• The FBM KLCI managed to extend its gains for the fourth consecutive time on the back of the stronger Ringgit and mildly positive market response and sentiment towards the recalibration of Budget 2016. The lower liners, however, underperformed on the back of a mixed broader market and lack of fresh catalysts.

• Market breadth was negative as losers outdone gainers on a ratio of 348-to-521 stocks. Traded volumes increased by 12.3% to 1.82 bln shares.

• BAT (+RM2.50) led the heavyweight gainers on the FBM KLCI, followed by Sime Darby (+38.0 sen), Genting (+18.0 sen), KLK (+58.0 sen) and Petronas Gas (+30.0 sen). On the broader market, the other major advancers were Hap Seng Consolidated (+18.0 sen), Lay Hong (+14.0 sen), Litrak (+14.0 sen), MNRB (+8.0 sen) and SOP (+10.0 sen).

• In contrast, the key decliners in the broad market include SAM (-24.0 sen), Ajinomoto (-21.0 sen), KESM (-20.0 sen), Hartalega (-19.0 sen) and Kossan (-59.0 sen). Meanwhile, Axiata (-52.0 sen), Maxis (-42.0 sen), Digi (-22.0 sen), Telekom (-13.0 sen), Astro (-2.0 sen), Ambank (-3.0 sen) and MISC (-4.0 sen) were the index-linked heavyweight losers on the big board.

• After the 2.9% loss yesterday, the Shanghai Composite is now close to a 50.0% drop since June 2015. The Nikkie also slipped yesterday, falling 0.7%. The Hang Seng, however, bucked the market trend by registering a gain of 0.8%. ASEAN indices, meanwhile, ended mostly positive.

• U.S. stockmarkets ended positively overnight amid the jump in crude oil prices. On the S&P 500, nine out of the ten main sectors closed higher, led by gains in energy and utilities, while the healthcare sector tumbled.

• In Europe, however, most of the benchmark indices were dressed in red as the DAX and CAC slumped 2.4% and 1.3% respectively, while the FTSE fell by 1.0% - the latter after the U.K posted a GDP growth of 0.5% in 4Q2015, meeting consensus expectations.

THE DAY AHEAD

• Although the revised Budget is largely neutral, we see further near term upsides on the FBM KLCI as it continues with its technical rebound and adjustment from its recent bout of oversold. The recovering oil prices could also aid the key index’s recovery, as with the positive overnight performance on Wall Street.

• We also think that that the ongoing technical rebound will remain mild as the general market conditions are still tentative, thereby limiting the market’s potential upsides as investors are likely to adopt quick profit taking strategies. Consequently, the 1,640-1,650 levels will remain as the immediate resistances, as with the near term supports at the 1,600-1,620 levels.

• There is also no change to our view that the lower liners and broader market will remain mixed amid the uncertain market environment that could keep most retail investors on the sidelines until there is further clarity on the market’s direction.

COMPANY BRIEFS

• I-Bhd’s unit, City Centrepoint Sdn Bhd has awarded the contract for earthworks, piling and sub-structure works for the Hilton project in i-City, Shah Alam, to Pintaras Jaya Bhd. The contract is valued at RM67.6 mln with a completion period of 14 months. The 50-storey project is worth RM1.00 bln in gross development value and that the groundbreaking ceremony is slated in February 2016. (Bernama)

• Glove formers maker ES Ceramics Technology Bhd’s 2QFY16 net profit gained 31.7% Y.o.Y to RM1.8 mln, helped by continuous cost improvement, better product mix and higher output volume. Revenue for the quarter grew 7.3% Y.o.Y to RM7.7 mln.

• For 1HFY16, cumulative net profit climbed 31.4% Y.o.Y to RM3.3 mln. Revenue for the period added 7.9% Y.o.Y to RM14.3 mln. (The Edge Daily)

• Perusahaan Sadur Timah Malaysia Bhd’s (Perstima) 3QFY16 net profit rose 25.7% Y.o.Y to RM14.3 mln on higher sales volume, despite lower selling prices. Revenue for the quarter increased 25.4% Y.o.Y to RM208.7 mln.

• For 9MFY16, cumulative net profit surged 50.6% Y.o.Y to RM37.7 mln. Revenue for the quarter improved 12.4% Y.o.Y to RM543.9 mln. (The Edge Daily)

• Spritzer Bhd’s 2QFY16 net profit surge 113.5% Y.o.Y to RM7.4 mln, boosted by higher sales and lower packaging material costs. Revenue for the quarter rose 13.4% Y.o.Y to RM65.6 mln.

