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Wednesday, June 21, 2017

Market Daily Report: FBM KLCI down on Tenaga as crude oil drop hits Malaysian shares




KUALA LUMPUR (June 21): The FBM KLCI fell 5.14 points or 0.3% on Tenaga Nasional Bhd share losses and as lower crude oil prices hit Bursa Malaysia oil and gas-related shares.

At 5pm, the KLCI closed at 1,775.57 points. Tenaga shares fell 14 sen to RM14.18 to become Bursa Malaysia's 7th largest decliner.

Tenaga shares fell after the state-controlled utility said the Employees Provident Fund and Permodalan Nasional Bhd cut their respective stakes in Tenaga.

On the broader market, analysts said investors could be taking profit across Bursa Malaysia ahead of the Hari Raya Aidilfitri holidays starting this Sunday (June 25).

Malaysian markets will be closed this Monday and Tuesday (June 26 and 27) for Hari Raya Aidilfitri.
Today, Jupiter Securities Sdn Bhd analyst Benny Lee told theedgemarkets.com: “Because of the long weekend for Malaysia, investors might be taking profit, so we might see a downtrend but the market should pick up after Hari Raya.”

Across Bursa Malaysia, 1.69 billion shares valued at RM2.41 billion were transacted. There were 284 gainers and 574 decliners.

Top active counter Hibiscus Petroleum Bhd fell 2.5 sen to 39 sen with 34.2 million shares transacted. Hibiscus could have taken the cue from lower crude oil prices.

Reuters reported that a renewed slump in oil prices to seven-month lows put Asian investors on edge on Wednesday, overshadowing a decision by US index provider MSCI to add mainland Chinese stocks to one of its popular benchmarks.

It was reported that Brent eased 10 cents to US$45.92 a barrel, while US crude futures lost 6 cents to US$43.45.


Source: The Edge

Tuesday, June 20, 2017

Market Daily Report: KLCI falls 8.19 points; Maybank active



KUALA LUMPUR (June 20): The FBM KLCI fell 8.19 points or 0.5% , weighed down by blue-chip stocks like Maxis Bhd and Petronas Gas Bhd.

At 5pm, the KLCI closed at 1,780.71 points. Maxis shares fell 26 sen to RM5.62 while Petronas Gas dropped 22 sen to RM18.66.

Maxis and Petronas Gas were Bursa Malaysia's fourth and sixth-largest decliners respectively.
“The KLCI’s decline was driven by losses sustained by some of the blue-chip stocks, including Maxis," Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew told theedgemarkets.com.

Maxis shares fell after the mobile telecommunication network provider said it was placing out 300 million new shares to investors. Petronas Gas shares dropped as crude oil prices fell.

Reuters reported that oil markets held around seven-month lows on Tuesday as investors focused on persistent signs of rising supply that are undermining attempts by OPEC and other producers to support prices.

US West Texas Intermediate crude futures were down three cents at US$44.17 a barrel. They declined 54 cents, or 1.2 percent in the previous session, to settle at US$44.20 per barrel, the lowest close since Nov. 14.

In Malaysia today, Bursa Malaysia saw 1.81 billion shares worth RM2.18 billion traded. Decliners beat gainers at 493 against 303 respectively.

Malayan Banking Bhd (Maybank) was among Bursa Malaysia's most-active stocks. Maybank shares rose one sen to RM9.64 with some 24 million units traded.

According to Inter-Pacific Securities remisier Sam Ng, Maybank drew interest from fund managers as investors might be reorganising their blue-chip  portfolios.

“In my view, the stock (Maybank) is still undervalued, so the attractiveness is there,” Ng told theedgemarkets.com.


Source: The Edge

Tuesday, June 13, 2017

Market Daily Report: FBM KLCI falls ahead of US interest rate decision




KUALA LUMPUR (June 13): The FBM KLCI fell 4.45 points or 0.2% to close at 1,784.44 points on profit taking ahead of the closely-watched US interest rate decision this week.

The US Federal Reserve's Federal Open Market Committee will decide on the country's interest rate direction upon conclusion of its two day meeting on Wednesday (June 14). US interest rate decisions are closely watched due to their impact on global fund flow.

In Malaysia today, Areca Capital Sdn Bhd chief executive officer Danny Wong Teck Meng told theedgemarkets.com : “Overall, the Malaysian market is not having a big fluctuation, investors are still waiting for more clarity from global economic (factors) like UK’s Brexit development and US’ Federal Reserve’s widely-anticipated rate hike."

At Bursa Malaysia, investors took profit after the KLCI reached its intraday high at 1,793.01 points.
Bursa Malaysia saw a total of 2.05 billion shares worth RM2.57 billion change hands. There were 349 gainers versus 557 decliners.

Priceworth International Bhd was the most-actively traded counter with 117.35 million shares traded. The stock rose three sen to 27 sen.

Across Asian share markets, Hong Kong's Hang Seng rose 0.56% while South Korea's Kospi gained 0.71%. Japan’s Nikkei 225 declined 0.05%.

Reuters reported that Asian stocks rebounded on Tuesday despite a further slide in US tech shares, while the Canadian dollar soared on the possibility interest rates might go up sooner than expected.


Source: The Edge

Friday, June 9, 2017

Market Daily Report: KLCI remains trapped below 1,800, lacking catalysts




KUALA LUMPUR (June 9): The FBM KLCI gained 3.32 points or 0.19% to close at 1,788.89, but remains trapped below the 1,800 resistance level amid a lack of catalysts and the uncertainty surrounding recent global developments.

On a week-on-week basis, the benchmark index has risen 11.94 points or 0.67% since it closed at 1,776.95 on June 2.

Kenanga Investment Bank Bhd research head Chan Ken Yew said the market is still consolidating following the developments in the US and UK, adding that there was not much catalyst for the local market currently.

“The market still seems to be consolidating below the 1,800 level. If it breaks the 1,787 to 1,800 ceiling, that would drive further increases in the index,” he said.

Meanwhile, Chan said investors are keeping an eye on the happenings in the US, UK and the Middle East, but said it is unlikely to have a significant impact on the local market.

Across the board, a total of 1.91 billion shares worth RM2.22 billion were traded. Gainers edged losers at 476 against 396, while 382 counters were unchanged.

Leading the gainers were Hartalega Holdings Bhd’s warrant stock HARTA-CU, while the decliners were led by Dutch Lady Milk Industries Bhd. The top active stock was Frontken Corp Bhd.
Elsewhere in Asia, Japan’s Nikkei gained 0.52%, South Korea’s Kospi increased 0.77% while Hong Kong’s Hang Seng fell 0.13%.

Reuters reported that the sterling pound spiralled lower today as British elections left no single party with a clear claim to power, sideswiping investors who had already weathered major risk events in the United States and Europe.

MSCI's broadest index of Asia-Pacific shares outside Japan were all but flat, it said.


Source: The Edge

Thursday, June 8, 2017

Market Daily Report: KLCI ends flat amid external uncertainties




KUALA LUMPUR (June 8): The FBM KLCI closed 0.35 point or 0.02% lower at 1,785.57, as investors keep an eye on global events, including the UK elections, the upcoming testimony by former FBI director James Comey and the developments in the Middle East.

Public Investment Bank Bhd head of research Ching Weng Jin said market participants are taking a wait-and-see attitude, amid the various global uncertainties.

