Following the stronger-than-expected 2Q2015 GDP data which grew 4.9% Y.o.Y vs. economists’ estimates of a 4.8% rise, the FBM KLCI snapped a five day losing streak to close 0.7% higher. Lower liners also rebounded in tandem with the gains among many key index stocks, while the Plantations sector (- 0.2%) was the sole underperformer on the broader market.

Market breadth turned positive as losers outpaced gainers on a ratio of 714-to- 217 stocks. Traded volumes, however, fell 25.2% to 1.86 bln shares as the buying interest has yet to return in force.

Anchoring the main gainers on the FBM KLCI were banking heavyweights like Maybank (+19.0 sen), RHB Capital (+16.0 sen), AmBank (+14.0 sen) and CIMB (+14.0 sen) while Genting Malaysia rose 15.0 sen, snapping a streak of six straight losing days. Amongst the biggest gainers on the broader market were rubber-related companies like Top Glove (+50.0 sen), Kossan (+31.0 sen), Hartalega (+22.0 sen) and Karex (+21.0 sen), while Dutch Lady climbed 50.0 sen.

On the other side of the trade, significant losers include BLD Plantation (-20.0 sen), UMS (-19.0 sen), IJM Plantations (- 15.0 sen), Bertam (-11.0 sen) and Tasco (-10.0 sen). Key index decliners of the day were KLK (-22.0 sen), Hong Leong Financial Group (-10.0 sen), Petronas Gas (-6.0 sen), Axiata (-6.0 sen) and Telekom (-2.0 sen).

Key Asian stockmarkets rebounded as the Nikkei rose 1.0%, due to the buying support on utilities, drugmakers and food companies. The Shanghai Composite Index climbed 1.8% after the People Bank of China intervened to soothe Yuan worries, while the Hang Seng Index added 0.4% to close marginally above the 24,000 psychological mark. ASEAN stockmarkets, meanwhile, ended mostly positive.

U.S. stockmarkets closed mixed as the Dow ended modestly higher after China’s central bank calmed concerns over its currency slide, coupled with stronger-than-expected retail sales for the month of July which climbed 0.6% M.o.M vs. economists’ expectations of 0.5% M.o.M increase. On the broader market, the S&P 500 closed 0.1% lower, dragged by the energy sector (-1.4%) after crude oil prices slid to six-and-a half year low.

Earlier, European stockmarkets closed mostly higher as the CAC and DAX climbed 1.3% and 0.8% respectively, rebounding from the recent losses that was spooked by China’s weakening currency. The FTSE, however, ended marginally lower while the Athens Stock Exchange fell 0.7% despite Greece’s 2Q2015 GDP expanding 0.8% vs. economists’ expectations of a 0.5% contraction.

THE DAY AHEAD

Yesterday’s technical rebound was certainly anticipated as the key index was deemed oversold after the recent steep market slide that nearly send the FBM KLCI below the 1,600 points level. Despite yesterday’s recovery, however, the general market outlook remains clouded amid the uncertain direction of the Ringgit and U.S. interest rates that may be raised as early as next month.

Still, we think there should be further near term rebound and we expect most stocks on Bursa Malaysia to continue heading higher on mild bargain hunting activities, particularly among the beaten down sector leaders. This may lift the key index to the next psychological resistance of 1,650 points on the back of a choppy market environment as investors are also expected to adopt quick profit taking activities that could limit the upsides, particularly among the lower liners. On the downside, meanwhile, the 1,600 points level will serve as the major support.

MACRO NEWS

Malaysia’s 2Q2015 gross domestic product (GDP) growth slowed to 4.9% Y.o.Y vs. 5.6% in the preceding quarter, as exports decelerated. The growth rate, nevertheless, was slightly higher than market expectation of a 4.8% expansion. The growth in 2Q2015 was also supported by continued expansion in services and a turnaround in agricultural production.

The services sector expanded 5.0% Y.o.Y, supported by growth in the wholesale & retail trade and information & communication sub-sectors, while the manufacturing sector grew at a moderate pace of 4.2% Y.o.Y, supported by electrical, electronic & optical products. Meanwhile, the CPI in 2Q2015 expanded 2.2% Y.o.Y. During the quarter in review, (The Star Online)
Comments

The lower GDP performance was very much anticipated after the implementation of the Goods and Services Tax in April, while the manufacturing sector has largely failed to capitalise on the cheaper Ringgit as domestic activities continue to slow with most consumers adopted wait-and-see attitudes.

The low commodity prices have also contribute the insipid performance of the resource and commodity based industries.

Looking ahead, the difficult operating environment is expected to persist for at least another quarter as consumers and businesses alike continue to adopt to the new GST environment. At the same time, the slowing growth in China could also affect Malaysia’s export performance, further undermining the growth prospects, as with the prevailing low commodity prices.

