• The FBM KLCI posted a recovery yesterday and closed 0.8% higher as investors bargain-hunted for undervalued blue chip stocks following the recent selldown of the key index. Contrary to the day earlier, the lower liners - FBM ACE (+1.3%), FBM Small Cap (+0.6%), FBM Fledging (+0.5%) and the broader market shares also rallied in tandem with the key index’s recovery. However, the Construction (-0.3%) and Properties (- 0.1%) sub-indices flatlined.
• Expectedly, market breadth was positive as winners outpaced losers on a ratio of 479-to-341 stocks. Traded volumes were relatively stagnant with 1.70 bln shares exchanging shares as market sentiment remains cautious.
• Notable gainers on the key index include Petronas-linked companies – Petronas Dagangan (+56.0 sen), Petronas Gas (+54.0 sen) and Petronas Chemicals (+19.0 sen) after crude oil prices hit a seven-month high. Genting (+19.0 sen), and PPB Group (+19.0 sen) were the other key advancers. Meanwhile, plantations and consumer-related stocks dominated the broader market. United Plantations (+78.0 sen) and Batu Kawan (+48.0 sen) climbed, while Nestle, Ajinomoto and Dutch Lady gained 78.0 sen, 72.0 sen and 60.0 sen respectively.
• On the other side of the trade, the key losers include Heineken Malaysia (-20.0 sen), while Amway and Time dotCom shed 15.0 sen each. Lingkaran Trans Kota Holdings (-14.0 sen) and Vitrox (- 12.0 sen) also closed lower. UMW Holdings (-13.0 sen) extended its losses for the fourth-straight session, while, the other big board constituents that were down include Kuala Lumpur Kepong (- 10.0 sen), Axiata (-0.3 sen) and banking heavyweights like Ambank (-6.0 sen) and Hong Leong Financial Group (-4.0 sen).
• Asian stockmarkets ended mostly higher as regional stocks rode on the crude oil rally. The Nikkei extended its gains by 1.1%, while, the Hang Seng Index rose 1.2% as O&G-related stocks pushed the index higher. The Shanghai Composite Index (-0.3%), however, ended on a slightly negative tone. Most ASEAN stockmarkets closed in green yesterday.
• Most U.S. stockmarkets tumbled overnight as the positive inflation and housing data sparked fears of an earlier-than-expected interest rates hike by the Federal Reserve. Twenty eight stocks out-of-the 30 stocks on the Dow fell, sending the key index to plummet by 1.0%. On the broader market, the S&P 500 fell 0.9%, while the Nasdaq slumped 1.3%.
• European key benchmark indices finished mostly lower due to the drag by the automobile industry. Despite the overall negative trend, the FTSE (+0.3%) gained momentum, closing higher for the third-straight session. The DAX slid 0.6%, while, the CAC lost 0.3% to close at 4,297.6 points.

THE DAY AHEAD

• Despite yesterday’s decent recovery, we think that the market will endure another volatile session today due to overnight weakness on Wall Street amid the renewed expectations that interest rates could be raised earlier-than-anticipated. The expectation could see foreign funds hastening their withdrawal from emerging stockmarkets, which includes Malaysian stocks.
• This could also prompt quick profit taking activities and send both the blue chips and broader market shares lower over the near term. Therefore, we think that the market is likely to pullback to around the
• 1,630 level, but potentially cushioned by the renewed interest in oil and gas stocks as crude oil prices recovered to its seven-month high.

COMPANY BRIEFS

• UMW Oil & Gas Corp Bhd (UMWOG) is tendering for 22 contracts in 2016 worth US$628.0 mln (RM2.52 bln), comprising of domestic and international jobs in Asia and the Middle East. Forty eight percent the tenders are on domestic jobs, while the balance 52% consists of international jobs. The group's orderbook is valued at approximately US$600.0 mln.
• Going forward, the group will continue to focus on improving its efficiencies, while also reducing costs amid the current challenging oil and gas (O&G) environment. Already, the group has reduced RM18.0 mln in costs in 1Q2016 after taking rationalising steps including the reduction in its workforce, renegotiations with its vendors and a reduction in inventory and capital costs.
• Currently, UMWOG's workforce stands at 736 employees, after letting go 300 contractors and the group will be looking to further shrink its workforce. (The Edge Daily)
• Malayan Flour Mills Bhd's (MFM) 1Q2016 net profit soared 226.5% Y.o.Y to RM17.6 mln, attributed to the higher margins in both its flour and poultry integration segments. Revenue for the quarter rose 19.9% Y.o.Y to RM666.8 mln. (The Edge Daily)
• Zelan Bhd is tendering for contracts worth RM4.0 bln in 2016, comprising mostly local infrastructure projects as the company winds down its overseas operations. (The Edge Daily)
• Carlsberg Brewery Malaysia Bhd's 1Q2016 net profit rose 33.3% Y.o.Y to RM62.9 mln on higher volume and contributions from both its Malaysian and Singapore operations. Revenue for the quarter added 6.1% Y.o.Y to RM455.7 mln.
• It added that the aggressive excise tax increase in Malaysia on 1st March 2016 had dampened the group's outlook for 2016. The group is currently evaluating the possibility of increasing its product prices in 2016. (The Edge Daily)
• APM Automotive Holdings Bhd's 1Q2016 net profit dipped 47.6% Y.o.Y to RM9.3 mln, mainly due to lower revenue and higher imported raw material cost from a strong U.S. Dollar. Revenue for the quarter declined 13.2% Y.o.Y to RM276.1 mln. (The Edge Daily)
• Top Glove Corp Bhd's proposed secondary listing on the Main Board of the Singapore Stock Exchange (SGX-ST) has been approved by the Securities Commission Malaysia, subject to the secondary listing of and quotation for the entire issue share capital of Top Glove on SGX-ST being fully fungible (exchangeable). (The Edge Daily)
• Amway (Malaysia) Holdings Bhd's 1Q2016 net profit sank 51.0% Y.o.Y to RM18.1 mln, dampened by lower sales and higher import costs as a result of the weaker Ringgit, in addition to higher sales incentive provisions and operating expenses. Revenue for the quarter decreased 5.0% Y.o.Y to RM305.9 mln. A dividend of 5.0 sen per share, payable on 15th June 2016 was declared. (The Edge Daily)
• Boustead Plantations Bhd's 1Q2016 net profit surged 5.8x to RM42.6 mln, primarily due to gains realised on disposal of lands amounting to RM34.6 mln. Revenue for the quarter gained 3.9% Y.o.Y to RM137.0 mln. A first interim dividend of 3.0 sen per share, payable on 28th June 2016 was declared. (The Edge Daily)
• Lion Corp Bhd's 3QFY16 net loss narrowed to RM71.1 mln, from RM105.9 mln in the previous corresponding quarter, aided by higher foreign exchange gain of RM40.0 mln. Revenue for the quarter, however, plunged 74.4% Y.o.Y to RM146.4 mln.
• For 9MFY16, cumulative net loss increased 15.8% Y.o.Y to RM365.1 mln. Revenue for the period declined 59.3% to RM671.4 mln. (The Edge Daily)
• Ann Joo Resources Bhd's wholly-owned subsidiary, Ann Joo Integrated Steel Sdn Bhd has received the green light from bondholders for early settlement of RM104.7 mln worth of its bonds, which forms the last tranche of the RM500.0 mln redeemable bonds issued in 2011.
• The payment of the last tranche of RM104.7 mln is slated for 27th May 2016 that will render the RM500.0 mln redeemable bonds fully redeemed. (The Edge Daily)

Source: M+ Online Research - 18 May 2016