“Investors are not taking any risks amid the UK elections, Comey’s testimony in the US and the diplomatic row in the Middle East. With all these external uncertainties, people are not willing to take any chances,” he said.

Ching noted the low volume of trades today, but said these external factors should not significantly impact the local market.

Across the board, some 1.95 billion shares, worth RM2.15 billion, were traded. Decliners beat gainers at 459 versus 419, while 389 counters were unchanged.

United Plantations Bhd led decliners, while Hartalega Holdings Bhd was top gainer. The top actively-traded counter was AT Systematization Bhd.

Elsewhere in Asia, Hong Kong’s Hang Seng rose 0.34%, South Korea’s Kospi gained 0.15%, while Japan’s Nikkei fell 0.38%.

Reuters reported Asian shares wobbled today, as investors braced for surprises from the UK election, a European Central Bank policy meeting and Comey’s testimony.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed, though China edged up on unexpectedly solid trade data.



Source: The Edge

Wednesday, June 7, 2017

Market Daily Report: KLCI eases as investors become more risk averse





KUALA LUMPUR (June 7): The FBM KLCI fell slightly today as investor sentiment was affected by foreign institutional funds becoming more risk averse, amid the Middle East political rift and ahead of events like the UK general election, European Central Bank policy meeting and former FBI director James Comey's Senate testimony.

The benchmark index settled at the day’s low of 1,785.92, down 5.09 points or 0.28% from yesterday. Its intra-day high was 1,792.65.

Mercury Securities Sdn Bhd head of research Edmund Tham said there was some profit taking in the market, as some investors do not see substantial upside to their investment.

“Investors are waiting for more clarity from these events, especially the foreign funds, they are more sensitive to global news development,” he told theedgemarkets.com.

“So when there is uncertainty, the KLCI would be capped and some local investors will be affected by this kind of sentiment and start taking profit,” he said.

Reuters reported other Southeast Asian stock markets were up today, as investors priced in chances of a victory for the ruling party in the UK election and a rate increase by the U.S. Federal Reserve next week.

Elsewhere, Japan’s Nikkei inched up 0.02%, while Hong Kong Hang Seng index declined 0.09%, and South Korea’s Kospi fell 0.36%.

Over at Bursa Malaysia, total volume stood at 2.36 billion shares, worth some RM2.36 billion. There were 395 gainers versus 459 losers, while 390 counters remained unchanged.

Top gainers included Nestle (M) Bhd, while the biggest loser was Bursa Malaysia Bhd. Frontken Corp Bhd was the most actively-traded counter, with 151.75 million shares exchanging hands.

The ringgit strengthened against the U.S. dollar, trading at 4.2645 at the time of writing.


Source: The Edge

Monday, June 5, 2017

Market Daily Report: KLCI up 0.62%, trails U.S. market rally from last week



KUALA LUMPUR (June 5): The FBM KLCI rose 0.62% today, trailing last week’s rally in the U.S. stock market and supported by higher commodity prices.

The benchmark index rallied throughout the day to close up 11 points at 1787.95. On the broader market, 2.48 billion shares, worth RM2.64 billion were traded with 542 gainers against 382 decliners, while 353 counters closed unchanged.

Inter-Pacific Research head Pong Teng Siew said the local market was boosted by the bullish sentiment seen in the U.S. market, which closed at record highs last Friday, lifted by finance and technology stocks.

Both the S&P 500 and the Dow Jones Industrial Average closed at record highs of 2,349.07 and 21,206.39 respectively.

Back home, gainers included Hong Leong Financial Group Bhd, KESM Industries Bhd, United Plantations Bhd and Petronas Dagangan Bhd. Decliners included Kluang Rubber Co (M) Bhd and Manulife Holding  Bhd.

Pong said the KLCI “has no problem breaching the 1,800-level soon”, but raised concerns on over-valuation of companies. “The average price-earnings ratio (P/E) in KLCI is at 15.9 times, fast approaching the trading levels in 12-month forward basis.

“This tells you that we are near the peak of valuation in P/E terms.

“We have not been able to break the level during the previous cycles of stock market rally and during the 2008 financial crisis, so it remains to be seen [as to] how far the shares will climb,” he added.

Oil prices rose to an intra-day high of US$50.71 earlier today, following news Saudi Arabia, Bahrain, the United Arab Emirates and Egypt cut ties with Qatar on terrorism concerns, Reuters reported. Meanwhile, crude palm oil prices continued to recover from last week’s losses, thanks to higher demand in the spot market.

Among Asian stock indices, Japan’s Nikkei 225 closed down 0.03% to stay well above the 20,000 level. South Korea’s KOSPI lost 0.13%, whereas Hong Kong’s HSI closed 0.24% lower.


Source: The Edge

Friday, June 2, 2017

Market Daily Report: FBM KLCI up 13.84pts on strong US jobs numbers



KUALA LUMPUR: The FBM KLCI rose 13.84 points or 0.78% to close at 1,776.95 as market sentiment was boosted by the strong overnight performance on Wall Street on positive jobs data.
"Payroll numbers in the US were better than expected, so the market's performance was riding on that momentum and the anticipation of what should be a positive US jobs report to be released later this evening," said Etiqa Insurance head of research at Chris Eng.

Reuters said ADP reported private payrolls grew by 253,000 last month, beating analysts' median forecast of a 185,000 increase. If the US government's payroll report for May were to show another solid pickup in hiring, it would cement expectations that a rate hike in less than two weeks is a done deal.

"The big, medium and small cap indexes saw positive performance today as well," Eng added.
The broader market saw gainers leading losers at 732 to 247, with 318 counters closing unchanged.
Some 2.46 billion shares valued at RM2.58 billion changed hands.

Top gainers included Dutch Lady Milk Industries Bhd, Hong Leong Bank Bhd and Hong Leong Financial Group Bhd, while top losers were Nestle (M) Bhd, British American Tobacco (M) Bhd and Ajinomoto (M) Bhd.

Elsewhere in Asia, Japan's Nikkei share average broke through the 20,000-point level for the first time since December 2015 as strong US economic data and a weaker yen boosted investor confidence, Reuters reported.

South Korea's KOSPI rose 1.16% to 2,371.72 while Hong Kong's Hang Seng Index was up 0.44% at 25,924.05.



Source: The Edge

Wednesday, May 31, 2017

Market Daily Report: FBM KLCI up at 11th hour on CIMB, Maybank




KUALA LUMPUR (May 31): The FBM KLCI rose 0.53 point as the index erased losses at the eleventh hour on buying interest in CIMB Group Holdings Bhd, Malayan Banking Bhd and Petronas Dagangan Bhd shares.

At 5pm, the KLCI closed at 1,765.87 points after falling to its intraday low at 1,761.11 points. CIMB added 14 sen to RM6.40, Maybank climbed eight sen to RM9.44 while Petronas Dagangan rose 64 sen to RM24.60.

Petronas Dagangan was Bursa Malaysia's top gainer while CIMB was the fifth most-active stock.
"Thanks to the banking counters, the KLCI managed to  continue sustaining its green position today,” Maybank Investment Bank Bhd chartist Nik Ihsan Raja Abdullah told theedgemarket.com over telephone.

Across Bursa Malaysia, 2.74 billion shares worth RM5.17 billion were traded. Decliners outpaced gainers by 501 versus 437 respectively.

