• Tracking last Friday’s weakness on Wall Street, the FBM KLCI nosedived 19.74 pts at the start of the trading bell, but the key index managed to pare most of its intraday losses before closing just 0.4% lower. Both the broader market and lower liners also closed in the red with the FBM Ace (-2.3%) taking the heaviest beating on the back of steep profit taking activities.
• Market breadth remained negative as losers hammered gainers on a ratio of 776-to-190 stocks. Traded volumes rose by 13.5% to 2.13 bln shares as the selling activities were evident amongst the lower liners.
• Two-third of the key index constituents fell, dragged down by BAT (-76.0 sen), followed by Petronas Dagangan (-34.0 sen), Hong Leong Financial Group (- 26.0 sen), KLK (-14.0 sen) and Public Bank (-12.0 sen). Significant losers on the broader market were Panasonic (- 56.0 sen), Aeon Credit (-46.0 sen), Chintek Plantations (-31.0 sen), Shell (- 28.0 sen) and Apollo (-24.0 sen).
• In contrast, notable gainers of the day include Enra (+32.0 sen), Top Glove (+18.0 sen), Bintulu Port (+15.0 sen) and Sapura Resources (+15.0 sen). CAB rose 7.0 sen after inking a Memorandum of Understanding with Salim Group. Meanwhile, leading the advancers on the big board were Westports (+10.0 sen), DiGi (+4.0 sen), Petronas Gas (+4.0 sen) and IOI Corporation (+2.0 sen).
• The Nikkei (-1.1%) extended its losses for the third straight session to close below the 17,000 psychological level on the selloff in oil and financial stocks. The Hang Seng Index ended 1.5% lower, but the Shanghai Composite bucked the negative regional market sentiment to climb 0.4% ahead of the release of its 4Q2015 GDP data. ASEAN indices, meanwhile, ended mostly lower.
• Despite opening higher at the start of the trading bell, however, European benchmark indices closed lower – the FTSE (-0.4%), CAC (-0.5%) and DAX (-0.3%), all fell. The negative market sentiment was heightened after the European Central Bank begun to take action against lenders with high levels of bad loans. U.S. stockmarkets, meanwhile, was closed for the Martin Luther King Jr. holiday.

THE DAY AHEAD

• Although the general market condition remains cautious due to the ongoing economic, commodity and stockmarket concerns, we think there could be a short-term relieve for the Malaysian stockmarket as there are few fresh concerns as the U.S. markets were closed overnight.
• In addition, there were also little developments among regional indices as investors await for the release of China’s GDP data and its performance will provide a gauge on the direction of the regional economies in 2016.
• Meanwhile, we do not anticipate strong upsides over the near term due to the cautiousness with the immediate resistance at the 1,630 level. Thereafter, the resistance is at the 1,650 level. On the downside, the 1,620 level remains the near-term support with the 1,600 points level serving as a major support.
• The calmer market conditions could also see some renewed interest from retail investors on the lower liners and broader market shares that would also help them stage a minor near term recovery.