COMPANY BRIEF

Gas Malaysia Bhd’s 2Q2015 net profit fell 31.1% Y.o.Y to RM33.7 mln after the tariff revisions in May 2015 and November 2015 that lowered its margins. Revenue for the quarter, however, rose 17.3% Y.o.Y to RM795.0 mln.

For 1H2015, cumulative net profit declined 31.3% Y.o.Y to RM62.2 mln. Revenue for the period, however, rose 23.7% Y.o.Y to RM1.56 bln. A first interim dividend of 3.5 sen per share, payable on 15th September 2015 was declared. (The Edge Daily)

Bina Darulaman Bhd’s outstanding orderbook has been lifted to RM438.0 mln on its road building, quarry and construction businesses. The group has announced that its construction and quarry unit, BDB Infra Sdn Bhd currently has an orderbook of RM238.0 mln, while BDB Synergy Sdn Bhd has RM200.0 mln in orders as at August 2015.

Bina Darulaman's property development am, BDB Land Sdn Bhd signed a RM280.0 mln financing deal with Maybank to redevelop Bandar Darulaman (Darulaman 2.0) in Kedah which carries a gross development value of RM858.0 mln. BDB Infra also signed a RM40.4 mln agreement with OCBC Al-Amin for an Islamic financing facility for its new premix plant and quarry facilities
at Sungai Ular, Kulim, and for the state road maintenance project in six districts in Kedah. (The Edge Daily)

Dayang Enterprise Holdings Bhd’s mandatory general offer (MGO) for the shares it does not own in Perdana Petroleum Bhd has closed. At the closing of the offer on 13th August 2015, Dayang has received acceptances for some 338.0 mln shares, representing a 45.2% equity stake in Perdana. This brings Dayang’s total stake in Perdana to 709.6 mln shares, equal to a 94.8% in equity interest.

As for Perdana’s warrants, Dayang has received acceptances for 15.1 mln shares, representing 49.4% of the total warrant base, bringing its total holdings to 27.9 mln warrants or 91.1% of the outstanding warrants. (The Edge Daily)

Media Prima Bhd’s 2Q2015 net profit rose 22.6% Y.o.Y to RM43.9 mln on lower operating expenses and finance costs. Revenue for the quarter, however, dipped 5.9% Y.o.Y to RM365.8 mln from RM388.58 mln.

For 1H2015, cumulative net profit was largely flat at RM62.8 mln. Revenue for the period, however, declined 6.4% Y.o.Y to RM695.2 mln. A first interim single-tier dividend of 3.0 sen per share, payable on 30th September 2015 and will trade ex-dividend on 9th September 2015 was declared.

Separately Media Prima has announced the resignation of its chairman Tan Sri Johan Jaffar, effective 31st August 2015. However, no specific reason was given for the resignation, who will be replaced by the current Deputy Chairman Datuk Seri Fateh Iskandar Mohamed Mansor whom helms as the current Group Managing Director and Chief Executive Officer of Glomac Bhd. The media group also announced the appointment of Datuk Raja Datuk Zaharaton Raja Zainal Abidin, as an Independent and Non-Executive Director. (The Edge Daily)

Takaso Resources Bhd plans to undertake a mixed development project in Taman Melaka Raya, Malacca, with an estimated gross development value of RM134.2 mln. Takaso has acquired a piece of leasehold land measuring 37,264 sq ft in Malacca from Mega Irama Enigma Sdn Bhd via its wholly-owned unit, Tristar City Sdn Bhd (TCSB), for RM9.3 mln.

Although the land was initially approved to be developed into a seven-storey budget hotel with 174 rooms, Takaso plans to turn it into a mixed development project as it sees high demand for properties in that locality. (Bernama)

Tropicana Corp Bhd’s 2Q2015 net profit plunged 74.1% Y.o.Y to RM23.2 mln, as the previous corresponding quarter included gains of RM69.9 mln recognised from the disposal of investment properties and a subsidiary joint venture unit. Revenue for the quarter, however, rose 3.6% Y.o.Y to RM312.3 mln.

For 1H2015, cumulative net profit fell 46.4% Y.o.Y to RM42.4 mln. Revenue for the period, however, increased 26.9% Y.o.Y to RM703.3 mln. For the 1H2015, Tropicana achieved total sales of RM787.4 mln in addition to having secured unbilled sales at a record high of RM3.00 bln. (The Star Online)

Bumi Armada Bhd’s has agreed to pay €3.2 mln (RM14.0 mln) to settle a dispute with SEA Srl over the Filanovsky field development project in the Russian sector of the Caspian Sea. Its unit Bumi Armada Caspian LLC had on 13th August 2015 signed a settlement agreement following a €28.5 mln (RM127.0 mln) claim by SEA Srl over a service contract for post trenching and backfilling services.

As part of the settlement, the arbitration proceedings will be discontinued. Bumi Armada Caspian had received the notice of arbitration for the 28th September 2012 contract valued at €16.2 mln for providing the services on the Filanosky field development project. (The Star Online)

Source: M+ Online Research - 14 Aug 2015