• Despite opening lower at the start of the trading bell, the FBM KLCI (+0.4%) managed to recoup all its intraday losses before closing at its intraday high of 1,634.89 points. The lower liners – FBM Small Cap (-0.2%), FBM Fledgling (-0.1%) and FBM Ace (-1.2%), however, all fell while the broader market ended in the positive zone, led by the Technology (+1.6%) sub-index.
• Market breadth remained negative as losers outpaced gainers on a ratio of 451- to-337 stocks. Traded volumes rose marginally by 1.5% to 1.74 bln shares amidst the positive broader market.
• Leading the gainers on the key index was BAT (+40.0 sen), followed by Petronas Dagangan (+24.0 sen), Hong Leong Financial Group (+16.0 sen), KLK (+14.0 sen) and IHH (+13.0 sen). Significant gainers on the broader market include United Plantations (+80.0 sen), Ajinomoto (+44.0 sen), TAHPS Group (+30.0 sen) and Aturmaju (+21.0 sen). Lii Hen gained 16.0 sen after reporting a strong set of quarterly earnings.
• In contrast, Focus Lumber (-27.0 sen) took the top spot as the biggest loser on the broader market after reporting a slump in its quarterly profit, while Carlsberg (-18.0 sen), Apex Healthcare (- 17.0 sen), Heineken (-16.0 sen) and Can- One (-12.0 sen) were amongst the biggest decliners. Key losers on the FBM KLCI include UMW (-5.0 sen), Astro (-5.0 sen), Axiata (-4.0 sen), Petronas Gas (-4.0 sen) and Westports (-3.0 sen).
• Japanese stockmakrets started off the week on a dour note as the Nikkei fell 0.5% on fears of a potential sales tax hike, taking cue from the G7 finance ministers meeting over the last weekend. The Hang Seng Index fell 0.2%, dragged down by the weakness in property development stocks. The Shanghai Composite, however, gained 0.6%, while ASEAN indices closed mostly positive.
• Wall Street retreated overnight as the Dow (-0.1%) gave up all its intraday gains to fall into the negative territory in the eleventh trading hour. On the broader market, the S&P 500 fell 0.2% on fears over a potential interest rate hike which sent the high paying dividend utilities sector 1.0% lower.
• As the Eurozone’s flash Markit Composite PMI in May stood at 52.9 – below consensus estimates of 53.2, European benchmark indices – the FTSE (-0.3%), CAC (-0.7%) and DAX (-0.7%) all retreated. Meanwhile, Greece’s Athens Stock Exchange jumped 1.5% after Greek lawmakers have approved new tax and austerity reforms in effort to unlock further bailout loans.

THE DAY AHEAD

• The FBM KLCI’s mostly sideway trend between the 1,620-1,650 levels is expected to persist over the near term amid the ongoing concerns over the U.S. interest rate direction and insipid domestic corporate earnings performance that will continue to keep most investors on the sidelines.
• As it is, most investors are still adopting a cautious mode and are likely to continue adopting short term trading strategies rather than buy and hold strategies amid the uncertain market direction.
• Therefore, we think the FBM KLCI will continue to make some near-term headway amid the continuing recovery from its oversold conditions and this could lift the key index back to the 1,640 level over the near term.