IHH Healthcare, Berjaya Sports Toto Bhd and AirAsia X Bhd were the top three actively-traded counters.


Source: The Edge

Tuesday, May 30, 2017

Market Daily Report: KLCI stays flat as 1Q earnings fall short of expectations



KUALA LUMPUR (May 30): The FBM KLCI remained fairly flat today, closing 0.45 points or 0.03% higher at 1,765.34, as the market appeared unimpressed by first quarter financial results.

“(There was) a bit of disappointment on the market's part, as the big comeback was expected in 1Q earnings did not live up to expectations,” said Pong Teng Siew, head of research at Inter Pacific Securities Sdn Bhd, although he himself did not feel let down by the results.

In particular, the small and mid-cap indexes were in the midst of a correction, Pong said, highlighting that most other regional indices were down.

A total of 2.61 billion shares worth RM2.16 billion were traded. Decliners outpaced gainers by 680 to 235 stocks with 348 other counters unchanged.

Gainers were led by Ajinomoto (M) Bhd, Petronas Gas Bhd, and KESM Industries Bhd. Meanwhile, the day’s top losers were Panasonic Manufacturing Malaysia Bhd, Fraser & Neave Holdings Bhd and Genting Malaysia Bhd.

Hibiscus Petroleum Bhd, Luster Industries Bhd, and AirAsia X Bhd were the top three most active counters of the day.

Reuters reported that concerns over Greece’s inability to fulfil debt repayments due in July weighed on both the European and Asian stock markets, with European markets experiencing a soft start.
Japan’s Nikkei, meanwhile, was flat on a stronger yen and South Korea’s KOSPI fell 0.4% on profit taking after the market rallied this month.


Source: The Edge

Friday, May 26, 2017

Market Daily Report: KLCI declines as OPEC disappoints




KUALA LUMPUR (May 26): The FBM KLCI fell 1.66 points or 0.1% to 1,772.30 points at 5pm today, after the Organization of the Petroleum Exporting Countries' (OPEC) output cut extension disappointed investors.

Investors had earlier hoped OPEC would do more to support crude oil prices. They were disappointed by the absence of additional cut in crude oil production by OPEC.

Reuters reported at Thursday's meeting in Vienna that OPEC and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day, until the end of the first quarter of 2018. The initial agreement would have expired in June this year.

It was reported Brent futures were up 28 cents at US$51.74 a barrel at 0837 GMT today.
In Malaysia today, JF Apex Securities Bhd research head Lee Chung Cheng told theedgemarkets.com that oil and gas share losses weighed on the KLCI.

“There were some disappointment in the market after OPEC's meeting, a lot of people are expecting a bigger output cut, as you can see there were sell down on the oil and gas stocks, which dragged the whole market sentiment.

“We think this is just temporary; as you can see, oil prices have come up again towards the afternoon, but for next week, we still see sideway trading within the local market,” Lee said.

Bursa Malaysia saw 771 decliners versus 208 gainers. Trading volume was 2.86 billion shares, worth RM2.61 billion.

The biggest decliner was oil and gas entity Petron Malaysia Refining & Marketing Bhd, while Malaysian Pacific Industries Bhd led gainers.


Source: The Edge

Thursday, May 25, 2017

Market Daily Report: KLCI rises with Asian markets on US Fed cue



KUALA LUMPUR (May 25): The FBM KLCI rose 2.95 points or 0.2% to 1,773.96 points with Asian shares after the overnight uptick in US equities. World shares rose after the US Federal Reserve indicated it may postpone interest rate hikes until policymakers get a clearer picture on the economy.

Slower US interest rate hikes bode well for Asian markets like Malaysia in anticipation of foreign demand for Asian assets, which yield higher returns.

Across Asia, Japan's Nikkei 225 added 0.36% while Hong Kong's Hang Seng rose 0.8%.
At Bursa Malaysia, the KLCI pared gains at 5pm after reaching its intraday high at 1,782.54 points. Etiqa Insurance & Takaful research head Chris Eng said the KLCI pared gains due to spillover effects from the selldown in European stock markets.

"The (Malaysian share market) selldown is not really localised; it coincides with the selldown in the European markets, at around 3.55pm today," Eng said.

Reuters reported that European shares opened higher, but quickly dipped into negative territory. The pan-European STOXX 600 index was last down 0.3%, led lower by resources companies after a 4% drop in iron ore on China's Dalian Commodity Exchange.

In Malaysia, Eng told theedgemarkets.com that investor sentiment might have been subdued by the sudden selldown in European markets prompting more selling later in the day despite an overall encouraging financial results by companies, such as index-linked Malayan Banking Bhd.
Bursa Malaysia saw 2.95 billion shares valued at RM3.17 billion traded. There were 377 gainers against 590 decliners.

Newly-listed Inta Bina Group Bhd shares added 5.5 sen to 30.5 sen with some 126 million units traded. Inta Bina, which was listed at 25 sen a share, was Bursa Malaysia's second most-active stock.


Source: The Edge

Wednesday, May 24, 2017

Market Daily Report: KLCI up on bargain hunting, CIMB




KUALA LUMPUR (May 24): The FBM KLCI rose 3.84 points or 0.2% on bargain hunting and as investors bought CIMB Group Holdings Bhd shares after the financial-services provider reported a 46% rise in first quarter net profit from a year earlier.

At 5pm, the KLCI closed at 1,771.01 points after trading between 1,767.22 and 1,776.24 points today. KLCI-linked CIMB rose 14 sen to RM6.13 to become Bursa Malaysia's eighth-largest gainer.
CIMB said net profit rose to RM1.18 billion in the first quarter ended March 31, 2017 from RM813.8 million. Revenue was higher at RM4.36 billion versus RM3.73 billion.

Across Bursa Malaysia, 3.38 billion shares worth RM2.9 billion changed hands. Decliners outran gainers by 546 to 419 respectively.

Yesterday, the KLCI fell 7.78 points to 1,767.17 points after the explosion at the UK's Manchester city hit market sentiment.

Today, Areca Capital Sdn Bhd chief executive officer Danny Wong Teck Meng said: "KLCI is expected to remain range bound this week, but in the longer term, we still see some more upside. Corporate earnings have been satisfying so far, and they can be better by the next reporting season in August this year."

"Most of the economic indicators have been reflecting that Malaysia's economy is recovering, be it trade, ringgit and oil prices," Wong told theedgemarkets.com.

Malaysian shares rose as news on China's sovereign credit rating downgrade by Moody's Investors Service hit market sentiment. Reuters reported that world stocks inched lower on Wednesday after China's sovereign credit rating was downgraded and as investors eyed a pause in Wall Street's four-day winning streak, the longest in over three months.

In its first downgrade of the country in nearly 30 years, Moody's cut China's rating by one notch to A1 from Aa3, saying it expects the economy's financial strength to erode in coming years as growth slows and debt continues to rise.


Source: The Edge

Tuesday, May 23, 2017

Market Daily Report: KLCI falls 7.78pts as UK blast hits sentiment



KUALA LUMPUR (May 23): The FBM KLCI fell 7.78 points or 0.4% on profit taking and as an explosion in the UK's Manchester city, clouded sentiment.

At 5pm, the KLCI closed at its intraday low at 1,767.17 points, as investors took profit in index-linked Petronas Gas Bhd and Petronas Dagangan Bhd shares.

