Still Stuck In First Gear

• The FBM KLCI finished mostly unchanged, mainly due to holiday-thinned trading. On a weekly basis, the local keyindex, however, closed on a softer footing after losing 0.6% W.o.W to 1,695.9 points. All the lower liners – the FBM Small Cap (-1.3%), the FBM Fledgling (-0.5%) and the FBM Ace (-1.9%) retreated, together with most of the broader market shares.

• Market breadth was still bearish as losers more than doubled the winners, while traded volumes also narrowed by 10.0% to 1.58 bln shares as investors stayed on the sidelines with the lack of fresh leads.

• Hong Leong Bank (+10.0 sen), Petronas Dagangan (+6.0 sen), KLCC (+5.0 sen), Dialog (+4.0 sen) and IOI Corporation (+4.0 sen) led the Main Board gainers. Other charttoppers, meanwhile, include Allianz Malaysia (+50.0 sen) after it posted upbeat quarterly results, followed by United Plantations (+34.0 sen), Muda Holdings (+23.0 sen), BAT (+16.0 sen) and Time Dotcom (+13.0 sen).

• On the other-end of the spectrum, broader market losers were KESM Industries (-RM1.68), Malaysian Pacific Industries (-34.0 sen), Panasonic Manufacturing (-30.0 sen), Dufu Technology (-27.0 sen) and Fraser & Neave (-24.0 sen). Meanwhile, telcoheavyweights like Maxis (-5.0 sen) and Digi (-3.0 sen) weighed on the blue-chip gauge, alongside Malaysia Airports (-8.0 sen), Hong Leong Financial Group (-6.0 sen) and Press Metal (-5.0 sen).

• The Japanese market was closed for a public holiday, while key regional equities lost their footing amid heightened geopolitical uncertainties surrounding mega global economies, mainly the U.S., China, as well as the European Union. Chinese stocks were among the biggest losers as the Shanghai Composite erased 2.5%, weighed down by energy stocks, while the Hang Seng index fell 0.4% to close at 25,927.7 points. ASEAN stockmarkets, meanwhile, closed broadly weaker on Friday.

• Wall Street – the Dow (-0.7%), the S&P500 (-0.7%) and the Nasdaq (-0.5%) slipped, hit by expectations of slower economic growth and losses in the energy sector as crude oil prices sink to its lowest level in more than a year.

• U.K. stockmarkets also remained depressed as the FTSE erased 0.1% following an extended oil rout and uncertainties ahead of a key EU-UK Brexit summit. On the other hand, the DAX and the CAC bucked the general downtrend and closed 0.5% and 0.2% higher, the latter due to the rally in banking stocks amid Italy’s budget saga.

The Day Ahead

• Once again, a last minute haul on selected index heavyweights allowed the key index to close in the positive territory last Friday. Even with the above actions over the past few sessions to allow the FBM KLCI to close on a positive trend, the overall market environment is still tepid, devoid of catalysts as economic and trade concerns continue to dominate sentiments.

• Going by the current market environment, sentiment on Malaysian stocks is likely to remain dour as the ongoing results reporting season has provided few outperformers. Hence, we think the downside bias is still prevalent, in tandem with the global equity market performance.

• While we continue to see a weak market condition, we do not rule out further institutional support on selective index heavyweights that will allow the key index to close positively. On the downside, there are supports at 1,690 and 1,680 respectively, while the resistances are at 1,700 and 1,710 respectively.

• There appears to be little reprieve for the lower liners and broader market shares as market following continues to thin with the lack of positive leads that is sending more retail players to the sidelines, which we see continuing for longer.

MACRO BRIEF

• Malaysia's inflation, as measured by the consumer price index (CPI), rose 0.6% Y.o.Y in October 2018, due to higher price for housing, water, electricity, gas and other fuels (+2.1% Y.o.Y), food and nonalcoholic beverages (+1.2% Y.o.Y), restaurants and hotels (+1.2% Y.o.Y), education (+1.1% Y.o.Y), and transport (+0.8% Y.o.Y). On a monthly basis, the CPI increased 0.2% M.o.M. CPI for the period January-October 2018 registered an increase of 1.1% Y.o.Y. (The Edge Daily)

COMPANY BRIEF

• Malakoff Bhd’s 3Q2018 net profit increased 30.1% Y.o.Y to RM83.5 mln, mainly due to the gain from the disposal of 20.0% equity interest in Lekir Bulk Terminal Sdn Bhd. Revenue for the quarter improved 5.0% Y.o.Y to RM1.91 bln.

