As sentiments surrounding regional markets still remain weak, the FBM KLCI fell for the fifth consecutive time. The cabinet reshuffling exercise also did not do much to alleviate the uncertainty as none of the sub-indices on the broader market recorded gains yesterday. The lower liners sub-indices and as well as Construction (-1.4%) and Technology (- 1.2%) sectors were amongst the leading losers yesterday.

Market breadth stayed negative as losers outpaced gainers on a ratio of 726-to-197 stocks. Traded volumes declined slightly (3.6%) to 2.14 bln shares.

KLK (-54.0 sen) led the heavyweight decliners on the FBM KLCI, followed by Hong Leong Financial Group (-32.0 sen), MISC (-27.0 sen), Westports (-20.0 sen), Public Bank (-12.0 sen) and Maxis (-10.0 sen). Elsewhere, other notable losers on the broader market include Prestariang (-18.0 sen), Carlsberg (-30.0 sen), CCB (-20.0 sen) and Latitude (-34.0 sen). Also, Hartalega and Daibochi fell 19.0 sen and 16.0 sen respectively.

On the other side of the trade, some of the other major advancers were MPI (+19.0 sen), Rapid (+13.0 sen), Karex (+26.0 sen) and Tekala (+8.5 sen). Despite surging slightly more than 10.0% during its early trading hour, new listing Sunway Construction closed unchanged. Meanwhile, there were only five heavyweight gainers on the big board - RHB Capital (+5.0 sen), Sime Darby (+2.0 sen), Petronas Gas (+2.0 sen) Petronas Chemicals (+3.0 sen) and Astro (+3.0 sen).

The Shanghai Composite edged lower yesterday to mark its third straight session of losses, while the Nikkei also ended 0.1% lower. The Hang Seng Index, however, bucked the slump in most regional markets, supported by gains in AIA Group Ltd & PetroChina Co Ltd. ASEAN stockmarkets, meanwhile, ended mostly negative.

Following the jump in crude oil prices, U.S. stockmarkets rebounded overnight to snap their five consecutive session of losses, mostly led by gains in energy related companies. Concurrently, 27 out of the 30 Dow constituents also ended in the positive territory, while Internet shares like Twitter surged as the social media company posted better-than-expected earnings.

Most European equities also ended their losing streak on the back of a slew of potential M&A activities like FTSE listed Hikma Pharmaceuticals Plc proposal to acquire U.S.’ Roxane Laboratories and Boehringer Ingelheim Inc., while DAX listed drugs packaging firm Gerresheimer AG intends to acquire Centor U.S. Holding Inc. for $725.0 mln.

THE DAY AHEAD

With the key index closing at the near the 1,700 points levels, we think that there should be some support from local funds to shore-up the market over the near term and after the incessant falls over the past five sessions. The positive overnight performance of Wall Street indices should also provide some mild catalyst. However, the market’s near term outlook is still cautious for the most part, which means that the downside bias will still be prevalent and market conditions could remain choppy.

Therefore, we do not think that the upsides will not be strong given the prevailing weak market sentiments and the bargain hunting activities will be relatively insipid. Consequently, we think the upsides could be capped at around the 1,720 level for the near term. Meanwhile, selective trading activities could return and this could help shore up both market breadth and depth.

COMPANY BRIEF

Only World Group Bhd (OWG), a leisure and hospitality services provider, is expanding into adventure games through the purchase of a 60.0% stake in Escaperoom Holdings Sdn Bhd for RM5.4 mln. Escaperoom Holdings owns the Escape Room brand and its core business is the provision of real-life physical adventure games/puzzle concept.

As at 21st July 2015, Escape Room is available in seven outlets around Malaysia and one outlet each in Australia, Estonia, India, Romania, Thailand, the United Kingdom and Vietnam. The purchase consideration comes with a net profit guarantee of no less than RM4.0 mln for the two financial years ending 30th June 2016 and 2017 (The Star Online)

Alam Maritim Resources Bhd has bagged a contract for the Provision of Splash Zone Structural Repair and Maintenance from Petronas Carigali Sdn Bhd valued at RM6.0 mln. The contract is for a period of two years, effective from 8th June 2015 until 7th June 2017 with an extension option of one year, from 8th June 2017 to 7th June 2018. (The Edge Daily)

Malaysia Marine and Heavy Engineering Holdings Bhd’s (MMHE) 2Q2015 net profit fell 54.6% Y.o.Y to RM18.0 mln as most of its projects have been completed, while the newly secured projects were still at the early stage of their project lifecycle. Revenue for the quarter decline 40.6% Y.o.Y to RM582.1 mln.

