• Tracking the overall strength on the key regional indices, the FBM KLCI rose marginally by 0.2% as investors bargain-hunted for undervalued stocks. The FBM ACE (-0.1%) index was the only underperformer amongst the lower liners, despite the mostly positive broader market trend.
• Market breadth turned positive as gainers outweigh losers on a ratio of 427-to-362 stocks, while traded volumes shed 4.2% to 1.62 bln as market sentiment remained cautious ahead of the 1MDB bond interest payment due today.
• Petronas Gas (+40.0 sen), MISC Bhd (+35.0 sen), Petronas Chemicals (+31.0 sen), Maxis (+12.0 sen) dominated the big board as the blue chips raked back some of their Monday losses, while, Hong Leong Bank rose 6.0 sen. On the broader market, consumer products giants, Nestle (+80.0 sen) and Dutch Lady (+68.0 sen) continues to advance, while Ajinomoto, Chin Tek Plantations and Tasek Corporation expanded 54.0 sen, 33.0 sen and 30.0 sen respectively.
• In contrast, Panasonic (-30.0 sen) topped the broader market’s decliners list along with Ta Ann Holdings (-27.0 sen), LPI Capital (-22.0 sen), UEM Edgenta (-15.0 sen) and Time Dotcom (-15.0 sen). Tenaga fell by 18.0 sen after Khazanah Nasional reported that it might trim its stake in the company. Meanwhile, the other key index decliners include BAT (- 28.0 sen), Petronas Dagangan (-14.0 sen), PPB Group (-10.0 sen) and Public Bank (- 8.0 sen).
• Asian benchmark indices closed in the positive territory, led by the jump in the Nikkei of 2.2% yesterday, after the government expressed its readiness to intervene in the forex markets should there be a sharp appreciation in the Yen. Meanwhile, the Hang Seng Index climbed 0.4% as energy stocks erased their steep losses from the late trading, while the Shanghai Composite rose slightly by 0.02%. ASEAN stockmarkets closed mostly higher.
• On Wall Street overnight, stocks ended higher as crude oil prices rebounded and the Dow surged 1.3%, its biggest gains in two months led by Caterpillar and Goldman Sachs Group. Meanwhile, on the broader market, the S&P500 and the Nasdaq was up by 1.3% each.
• European stocks inched upwards as investors cheered on the positive developments of Greece’s debt in the Eurozone finance minister’s meeting. The FTSE rose 0.7% to 6,156.7 points while, the DAX and CAC expanded 0.7% and 0.4% respectively. Danish Jeweler, Pandora climbed 11.2% after announcing favorable quarterly results.

THE DAY AHEAD

• Although the market appears poised for further recoveries, taking cue from the positive performance of overseas stockmarkets and the key index’s oversold position, market conditions remain fluid for the time being amid the uncertain status of 1MDB’s bond interest payment that is due today.
• Consequently, we think that the uncertainties will continue to weigh on investor sentiments and the market’s volatility is likely to persist.
• With the market remaining cautious, we think that the downside bias is likely to remain as investors could opt for quick profit taking strategies which could see the key index veering back to the 1,630 level and prolonging its oversold conditions. On the upside, the main resistance is at the 1,650 level.