• For 9M2018, cumulative net profit fell 29.0% Y.o.Y to RM188.9 mln. Revenue for the period, however, rose 2.3% Y.o.Y to RM5.46 bln. (The Star Online)

• Bintulu Port Holdings Bhd’s 3Q2018 net profit sank 46.7% Y.o.Y to RM18.5 mln, on lower revenue, coupled with the disruption in LNG supplies. Revenue for the quarter fell 9.1% Y.o.Y to RM162.0 mln.

• For 9M2018, cumulative net profit slipped 43.6% Y.o.Y to RM58.2 mln. Revenue for the period declined marginally, by 1.1% Y.o.Y to RM488.1 mln. An interim dividend of 2.0 sen per share, payable on 27th December 2018 was declared. (The Star Online)

• Bumi Armada Bhd’s 3Q2018 net loss stood at RM502.8 mln vs. a net profit of RM123.7 mln recorded in the previous corresponding quarter, due to non-cash impairments totaling RM563.5 mln. Revenue for the quarter fell 8.3% Y.o.Y to RM588.0 mln.

• For 9M2018, cumulative net loss stood at RM1.04 bln vs. a net profit of RM288.4 mln recorded in the previous corresponding period. Revenue for the quarter, however, rose 5.7% Y.o.Y to RM1.84 bln. (The Star Online)

• MISC Bhd’s 3Q2018 net profit slipped 49.9% Y.o.Y to RM341.0 mln as a result of the volatile energy shipping market and its offshore business’ disappointing revenue contribution. Revenue for the quarter fell 4.0% Y.o.Y to RM2.23 bln.

• For 9M2018, cumulative net profit sank 49.2% Y.o.Y to RM972.8 mln. Revenue for the period retreated 15.9% Y.o.Y to RM6.39 bln. (The Star Online)

• Axiata Group Bhd’s 3Q2018 net profit fell 44.6% Y.o.Y to RM132.1 mln, after the Ringgit strengthened against all regional currencies, leading to an adverse foreign exchange (forex) translation impact. Revenue for the quarter declined 3.2% Y.o.Y to RM6.0 bln.

• For 9M2018, cumulative net loss stood at RM3.37 bln vs. a net profit of RM884.8 mln recorded in the previous corresponding period. Revenue for the quarter fell 2.9% Y.o.Y to RM17.62 bln. (The Star Online)

• YTL Corp Bhd’s 1QFY19 net profit declined 11.3% Y.o.Y to RM125.8 mln, due to lower contributions from its cement manufacturing and trading, property investment and development as well as utilities segments. Revenue for the quarter, however, rose 4.3% Y.o.Y to RM4.09 bln. (The Star Online)

• YTL Power International Bhd’s 1QFY19 net profit decreased 4.8% Y.o.Y to RM126.3 mln, mainly because of lower profit contribution from its water and sewerage as well as investment holding businesses, while the company’s multiutilities business fell into the red in the quarter. Revenue for the quarter, however, rose 8.9% Y.o.Y to RM2.80 bln. (The Star Online)

• Malaysian Resources Corp Bhd has received the settlement sum of RM1.33 bln for the termination of the Eastern Dispersal Link (EDL) concession from the Government. This would immediately reduce MRCB’s net gearing from 0.7x to 0.5x. Net gearing is expected to fall significantly further to 0.2x after the completion of the 80.0% disposal of MRCB’s 76.1 ac. land in Bukit Jalil to Employees Provident Fund, which is expected to be completed by the end- 2019. (The Star Online)

• Parkson Holdings Bhd’s 1QFY19 net loss narrowed to RM43.0 mln vs. a net loss of RM43.5 mln as higher taxes and finance costs were offset by improved revenue and lower operating expenses. Revenue for the quarter improved marginally by 0.8% Y.o.Y to RM924.1 mln. (The Edge Daily)

• Dayang Enterprise Holdings Bhd’s 3Q2018 net profit surged 43.5x Y.o.Y to RM48.8 mln, mainly due to higher volume of work orders and foreign exchange gains. Revenue for the quarter rose 32.5% Y.o.Y to RM281.9 mln.

• For 9M2018, cumulative net profit stood at RM66.5 mln vs. a net loss of RM89.7 mln recorded in the previous corresponding period. Revenue for the period grew 25.0% Y.o.Y to RM652.0 mln. (The Edge Daily)

• IOI Properties Group Bhd’s 1QFY19 net profit declined 54.3% Y.o.Y to RM112.0 mln, dragged down by lower property sales from Singapore and lower contribution from development projects in Malaysia. Revenue for the quarter fell 36.6% Y.o.Y to RM560.1 mln. (The Edge Daily)  

Source: Mplus Research - 26 Nov 2018