• Following the lacklustre 3Q2015 corporate earnings season, the FBM KLCI extended its losses by 0.6% yesterday, but managed to pare off most of its intraday losses on a late buying support on selective index heavyweights. Meanwhile, the lower liners remained in the red, while the Technology (+0.9%) and Mining (+0.8%) sectors outperformed the broader market.
• Market breadth stayed negative as losers outstripped gainers on a ratio of 679-to-270 stocks. Traded volumes, however, rose by 4.1% with 2.51 bln shares exchanging hands.
• Topping the key losers list on the big board was BAT (-64.0 sen), followed by Tenaga (-24.0 sen), Sime Darby (-14.0 sen), Maybank (-12.0 sen) and Digi (- 12.0 sen). Other significant decliners of the day were Batu Kawan (-30.0 sen), OIB (-28.0 sen), Tenaga (-24.0 sen) and Can-One (-23.0 sen). My.EG fell 10.0 sen despite reporting a strong set of quarterly earnings.
• Amongst the biggest gainers on the broader market include Panasonic (+RM1.54), Aeon Credit (+60.0 sen), Pharmaniaga (+35.0 sen), AmWay (+32.0 sen) and Hap Seng (+28.0 sen). MWE jumped 20.0 sen after receiving a takeover offer of RM1.70 per share from its major shareholder, Pinjaya Sdn Bhd. Notable advancers on the FBM KLCI were Hong Leong Financial Group (+40.0 sen), Hong Leong Bank (+20.0 sen), KLK (+14.0 sen), Public Bank (+12.0 sen) and Westports (+10.0 sen).
• The Nikkei slipped 0.7% on weaker-than-expected industrial output data for October. The Hang Seng Index fell 0.3%,
• but the Shanghai Composite rose 0.3% after shrugging off its intraday losses, lifted by gains in financial stocks. ASEAN indices, meanwhile, ended mostly negative.
• U.S stockmarkets closed lower yesterday as the Dow fell 0.4% after the Chicago PMI for November contracted to 48.7 – significantly below economists’ expectations of 54.0. On the broader market, the S&P 500 also declined 0.4%, dragged down by the consumer discretionary sector (-0.5%) as Nike and Walmart fell 1.4% and 1.7% respectively.
• European benchmark indices, however, started off the week mostly positive as the DAX and CAC added 0.8% and 0.6% respectively - ahead of the European Central Bank meeting later of the week. The FTSE, however, slipped 0.3% to erase its monthly gain, falling 0.1% M.o.M as Bank of England is set to release the stress test results on banks, while iron ore prices slumped.

THE DAY AHEAD

• Despite the key index paring its intraday losses, the market’s general momentum remains on the weak side as there continues to be fewer positive catalyst with the end of the results reporting season. As it is, corporate results continue to be a mixed bag and this is doing little to instil market confidence. Consequently, we expect the market to continue drifting lower over the near term as investors retreat to the sidelines to await for a decision on U.S. interest rates in two weeks’ time.
• At the same time, interest among the lower liners and broader market stocks have also been waning and we think the profit taking and selling is likely to persist over the near term. Again, the lack of domestic catalyst, coupled with the impending interest rate decision will see retail investors taking a more cautionary stance.
• With the downside risk still prevailing, the key index could slip further and the 1,670 may give way with the key index likely to look to the 1,650 level for support.

