• The FBM KLCI (+0.3%) closed higher for the third straight day on the back of buying support on blue-chip stocks, including Genting and Axiata, as well as a favorable industrial production data. Meanwhile, the FBM ACE (+1.3%) led the gains in the lower liners amid a mixed broader market.
• Market breadth was positive as gainers outpaced losers on a ratio of 449-to-395 stocks. Traded volumes expanded 22.7% to 2.04 bln shares due to renewed trading interest among FBM ACE stocks.
• Topping the gainers list on the key index was Genting (+29.0 sen), followed by KLCC (+28.0 sen), Hong Leong Financial Group (+18.0 sen), UMW Holdings (+10.0 sen) and Petronas Gas (+8.0 sen). Notable decliners on broader market include Huat Lai Resources (+20.0 sen), Perusahaan Sadur Timah Malaysia (+18.0 sen), Focus Lumber (+17.0 sen), Genting Plantations (+16.0 sen) and Kim Loong Resources (+14.0 sen).
• On the other side of the trade, the key losers include Nestle (-50.0 sen) Boustead Holdings (-18.0 sen), Apex Healthcare (- 14.0 sen), Top Glove (-13.0 sen), in addition to Tan Chong Motor Holdings, which extended its losses by another 12.0 sen after posting an unprecedented net loss in 1Q2016. Meanwhile, banking heavyweights like Hong Leong Bank and Maybank slipped 10.0 sen and 3.0 sen respectively, trailed by Maxis (-10.0 sen), MISC (-8.0 sen) and Tenaga Nasional (-4.0 sen).
• The Nikkei rose 0.4% as positive earnings from the companies like DeNA (+12.4%) to Meiji Holdings (+11.0%) outweigh weaker results of its peers. Meanwhile, scandal-hit Mitsubishi Motors jumped 16.2% after Nissan Motor agreed to acquire a key stake in the former. On the other hand, the Hang Seng (-0.7%) continues to spiral downwards for the second consecutive day, while the Shanghai Composite Index closed virtually unchanged. ASEAN stockmarkets, meanwhile, closed mostly higher.
• After a choppy trading session, most U.S. stock indices closed marginally lower as investors adopted a wait-and-see attitude ahead of the retail sales report due Friday. The Dow was slightly up by 0.1%, while, Apple fell to its two-year record low to US$90.34. On the broader market, the S&P narrowed further by 0.02%, dragged down by declines in healthcare and technology stocks, while the Nasdaq settled 0.5% lower.
• Key European benchmark indices – the FTSE (-1.0%), DAX (-1.1%) and CAC (-0.5%) all retreated in tandem with the fall in crude oil prices, a sharp dip in mining stocks and a mixed set of earnings. However, Germany’s largest power producer, RWE bucked the general trend after it jumped 6.8%, supported by better-than-expected 1Q2016 earnings.

THE DAY AHEAD

• Market sentiments have improved slightly after the 1MDB bond interest payment was paid by the guarantors which helped to calmed investors for the time being. The key index’s gains have also been decent to also allow the FBM KLCI to adjust from oversold and with the upward momentum still intact, we think there should be further near term upsides.
• The upsides, however, could be more measured as investors are likely to adopt quick profit taking strategies ahead of the weekend and this could limit the key index’s gains to just above the 1,650 level. We also think that the trading environment will remain choppy as investors are likely to stay wary for the time being.
• On the broader market and lower liners, there appears to be renewed trading interest, but we also think that a mixed trading environment will prevail as retail investors adopt quick profit taking strategies.

