Nowhere To Go

• The FBM KLCI finished on an upbeat note after lingering mostly in the positive territory during the day, alongside its regional peers. All the lower liners - the FBM Small Cap (+0.4%), the FBM Fledgling (+0.1%) and the FBM Ace (+0.2%) advanced, while the broader market ended mostly higher. Construction and Plantations sector stocks, however, remained negative on Monday.

• Market breadth was bullish as gainers flipped the decliners a ratio of 446-to-378 stocks. Traded volumes, however, dropped by 10.2% to 2.75 bln shares as investors took a breather following the recent rally in the lower liners.

• Energy-linked counters like Petronas Dagangan (+24.0 sen) and Dialog (+9.0 sen) were amongst the leading heavyweights gainers due to stronger crude oil prices, followed by Nestle (+20.0 sen), Public Bank (+8.0 sen) and Axiata (+7.0 sen). Meanwhile, other gainers include Carlsberg (+RM1.10), Aeon Credit (+64.0 sen), Fraser & Neave (+32.0 sen), Heineken Malaysia (+30.0 sen) and Amway (+24.0 sen).

• On the other hand, KESM Industries (- 20.0 sen), LPI Capital (-16.0 sen), BAT (- 14.0 sen), Shangri-La Hotels (-12.0 sen) and Lotte Chemical Titan (-11.0 sen) weighed on the broader market. Maxis (- 8.0 sen), Kuala Lumpur Kepong (-6.0 sen), Hartalega (-4.0 sen), Hong Leong Financial Group (-4.0 sen) and Tenaga Nasional (-4.0 sen) also lagged behind its key-index peers on Monday.

• Chinese shares rallied on Monday, following a record high of new bank loans issued in January, raising expectations of easing monetary policies by the government. The Shanghai Composite hit a new high last seen in September last year, while the Hang Seng Index gained 1.6% to 28,347 points. The Nikkei (+1.8%) also rallied, mainly due to gains in energy and consumer discretionary-linked stocks, while ASEAN stockmarkets ended mostly higher.

• U.S. stockmarkets were closed for the Presidents’ Day holiday.

• European benchmark indices pulled back slightly earlier, amid profit-taking activities and renewed concerns of higher auto tariffs. Gains in the Pound and weakness in defensive shares weighed on Britain’s main bourse as the FTSE closed 0.2% lower, while the DAX flatlined. The CAC, however, shrugged off the general downtrend and closed up by 0.3% to its three-month high.

The Day Ahead

• Expectedly, stocks on Bursa Malaysia headed higher yesterday in tandem with the positivity in global equities. However, the gains are still dull with only minute upsides as the fresh buying interest is still largely indifferent, a trend we see persisting over the near term.

• The insipid buying is also likely to restrain the key index’s progress and poised to keep it in a rangebound trend for longer. Therefore, we expect the FBM KLCI to remain within the 1,690 and 1,700 levels for now – the latter we continue to think is a difficult barrier for the key index to breach amid the already fair valuations of 16.4x on 2019’s potential earnings. 2019’s PER is already within its historical average range of 14x-17x. Apart from the above levels, the other support and resistance levels are at 1,687 and 1,698 respectively.

• The FBM Small Cap is still making minor headway, but we continue to think that it is already toppish and a pullback is already due. Hence, we think the upsides will be limited as the buying tapers after the recent gains.

COMPANY BRIEF

• Petronas Gas Bhd’s 4Q2018 net profit fell 34.6% Y.o.Y to RM317.9 mln, due to share of losses from a joint venture company, Kimanis Power Sdn Bhd (KPSB). Revenue for the quarter, however, increased 4.9% Y.o.Y to RM1.38 bln.

• For 2018, cumulative net profit grew marginally by 1.1% Y.o.Y to RM1.81 bln. Revenue for the year rose 12.3% Y.o.Y to RM5.50 bln. A fourth interim dividend of 22 sen per share, payable on 15th March 2019 was announced. (The Star Online)

• Deleum Bhd has bagged a three-year contract to provide gas lift valves and insert strings equipment, accessories and services to Petronas Carigali Sdn Bhd. The contract commenced on 7th January 2019 and has a one-year extension option. (The Edge Daily)

• Southern Steel Bhd’s 2QFY19 net loss stood at RM44.4 mln vs. a net profit of RM70.0 mln in the previous corresponding quarter on lower sales volume and selling prices. Revenue for the quarter declined 15.4% Y.o.Y to RM809.5 mln.

• For 1HFY19, cumulative net loss stood at RM42.6 mln vs. a net profit of RM123.4 mln recorded in the previous corresponding period. Revenue for the period decreased 6.3% Y.o.Y to RM1.74 bln. (The Edge Daily)

• Kuala Lumpur Kepong Bhd’s (KLK) 1QFY19 net profit added 6.6% Y.o.Y to RM250.9 mln, lifted by the property segment that offset the weak plantation segment that was impacted by the drop in crude palm oil's (CPO) and palm kernels' (PK) selling prices. Revenue, however, dropped 21.1% Y.o.Y to RM4.09 bln. (The Edge Daily)

• Berjaya Land Bhd is proposing to acquire a 100.0% stake in Geirsgata 11 EHF (GE11) and consequently settle the Iceland-based company's loan for a collective amount of US$14.0 mln (about RM57.5 mln) in its bid to venture into Iceland's property market. It’s unit, Berjaya Reykjavik Investment Ltd (BRIL) had entered into an agreement with Fiskitangi EHF (FEHF) and Utgerdarfelag Reykjavikur HF (URHF) for the two proposals.

• The first proposal is for BRIL to acquire 100.0% shares of Geirsgata 11 EHF for US$1.4 mln cash from FEHF. The second proposal is for BRIL to repay the outstanding loan of US$13.0 mln obtained by GE11 from URHF to purchase a piece of leasehold land in Iceland. (The Edge Daily)

• Kossan Rubber Industries Bhd’s 4Q2018 net profit increased 29.6% Y.o.Y to RM59.5 mln, attributable to improvements in all of its three divisions — gloves, technical rubber products (TRPs), and clean room. Revenue for the quarter expanded 23.4% Y.o.Y to RM589.4 mln.

• For 2018, cumulative net profit grew 10.3% Y.o.Y to RM200.8 mln. Revenue for the year rose 9.5% Y.o.Y to RM2.14 bln. (The Edge Daily)

• Hong Leong Industries Bhd’s 2QFY19 net profit increased 4.5% Y.o.Y to RM86.7 mln, on the back of higher consumer segment sales. Revenue for the quarter gained 11.2% Y.o.Y to RM702.9 mln.

• For 1HFY19, cumulative net profit decreased 4.9% Y.o.Y to RM156.8 mln. Revenue for the period, however, increased by 9.0% Y.o.Y to RM1.38 bln. (The Edge Daily)

• Guan Chong Bhd’s 4Q2018 net profit jumped 92.6% Y.o.Y to RM63.0 mln, thanks to improved margins, coupled with higher sales volume of cocoa products. Revenue for the quarter grew 32.5% Y.o.Y to RM651.3 mln.

• For 2018, cumulative net profit surged 107.9% Y.o.Y to RM189.3 mln. Revenue for the year rose 5.3% Y.o.Y to RM2.26 bln. A special dividend of 2.0 sen per share, payable on 29th March 2019, was declared.(The Edge Daily)  

Source: Mplus Research - 19 Feb 2019