Petronas Gas fell 62 sen to RM19.18, while Petronas Dagangan dropped 36 sen to RM24.68. Petronas Gas and Petronas Dagangan were the fourth and seventh-largest decliners on Bursa Malaysia, respectively.

Bursa Malaysia saw 2.91 billion shares, valued at RM2.8 billion changed hands. There were 636 decliners versus 292 gainers.

Oil and gas companies' shares could have taken the cue from lower crude oil prices, after the U.S. proposed to sell half of its crude oil inventory.

Reuters reported oil prices fell on Tuesday, weighed down by U.S. President Donald Trump's plan to sell off half of the country's huge oil stockpile, threatening a future glut, even as OPEC and its allies cut output to try and tighten the market. Brent crude ended a run of four days of consecutive gains to trade 36 cents lower at US$53.51 per barrel at 0831 GMT.

In the UK, Reuters reported the sterling slipped on Tuesday after a suspected suicide attack killed at least 22 people and wounded 59 at a pop concert in the English city of Manchester, while the euro held gains made, after German Chancellor Angela Merkel said it was "too weak".

In Malaysia, Mercury Securities Sdn Bhd research head Edmund Tham told theedgemarkets.com that other than the news on the UK explosion, the Malaysian share market also fell on profit taking.
“All (Bursa Malaysia) industry indices were down today, we didn’t see anything other than the (suspected) terrorist attack news so far.

"But we believe there were some profit taking activities going on, as well. The market decline was not entirely due to the (UK) news, which affects sentiment,” Tham said.


Source: The Edge

Friday, May 19, 2017

Market Daily Report: FBM KLCI up on crude oil as U.S. shares recover




KUALA LUMPUR (May 19): The FBM KLCI rose 1.11 points or 0.1% as higher crude oil prices led to oil and gas companies' share gains. Malaysian equities also tracked Asian share gains, following U.S. stocks' overnight recovery.

At 5pm, the KLCI closed at 1,768.28 points, after reaching its intraday high and low at 1,771.50 and 1,767.89 points respectively.

KLCI-linked oil and gas stock Petronas Dagangan Bhd rose 68 sen to RM24.76, while Petronas Gas Bhd ended flat at RM19 after rising to its intraday high at RM19.56. Petronas Dagangan was Bursa Malaysia's top gainer.

Across Bursa Malaysia, 3.27 billion shares, worth RM3.24 billion, were traded. Gainers outpaced decliners at 623 versus 302 respectively.

Reuters reported oil futures rose on Friday to the highest in nearly a month, on growing optimism big producing countries will extend output cuts to curb a persistent glut in crude, with key benchmarks heading for a second week of gains.

Brent crude was up 28 cents or 0.5% at US$52.79 at 0630 GMT. The contract earlier rose to the highest since April 21 and is on track for a nearly 4% climb this week, its second week of gains.
In Malaysia, TA Securities Holdings Bhd senior technical analyst Stephen Soo told theedgemarkets.com: “Oil and gas stocks are rather buoyant now and all eyes will be on these counters soon. The degree of production cuts may be higher than the market’s expectations, but this would mean oil prices will be firmer."

“Further[more], Asian (share) markets are also recovering, following a period of being under pressure on concerns over U.S. interest-rate hike announcements,” Soo said.

Across Asia, Japan’s Nikkei 225 climbed 0.19%, while Hong Kong’s Hang Seng rose 0.15%. In overnight U.S. share trades, the Dow Jones Industrial Average climbed 0.27%, S&P 500 increased 0.37%, while Nasdaq Composite was 0.73% higher.

U.S. shares recovered on Thursday, after closing lower on Wednesday, amid allegations U.S. President Donald Trump tried to influence a federal probe, which sparked talk of his impeachment.
It was reported former Federal Bureau of Investigation chief James Comey said in a memo that Trump had asked him to end a probe into former National Security Adviser Michael Flynn's ties with Russia.


Source: The Edge

Thursday, May 18, 2017

Market Daily Report: KLCI falls with Asian shares as Trump talk hits sentiment




KUALA LUMPUR (May 18): The FBM KLCI fell 8.48 points or 0.5% with Asian markets, after U.S. shares closed lower overnight, amid allegations U.S. President Donald Trump tried to influence a federal probe, which sparked talk of his impeachment.

Reuters reported the S&P 500 and the Dow notched their biggest one-day fall since Sept 9 as investors hope for tax cuts, while other pro-business policies faded after reports Trump tried to interfere with a federal investigation, set off alarm bells on Wall Street.

Former Federal Bureau of Investigation chief James Comey said in a memo that Trump had asked him to end a probe into former National Security Adviser Michael Flynn's ties with Russia, the report said.

In Malaysia, the KLCI closed at 1,767.17 points. Across Asia, Japan’s Nikkei 225 fell 1.32%, South Korea’s Kospi retreated 0.27%, while Hong Kong’s Hang Seng declined 0.62%.
In overnight U.S. share trades, the Dow Jones Industrial Average dropped 1.78%, S&P 500 fell 1.82%. while Nasdaq Composite was 2.57% lower.

In Malaysia today, Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew told theedgemarkets.com: “The KLCI fell in line with U.S. markets that declined on talks of Trump’s impeachment, but I doubt it will come true. The markets have been affected, but I think this would only be a short-term pullback.”

Across Bursa Malaysia, 2.99 billion shares valued at RM2.64 billion were traded. Decliners beat gainers at 625, against 317 respectively.
Aeon Credit Service (M) Bhd led decliners, while British American Tobacco (M) Bhd topped gainers.

The most active stocks included Anzo Holdings Bhd which saw 59.47 million shares exchanging hands. Anzo shares fell two sen to 25.5 sen, after trading between 25 sen and 28.5 sen today. 
Timber product maker Anzo's shares had earlier risen, after it reported a net profit of RM1.27 million in the fourth quarter ended March 31, 2017, versus a net loss of RM3.84 million a year earlier. Full year net loss narrowed to RM4.63 million, from a net loss of RM10.85 million.


Source: The Edge

Wednesday, May 17, 2017

Market Daily Report: FBM KLCI down with S&P 500 mini futures





KUALA LUMPUR (May 17): The FBM KLCI fell 2.5 points or 0.1% as Asian shares tracked U.S. stock futures' losses, on concerns about U.S. President Donald Trump's ability to realise the U.S.' economic growth plans.

Reuters reported the S&P 500 mini futures and the dollar tumbled on Wednesday on worries about more U.S. political turmoil, after media reports said Trump asked then-FBI Director James Comey to end a probe into Trump's former national security advisor.
The reports raised questions over whether obstruction of justice charges could be laid against Trump, weakening confidence in the U.S. president's ability to push through an aggressive stimulus programme that investors had been banking on, since his election in November.

In Malaysia today, the KLCI closed at 1,775.65 points at 5pm. Across Asia, Japan’s Nikkei 225 fell 0.53%, Hong Kong’s Hang Seng dropped 0.17%, while South Korea’s Kospi was down 0.1%.
At 5:08pm, S&P 500 mini futures fell 0.52% to 2,384.50.
In Malaysia, JF Apex Securities Bhd senior analyst Lee Cherng Wee told theedgemarkets.com that the KLCI fell in line with Asian markets, amid a lack of catalysts for Malaysian markets.
“The decline was in line with regional markets. We expect the market to remain sideways in the near-term, below the 1,785 level,” Lee told theedgemarkets.com.

