• The FBM KLCI fell 0.1% after lingering in the negative region for most of the trading session. Meanwhile, the FBM Small Cap and FBM Fledging closed marginally lower while the FBM Ace, which bucked the general negative tone, rose 0.6%. The majority of the broader market and lower liner stocks also ended the day in the red.
• Market breadth was negative as losers surpassed gainers on a ratio of 415-to- 355 stocks. Traded volumes plummeted by 25.9% to 1.39 bln shares as investors stayed on the sidelines amidst uncertainties in the global direction.
• The significant heavyweights losers on the key index were Genting (-25.0 sen), UMW (-14.0 sen), and banking heavyweights - Maybank (-18.0 sen), Hong Leong Bank (-6.0 sen) and Hong Leong Financial Group (-6.0 sen). On the broader market, Aturmaju Resources slumped 39.0 sen following an Unusual Market Activity (UMA) query by Bursa Malaysia. Perusahaan Sadur Timah Malaysia (-12.0 sen), Ta Ann Holdings (- 12.0 sen) and Teo Guan Lee Corporation (-11.0 sen) also declined, while Tomypak Holdings shed 11.0 sen after its 1Q2016 net profit weakened to RM3.5 mln from RM5.3 mln in the previous corresponding period.
• In contrast, Scientex was up 58.0 sen, following the recovery of the U.S. Dollar. Other notable broader market winners include Ajinomoto (+42.0 sen), Calsberg (+42.0 sen) and Nestle (+40.0 sen). Meanwhile, key index movers were BAT (RM2.22), PPB Group (+20.0 sen), Petronas Gas (+10.0 sen) and MISC (+9.0 sen). IOI Corp gained 8.0 sen after it swung into profit in 3Q2016 against a net loss in the last quarter.
• Key Asian stockmarkets finished mostly lower yesterday as crude oil took a hit after surging output from Iran and investors pricing-in the possibilities of an imminent interest rate hike by the U.S. Federal Reserve. The Nikkei (+0.01%) and the Shanghai Composite (-0.02%) was largely flatlined, while, the Hang Seng Index shed 0.7%. ASEAN indices meanwhile closed mostly negative.
• U.S. stockmarkets sunk overnight on increasing fears that an interest rate hike could be as early as June. The Dow tanked 0.5%, while, the S&P 500 (-0.4%) fell to its lowest since March, led by industrials and finance-related stocks. The Nasdaq weakened 0.6% to close at 4,712.5 points
• Most European key benchmark indices also took a beating yesterday and ended the day lower. The FTSE lost 1.8%, dragged down by falling commodities prices around the globe. Meanwhile, the DAX declined by 1.5%, while the CAC slid 0.9%.

THE DAY AHEAD

• The dour market conditions have returned amid the growing uncertainties over the direction of interest rates and faltering commodity prices that sent many global stocks lower overnight. Interest on Bursa Malaysia stocks are also thinning as investors are still adopting a cautious stance that is also limiting the key index’s recovery.
• There are also few bright spots in the ongoing corporate results reporting season which is also leaving many stocks on the wayside. Consequently, we think the insipid market conditions will persist over the near term with the downside bias likely to stay and the FBM KLCI could again retreat to the 1,630 support level.

COMPANY BRIEFS

• MSM Holdings Bhd's 1Q2016 net profit fell 16.4% Y.o.Y to RM59.3 mln due to higher raw sugar cost and a weakening Ringgit. Revenue for the quarter, however, gained 8.7% Y.o.Y to RM553.2 mln. (The Star Online)
• Pelikan International Corp Bhd’s 1Q2016 net profit stood at RM3.6 mln vs. a net loss of RM10.7 mln recorded in the previous corresponding quarter, owing to the lower cost base and improvement in contribution from better sales and product mix. Revenue for the quarter rose marginally by 1.0% Y.o.Y to RM284.7 mln. (The Star Online)
• IJM Corp Bhd was awarded a contract from Mass Rapid Transit Corp Sdn Bhd (MRT Corp) for a construction project worth RM1.47 bln. The project is under package V203 of the Mass Rapid Transit Laluan 2: Sungai Buloh-Serdang-Putrajaya involving the construction and completion of viaduct guideway and other associated works from Jinjang to Jalan Ipoh.
• Meanwhile, Malaysian Resources Corp Bhd (MRCB) has bagged Package V210 of the MRT Line 2 Sungai Buloh-Serdang-Putrajaya project worth RM648.0 mln from MRT Corp. The package would involve the construction and completion of a viaduct guideway and other associated works from Persiaran Apec to Putrajaya Sentral. (Bernama)
• Oil-and-gas services provider Tanjung Offshore Bhd has filed a suit against the former Group Adviser and Managing Director Harzani Azmi and two other parties – former Executive Director Tan Wee Koh and Al Maurid Resources over alleged breaches of fiduciary duties.
• The claims are related to Tanjung Offshore’s acquisition of 51.0% stake in Gas Generators (Malaysia) Sdn Bhd (Gastec) for RM5.1 mln on 6th Jan 2009. (The Star Online)
• IOI Corp Bhd’s proposed acquisition of a 50.0% stake in LCK Nutrition Ltd for US$25.0 mln (RM93.5 mln) has been called off. Both parties have mutually agreed to terminate the agreement entered into in June 2015 with immediate effect. There was no reason was given for the termination. (The Edge Daily)
• Hock Seng Lee Bhd’s (HSL) 1Q2016 net profit dropped 17.2% Y.o.Y to RM16.3 mln due to lower profit margins from its construction segment. Revenue for the quarter fell 23.7% Y.o.Y to RM142.3 mln. (The Edge Daily)
• Aeon Co (M) Bhd's 1Q2016 net profit fell 41.9% Y.o.Y to RM28.7 mln due to lower margin, higher operating costs, interest expenses and initial costs associated with newly opened stores. Revenue for the quarter slipped 2.8% Y.o.Y to RM1.08 bln.
• Separately, the group has allocated RM650.0 mln in capital expenditure (capex) for 2016 to open two outlets in Johor Bahru and Kuching and to refurbish its older retail outlets. (The Edge Daily)
• Ta Ann Holdings Bhd's 1Q2016 net profit sank 53.7% Y.o.Y to RM12.6 mln due to lower plywood sales volume and the decline in export logs average selling prices. Revenue for the quarter slipped 1.6% Y.o.Y to RM218.5 mln.
• A first interim dividend of 5.0 sen per share, payable on 23rd June 2016, as well a one-for-five bonus issue of up to 74.2 mln new shares was announced. (The Edge Daily)
• KPJ Healthcare Bhd's 1Q2016 net profit rose marginally by 0.8% Y.o.Y to RM34.2 mln, largely due to better performance of its healthcare operations in Malaysia and Indonesia which offset the higher losses in Australia. Revenue for the quarter grew 4.8% Y.o.Y to RM744.0 mln. (The Edge Daily)
• Dagang Nexchange Bhd’s (DNeX) 80.0%-owned subsidiary, DNeX Oilfield Services Sdn Bhd has bagged a drilling equipment and services contract from Petronas Carigali Sdn Bhd. The value of the contract was undisclosed, but the contract is for three years, effective from 28th April 2016 to 27th April 2019 with an option for Petronas Carigali to extend for a year. (The Edge Daily)

Source: M+ Online Research - 20 May 2016