• Tracking the strong gains in Wall Street overnight, the FBM KLCI rose for the third straight session yesterday (+0.3%). The key index opened sharply higher and was hovering in the positive territory for the entire trading session, largely due to strong buying support in oil & gas heavyweights. Among the mixed broader market, however, the FBM Ace (-0.6%) underperformed.
• Market breadth turned positive as gainers outstripped losers on a ratio of 463-to-375 stocks. Traded volumes rose by 3.9% to 1.62 bln shares.
• Topping the gainers list on the big board were oil & gas heavyweights like Petronas Gas (+66.0 sen), Petronas Chemicals (+9.0 sen) and SapuraKencana Petroleum (+5.0 sen), while Hong Leong Financial Group and Astro rose 10.0 sen and 7.0 sen respectively. Other notable advancers of the day include Dutch Lady (+30.0 sen), Aeon Credit (+25.0 sen), Ajinomoto (+20.0 sen) and Batu Kawan (+20.0 sen). Astral Asia, meanwhile, jumped 25.0 sen after announcing a bonus issue of 9-for-2 shares.
• Amongst the biggest decliners of the day were United Plantations (-68.0 sen), Globetronics (-32.0 sen), Top Glove (- 30.0 sen), Shangri-La (-23.0 sen) and GAB (-20.0 sen). There were only five decliners on the FBM KLCI – BAT (-72.0 sen), Sime Darby (-15.0 sen), MISC (- 13.0 sen), UMW (-9.0 sen) and KLK (-2.0 sen).
• The Nikkei jumped 2.7% to close above the 17,000 psychological level ahead of the Bank of Japan’s policy meeting on Friday. The Hang Seng Index added 1.0%, but the Shanghai Composite fell 0.5% on concerns over further RMB depreciation. ASEAN indices, meanwhile, closed mostly higher.
• Wall Street endured another volatile session as the Dow swung between gains and losses before closing 1.3% lower with losses accelerating in the final trading hour. Meanwhile, the S&P 500 closed 1.2% lower, dragged down by weak quarterly earnings from corporate giants like Apple Inc. and Boeing Co.
• Despite opening lower, European benchmark indices, however, closed in the positive – the FTSE (+1.3%), CAC (+0.5%) and DAX (+0.6%) all advanced as crude oil price rose for the second straight session. Amongst the biggest gainers of the day include Royal Dutch Shell Plc (+2.9%) after its shareholders have approved the takeover of BG Group Plc (+3.5%).

THE DAY AHEAD

• We think the FBM KLCI could continue on with its near term recovery trend as it continues to adjust from its bout of oversold. The efforts could be helped by renewed interest in palm oil stocks after crude palm oil prices have steadily increased over the past week to breach the RM2,500 per tonne level on expectations of potentially lower supplies due to the El Nino weather phenomenon. In addition, we also think that oil and gas stocks could see renewed trading interest on the back of the steadying Brent prices that have climbed over the past week to hover around US$33 per barrel.
• Interest in the stocks in the above sectors could mitigate the expected cuts in government spending in a revised Budget 2016 to be announced today. The revision could also include a higher budget deficit and lower GDP growth forecast for 2016. Consequently, we think the near term upsides will continue to be measured with the potential gains limited to the 1,640-1,650 levels, while the 1,600-1,620 levels continue to serve as the main near-term support points.
• On the broader market, we do not see significant upsides as market breadth has thinned as many retail players have retreated to the sidelines due to the sustained market cautiouness and are awaiting for more positive catalysts to appear.

COMPANY BRIEFS

• Industrial chemicals and materials distributor, Luxchem Corp Bhd is acquiring Transform Master Sdn Bhd, a chemical product manufacturer for RM46.0 mln. The purchase consideration would be settled through RM36.8 mln cash and an issue of 5.2 mln new shares in Luxchem at an issue price of RM1.77 per share. (The Edge Daily)
• Scanwolf Corporation Bhd's wholly owned subsidiary, Scanwolf Properties Sdn Bhd plans to buy a four-storey shophouse with a lift in Falim Business Centre, Ipoh, from its former director and substantial shareholder Datuk Loo Bin Keong for RM2.3 mln.
• The acquisition was to facilitate the centralisation of its operations and relocate its corporate office to a single roof to improve efficiency and operational productivity. The acquisition will be financed partly through internally generated funds and bank borrowings. Loo has resigned from Scanwolf and Scanwolf Properties on 5th February 2015 and 28th November 2014 respectively. (The Edge Daily)
• Sunway Real Estate Investment Trust’s 2QFY16 net property income added 1.9% Y.o.Y to RM97.1 mln, largely on improved performance of its retail and hotel segments. Revenue for the quarter rose 15.7% Y.o.Y to RM131.9 mln.
• For 1HFY16, cumulative net property income gained 7.9% Y.o.Y to RM187.0 mln. Revenue for the period climbed 11.1% Y.o.Y to RM253.1 mln. A distribution per unit (DPU) of 2.6 sen for the quarter was proposed. (The Edge Daily)
• General insurance provider, LPI Capital Bhd’s 4Q2015 net profit declined 12.7% Y.o.Y to RM102.2 mln due to lower realised gains on its investment in equities. Revenue for the quarter, however, rose 6.5% Y.o.Y to RM338.6 mln.
• For 2015, cumulative net profit increased 13.4% Y.o.Y to RM321.0 mln. Revenue for the year improved 9.4% Y.o.Y to RM1.28 bln. A second interim dividend of 50.0 sen per share, payable on 24th February 2016 was declared. (The Edge Daily)
• Pensonic Holdings Bhd's 2QFY16 net profit surged 4.6x to RM2.7 mln, mainly due to cost rationalisation implemented by management and gains from reversal of impairment for doubtful debts. Revenue for the quarter increased 4.0% Y.o.Y to RM91.5 mln.
• For 1HFY16, cumulative net profit jumped 78.6% Y.o.Y to RM5.0 mln. Revenue for the quarter, however, fell 1.9% Y.o.Y to RM190.4 mln. (The Edge Daily)
• Dagang NeXchange Bhd (DNeX) expects revenue to double in 2016, following the completion of its acquisition of OGPC Group. The company acquired 100% equity interest in oil and gas (O&G) outfit OGPC Sdn Bhd and a 52.0% equity interest in OGPC O&G Sdn Bhd, marking its’ first entry into the O&G industry.
• Historically, OGPC Group's revenue has been in the range of RM90.0 mln to RM140.0 mln over the past three years while DNeX's revenue for 2014 stood at RM86.8 mln. (The Edge Daily)
• Syarikat Takaful Malaysia Bhd’s 4Q2015 net profit rose 22.3% Y.o.Y to RM36.4 mln, due to higher sales from both family and general takaful businesses as well as higher net investment income. Revenue for the quarter improved marginally by 0.5% Y.o.Y to RM403.3 mln.
• For 2015, cumulative net profit added 11.0% Y.o.Y to RM156.0 mln. Revenue for the year gained 8.2% Y.o.Y to RM1.79 bln. (The Star Online)

Source: M+ Online Research - 28 Jan 2016