The FBMKLCI extended its losses for the third straight day before closing 0.1% lower yesterday, as the key index endured another choppy trading session amid the continuing lack of new leads The lower liners, however, continue to close higher as the FBM Small Cap and FBM Fledgling rose 0.3% and 0.4% respectively, while the broader market ended mixed.

Market breadth turned positive as gainers edged losers on a ratio of 413-to-385 stocks. Traded volumes rose by 17.3% to 1.75 bln shares, owing to the rotational play amongst the lower liners.

BAT (-RM1.66) topped the FBM KLCI decliners, followed by UMW (-9.0 sen), PPB Group (-8.0 sen), Astro (-6.0 sen) and Maybank (-5.0 sen). Meanwhile, Panasonic (-40.0 sen), Lafarge (-16.0 sen), Top Glove (-13.0 sen), Scientex (- 12.0 sen) and Apollo Food (-10.0 sen) were amongst the biggest losers on the broader market.

Significant gainers on the broader market include Dutch Lady (+50.0 sen), Hong Leong Industries (+35.0 sen), Can-One (+34.0 sen), Atlan Holdings (+30.0 sen) and KESM (+25.0 sen). Amongst the biggest gainers on the big board were Genting (+15.0 sen), Hong Leong Bank (+10.0 sen), RHB Capital (+10.0 sen) and MISC (+5.0 sen). Public Bank rose 2.0 sen after reporting a stronger set of quarterly earnings.

Japanese stockmakrets advanced for the second straight session as the Nikkei rose 0.2%, but came off from most of its intraday gains. The Shanghai Composite, however, tanked 2.3% to close below the 3,000 psychological level, dragged down by the weakness in metal-related companies coupled with the concern over the 1Q2016 corporate earnings growth. The Hang Seng Index was also dragged 0.9% lower. ASEAN benchmark indices, meanwhile, ended mostly lower.

Wall Street closed higher for the third straight day – the Dow added 0.3% as crude oil prices rallied after the U.S. Energy Information Administration reported that domestic output fell for the sixth straight week. On the broader market, the S&P 500 gained 0.1%, owing to the stronger-than-expected corporate earnings from Goldman Sachs (+2.3%) and Johnson & Johnson (+0.8%).

Earlier, European benchmark indices also advanced – the FTSE (+0.1%), CAC (+0.6%) and DAX (+0.7%) all rose to near three-month highs, buoyed by the recovery in crude oil prices. Notable gainers of the day were oil giants like Royal Dutch Shell Plc (+0.7%), Tullow Oil Plc (+5.1%) and BP Plc (+0.2%)

THE DAY AHEAD

The market’s uptrend seems to have run out of steam after it was unable to breach the 1,730 level amid the toppish market conditions where current and forward valuations in the mid-teens have already largely reflected the fundamentals of the Malaysian stockmarket. As it is, fresh market catalysts are required to provide fresh impetus for the FBM KLCI to head higher, but the leads are still scant.

Consequently, we think the key index is likely to continue dithering and is likely to trend within the tight range between 1,700 and 1,730 levels for longer as the market interest remains thin. In the interim, however, there may be a mild recovery as the selling appears to be abating. We also think the market could take cue from the positive U.S. stockmarket performance overnight to provide some market confidence. Still the upsides could be mild as fresh buying is still tentative.

The mixed trading conditions will also prevail among the lower liners as many retail players are on the sidelines until there are improvements in market confidence. However, the occasional rotational buying will help to provide some retail interest.

MACRO BRIEF

Malaysia’s Consumer Price Index (CPI) rose 2.6% Y.oY to 113.8 in March – below economists’ estimates of 3.4% Y.o.Y rise. The increased were due to increases in ten major groups, particularly the alcoholic beverages and tobacco (+22.7%), miscellaneous goods and services (+5.1%) and food & non-alcoholic beverages (+5.0%) indices.

On a monthly basis the CPI, however, decreased 0.6% Y.o.Y. For the period January to March in 2016, the CPI climbed 3.4% Y.o.Y. (The Star Online)

COMPANY BRIEFS

Public Bank Bhd's 1Q2016 net profit rose 4.9% Y.o.Y to RM1.23 bln, as the domestic loans and deposits recorded a healthy annualised growth rate of 9.0% Y.o.Y and 10.9% Y.o.Y respectively. Revenue for the quarter added 9.5% Y.o.Y to RM5.04 bln. (The Star Online)

AmanahRaya Real Estate Investment Trust (Amanahraya REIT) – through its trustee CIMB Islamic Trustee Bhd, plans to acquire a single story factory, annexed with a three storey office building in Nusajaya, Johor Bahru for RM24.0 mln from Pipeline Distribution (M) Sdn Bhd. The building is erected on a 1.2-ha. piece of freehold land. (The Edge Daily)

Malayan Banking Bhd (Maybank) has fixed the issue price of its new shares to be issued pursuant to its 12th dividend reinvestment plan (DRP) at RM8.35 per new Maybank share.