COMPANY BRIEFS

• Cash rich Abric Bhd plans to distribute 43 sen a share totaling RM63.9 mln to its shareholders under a corporate exercise which will lead to its delisting from Bursa Malaysia Securities. Abric, which is a Practice Note 16 company, has proposed a capital reduction and repayment exercise and a special cash dividend.
• Earlier on 16th December 2014, the company was classified a cash company after it had received substantial cash proceeds from the sale of its entire core business. Bursa Securities had given it up to 10th June 2016 to submit a regularisation plan to the Securities Commission. However, the board had considered numerous business opportunities to regularise its PN16 condition and felt it was appropriate to distribute the company’s assets back to its shareholders. (The Star Online)
• PLB Engineering Bhd has acquired property developer Phoenix Residences Sdn Bhd (PRSB) for RM23.5 mln. The firm, whose shares since December 2015, reclassified from construction sector to properties sector, signed an agreement on Monday to acquire 100% equity interest in Penang-based PRSB. However, PLB did not specify the size of PRSB’s landbank or its exact location in Penang. (The Star Online)
• Dagang NeXchange Bhd (DNeX) is tapping into the Asian renewable energy market after signing a Memorandum of Understanding (MoU) with three companies, namely China Everbright International Ltd, Broadgate Engineering (M) Sdn Bhd and HydroChina International Enginnering Co Ltd.
• Under the MoU, the parties will collaborate and cooperate specifically in submitting business proposals for waste-to-energy technology projects in Malaysia and regional markets. (The Edge Daily)
• Boustead Holdings Bhd is looking to raise up to RM1.05 bln via a two-for-five rights share issue to pare down its gearing, fund its property development and property investment activities and for working capital. The group also proposed to give out two bonus shares-for-every five of Boustead shares held after the proposed rights issue.
• The issue price for the rights share, which entails an issue of up to 413.7 mln new shares, will be determined based on a discount of 30.0% to the theoretical ex-rights price.
• Over half the proceeds of the rights issue, or RM507.0 mln, will be used for property development activities, while RM486.0 mln will be used to repay bank borrowings of RM7.96 bln as at 30th September 2015. (The Edge Daily)
• Media Prima Bhd's wholly-owned unit, Sistem Televisyen Malaysia Bhd (STMB) has entered into an agreement with Korean firm CJ O Shopping Co Ltd to establish a joint venture (JV) company to venture into the home shopping business.
• The shareholding structure of the JV company shall be 51.0% STMB and 49.0% CJ O. The JV company's capitalisation shall be RM65.0 mln, to be contributed by the two companies in proportion to their stake in the JV company, in several tranches. (The Edge Daily)
• Rice vermicelli manufacturer EKA Noodles Bhd has entered into a Memorandum of Understanding (MoU) with Anhui HuiJia Biological Science and Technology Co Ltd (HuiJia), a company based in Anhui Province, China, for the transfer of technology for the production of liquid fructose. The MoU also includes the extraction of rice protein powder from its by-product, subject to commercial feasibility and financial viability studies to be conducted.
• The estimated cost and production capacity of the proposed production line will be determined upon completion of the relevant studies. HuiJia shall provide the technology transfer and support in producing liquid fructose in accordance to the needs of EKA's business, while EKA shall provide the relevant market information to HuiJia to facilitate the technology transfer, amongst others. (The Edge Daily)
• Hap Seng Consolidated Bhd is acquiring 2.0 mln shares, representing the entire equity base of Lei Shing Hong Wood Products Ltd (LSHWP), for US$3.2 mln (RM14.2 mln). The target company is involved in general trading and trading of plywood.
• The acquisition presents an opportunity for the expansion of its fertilisers division — currently consists of its subsidiaries Hap Seng Fertilizers Sdn Bhd and PT Sasco Indonesia, which sources its fertilisers overseas. The acquisition is expected to be completed within two months. (The Edge Daily)
• Acoustech Bhd’s wholly-owned subsidiary, Formosa Prosonic Technics Sdn Bhd (FPT) is disposing of a leasehold land that measures 4.3-ac., located at Bandar Sultan Sulaiman, Klang, together with buildings constructed on it for RM11.0 mln cash to Full Sprint Sdn Bhd (FS).
• On top of that, FPT and FS also entered into a tenancy agreement for the rental of buildings upon completion of the proposed disposal. The monthly rental would be RM68,044.50 or 80 sen psf.
• Acoustech estimated that there will be a net gain of RM151,791 from the proposed disposal. Proceeds from the disposal would be allocated for acquisition of factory (RM5.0 mln) in the next three years, RM3.4 mln for working capital, RM2.5 mln for rental payments, and the remaining RM0.1 mln for estimated expenses. The proposal is estimated to be completed by 2Q2016. (The Edge Daily)
• Penang-based poultry farmer CAB Cakaran Corp Bhd has proposed to issue a private placement of 15.1 mln new shares, representing a 9.1% stake of the enlarged share capital, to Indonesia's Salim Group for RM31.2 mln or RM2.07 per placement share. The issue price of RM2.07 represents a premium of 26.2% to the five-day weighted average market price of CAB shares up to and including 15th January 2016.
• The proceeds raised from the placement will enable the company to reduce its bank borrowings to RM183.1 mln (from RM193.1 mln) and will be used as general working capital to help reduce its gearing to 0.7x (from from 1.1x). The proposed private placement is expected to be completed by 2Q2016. (The Edge Daily)
• Bright Packaging Industry Bhd’s 1QFY16 net loss stood at RM192,000 vs. a net profit of RM2.1 mln in the previous corresponding quarter, owing to tighter operating environment which resulted in a margin contraction. Revenue for the quarter, however, climbed 29.8% Y.o.Y to RM14.4 mln. (The Edge Daily)
• Axis Real Estate Investment Trust’s (Axis REIT) 4Q2015 net income fell 35.0% Y.o.Y to RM17.0 mln, largely due to expenses and a change in fair value of its investment properties. Revenue for the quarter, however, rose 9.8% Y.o.Y to RM32.8 mln.
• For 2015, cumulative net income declined 12.6% Y.o.Y to RM96.6 mln. Revenue for the year, however, added 18.0% Y.o.Y to RM163.8 mln. A dividend per unit (DPU) of 2.0 sen for the quarter, payable on 29th February 2016 and bringing its full year DPU to 8.40 sen, was declared. (The Edge Daily)

Source: M+ Online Research - 19 Jan 2016