COMPANY BRIEFS

• UMW Oil and Gas Corp Bhd (UMW O&G) reported a 1Q2016 net loss of RM65.1 mln from a net profit of RM32.2 mln in 1Q2015, after its revenue more than halved to RM87.7 mln due to the weaker performance of both its drilling services and oilfield services divisions. (The Star Online)
• Lafarge Malaysia Bhd's 1Q2016 net profit plunged 72.0% Y.o.Y to RM20.7 mln compared to RM73.7 mln in the previous corresponding period on lower contribution from its cement segment, following stiff pricing competition and a one-off Holcim integration costs following the acquisition of Holcim Malaysia. Quarterly revenue, meanwhile, lost 3.8% Y.o.Y to RM669.8 mln from RM696.1 mln a year earlier. (The Edge Daily)
• JCY International Bhd has terminated the operation of its subsidiary in China, Foshan YK HDD Co Ltd with immediate effect due to the sluggish demand for its hard disk drive (HDD).
• The company expects to incur an estimated one-time cost impact arising from fixed assets impairment and/or fixed assets written down of RM12.6 mln. (The Edge Daily)
• Malakoff Corporation Bhd's net profit for the 1Q2016 shrank 19.1% Y.o.Y to RM84.1 mln, mainly due to higher maintenance costs and share of losses from its associates and joint ventures, albeit the results were partly offset by lower forex losses and lower finance costs. Revenue, meanwhile, slid marginally to RM1.30 bln from RM1.34 bln in 1Q2015. (The Edge Daily)
• TH Plantations Bhd fell into a net loss of RM7.2 mln for the 1Q2016, in comparison to a net profit of RM6.6 mln in previous corresponding year, dragged down by lower crude palm oil production, lower fair value recognition of forestry assets and a foreign currency translation loss from its Indonesian assets. Quarterly revenue, on the other hand, rose 8.8% Y.o.Y to RM89.5 mln from RM82.3 mln in 1Q2015. (The Edge Daily)
• British American Tobacco (Malaysia) Bhd (BAT) has appointed its North Asia area director, Erik Stoel to replace its former Managing Director (MD) Stefano Clini, effective 1st June 2016.
• Stoel held numerous top brand marketing positions in the conglomerate in Korea, Ukraine, Dubai (UAE), Hong Kong, Pakistan, the United Kingdom, Vietnam and Malaysia over the past 20 years. (The Star Online)
• Landmarks Bhd's net loss widened to RM6.6 mln in 1Q2016, from RM1.5 mln in the 1Q2015 due to expenses incurred in the course of business commencement and start-ups. Revenue, however, rose 24.0% Y.o.Y to RM23.9 mln due to strong performance of The Andaman. (The Edge Daily)
• Tanjung Offshore Bhd's 1Q2016 net loss widen by 138.1% Y.o.Y to RM4.7 mln, compared to RM2.0 mln a year ago, on weaker revenue contribution from its engineering packages and higher cost of sale and expenses. Revenue, however, increased by 47.3% Y.o.Y to RM12.0 mln from RM8.1 mln in 1Q2015. (The Satr Online)
• Sunsuria Bhd has announced the appointment of Koong Wai Seng as its new Chief Executive Officer (CEO), with effect from 23th May 2016. Koong, who currently serves as the Group's Deputy CEO and Executive Director (ED) will be replacing Ho Hon Sang who will be undertaking the advisory role to the Founder and Executive Chairman of Sunsuria, Datuk Ter Leong Yap.
• Further, its 2QFY16 net profit jumped 114.3% Y.o.Y to RM3.2 mln due to a disposal gain, while revenue more than doubled to RM38.8 mln from RM17.1 mln in 2QFY15.
• The company’s cumulative 1HFY16 net profit jumped more than four-fold to RM12.6 mln from RM2.6 mln in the previous corresponding year, mainly due to a disposal gain. Revenue locked-in 56.4% Y.o.Y gains to RM56.3 mln. (The Star Online)
• Rubberex Corp (M) Bhd’s 1Q2016 net profit was up by 28.9% Y.o.Y to RM3.6 mln, attributed to an overall improvement in product mix and better production efficiencies as well as favourable forex gains. Revenue for the quarter came in 5.3% Y.o.Y higher at RM74.5 mln.
• The company has also declared a first interim single tiered dividend of 1.5 sen a share, which is payable on 28th July 2016. The entitlement date falls on 1st July 2016. (The Edge Daily)
• The Store Corp Bhd posted a 48.3% Y.o.Y drop in its 2QFY16 net profit to RM4.2 mln due to falling sales as revenue for the quarter was 18.4% Y.o.Y lower at RM386.8 mln vs. RM474.1 mln in 2QFY15.