The issue price is based on the five-day volume weighted average market price (VWAMP) of RM9.13 per Maybank share, up to and including 19th April 2016 – being the last trading day prior to the price-fixing date.

The issue price was adjusted for a dividend adjustment of 30 sen to the five-day VWAMP and a discount of 48 sen or approximately 5.4% to the ex-dividend VWAMP of RM8.83. The book closure date pursuant to the final cash dividend and the DRP has been fixed for 6th May 2016. (The Edge Daily)

Nexgram Holdings Bhd's wholly-owned subsidiary, Nexgram Land Sdn Bhd is planning to acquire 70.0% of construction outfit, Blue Hill Development Sdn Bhd, for RM12.5 mln. Nexgram Land had, on 14th April 2016, entered into a conditional share sale agreement with Spacious Glory Sdn Bhd to acquire 770,000 ordinary shares of Blue Hill.

The remaining 30% stake in Blue Hill will be held by Spacious Glory directors and shareholders, Lau Tian Kit and Lim Kim Lee. Blue Hill’s principal activities include rendering management services, housing development and building construction, as well as civil and electrical engineering works. (The Edge Daily)

Eastern & Oriental Bhd (E&O) has aborted the planned admission of the securities of its indirect wholly-owned Eastern & Oriental Property (UK) Ltd (E&O UK) on the London Stock Exchange (LSE) due to the unstable global market and exchange rate volatility.

Approximately £1.4 mln (RM8.3 mln based on the average exchange rate of £1.00: RM6.1553 between April 2015 and March 2016) costs in relation to the Proposed Admission will be expensed off to the consolidated statements of comprehensive income for the financial year ended 31st March 2016. (The Edge Daily)

TAS Offshore Bhd’s 3QFY16 net loss stood at RM13.4 mln vs. a net profit of RM676,000 in the previous corresponding quarter, due to an impairment loss on trade receivable and provision for termination of contracts, which are still disputed by the company. Revenue for the quarter plunged 77.2% Y.o.Y to RM17.0 mln.

For 9MFY16, cumulative net loss stood at RM3.1 mln as opposed to a net profit of RM10.3 mln in the previous corresponding period. Revenue for the period fell 36.2% Y.o.Y to RM128.8 mln. (The Edge Daily)

Guinness Anchor Bhd (GAB), which has received shareholders' approval to change its name to Heineken Malaysia Bhd, expects to enjoy cost-savings from being a part of Heineken's global supply chain over the next six-to-12 months.

GAB can tap into the global procurement contracts of raw materials such as barley, glass and aluminum that Heineken has, and will be much more efficient in terms of purchasing. (The Edge Daily)

Hume Industries Bhd’s 3QFY16 net profit dipped 42.0% Y.o.Y to RM11.2 mln due to higher production costs. Revenue for the quarter fell 15.7% Y.o.Y to RM145.5 mln. A dividend of three sen per share for the quarter, payable on 25th May 2016, was announced. (The Edge Daily)

Crest Builder Holdings Bhd's 51.0%-owned unit, Landasan Bayu Sdn Bhd, has entered into a joint development agreement with the Malaysian Rubber Board (MRB) for the development of the latter's piece of land at Jalan Ampang, Kuala Lumpur.

The mixed commercial development will comprise retail, premium residences and offices, with a gross development value (GDV) of RM1.33 bln. Under the agreement, MRB will be entitled to a 22.5% share of the total GDV with a guaranteed amount of RM299.9 mln. (The Edge Daily)

Petronas Dagangan Bhd (PetDag) plans to open up to 15 new service stations in 2016 despite the challenging market conditions and crude oil prices remain dampened. The company has allocated RM400.0 mln in CAPEX for 2016 to expand its operations. (The Edge Daily)

A two-year legal suit between Mah Sing Group Bhd and several vendors in Penang over the aborted acquisition of a RM42.6 mln land in Jawi by Mah Sing's unit has been resolved out of court, with Mah Sing getting back half of paid initial deposit for the deal.

Mah Sing’s wholly-owned unit, Nature Legend Development Sdn Bhd, have been refunded RM2.1 mln for the land deal. The balance of the initial deposit shall be retained by the vendors. (The Edge Daily)

Source: M+ Online Research - 21 Apr 2016