• Following the firmer Ringgit against the Dollar and a mild reprieve from the uncertainties surrounding the 1MDB bond payment after guarantor IPIC paid the interest due on the bond, the FBM KLCI (+0.5%) extended its gains for the second consecutive day. Similarly, all the lower liners also advanced as FBM ACE recovered all of its previous day losses to close 1.5% higher. The broader market ended mostly on a positive note with the exception of Industrial Products (-0.04%) and Technology (-0.09%) sub-indices.
• Market breadth turned positive as gainers outweigh losers on a ratio of 467-to-359 stocks, while traded volumes added 3.3% to 1.67 bln as trading interest swayed towards the lower liners.
• The top performers on the FBM KLCI includes BAT (+RM1.18), Hong Leong Financial Group (+22.0 sen), PPB Group (+16.0 sen), RHB Capital (+16.0 sen) and Kuala Lumpur Kepong, which rose 12.0 sen after crude palm oil stockpiles hit a 13-month low in April. On the broader market, Panasonic (+40.0 sen) Calsberg (+28.0 sen), Bursa Malaysia (+26.0 sen), UEM Edgenta (+13.0 sen) and Metrod Holdings (+13.0 sen) were the main advancers. Meanwhile, MSC gained 13.0 sen after it returns into a profit in 1Q2016.
• On the negative side, Nestle (-48.0 sen) and Ajinomoto (-14.0 sen) experienced some pullback after their sharp gains previously, while Heineken Malaysia, Boustead Heavy Industries Corp and Boustead shed 16.0 sen, 15.0 sen and 14.0 sen respectively. Notable losers on the big board were Petronas Dagangan which fell 16.0 sen, trailing the weakness in the WTI crude oil prices, Genting Malaysia (-3.0 sen), Public Bank (-2.0 sen), UMW Holdings (-2.0 sen) and CIMB Bank (-1.0 sen) were the other big losers.
• Most Asian stocks finished on a positive note as Nikkei (+0.1%) closed marginally higher after a two-day rally in its currency was curbed as the Yen’s rise fizzled out. The Hang Seng lost 0.9%, dragged by property and financial stocks, while the Shanghai Composite Index gained 0.2%. Asean stockmarket closed mostly lower.
• The steady selldown on Wall Street yesterday intensified after investors digested disappointing earnings by consumer-discretionary giants such as Macy’s (-15.2%) and Walt Disney (-4.0%). The Dow sank 1.2% as all but one blue-chip stock (Microsoft Corp) closed slightly higher. On the broader market, the S&P500 fell 1.0%, while the Nasdaq ended the day down by 1.0%.
• European stocks ended mostly lower as the fall in mid-caps stocks offset the gains in the large-cap companies due to concerns over the U.K.’s potential secession from the European Union. The FTSE (+0.1%) inched upwards to 6,162.5 points, while Germany’s DAX and France’s CAC declined by 0.7% and 0.5% respectively.

THE DAY AHEAD

• With the 1MDB issue finding some near–term reprieve, the local market managed to extricate from the oversold position yesterday as investors pick-up some beaten down market leaders, albeit market sentiments remain mostly on the cautious side.
• With domestic market sentiments improving slightly, we think there could be further near term upsides as the market continues to make its adjustment from oversold. In addition, market players will also take cue from the calmer 1MDB bond issue to continue their bargain hunting activities.
• On the upside, the 1,650 level remains the main near term hurdle, followed by the 1,660 level. On the downside, there is support at the 1,630 and 1,600 levels.

