• Following the sharp recovery in crude oil prices, coupled with the recovery in U.S. stockmarkets last Friday, the FBM KLCI also staged a rebound yesterday as the key index rose 0.4%. Both the lower liners and broader market stocks also ended in the positive zone with the exception of the Construction sub-index (-0.2%).
• Market breadth turned positive as gainers outpaced losers on a ratio of 497-to-297 stocks. Traded volumes rose by 15.5% to 1.54 bln shares as market participants returned from the extended Chinese New Year break.
• Topping the key index gainers list was BAT (+40.0 sen), followed by Petronas Gas (+40.0 sen), KLK (+22.0 sen), KLCC (+10.0 sen) and Maxis (+9.0 sen). Notable gainers on the broader market were plantations stocks like United Plantations (+52.0 sen), BLD Plantations (+30.0 sen) and Genting Plantations (+18.0 sen), while Enra added 28.0 sen.
• In contrast, amongst the biggest decliners on the broader market include Shell (-33.0 sen), Asia File (-19.0 sen), Engkah (-16.0 sen), Scientex (-16.0 sen) and Goldis (-15.0 sen). Topping the losers list on the big board was Hong Leong Financial Group (-18.0 sen), Genting (-9.0 sen), Sime Darby (-6.0 sen), Public Bank (-6.0 sen) and Hong Leong Bank (-2.0 sen).
• Despite slipping into a technical recession in 4Q2015 after Japan announced its GDP contracted 1.4% Y.o.Y, the Nikkei jumped 7.2% as the Japanese Yen slid against the Greenback. The Shanghai Composite resumed trading by closing 0.6% lower, but managed to pare off most of its intraday losses while the Hang Seng Index added 3.3%, taking cue from the rally on U.S. stockmarkets last Friday. ASEAN indices, meanwhile, ended mostly positive.
• European benchmark indices extended their rally – the FTSE (+2.0%), CAC (+3.0%), DAX (+2.7%) all closed sharply higher after the European Central Bank said that further stimulus measures will be deployed in March 2016 to boost economic growth. HSBC Plc added 1.4% after announcing that the headquarters will remain in London. Elsewhere, U.S. stockmarkets was closed for the President’s Day public holiday.

THE DAY AHEAD

• We expect stocks on Bursa Malaysia to maintain their positive bias over the near term amid the continuing gains on most global equities. The recovering oil prices have certainly given credence to the ongoing recovery, despite the spate of weak global economic data released recently that point to a still challenging environment - at least in 1H2016. Nevertheless, the market’s near term optimism stems from hopes that Central Banks around the world would do more to lift their respective sagging economies and this may continue to drive stocks higher for longer. 
• Therefore, we expect the FBM KLCI to breach the 1,650 level and attempt a move towards the 1,670-1,680 levels as it takes cue from the runup in global equity markets. On the downside, the 1,630 level will serve as the main near term support level. 
• We also think that stocks in the broader market and lower liners will see renewed interest amid the positive near term outlook and retail investors return from their Chinese New Year break.

COMPANY BRIEFS

• Tek Seng Holdings Bhd’s 4Q2015 net profit stood at RM10.4 mln vs. net loss of RM513,000 in the previous corresponding quarter, boosted by higher sales volume of solar-related products. Revenue for the quarter jumped 149.7% Y.o.Y to RM122.4 mln. 
• For 2015, cumulative net profit grew 76.1% Y.o.Y to RM21.3 mln. Revenue for the year added 54.9% Y.o.Y to RM359.5 mln. A final dividend of 1.5 sen, giving a total dividend of 3.0 sen for the year was proposed. 
• Separately, Tek Seng plans to triple its solar products’ production capacity to 740MW by spending RM237.0 mln to add five production lines in 2016. (The Star Online) 
• TSR Capital Bhd’s unit has clinched a RM240.0 mln contract to build condominiums and car parks in Putrajaya from Putrajaya Homes Sdn Bhd. The project is for duration of 36 months and is expected to be completed by February 2019. (The Star Online) 
• Pharmaniaga Bhd’s 4Q2015 net profit plummeted 56.2% Y.o.Y to RM16.1 mln, mainly due to increased promotional activities, research and development expenses, higher selling and distribution, as well as amortisation for the Pharmacy Information System. Revenue for the quarter, however, gained 8.5% Y.o.Y to RM680.2 mln. 
• For 2015, cumulative net profit fell 10.4% Y.o.Y to RM84.0 mln. Revenue for the year, however, rose 3.3% Y.o.Y to RM2.19 bln. A dividend of 7.0 sen per share, bringing the total payout for the year to 30 sen per share was declared. (The Edge Daily) 
• BP Plastics Holding Bhd’s 4Q2015 net profit surged 264.0% Y.o.Y to RM8.3 mln, attributable to higher sales volume with better product mix, higher process efficiencies and the weaker Ringgit. Revenue for the quarter rose 16.3% Y.o.Y to RM81.1 mln.
• For 2015, cumulative net profit jumped 119.3% Y.o.Y to RM22.1 mln. Revenue for the year, however, contracted 0.2% Y.o.Y to RM283.5 mln. A second interim dividend of three sen per share, payable on 17th March 2016, was declared.
• BP Plastics also announced that they will adopt a dividend policy of distributing a minimum of 40% from its net profit starting from 2016. (The Edge Daily)
• AWC Bhd has secured a maintenance subcontract, which is worth RM90.0 mln over the span of five years, for the newly completed Shah Alam Hospital from the Government of Malaysia. The maintenance of the Shah Alam Hospital will include engineering, cleaning and maintenance works.
• The subcontract is effective from 1st March 2016 and will end on 28th February 2021. (The Edge Daily)
• AirAsia Bhd’s 4Q2015 number of passengers grew 11.6% Y.o.Y to 13.5 mln. The improvement was ahead of a 6.0% increase in capacity, despite a lower fleet count of 170 aircraft, vs. 172 aircraft in the previous year.
• On the other hand, AirAsia X Bhd (AAX) registered a 9.2% Y.o.Y fall in its passenger count to 1.0 mln in 4Q2015, in line with a 10.0% reduction in capacity to 1.2 mln passengers. The reduction in capacity was due to its route consolidation exercise which saw the termination of routes to Narita, Nagoya and Adelaide, while it’s Colombo and Chongqing routes were shifted to A320 operations. (The Edge Daily)
• Kejuruteraan Samudra Timur Bhd (KSTB) has bagged a contract from Lundin Malaysia BV to provide oil country tubular goods inspection services. The contract is for a duration of two years, with an extension option of one year, from 15th September 2015.
• The contract value was undisclosed as such services depend on the demand and activity levels of Lundin and the scope of services rendered by Samudra Timur during the duration of the contract. Meanwhile, the price and rates for each type of inspection services are stipulated in a schedule accompanying the contract. (The Edge Daily)

Source: M+ Online Research - 16 Feb 2016