• For 1HFY16, cumulative net profit added 45.1% Y.o.Y to RM14.7 mln. Revenue for the period gained 10.0% Y.o.Y to RM132.3 mln. (The Edge Daily)

• Malaysian Pacific Industries Bhd’s (MPI) 2QFY16 net profit improved 36.9% Y.o.Y to RM32.9 mln, due to improved margins, stronger US dollar and lower material cost. Revenue for the quarter grew 12.2% Y.o.Y to RM379.7 mln.

• For 1HFY16, cumulative net profit surged 81.6% Y.o.Y to RM79.9 mln. Revenue for the period increased 15.1% Y.o.Y to RM766.3 mln. (The Edge Daily)

• Furniture manufacturer Homeritz Corp Bhd’s 1QFY16 net profit jumped 108.7% Y.o.Y to RM8.9 mln, due to higher sales and the stronger U.S. dollar. Revenue for the quarter grew 21.9% Y.o.Y to RM40.7 mln. (The Edge Daily)

• Practice Note 16 (PN16) company Kejuruteraan Samudra Timur Bhd (KSTB) is proposing a regularisation plan that will pave the way for the company to venture into power generation sector in Sabah, a capital repayment, followed by a management buyout.

• KSTB and the substantial shareholders of Sepangar Bay Power Corporation Sdn Bhd (SBPC) have agreed to negotiate the proposed acquisition of SBPC with the intention to finalise and enter into definitive agreements within 60 days.

• SBPC has been granted the right to construct, own and operate a 100-MW combined-cycle gas turbine power plant in Kota Kinabalu, Sabah under a power purchase agreement with Sabah Electricity Sdn Bhd, which expires on 11th August 2029.

• KSTB also plans to distribute substantially the cash it retained through either a capital reduction exercise or a combination of capital reduction and dividend payment to reward existing shareholders. To facilitate the capital repayment, KSTB may undertake a proposed bonus issue of new ordinary shares of 30 sen each. (The Edge Daily)

• Tropicana Corp Bhd has sold the 19-storey Dijaya Plaza at Jalan Tun Razak, Kuala Lumpur, to Kenanga Investment Bank Bhd for RM140.0 mln in cash. The property, in which Tropicana originally invested RM110.6 mln, had a net book value of RM130.0 mln as at 31st December 2014.

• Tropicana said it expected to net gain RM8.9 mln from the disposal. The net proceeds of about RM51.6 mln would be used for working capital and/or repayment of bank borrowings of the Tropicana group. The disposal is expected to be completed in 2Q2016. (The Star Online)

• Axiata Group Bhd and Bharti Airtel Ltd have signed a definitive agreement to merge their respective telecommunications units in Bangladesh, Robi Axiata Ltd and Airtel Bangladesh Ltd. Post-merger, the combined entity operating as Robi will serve approximately 40.0 mln customers.

• Axiata will hold a 68.3% controlling stake in the combined entity, Bharti will hold 25.0%, while the remaining 6.7% will be held by the existing shareholder, NTT DoCoMo of Japan.

• Separately, Axiata, Telekom Malaysia Bhd (TM) and Packet One Networks (M) Sdn Bhd (P1) have signed three agreements on 28th January 2016 for the TM Next-Gen Backhaul (NGBH) high speed broadband (HSBB) access and domestic roaming services. The agreements will ensure faster and seamless Internet experience for subscribers as telecommunications companies leverage on each other’s infrastructure to improve their respective customers’ Internet experience.

• Apart from that, there will be an extension of the agreement for Celcom’s access to TM’s HSBB network. From this, Axiata will be able to offer fixed broadband services for business-to-customer and business-to-business segments on top of its mobile offerings. The services are expected to be rolled out by 2H2016. (The Star Online)

• Tenaga Nasional Bhd’s 1QFY16 net profit fell 16.0% Y.o.Y to RM1.98 bln, mainly due to the recognition of imbalance cost pass through (ICPT) over-recovery and the strengthening of the U.S. dollar and Japanese yen against the Ringgit. Revenue for the quarter declined 3.2% Y.o.Y to RM10.68 bln. (The Star Online)

Source: M+ Online Research - 29 Jan 2016