Bursa Malaysia saw 3.45 billion shares, worth RM2.88 billion traded. Decliners beat gainers at 473 versus 417, respectively.

The top active stock was Priceworth International Bhd, which recorded a trading volume of 282.96 million shares.

Priceworth rose four sen to 29 sen, after the company said its wholly-owned subsidiary Sinora Sdn Bhd would immediately start logging operations within Sabah's Forest Management Unit 5 in Trus Madi, following the state's authorities' approval.


Source: The Edge

Tuesday, May 16, 2017

Market Daily Report: KLCI flat after falling on IHH



KUALA LUMPUR (May 16): The FBM KLCI fell 0.5 point to 1,778.15 points after the index cut losses in the final trading minutes on late buying of Petronas Dagangan Bhd shares.

The KLCI had earlier fallen partly on IHH Healthcare Bhd share losses. At 5pm, Petronas Dagangan rose 34 sen to RM24.40 while IHH fell 25 sen to RM5.92.

Petronas Dagangan was the fourth-largest gainer across Bursa Malaysia while IHH was the fifth-largest decliner.

Bursa Malaysia decliners outpaced gainers at 497 versus 412 respectively. The bourse saw 3.52 billion shares worth RM3.84 billion change hands.

Iskandar Waterfront City Bhd (IWCity) was the most-actively traded with 272.02 million shares transacted. The stock closed 15 sen lower at RM1.98. As Bandar Malaysia-linked stocks like IWCity and Ekovest Bhd hogged the spotlight, analysts, however, said the Malaysian stock market still lacked major catalysts.

Mercury Securities Sdn Bhd head of research Edmund Tham told theedgemarkets.com that economic data such as the Malaysia's first quarter gross domestic product (GDP) numbers might offer investors
notable clues on the stock market's direction.

“There is not any huge catalyst in the stock market. Investors are also waiting for economic data to have a clearer direction, such as the first quarter GDP,” Tham said.

Bank Negara Malaysia will release the first quarter GDP numbers this Friday (May 19). For tomorrow (May 17), the Statistics Department will announce the country's inflation numbers.


Source: The Edge

Monday, May 15, 2017

Market Daily Report: KLCI rises in 11th hour on Genting; IWCity hits limit up




KUALA LUMPUR (May 15): The FBM KLCI rose 2.78 points or 0.2% in the final trading minutes on late buying of Genting Bhd shares and as investors evaluated the impact of higher crude oil prices on the stock market.

At 5pm, the KLCI closed at 1,778.65 points after falling to its intraday low at 1,771.87 points.

KLCI-linked Genting Bhd shares rose seven sen to RM9.96 after 52.84%-owned subsidiary Genting Singapore PLC said net profit rose significantly to S$181.1 million (RM560.58 million) in the first quarter ended March 31, 2017 from S$10.84 million a year earlier.

“The KLCI erased losses when it is nearing the end of the trading hours. The market may consolidate depending on the corporate earnings announcement moving forward,” Areca Capital Sdn Bhd chief executive Danny Wong told theedgemarkets.com.

Bursa Malaysia saw 3.74 billion shares worth RM3 billion change hands. Decliners outpaced gainers at 508 versus 421.

Iskandar Waterfront City Bhd (IWCity) was the most-actively traded counter with 201.73 million shares traded after the stock hit limit up on bargain hunting.

IWCity rose 49 sen or 30% to close at its intraday high at RM2.13
to become the third-largest gainer. The stock had in recent days fallen after Malaysian Government-owned TRX City Sdn Bhd said its planned sale of a 60% stake in Bandar Malaysia Sdn Bhd to IWH CREC Sdn Bhd  was "null and void with immediate effect."

Today, Malaysian shares could have also risen on higher crude oil prices, which led to gains in stocks including KLCI-linked Petronas Dagangan Bhd and Petronas Chemicals Group Bhd.

Reuters reported that oil prices jumped two percent on Monday after the energy ministers of the world's two biggest producers Saudi Arabia and Russia jointly said that a crude production cut would be extended from the middle of this year until March 2018.


Brent crude was at US$51.88 per barrel at 0655 GMT, up US$1.04, or 2.1 percent, from its last close at a level last seen in early May.


Source: The Edge

Friday, May 12, 2017

Market Daily Report: FBM KLCI erases losses on late buying of Genting, Maybank and CIMB




KUALA LUMPUR (May 12): The FBM KLCI rose 0.48 point to 1,775.87 points on last minute buying in index-linked Genting Bhd besides banking stocks Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd.

The KLCI erased losses after falling on declines in Petronas Gas Bhd, Petronas Dagangan Bhd and Petronas Chemicals Group Bhd shares. The KLCI rose to its intraday high at 1,778.64 points before falling to its intraday low at 1,773.15 points.

“There was a high selling pressure in index-linked Petronas Chemicals and Genting Malaysia Bhd since the noon market break today. But clearly, the market remains buoyant and flush with liquidity as investors continue to search for hidden gems,” Maybank Investment Bank Bhd chartist Nik Ihsan Raja Abdullah told theedgemarkets.com.

At 5pm, Genting Bhd shares rose 16 sen to RM9.89, Maybank added seven sen to RM9.38 while CIMB climbed four sen to RM5.95. Genting Bhd was the seventh-largest gainer across Bursa Malaysia.

Bursa Malaysia saw 2.7 billion shares worth RM2.18 billion change hands. Decliners outpaced gainers at 516 versus 424 respectively.

Top decliner Petronas Gas fell 52 sen to RM18.60.

Source: The Edge

Thursday, May 11, 2017

Market Daily Report: FBM KLCI up 8.83 points on crude oil price rise




KUALA LUMPUR (May 11): The FBM KLCI rose 8.83 points or 0.5%
as higher crude oil prices buoyed world share gains. Such sentiment led to buying in KLCI-linked Petronas Gas Bhd and Petronas Dagangan Bhd shares.

At 5pm, the KLCI closed at 1,775.39 points. Petronas Gas rose 62 sen to RM19.12 to become Bursa Malaysia's third-largest gainer. Petronas Dagangan climbed 28 sen to RM24.28.

Across Asian share markets, Japan's Nikkei 225 closed up 0.31%, while Hong Kong's Hang Seng rose 0.44%.

Reuters reported that world stocks held near all-time highs on Thursday, helped by a rebound in energy shares as oil prices rose after US fuel inventories declined and Saudi Arabia cut supplies of crude to Asia more than expected.

It was reported that Brent crude rose another 1.3 percent following a 3 percent gain in the previous session. The advance helped Brent regain the US$50 level and reverse all of last week's losses.
In Malaysia, Maybank Investment Bank Bhd chartist Nik Ihsan Raja Abdullah told theedgemarkets.com that "clearly, there is ample liquidity in the market."

"The benchmark index (KLCI) also tracked the slight recovery in oil prices, which gained 3% overnight," Nik Ihsan said.

Across Bursa Malaysia, 3.55 billion shares valued at RM3.48 billion changed hands. Gainers outpaced decliners at 560 versus 376 respectively.

Top gainers included oil and gas-based Petron Malaysia Refining & Marketing Bhd and Hengyuan Refining Co Bhd. NetX Holdings Bhd was the most-active counter.


