• Despite falling at the opening bell, the FBM KLCI (+0.1%) pared of most of its losses to close higher on the back of selective bargain hunting activities. The lower liners, however, bucked the positive sentiment on the key index as the FBM Small Cap (-0.3%), FBM Fledging (-0.6%) and FBM Ace (-2.3%) fell. Similarly, the broader market was splashed in red, with the exception of Consumer Products (+1.0 sen) and Finance (+0.3%) sub-indices.
• Market breadth was negative as decliners outweigh advancers on a ratio of 518-to- 302 stocks. Traded volumes were up by 10.4% with 1.88 bln shares due to selective heavyweights buying by local institutions.
• Less than a third of the stocks on the key index advanced – BAT (+RM1.08), Tenaga Nasional (+14.0 sen), Maybank (+13.0 sen) and Genting (+10.0 sen) were the big movers, while DIGI rose 18.0 sen tonear its three-week high. Meanwhile, consumer-related counters - Ajinomoto (+44.0 sen), F&N (+30.0 sen) and Dutch Lady (+20.0 sen) improved, while Hong Leong Industries and Warisan TC Holdings gained 18.0 sen each.
• On the broader market, Ta Ann Holdings declined 49.0 sen, while Batu Kawan (- 30.0 sen) erased yesterday’s gains to closed in the red. The other major losers were Naim Holdings (-21.0 sen), Petron (- 19.0 sen) and Lay Hong (-18.0 sen). Significant losers on the FBM KLCI include Petronas Gas (-26.0 sen), MISC (- 20.0 sen), PPB Group (-20.0 sen), UMW Holdings (-15.0 sen) and IHH Healthcare (-7.0 sen).
• Key regional stockmarkets finished mostly lower due to overnight weakness-on Wall Street and speculation of an interest rate hike. As the U.S. Dollar vs the Japanese Yen swung between gains and losses, the Nikkei experienced a choppy trading session before ending marginally lower by 0.1%. The Hang Seng lost 1.5%, while the Shanghai Composite Index shed 0.6%. Most ASEAN stockmarkets fell into the negative territory on Wednesday.
• U.S. key benchmark indices were mostly up due to gains on banking stocks amid the possibility of an interest rate hike in June. The Dow, however, was flattish (-0.02), while on the broader market the S&P 500 rose, albeit marginally to close at 2,047.6 points. The Nasdaq was 0.5% higher.
• Most European key benchmark indices finished in the green as banks rallied, offsetting the recent weak corporate earnings reported. The FTSE (-0.03) was slightly lower, dragged down by mining stocks as the Greenback strengthened. On the other hand, both the DAX and CAC rose 0.5%.

THE DAY AHEAD

• The FBM KLCI’s recovery yesterday has helped to calm market conditions somewhat and has kept the key index above the 1,630 support level as well. This could allow the market to continue building up a base at around the 1,630-1,650 levels over the near term as market players await for further hints on the U.S. interest rate direction.
• Although we think that the FBM KLCI could mount a mostly sideway trend over the near term, there should further uptrend bias in the absence of significantly negative market developments, both from domestic and foreign sources. There will also be selected bargain hunting activities on commodity stocks amid the recovering prices, while a mixed environment is expected among the lower liners.

COMPANY BRIEFS

• IOI Corporation Bhd’s 3QFY16 net profit stood at RM748.4 mln vs. a net loss of RM188.0 mln in the previous corresponding quarter, underpinned by higher contributions from its resource-based manufacturing segment and net foreign currency translation gain on foreign currency denominated borrowings. Revenue for the quarter added 3.9% Y.o.Y to RM2.87 bln.
• For 9MFY16, its cumulative net profit soared 91.0x to RM754.2 mln. Revenue for the period gained 3.6% Y.o.Y to RM8.92bln. (The Star Online)
• Tien Wah Press Holdings Bhd is confident of a contract renewal of additional three years from its major customer, British American Tobacco (M) Bhd (BAT). The group has entered into the final year of a long-term supply contract with BAT. Revenue from tobacco customers stood at RM312.7 mln, which translates to 85.1% from its total revenue of RM367.4 mln in 2015. (The Edge Daily)
• Padini Holdings Bhd's 3QFY16 net profit rose 32.1% Y.o.Y to RM35.1 mln, on the back of strong revenue and smaller increase in operating expenses. Revenue for the quarter grew 20.7% Y.o.Y to RM342.4 mln.
• For 9MFY16, cumulative net profit gained 61.2% Y.o.Y to RM100.0 mln. Revenue for the period increased 26.0% Y.o.Y to RM952.3 mln. A fourth interim dividend of 2.5 sen per share (single tier) and a special dividend of 1.5 sen per share (single tier), payable on 29th June 2016 were declared. (The Edge Daily)
• S P Setia Bhd is confident of achieving its RM4.0 bln property sales target in 2016 by being selective in the projects the company chooses to pursue. The developer plans to launch another 11 projects for 2016 in Malaysia and abroad. Combining the 11 projects with the two projects launched earlier this year, S P Setia has RM4.70 bln worth of projects on offer in 2016. (The Edge Daily)
• MBM Resources Bhd's 1Q2016 net profit dipped 47.6% Y.o.Y to RM18.4 mln after the recognition of a one-off property contribution in the previous corresponding quarter, coupled with lower vehicle sales and production volumes. Revenue for the quarter declined 36.8% Y.o.Y to RM373.9 mln. (The Edge Daily)
• Apex Healthcare Bhd's 1Q2016 net profit expanded 16.2% Y.o.Y to RM9.8 mln on the back of higher revenue that improved 5.3% Y.o.Y to RM147.5 mln. (The Edge Daily)
• Shangri-La Hotels (M) Bhd's 1Q2016 net profit fell 26.0% Y.o.Y to RM18.9 mln, primarily due to negative impact of unrealised net foreign exchange losses due to a weaker U.S. Dollar exchange rate. Revenue for the quarter, however, grew 12.1% Y.o.Y to RM135.3 mln. (The Edge Daily)
• Pestech International Bhd has inked a Memorandum of nderstanding with Permodalan Darul Ta'zim Sdn Bhd for a strategic cooperation of power projects in Johor.
• The parties intend to collaborate in projects related to the generation, transmission and distribution of electric power sector utilities, industrial, data centre, as well as oil and gas and petrochemicals specifically in Pengerang, Johor. (The Edge Daily)
• Dialog Group Bhd's 3QFY16 net profit slipped 3.6% Y.o.Y to RM78.9 mln due to slower upstream activities and lower sales in specialist products and services. Revenue for the quarter decreased 4.2% Y.o.Y to RM641.4 mln.
• For 9MFY16, cumulative net profit gained 2.6% Y.o.Y to RM217.0 mln. Revenue for the period increased 2.2% Y.o.Y to RM1.82 bln. An interim dividend of one sen per share for the quarter, payable on 28th June 2016 was declared. (The Edge Daily)

Source: M+ Online Research - 19 May 2016