For 1H2015, cumulative net profit contracted 27.3% Y.o.Y to RM54.1 mln. Revenue for the period fell 21.2% Y.o.Y to RM1.30 bln. (The Edge Daily)

AirAsia X Bhd, which will fly four times a week from Kuala Lumpur to Sapporo, Japan starting 1st October 2015, is banking on new routes to help it improve its revenue and turn itself around in 2H2015. It is planning to next launch its first U.S. flights to Hawaii in November 2015, to fill a gap left by the axing of routes to Nagoya, Narita and Adelaide this year.

AirAsia X targets to carry close to 100,000 passengers on the Kuala Lumpur-Sapporo route in the first year of operations. The new route is in addition to its existing flights to Osaka and Tokyo. As part of its restructuring plan, the loss-making airline is also dropping some of its unprofitable flights and slowing its aircraft deliveries. (The Edge Daily)

Education service provider SEG International Bhd’s (SEGi) 2Q2015 net profit grew 18.1% Y.o.Y to RM8.0 mln, due to better product mix and demand for higher-end programmes. Revenue for the quarter gained 5.3% Y.o.Y to RM65.1 mln.

For 1H2015, cumulative net profit expanded 34.6% Y.o.Y to RM18.8 mln. Revenue for the period gained 7.4% Y.o.Y to RM132.4 mln. (The Edge Daily)

Fajarbaru Builder Group expects a double-digit growth in its earnings and revenue starting from the financial year ending 30th June 2017, driven by upcoming property launches and strong unbilled order book from its construction segment.

The group intends to undertake three residential development projects in the country with a combined GDV of RM728.0 mln. The group also has an unbilled orderbook of RM450.0 mln, which will keep it busy for the next two years. It is also tendering some RM500.0 mln worth of projects.

Projects in the pipeline include a condominiums in Bandar Kinrara, Puchong (RM400.0 mln GDV), a serviced apartment in Sentul (RM250.0 mln GDV) and serviced apartments in Pulau Melaka (RM78.0 mln GDV).

The Puchong project is expected to be launched by end-2015, followed by Sentul and Pulau Melaka, which will be launched in the 1Q2016 and 3Q2016, respectively. (The Edge Daily)

Jiankun International Bhd is planning a 377-unit serviced apartment with an estimated GDV of RM180.0 mln on a piece of freehold land measuring approximately 0.81 ha. in Daerah Petaling, Selangor. The development will be undertaken by its unit JKI Development Sdn Bhd together with the land owner Five Star Development (Puchong) Sdn Bhd.

Five Star agrees to grant JKI the exclusive right to develop and construct the proposed development in return for 20.0% of the GDV, estimated to be RM36.0 mln. The construction cost will be borne by JKI, which is estimated to be RM147.2 mln. The construction cost is to be funded via a combination of bank borrowings and proceeds from its rights issue completed on 31st December 2014. (The Edge Daily)

Perusahaan Sadur Timah Malaysia Bhd's (Perstima) 1QFY16 net profit rose 62.8% Y.o.Y to RM9.3 mln on higher profit margin coupled with higher sales volume. Revenue for the quarter increased 6.4% Y.o.Y to RM158.4 mln. (The Edge Daily)

Caring Pharmacy Group Bhd's 4QFY15 net profit jumped 105.5% Y.o.Y to RM2.6 mln, contributed by new store openings and revenue growth from existing outlets. Revenue for the quarter rose 7.6% Y.o.Y to RM95.4 mln.

For FY15, cumulative net profit fell 14.5% Y.o.Y to RM12.9 mln. Revenue for the period, however, climbed 8.4% Y.o.Y to RM366.7 mln. A final dividend of 2.0 sen per share was declared. (The Edge Daily)

Property developer EcoFirst Consolidated Bhd’s 4QFY15 net profit stood at RM4.7 mln vs. a net loss of RM3.9 mln in the previous corresponding quarter, underpinned by higher income from retail malls and condominium development in Ipoh, Perak known as "Upper East @ Tiger Lane". Revenue for the quarter surged 560.6% Y.o.Y to RM42.1 mln.

For FY15, its cumulative net profit fell 79.6% Y.o.Y to RM6.1 mln. Revenue for the period, however, jumped 232.1% Y.o.Y to RM81.2 mln. (The Edge Daily)

Source: M+ Online Research - 29 Jul 2015