COMPANY BRIEFS

• MWE Holdings Bhd has received a takeover offer from Tan Sri Surin Upatkoon via his private vehicle, Pinjaya Sdn Bhd, to acquire its entire business and undertaking, including all assets and liabilities for RM391.4 mln, or RM1.70 per share.
• The purchase consideration will be satisfied by way of RM267.5 mln in cash and a deferred amount of RM123.9 mln left owing by Pinjaya to MWE.On completion of the proposed distribution, Pintaja intends to delist MWE.
• RHB Capital Bhd’s (RHBCap) 3Q2015 net profit fell by 64.3% Y.o.Y to RM194.4 mln. The decline in earnings was due to lower non-interest income as the group registered workforce-downsizing cost and higher operating expenses. Revenue for the quarter declined 2.9% Y.o.Y to RM2.64 bln.
• For 9M2015, cumulative net profit fell by 20.0% to RM1.20 bln. Revenue for the period, however, rose 5.3% Y.o.Y to RM7.98 bln. (The Edge Daily)
• Boustead Holdings Bhd’s 3Q2015 net profit fell by 67.0% Y.o.Y to RM6.0 mln, mainly due to the decline in revenue in all its business divisions. Revenue for the quarter decreased by 21.2% Y.o.Y to RM2.12 bln.
• For 9M2015, cumulative net profit fell 91.8% Y.o.Y to RM9.0 mln. Revenue for the period also fell to RM6.22 bln vs.RM7.78 bln in 9MFY14.
• A third interim dividend of 6.0 sen per share was declared, which is payable on 12th January, 2016. (The Edge Daily)
• Eversendai Corp Bhd’s net profit surged 401.0% Y.o.Y to RM14.6 mln in 3Q2015, underpinned by higher value of contract executions during the quarter. Revenue for the quarter rose 1.9x to RM471.5 mln.
• For 9M2015, cumulative net profit soared 126.9% Y.o.Y to RM48.1 mln. Revenue for the period increased 85.9% Y.o.Y to RM1.30 bln. (The Edge Daily)
• IFCA MSC Bhd expects to earn 1.0% - 5.0% from the value of each property sold through its "Property365.my" website, targeted for launch in early December.
• The property portal marked its entry into the e-commerce business, where it would also earn subscription fees from property developers who utilises Property365.my's services.
• It is designed with an online booking feature to help property developers market and sell their projects smarter and faster. Potential property buyers can access all the information on their preferred projects, as well as register and proceed to book their preferred units through this platform. (The Edge Daily)
• EG Industries Bhd has secured new orders for box-build products worth approximately RM150.0 mln which is expected to be recognised in FY16. The said orders entail undertaking end-to-manufacturing services from designing to shipping of completed products to customers' end users.
• Separately, the company’s 1QFY16 net profit fell by 33.4% to RM5.0 mln due to the absence of a gain on disposal of other investments of RM6.7 mln that was seen in 1QFY15. Revenue for the quarter, meanwhile, fell by 1.5% Y.o.Y to RM190.9 mln due to a change of product sales mix to focus on high margin products. (The Edge Daily)
• K&N Kenanga Holdings Bhd slipped into the red in 3Q2015 with a net loss of RM13.1 mln, vs. a net profit of RM20.1 mln from a year ago due to losses in its stockbroking, investment management, as well as money lending and financing segments. Revenue for the quarter declined 25.4% Y.o.Y to RM125.4 mln.
• For 9M2015, the company registered a cumulative net loss of RM6.2 mln vs. a net profit of RM27.3 mln from a year ago. Revenue for the period dropped by 9.2% Y.o.Y to RM400.9 mln. (The Edge Daily)
• Damansara Realty Bhd has secured a contract from Putrajaya Corporation (PJC) for the proposed development of Perumahan Penjawat Awam 1Malaysia (PPA1M) and the commercial part of a mixed development at Presint 5, Putrajaya, which carries a total estimated gross development cost of RM467.3 mln.
• The company would construct 1,350 PPA1M units (675 units of 1,000 sq ft and 675 units of 1,200 sq ft) and 45 units of six-storey shop offices. The contract is for a period of 30 months.