COMPANY BRIEFS

• Iris Corportation Bhd is selling a 29.8% stake or 35.0 mln shares in Versatile Creative Bhd for RM21.0 mln to Edmund Fong R Boon as it seek to unlock the value of assets. The proposed disposal is also part of the group’s exercise to realign its focus on its core business, which includes education and property development.
• The proceeds of the sale would be used for the group’s working capital and the repayment of its borrowings. (The Star Online)
• Malaysia Building Society Bhd’s (MBSB) 1Q2016 net profit plunged 72.0% Y.o.Y of RM34.8 mln, impacted by higher allowance for impairment losses on loans, advances and financing. Revenue for the quarter, however, rose 17.6% Y.o.Y to RM812.6 mln. (The Star Online)
• BIMB Holdings Bhd’s 1Q2016 net profit fell marginally lower by 0.3% Y.o.Y to RM135.3 mln due to higher finance cost. Revenue for the quarter increased 10.8% Y.o.Y to RM896.8 mln. (The Star Online)
• Kumpulan Jetson Bhd’s subsidiary, Citarasa Haruman Sdn Bhd (CHSB) has entered into a RM15.0 mln settlement agreement with three companies in relation to the purchase of a piece of land in the sub-district of Ijok in May 2007.
• In the agreement, the companies agreed to revoke a sale and purchase agreement dated 28th May 2007 and another agreement pertaining to the joint development of the land, among other things. The settlement sum is the full and final settlement of all monies due and owing to CHSB. (The Star Online)
• TSR Capital Bhd is diversifying into the oil and gas (O&G) industry after it entered into a Memorandum of Agreement (MoA) with two individuals, Mohamad Othman and Datuk Seri Dr Prushotman Ragawan, to set up a special purpose vehicle (SPV) to for the O&G venture. The SPV will be eventually listed on Bursa Malaysia. (The Edge Daily)
• Gas Malaysia Bhd is allocating up to RM140.0 mln for its expansion plans in 2016, which includes growing its natural gas distribution system network in Peninsular Malaysia. The group expects to build up to 100 km of new pipelines in 2016 across several states. The group laid 74 km of pipelines in 2015, bringing its pipeline length to 2,139 km.
• Separately, Gas Malaysia’s 1Q2016 net profit gained 10.1% Y.o.Y to RM31.4 mln, mainly on higher gross profits, in line with the increase in its volume of gas sold. Revenue for the quarter added 26.2% Y.o.Y to RM961.0 mln. (The Edge Daily)
• Petronas Dagangan Bhd’s 1Q2016 net profit rose 6.6% Y.o.Y to RM219.4 mln on higher other income, though the effects was partially negated by lower gross profit. Revenue for the quarter, however, declined 19.2% Y.o.Y to RM4.93 bln. An interim dividend of 12.0 sen per share, payable on 8th June 2016 was declared. (The Edge Daily)
• Paramount Corporation Bhd’s 1Q2016 net profit plunged 58.2% Y.o.Y to RM9.7 mln, dented by weaker sales in its property division. Revenue for the quarter declined 31.2% Y.o.Y to RM113.3 mln. (The Edge Daily)
• LBS Bina Group Bhd's unconditional mandatory takeover offer of ML Global Bhd at 56.0 sen per share and six sen per warrant was deemed not fair and not reasonable by independent adviser, MainStreet Advisers Sdn Bhd. As such, the independent adviser has recommended that shareholders reject the offer.
• ML Global's shares and warrants have been trading above the offer price recently and up to the latest practicable day (LPD) on 5th May 2016. The offer price represents a discount of 6.7% to the LPD for its shares and a discount of 80.7% to the volume weighted average market price for the period between the latest trading day and LPD. (The Edge Daily)
• An indirect unit of CAB Cakaran Corp Bhd is buying a freehold land measuring 3.2 ha. in Pontian, Johor for RM1.6 mln for the company to expand its poultry farms to the southern region of Peninsular Malaysia. CAB’s 51.0%-owned subsidiary, CAB Cakaran Sdn Bhd, has inked a sales and purchange agreement with Banghong Livestock Trading Sdn Bhd for the acquisition. (The Edge Daily)
• PRG Holdings Bhd is proposing the subdivision of every one existing share-into-two shares to enhance the stock's marketability and trading liquidity. PRG's current issued and paid-up share capital stands at RM74.0 mln, comprising 148.1 mln shares (including 208,900 treasury shares) and 51.3 mln outstanding warrants 2014/2019. Each outstanding warrant is exercisable into one new PRG share at the exercise price of 75.0 sen apiece. The entitlement date has yet to be fixed. (The Edge Daily)

Source: M+ Online Research - 12 May 2016