COMPANY BRIEFS

• Enra Group Bhd, which owns 70.0% of Landmark Zone, has terminated its earlier conditional share sale agreement with Meridian Hectares Sdn Bhd to dispose of a 30.0% stake for RM13.9 mln. This is to allow for Enra’s to renegotiate the terms and conditions of the proposed disposal of a higher equity interest in Landmark Zone.
• Landmark Zone's core activity is in property development and it is undertaking a joint venture mixed development project identified as Shamelin Star in Taman Shamelin Perkasa, Kuala Lumpur under a joint venture agreement dated 28th February 2011 between Landmark Zone and the landowner, Koperasi Shamelin Bhd. The project would have comprised of two blocks of 29-storey serviced apartments with 630 apartments, 32 retail lots, car park and a club house. (The Star Online)
• Datasonic Bhd's unit, Datasonic Technologies Sdn Bhd has secured a RM260.4 mln contract from the Home Ministry to supply 12.0 mln MyKad raw cards and consumables for 40 months. The contract will start on 1st July 2016 and end on 31st December 2019. (The Star Online)
• Tan Chong Motor Holdings Bhd’s 1Q2016 net losses stood at RM37.2 mln vs. a net profit of RM26.4 mln reported in the previous corresponding quarter, due to the intense competition in the auto industry and the weak Ringgit. Revenue for the quarter fell 7.0% Y.o.Y to RM1.46 bln. (The Star Online)
• Iskandar Waterfront City Bhd (IWC) is planning to place out new shares to raise as much as RM65.9 mln for its property development and construction activities. The proposed issuance of up to 67.0 mln shares, which would represent up to 10.0% of its enlarged issued and paid-up share capital, would be placed to third-party investors to be identified later and at an issue price that would be determined later.
• Subject to prevailing market conditions and the timing of the identification of the placee, the proposed private placement of shares may be implemented in one or more tranches. As such, there could potentially be several price-fixing dates, depending on the number of tranches and the timing of the implementation.
• It said it would use the bulk of the funds raised – RM44.9 mln or 68.0% of the gross proceeds, as payment to sub-contractors, suppliers and professionals for ongoing projects. For land-related expenses, IWC plans to use RM15.2 mln or 23.0% of the gross proceeds, while general working capital would make up about RM4.3mln or about 6.5% of the total proceeds. (The Star Online)
• Malaysia Smelting Corp Bhd’s (MSC) 1Q2016 net profit stood at RM24.9 mln vs. a net loss of RM2.9 mln in the previous corresponding quarter, on the back of to higher sales volume of refined tin, coupled with favourable valuation adjustment on tin inventory arising from higher closing tin price. Revenue for the quarter improved 7.0% Y.o.Y to RM408.4 mln. (The Star Online)
• Telekom Malaysia Bhd (TM) and US-based Hurricane Electric signed a strategic partnership agreement to offer high-speed Internet in emerging Asian markets. The terms of the agreement calls for TM to leverage its ownership in multiple Asia-Pacific submarine cable systems linking the major regional hubs to new and growing markets in Asia. (The Edge Daily)
• Boustead Holdings Bhd has fixed the price for its two-for-five rights issue at RM2.55 per share, which is 25.2% lower than its theoretical ex-rights price (TERP) of RM3.41, which was based from a five-day volume-weighted average market price ended 9th May 2016 of RM3.76. (The Edge Daily)
• Malaysia Airports Holdings Bhd’s (MAHB) passenger throughput in local airports grew 2.2% M.o.M to 7.0 mln in April 2016. Its international passengers grew 4.4% M.o.M to 3.4 mln, while domestic passengers rose 0.1% M.o.M to 3.6 mln.
• This came despite the overall aircraft movements falling 4.8% M.o.M, with international and domestic aircraft movements declining 3.6% M.o.M and 5.5% M.o.M respectively. (The Edge Daily)
• YKGI Holdings Bhd has proposed to cancel 40 sen out-of-its 50 sen par valued shares to eliminate its accumulated losses and provide greater flexibility for the group to raise funds in the future. As at 31st December 2015, its audited accumulated losses at the company level stood at RM10.6 mln, which is expected to be fully offset against the credit of between RM139.3 mln and RM187.4 mln that will arise from the proposed par value reduction.
• It also has 95.0 mln outstanding warrants 2013/2020 with an exercise price of 50 sen per warrant and 21.7 mln Redeemable Convertible Preference Shares of 50 each, issued at an issue price of 60 sen each, which are convertible new YKGI shares.
• Assuming none of the outstanding convertible securities are exercised prior to the implementation of the par value reduction, the exercise will give rise to a minimum amount of RM139.34 mln. If all of them are exercised prior to that, it will see a credit amount of about RM187.4 mln. (The Edge Daily)

Source: M+ Online Research - 11 May 2016