y.o.Y to RM341.0 mln, after the previous year recorded a one-time gain from a favourable adjudication decision and construction profit from a floating storage and offloading (FSO) vessel. Revenue for the quarter slipped 3.9% Y.o.Y to RM2.23 bln. A third interim dividend of 7.0 sen per share, payable on 18th December 2018, was declared.

• For 9M2018, cumulative net profit declined 49.1% Y.o.Y to RM972.8 mln. Revenue for the quarter retreated 15.9% Y.o.Y to RM6.39 bln. (The Edge Daily)

• Deleum Bhd’s 3Q2018 net profit fell 15.6% Y.o.Y to RM9.1 mln, dragged down by unfavourable foreign exchange movements during the quarter. Revenue for the quarter, however, was up 4.6% Y.o.Y to RM175.4 mln.

• For 9M2018, cumulative net profit gained 4.6% Y.o.Y to RM19.7 mln. Revenue for the quarter increased 16.2% Y.o.Y to RM423.2 mln. (The Edge Daily)

• Dagang Nexchange Bhd’s 3Q2018 net profit slipped 55.4% Y.o.Y to RM6.7 mln, mainly due to increasing manpower cost and expenses incurred for business development activities and one-off goodwill impairment of RM3.6 mln. Revenue for the quarter, however, improved 27.9% Y.o.Y to RM63.3 mln.

• For 9M2018, cumulative net profit grew 16.4% Y.o.Y to RM35.0 mln. Revenue for the period gained 30.3% Y.o.Y to RM185.6 mln. (The Edge Daily)

• Ni Hsin Resources Bhd has sold off its 10.0% stake in undergarments manufacturer Caely Holdings Bhd to Penang-based businessman Datuk Seri Goh Choon Kim for RM9.6 mln. Ni Hsin expected RM1.5 mln gain arising from the disposal of the stake comprising 8.0 mln shares.

• Ni Hsin decided to hive off the stake because efforts to leverage on the customer bases of both companies had not been fruitful as the profiles of the customers are not compatible for the intended products. The selling price for the Caely shares was higher than the current market price. (The Edge Daily)  MMAG Holdings Bhd is buying Active Trio Deluxe Sdn Bhd which owns a 18,381 sq.m. parcel of industrial land in Seri Alam Industrial Park, Klang, Selangor for RM12.7 mln cash. The proposed acquisition will facilitate its whollyowned subsidiary, Line Clear & Logistics Sdn Bhd's future courier and logistics storage and warehousing needs in the area of Kapar. Line Clear may also use part of this land to carry out its sea freight business in future.

• The market value of the freehold land is RM13.0 mln, according to a valuation carried out by an independent valuer. With the proposed acquisition, the group's warehouse/storage land area will increase to 601,000 sq.ft., from 403,000 sq. ft. (The Edge Daily)  

Source: Mplus Research - 21 Nov 2018