Source: The Edge

Tuesday, May 9, 2017

Market Daily Report: KLCI pares losses on Axiata, Westports




KUALA LUMPUR (May 9): The FBM KLCI fell 1.59 points or 0.1% as the index pared losses on Axiata Group Bhd and Westports Holdings Bhd share gains.

At 5pm, the KLCI closed at 1,766.56 points after falling to its intraday low at 1,765.14 points. Investors took profit after the KLCI rose to its intraday high at 1,770.43 points.

Yesterday, the index climbed 5.41 points to 1,768.15 points as Emmanuel Macron's win in France's presidential election improved world market sentiment.

Today, Maybank Investment Bank Bhd chartist Nik Ihsan Raja Abdullah told theedgemarkets.com that the KLCI had fallen on Genting Bhd, Genting Malaysia Bhd, MISC Bhd and Malayan Banking Bhd (Maybank) share losses.

Genting Bhd fell eight sen to RM9.72, Genting Malaysia dropped two sen to RM5.74, MISC declined nine sen to RM7.35 while Maybank was three sen lower at RM9.36.

“Investors were battering down these four counters today but the losses were mitigated by continued support in Axiata and Westports today," Nik Ihsan said. Axiata rose three sen to RM5.25 while Westports added six sen to RM3.92.

Across Bursa Malaysia, 3.23 billion shares worth RM2.74 billion exchanged hands. A total of 427 counters ended higher versus 455 decliners.

Iskandar Waterfront City Bhd (IWCity) was the most-active stock with 237.62 million shares traded. The stock fell 55 sen to RM1.61 to become the second-largest decliner.

Tomorrow (May 10), Malaysian markets will be closed for the Wesak Day holiday. Markets reopen on Thursday (May 11).

On Thursday, the Statistics Department will announce the country's industrial output numbers at 12 noon. The Malaysian Palm Oil Board will announce the sector's output, inventory and export figures at about 12:30pm.


Source: The Edge

Monday, May 8, 2017

Market Daily Report: KLCI rises with Asian markets after Macron win




KUALA LUMPUR (May 8): The FBM KLCI climbed 5.41 points or 0.3% along with Asian share markets as Emmanuel Macron's win in France's presidential election lifted investor sentiments.

Investors cheered Macron's win as the pro-European Union (EU) candidate's policies were seen bringing stability to world markets. At 5pm, the KLCI settled at its intraday high at 1,768.15 points.
Across Asia, Japan’s Nikkei 225 gained 2.31% while Hong Kong’s Hang Seng climbed 0.41%.

Reuters reported that the euro hit a six-month high against the dollar on Monday while Asian shares gained and US stock futures briefly touched a record high, on investor relief after centrist Macron comfortably won the French presidential election.

Macron's emphatic victory brought comfort to investors and European allies alike, who had been nervous about the risk of another populist upheaval, following Britain's vote to quit the EU and Donald Trump's election as US president — neither of which had been predicted by pollsters or bookmakers.

In Malaysia, Areca Capital Sdn Bhd chief executive Danny Wong told theedgemarkets.com the local bourse was relieved from uncertainties, which put downward pressure on prices last week.

“There were a lot of uncertainties such as the status of Bandar Malaysia, slipping oil prices, anticipation on the French election and US jobs data, but you can see the number of companies with strong fundamentals bouncing back,” Wong said.

Across Bursa Malaysia today, there were 546 gainers against 388 decliners. A total of 4.01 billion shares worth RM2.43 billion changed hands.

TIME dotCom Bhd led gainers while Iskandar Waterfront City Bhd was the top decliner.

Source: The Edge

Friday, May 5, 2017

Market Daily Report: KLCI rebounds after selldown, gains 0.23%



KUALA LUMPUR (May 5): The FBM KLCI rebounded 0.23% today after seeing a sell down yesterday, bucking the decline in regional markets.

The benchmark index closed 4.07 points or 0.23% higher at 1,762.74. On a weekly basis, the KLCI fell 0.3% since its closing of 1,768.06 on April 28.

Etiqa Insurance & Takaful research head Chris Eng said the index rebounded after its decline yesterday, following news surrounding the termination of the Bandar Malaysia deal.

“The KLCI rebounded from the recent sell down, despite the decline in regional markets,” Eng said, adding that the French election has triggered some profit-taking in global markets.

“If it’s a positive outcome, there could be an uptrend in global markets including Malaysia, but it would probably not be a significant climb for the KLCI,” he added.

On corporate earnings, Eng said the market has priced in expectations of earnings growth in some sectors such as automotive and consumer products, which could weigh on the index if earnings disappoint.

However, he expects a mixed-bag of earnings as some sectors such as technology could surprise, amid strong export numbers, adding that other sectors like banking, telecommunication and oil and gas could also outperform.

The bourse saw a total of 3.57 billion shares, worth RM2.49 billion traded. Gainers beat decliners at 617 against 327, while 361 counters were unchanged.

Panasonic Manufacturing Malaysia Bhd led the gainers, while Petronas Gas Bhd headed the decliners. The top active counter was NetX Holdings Bhd.

Across the region, Japan’s Nikkei 225 rose 0.7%, South Korea’s Kospi climbed 0.97%, while Hong Kong’s Hang Seng fell 0.84%.

Reuters reported Asian stocks declined for a third consecutive day today, as fresh falls in commodities raised concerns about the health of the global economy, though the euro bucked broad weakness on receding concerns about France's presidential election.

MSCI's broadest index of Asia-Pacific shares outside Japan extended its decline to be down 0.8% today and was trading at its lowest level since April 25.


Source: The Edge

Thursday, May 4, 2017

Market Daily Report: FBM KLCI down 13.84pts after Bandar Malaysia stake sale nulled, U.S. Fed cue



KUALA LUMPUR (May 4): The FBM KLCI declined 13.84 points 0.8% after Malaysian Government-owned TRX City Sdn Bhd said its planned sale of a 60% stake in Bandar Malaysia Sdn Bhd to IWH CREC Sdn Bhd is "null and void with immediate effect".

The Government via the Finance Ministry owns TRX, a former unit under 1Malaysia Development Bhd (1MDB). The Government also owns 100% of 1MDB.

Iskandar Waterfront Holdings Sdn Bhd and China Railway Engineering Corporation (M) Sdn Bhd (CREC) jointly own IWH CREC. TRX said "IWH CREC failed to meet the payment obligations" under the share sale agreement.

Analysts said news on termination of TRX's plan to sell its 60% equity interest in the Bandar Malaysia real estate project here had affected investor sentiment. At 5pm, the KLCI settled at 1,758.67 points, while the ringgit weakened to 4.3300 against the U.S. dollar.

JF Apex Securities Bhd senior analyst Lee Cherng Wee told theedgemarkets.com that concerns surrounding the Bandar Malaysia aborted stake sale was one of other factors driving decline in the KLCI today, on top of ongoing profit-taking activity.

“The index might have also been impacted by concerns on 1MDB, following development on the Bandar Malaysia stake sale. If you recall, the market and ringgit were affected a while back due to the 1MDB issue, but had gradually recovered.

“Now with the Bandar Malaysia issue, all these concerns are resurfacing and it is affecting investor sentiment on the local market,” Lee said.

Across Bursa Malaysia, 3.45 billion shares worth RM2.89 billion were traded. Decliners outnumbered gainers at 824 against 185.