MACRO BRIEF

• Malaysia’s March 2016 Industrial Production Index (IPI) rose 2.8% Y.o.Y, supported by a 4.4% Y.o.Y growth in the manufacturing index and 7.7% Y.o.Y increase in the electricity index, which offsets the decline in Mining Index (-2.5% Y.o.Y). In seasonally adjusted terms, however, the IPI fell 0.4% M.o.M. For 1Q2016, Malaysia IPI expanded by 3.3% Y.o.Y, supported by growth in the manufacturing index (+4.3% Y.o.Y) and electricity index (+8.5% Y.o.Y). (The Star Online)

COMPANY BRIEFS

• Malaysian Resources Corporation Bhd (MRCB) and IJM Corporation Bhd were among the companies which were awarded part of the Mass Rapid Transit (MRT) Sungai Buloh-Serdang-Putrajaya (SSP) Line 2.
• IJM was awarded a RM1.47 bln elevated work package to build the 4.6 km viaduct guideway from Jinjang to Jalan Ipoh North Portal, while MRCB won the RM648.0 mln contract for Work Package V210 to build the 2.6 km viaduct guideway and other associated works from Persiaran APEC in Cyberjaya to Putrajaya Sentral. (The Star Online)
• Chin Hin Group Bhd has been granted a Feed-in Tariff (FiT) certification from the Sustainable Energy Development Authority of Malaysia (Seda). With the certification, Chin Hin can increase its electricity production capabilities by 1,000 kWh to 2,425kWh. It has a 21-year agreement whereby it delivers and sells metered renewable energy to Tenaga Nasional Bhd. (The Star Online)
• Kerjaya Prospek Group Bhd has secured a RM312.9 mln contract from BCB Heights Sdn Bhd for the main building works of the Phase 1 of the Elysia Park Residence project in Iskandar Malaysia. Work is scheduled to start in May 2016 and to be completed by 2019.
• Elysia Park Residence is within walking distance to Legoland and the development will comprise of three residential towers ranging from 30 floors to 36 floors and a 10-floor carpark, including a clubhouse. (The Star Online)
• Vivocom Intl Holdings Bhd's 1Q2016 net profit soared 27.2x Y.o.Y to RM25.1mln, driven by the group's construction business. Revenue for quarter surged 20.1x Y.o.Y to RM141.5 mln. (The Edge Daily)
• Media Prima Bhd's 1Q2016 net profit dropped 8.7% Y.o.Y to RM17.3 mln. Revenue for the quarter fell 7.7% Y.o.Y to RM304.1 mln due to the decline in its print media segment as a result of lower advertising and newspaper sales. (The Edge Daily)
• Box-Pak (M) Bhd's 1Q2016 net profit sank 45.6% Y.o.Y to RM1.4 mln, dragged down by higher operating expenses and finance costs. Revenue for the quarter, however, grew 25.3% Y.o.Y to RM120.4 mln. (The Edge Daily)
• Tanjung Offshore Bhd's subsidiary, Gas Generator (M) Sdn Bhd (GGM) has won a contract from PTS Resources Sdn Bhd worth RM17.9 mln to supply and commission battery systems – marking the group's first venture into the battery business. The three-year contract is to supply, deliver, install, test and commission batteries, including related engineering services and accessories to PTS Resources. (The Edge Daily)
• S P Setia Bhd’s 1Q2016 net profit stood at RM123.4 mln on the back of revenue of RM908.5 mln. There were no comparison figures as the property developer has changed its financial year end from 31st October to 31st December.
• Meanwhile, S P Setia has achieved an 86% take-up rate at its two projects – Edulis and Retusa in Setia Alam launched in 1Q2016 with a gross development value of RM128.0 mln. The group's unbilled sales of RM8.6 bln as at 31st March 2016 will be recognised within the next few years. (The Edge Daily)
• Pasdec Holdings Bhd has bagged a RM55.8 mln contract from Mass Rapid Transit Corp Sdn Bhd (MRT Corp) to build a mass rapid transit feeder bus depot and related supporting buildings and facilities for the MRT Sungai Buloh-Kajang Line at Kawasan Perindustrian Desa Tun Razak. The duration of the contract is approximately 12 months. (The Edge Daily)

Source: M+ Online Research - 13 May 2016