• For 1HFY16, net profit fell 46.3% Y.o.Y to RM7.4 mln, in comparison to RM13.8 mln in the previous corresponding period due to lower sales. Meanwhile, 1HFY16 revenue shed 14.7% Y.o.Y to RM745.5 mln. (The Edge Daily)
• EG Industries Bhd has secured a two-year contract worth US$36.0 mln (RM146.0 mln) from Shortcut Labs AB of Sweden to be the sole manufacturer of a wireless smart button known as Flic.
• The contract is expected to improve the prospects of the group to support the fast-growing adoption of smart interconnecting devices, apart from affirming its proposition as a one-stop manufacturing partner. (The Star Online)
• Chemical Company of Malaysia Bhd (CCM) edged into the red after logging in a 1Q2016 net loss of RM250,000 from a net profit of RM4.0 mln in 1Q2015. The net loss was a result of lower revenue and trading margins as well as higher loss from its discontinued fertiliser division. Revenue in 1Q2016 contracted 7.1% Y.o.Y to RM151.5 mln. (The Edge Daily)
• Ho Hup Construction Company Bhd has revised the growth projection of its net profit downwards to between 15.0% and 20.0% in financial year ending 31st December 2016 in view of the depressed property market. The company initially targeted an increase of 20.0%-to-25.0% in net profit in 2016.
• This comes after Ho Hup reported a fall in its 1Q2016 net profit by 5.0% Y.o.Y to RM19.1 mln due to additional financing cost incurred for corporate acquisitions as well as cost for funding new project developments. Revenue, meanwhile, dropped 7.8% Y.o.Y to RM81.1 mln from RM88.0 mln in 1Q2015. (The Edge Daily)
• Genting Plantation Bhd's 1Q2016 net profit weakened by 48.8% Y.o.Y to RM27.0 mln from RM52.7 mln in the previous corresponding period on the back of lower contributions from Malaysia's plantation and property businesses. Similarly, its quarterly revenue also fell 20.0% Y.o.Y to RM260.9 mln from RM324.4 mln in 1Q2015. (The Star Online)
• Pos Malaysia Bhd reported a 27.9% Y.o.Y plunge in its 4QFY16 net profit to RM14.4 mln, attributed to higher transportation cost for its transhipment business, despite revenue rising by 9.6% Y.o.Y to RM433.6 mln.
• For FY16, Pos Malaysia's net profit halved to RM63.1 mln from RM127.1 mln in FY15, as profitability took a hit due to higher staff and transportation costs. Revenue for the year, however, grew 15.0% Y.o.Y to RM1.72 bln from RM1.45 bln in FY15. (The Star Online)
• PRG Holdings Bhd reported a turnaround in its 1Q2016 net profit to RM1.6 mln from a net loss of RM361,000 in 1Q2015, driven by the profit recognition from Picasso Residence and progress billings from a construction contract in Ipoh. Revenue rose 15.7% Y.o.Y to RM31.0 mln from RM26.8 mln in 1Q2015. (The Edge Daily)
• Progressive Impact Corp Bhd reported a loss for the second consecutive quarter with a 1Q2016 net loss of RM2.8 mln, compared to a net profit of RM2.5 mln in 1Q2015, mainly due to losses incurred by its Saudi operations and foreign exchange loss from its subsidiaries. However, revenue for the quarter rose slightly by 0.7% Y.o.Y to RM20.1 mln from RM19.9 mln in the previous corresponding year.
• Paramjit Singh Gill, a major shareholder of Multi Sports Holdings Ltd, has requested an extraordinary general meeting to appoint five new directors to the company's board.
• Paramjit claimed that he is the beneficial owner of not less than 10.0% of the paid-up capital of the company held through JF Apex Nominees (Tempatan) Sdn Bhd and is seeking the appointment of Kasinathan Tulasi, Naren Anand Gill, Clarence Yeow Kong Chew, Cheh Chee Mun and Guan Swee Kee as directors of the company. (The Star Online)
• Reach Energy Bhd has plans to raise up to RM180.0 mln via a placement of new shares to facilitate its qualifying acquisition (QA) of a 60.0% stake in Palaeontolol Cooperatief UA's wholly-owned unit based in the Netherlands, Palaeontolol BV.
• The company will issue up to 305.1 mln new shares should 25.0% of its shareholders vote against the QA.
• The issue price will be fixed at a discount of not more than 15% to the five-day volume weighted average market price (VWAMP) of its shares immediately preceding the price-fixing date, but shall not be lower than the par value of one sen per share. (The Edge Daily)

Source: M+ Online Research - 24 May 2016