Besides the Bandar Malaysia and 1MDB factors, Malaysian shares could have also taken cue from anticipation of near-term U.S. interest rate hikes. Such sentiment followed the U.S. Federal Reserve's latest monetary policy statement.

Reuters reported the Federal Reserve kept interest rates unchanged on Wednesday and downplayed weak first-quarter economic growth, while emphasising strength of the labour market, in a sign it was still on track for two more rate rises this year.


In a bullish statement following the end of a two-day policy meeting, the central bank also said consumer spending continued to be solid, business investment had firmed and that inflation has been "running close" to the Fed's target.


Source: The Edge

Tuesday, May 2, 2017

Market Daily Report: FBM KLCI rises on recovery in banking sector




KUALA LUMPUR (May 2): The FBM KLCI rose today on bullish sentiment, following signs the banking sector is on its way to recovery.

The benchmark index closed 10.41 points or 0.59% higher at 1,778.47.

“The latest loan growth as well as interest margin will be pointing towards stronger earnings growth this quarter for the banks,” said Areca Capital Sdn Bhd chief executive officer Danny Wong told the edgemarkets.com.

He said he hopes to see a re-rating of the banks by research houses, which would depend on the banks’ upcoming results.

Wong said the banks’ performances over the past two quarters indicated that they have bottomed, and they are expected to attract foreign investors, amid the current recovery. “The banking sector remains the main magnet for foreign investors," he said.

Bursa Malaysia saw a total of 3.88 billion shares, worth RM3.48 billion, traded today. There were 594 gainers and 411 decliners.

Reuters reported Japan's Nikkei share average rose to six-week highs today in a holiday-shortened week, getting a lift from robust earnings and gains on Wall Street.

“Wall Street climbed on Monday, boosted by gains in Apple and other big technology stocks that more than offset weak U.S. economic data, and pushed the Nasdaq Composite to another record high,” it added.

The Nikkei finished 0.7% higher at 19,445.70, its highest close since March 21. It added 1.3% for the week. Tokyo markets will be closed for three days from tomorrow for a string of holidays known as Golden Week.

Meanwhile, South Korea’s Kospi rose 0.65%, while the Hong Kong Hang Seng Index was up 0.33%.

Source: The Edge

Friday, April 28, 2017

Market Daily Report: KLCI up 0.14pts, market turns in mixed performance ahead of extended weekend


 
KUALA LUMPUR (April 28): The FBM KLCI gained marginally today amid mixed sentiments, ahead of the Workers Day weekend and the release of U.S. gross domestic product (GDP) data.
The benchmark index closed 0.14 points higher at 1768.06.

Inter Pacific Securities research head Pong Teng Siew said the mixed performance was due to some profit-taking ahead of the extended weekend, but mitigated by weak U.S. gross development product forecasts, prior to the release of actual data by the Department of Commerce tonight.

The upswing from earlier political development in France and first look of U.S. tax cut plan has also weakened, said Pong, slowing down gains in the U.S. and subsequently the regional markets.

“You get a sense that the momentum from the U.S. market upswing is somewhat weakening, with a mixed picture all over. The upswing reaction, based on very little information other than political data, is not lasting.

“Market is starting to adjust, and is bracing for some disappointment,” he added.
Reuters reported that Asian stocks slipped as investors took profits from the recent rally, ahead of the Labour Day weekend, and the Golden Week Holiday in Japan.

Japan’s Nikkei 225 lost 0.29%, South Korea’s Kospi declined 0.18%, while the Hong Kong Hang Seng Index lost 0.34%.

On the local front, gainers were led by Dutch Lady Milk Industries Bhd, while decliners were led by Scientex Bhd.

There were 544 gainers against 403 losers, with 358 counters closing unchanged. A total of 3.1 billion shares, worth RM2.9 billion, were traded.


Source: The Edge

Thursday, April 27, 2017

Brokers Report: HSL - Rising Earnings Beckons

Retain BUY with target price (TP) of RM2.19



INVESTMENT HIGHLIGHTS

  • Strong reassurance from visit to HSL in Sarawak
  • Affordable housing and wastewater works will support earnings growth
  • Reaffirm earnings estimates
  • Maintain BUY with an adjusted TP of RM2.19

Strong reassurance from visit to HSL in Sarawak. We emerged from HSL’s Kuching Wastewater Treatment and La Promenade visit in Sarawak with reassurance on our revenue, target orderbook and earnings forecasts for FYE17/FYE18/FYE19

Key takeaways from visit:
Compelling underlying sewerage needs. HSL’s key competency in sewerage and wastewater engineering i.e. micro tunnelling and piping will anchor its future earnings prospect due to the strong need of efficient wastewater and sewerage connection in Kuching, Miri and Sibu from growing population. In a revised master plan in 2007, Sarawak Sewerage Department (SSD) has estimated that 3 Wastewater plants are needed to support the population in Kuching. In March 2016, HSL was awarded package 2 of the Kuching Wastewater Treatment Plant amounting to RM750m through its 75% joint venture with Nishimatsu Construction and recently in March, 2017 it clinched another award for Miri Wastewater Treatment Phase 1. Note that SSD has earmarked total of 4 phases of wastewater treatment plant in Miri amounting to RM3.3bn. Thus, we reckon that due to its key expertise in micro tunnelling and sewer piping HSL will stand to benefit.

Affordable housing will be a levelling factor. Secondly, we observe that affordable housing would be a levelling factor to even out earnings blips from progress billings and project recognition. We notice that HSL’s land banks are strategically located to be developed under the public housings such as Projek Perumahan Rakyat (PPR) and Projek Perumahan Penjawat Awam (PPA1M) such as in Muara Tebas and Muara Tuang. We estimate the comfortable level of GDV for affordable housing projects that HSL could undertake (based on its working capital) is c.RM170m. Last year, the state government has approved a total of 18,787 units of PR1MA houses to be constructed within the next 4 years. We are expecting HSL to take the opportunities in upcoming quarters.

Recommendation. We maintain our BUY recommendation with target price RM2.19 based on DCF method (WACC: 6.7%). We take cognizant that the previous results, HSL did not make the mark. We are convinced that earnings will make a comeback during the 2QFYE17-3QFYE17 as HSL would be able to recognize billings from Pan Borneo project. So far, anaemic earnings have subdued its share price advancement but due to its franchise in microtunneling, sewer piping and waste water engineering in Sarawak, HSL should be revisited.