• Separately, its 3Q2015 net loss widened to RM4.2 mln vs. a net loss of RM1.8 mln in 3Q2014 mainly due to the higher employee benefit and higher depreciation. Revenue for the quarter rose 9.4% Y.o.Y to RM50.6 mln, mostly attributable to higher revenue recognition from property development.
• For 9M2015, the company registered a cumulative net loss of RM2.7 mln from RM162,000 in 9M2014. Revenue for the period increased 4.6% Y.o.Y to RM154.2 mln. (The Edge Daily)
• Managepay Systems Bhd (Mpay) has accepted a letter of intent from Oversea-Chinese Banking Corp Ltd (OCBC) to provide terminal services to the bank's merchants.
• Under the project, it would provide certain services to OCBC, including the rental of its MPOS PinPad Terminal to the bank's merchants and the provision of installation/deployment and maintenance services. (The Edge Daily)
• Karex Bhd’s 1QFY16 net profit soared 74.0% Y.o.Y to RM22.3 mln, mainly due to a gain in foreign exchange of RM12.1 mln, higher margin products and lower raw material prices.Revenue for the quarter rose 8.0% Y.o.Y to RM76.1 mln, mostly attributable to the higher volume from its condom commercial sales segment. (The Edge Daily)
• HeiTech Padu Bhd has bagged a contract worth RM39.5 mln from Diamond Palace Co Ltd to develop passport and visa issuance systems for the Myanmar's Ministry of Foreign Affairs.
• The contract involves the supply, delivery, installation, configuration, testing, commissioning and maintenance of the passport issuance system (PIS) and visa issuance system (VIS) for the Myanmar government. The contract is for five years, which would start from 2015 to 2020. (The Edge Daily)
• Carlsberg Brewery Malaysia Bhd’s 3Q2015 net profit grew 11.0% Y.o.Y to RM62.5 mln, mainly driven by higher sales contribution from its Singapore operation and effective cost management. Revenue for the quarter, however, was down 0.9% Y.o.Y to RM405.7 mln.
• For 9M2015, cumulative net profit decreased 4.9% Y.o.Y to RM141.4 mln. (The Edge Daily)
• Iskandar Waterfront City Bhd (IWCity) has received a notice from Pentadbir Tanah Johor Bahru for the compulsory acquisition of two parcels of land by the state government for RM170.1 mln.
• The offer is made for the two lands in Plentong, Johor, measuring a combined 92.8 ac. The said land acquisition will result in a profit of approximately RM69.3 mln.
• Meanwhile, the company reported a 406.0% Y.o.Y surge in its 3Q2015 net profit to RM20.8 mln, primarily due to compulsory land acquisitions by the state government. Revenue for the quarter improved significantly to RM148.5 mln, from RM25.5 million in the previous corresponding period.
• For 9M2015, cumulative net profit soared 206.0% Y.o.Y to RM17.2 mln. Revenue for the period jumped 40.0% Y.o.Y to RM175.3 mln. (The Edge Daily)
• Felda Global Ventures Holdings Bhd (FGV) intends to start new discussions to buy a stake in Indonesia's PT Eagle High Plantations in the 1Q2016 after aborting an earlier plan for a RM2.40 bln deal. FGV cited bearish crude palm oil prices and a weakening Ringgit as the reasons for the renegotiation.
• Felda and Eagle High are still keen to pursue a deal and renegotiation will involve issues such as the size of the stake, pricing and the partnership in areas such as research and development. (The Edge Daily)
• Taliworks Corp Bhd had entered into a joint venture (JV) arrangement via a share sale and purchase agreement (SPA) with the Employees Provident Fund to dispose 50.0% of its equity interest in its wholly-owned subsidiary Pinggiran Muhibbah Sdn Bhd (PMSB), which has a majority stake in the concessionaire that operates and maintain the New North Klang Straits Bypass Expressway (NNKSB), for RM66.8 mln.
• The NNKSB, which was previously known as Shapadu Highway, is a 17.5km two-lane dual carriageway highway that links North Port to Bukit Raja.
• The group is expected to realise a gain on disposal of approximately RM57.1 mln, or an earnings per share of approximately 4.7 sen. (The Edge Daily)

Source: M+ Online Research - 1 Dec 2015