Source: MIDF Research - 27 April 2017

Brokers Report: AMMB Holdings - Loan growth gaining traction

Retain HOLD with a higher target price (TP) of RM5.00



Highlights

  • Outlook improving. We are turning more positive on AMMB as previous concern on various issues is now easing while management recently guided on a more upbeat outlook with a higher loan growth projection for FY18.
  • Higher loan growth in FY18. For several years, AMMB’s loan growth was impacted by its rebalancing effort, especially to diversify away from hire purchase segment. We believe AMMB is now comfortable with current composition of hire purchase loan given the corrected yield in the segment reinforced by improving 2017 TIV outlook. Given this, we believe AMMB will achieve a loan growth of 6% in FY18, which majority will be driven by corporate and SME segments.
  • Various tie-ups in SME space. We notice that AMMB had recently made various tie-ups with SME related organizations to offer financing to this segment. Overall, we are positive on these tie-ups on future contribution to the SME segment. That said, we expect the SME arrangements to contribute a marginal 1% to FY18 and FY19 loan growth.
  • NOII getting strong. AMMB’s acquisition spree in the past years is now showing more positive results especially in the merchant business. Merchant business penetration rose by 29% to 54k devices. Should AMMB keep this momentum, we can expect potential upside to its NOII through interchange and acquirer fee strategy.
  • No strain in asset quality. Asset quality continued to recover for five consecutive quarters to 1.51% as at 3QFY17, slightly better than industry GIL. Meanwhile, loan loss-coverage increased slightly to 83.5%. Exposure to O&G segment reduced by RM600m in the last 9 months, and current exposure to this sector is now manageable at only 3% of total loans. Given the improving outlook of global oil price, the risk of further strain in this sector is minimal moving forward.
  • Improving NIM. NIM picked up strongly in 3QFY17 as a result of lower funding cost and liability management. NIM is expected to improve due to promising CASA growth as well as higher financing to the SME segment which carries higher yield.


Risks

  • Slower impact from de-risking of auto loan book and lower recoveries to impact bottom line.
  • Forecasts FY18 and FY19 earnings forecasts are revised higher by 0.6% and 0.7% as we impute higher loan growth of 6%.


Rating

HOLD (  )
  • Increasing presence in the SME segment is a right move despite stiff competition from other banks in the space. With appropriate execution strategy, outlook of AMMB is turning better with loan growth gaining traction.


Valuation

  • We raise our TP to RM5.00 (previously RM4.48) based on higher ROE of 8.9% and WACC of 9.6%. We maintain
HOLD rating on AMMB.


Source: Hong Leong Investment Bank Research - 27 April 2017

Brokers Report: Nestlé - KitKat to ignite growth

Retain HOLD call with a higher target price (TP) of RM85.73



Highlights

  • We attended Nestle’s 1Q17 briefing and came away feeling neutral on the company’s prospects going forward.
  • Nestle anticipates half of revenue growth in FY17 will be driven by new product launches, in particular, the launch of new varieties of KitKat chocolates.
  • We share management’s optimism on its new KitKat products, given: (1) its lion share in Malaysia’s chocolate product market which market share has grown from 14.4% in 2013 to 16.8% in 2016 (and overtook Cadbury as Malaysia’s most popular chocolate); (2) Majority of Malaysian consumers (two-third, according to a Nielsen report) prefer new and innovative products from brands that are familiar to them.
  • Additionally, we believe that the launch of the Kit Kat confectionary store in Mid Valley in late-2016 (where consumers can customize KitKat chocolate bars with up to 10,000 combinations) will serve as its marketing base (apart from allowing Nestle to sell premium KitKat products at higher margins). The buzz generated by the store and custom made KitKats via social media posts are expected to have an influential effect with 40% of Malaysian consumers citing social media posts as a source of new products. (Nielsen)
  • Product launches in 1QFY17: MET KOOL Panda, Nescafe GOLD Creamy Latte and Dark Latte, MAGGI Hot Mealz, MAGGI Roasted Sesame Chicken Noodles and KIT KAT Mini.
  • Prospects: We believe the group will carry out its Fuel, Innovate, Transform (FIT) strategy by continuing to innovate its product brands, and enhance efficiencies in its factories and supply chain processes. In doing so, Nestle aims to mitigate higher input costs going forward, particularly from milk powder and sugar.

Risks

  • Prolonged depression in consumer sentiments; strong competition especially in the instant coffee segment; potential failure in quality control.

Forecasts

  • Maintained, as our forecasts have already reflected the contribution of new products.

Rating

HOLD 
  • We believe Nestle warrants a HOLD call as it is fully valued at the current price despite organic growth prospects going forward. Investors should have Nestle in their portfolio on the back of its defensive nature and as a proxy to Malaysia’s recovery in consumption growth.

Valuation

  • Maintain our HOLD call with a higher TP of RM85.73 (from RM81.20) based on DDM (WACC: 7.8%; TG: 3%) after rolling over our DDM valuation forward.


Source: Hong Leong Investment Bank Research - 27 April 2017

Brokers Report: Syarikat Takaful - Operating Efficiency To Drive Growth

Reaffirm BUY with an unchanged target price (TP) of RM4.84



INVESTMENT HIGHLIGHTS

  • Syarikat Takaful Malaysia Bhd (STMB)’s 1QFY17 PAZTAMI of RM56.8m (+23%yoy) was within ours and consensus expectations
  • Family Takaful continued to support the growth in 1QFY17 earnings
  • As the result is within our estimates, we make no changes to our existing forecast numbers
  • Hence we reiterate our BUY recommendation with an unchanged TP of RM4.84 per share

1QFY17 PAZTAMI met expectations. Despite challenging macroeconomic condition, STMB has continued to deliver solid PAZTAMI performance in 1QFY17, where it grew +23.0%yoy to RM56.8m. The increase was as a result of higher Wakalah fee income of RM186.3m (+13.0%yoy) to the Group and its portfolio rebalancing strategy to reduce exposure in risky assets. Overall, the reported earnings came in line with ours (at 29.1%) and consensus’ (at 29.5%) expectations.

Strong 1QFY17 earnings growth in tandem with higher sales. The growth in PAZTAMI was due to higher earned contributions from medical, personal financing and mortgage insurance product in the family segment.

Riding on the growth of Islamic banking and finance sector. Syarikat Takaful continued to benefit from the development of Islamic banking and finance sectors which offer a wide and trusted distribution base. The company continued to extend its footing in a various market segments by adopting “bancatakaful” as an alternative to insurance agents.

Enhanced distribution channels to spur further growth. According to management, the company is undertaking significant effort to increase its operating capacity in order to fulfil the needs of growing demand for takaful products via its digitization plan. The management is very optimistic with this strategy as they believe that technology will become the transformation agent and competitive advantage in providing enhanced customer experience and innovative product offerings. We positive on this development as we believe that this is the viable method to expand its presence in the market.

Introduction of online product distribution channel in 2017. In light of the company’s digitisation initiatives, ebusiness platform will be introduced to the market this year as a new catalyst to drive business growth. The ”Click to Cover” platform will ease accessibility of Syarikat Takaful’s product offerings. We opine that the implementation of this strategy will open up more opportunities for business growth by tapping new market which comprises of more digitally savvy consumers.
As such, we are comforted by the strategy undertaken by the management to strengthen its presence in the market as number one Takaful provider. Against the backdrop of expected motor de-tarriffication implementation in July 2017, we view the digitization plan the company has embarked as timely.

Impact on earnings. We maintain our earnings estimate for this year as the results fell within our expectation, with forecasted 11.0% growth in earnings. Against the backdrop of improved macro-economic performance, we opine that Syarikat Takaful is poised to benefit from the strong growth trajectory of Islamic finance industry. Pursuant to that, we are fairly comforted by the management’s strategy to embark on digitisation initiatives which will strengthen and enhance its distribution channel. We see this as a significant strategical move by the company to further strengthen its positioning in the takaful industry that will translate to stronger sale numbers.

Recommendation. Accordingly, we reiterate our BUY recommendation with an unchanged TP of RM4.84 per share. Our valuation is derived based on sum-of-parts, which is in line with its 3-year historical FY17 PER of 20x and this implies PBV of 5.4x.


Source: MIDF Research - 27 April 2017