The FBM KLCI snapped a five-day winning streak and finished 0.2% lower due to quick profit-taking on selective index heavyweights. The lower liners were also mostly in the red, with the exception of the FBM Small Cap which rose 0.4%. Meanwhile, the Consumer Products (+0.1%) and Industrial Products (+0.3%) sub-sectors bucked the general negative tone surrounding the broader market.

Market breadth turned negative as losers outnumbered winners on a ratio of 445-to- 355 stocks. Traded volumes fell by 8.7% to 1.77 bln shares as the profit taking activities saw fewer fresh buying.

Almost half of the key index constituents retreated, dragged down by BAT (- RM1.60), followed by KLCC (-22.0 sen), Maybank (-12.0 sen), KLK (-8.0 sen) and Genting (-7.0 sen). Amongst the biggest decliners in the broader market were UEM Edgenta (-21.0 sen), Batu Kawan (-20.0 sen), Takaful (-13.0 sen) and Success Transformer Corp (-8.0 sen). M3 Technologies, which was slapped with an Unusual Market Activity (UMA) query by Bursa Malaysia, also fell 10.5 sen.

In contrast, the significant gainers of the day include Nestle (+50.0 sen), Dutch Lady (+30.0 sen), KESM (+30.0 sen) Panasonic Malaysia (+28.0 sen) and United U-Li Corporation (+25.0 sen). Meanwhile, O&G-related counters like Petronas Gas (+18.0 sen) and Petronas Dagangan (+8.0 sen) climbed on the back of rising crude oil prices, while UMW (+24.0 sen), Telekom Malaysia (+8.0 sen) and Maxis (+6.0 sen) were the advancers on the big board.

Despite a choppy trading session, the Nikkei pared off earlier losses to close 0.9% higher after the Yen weakened against the Greenback. The Shanghai Composite Index (-0.3%), however, retreated after China's trade surplus fell to US$49.98 bln from US$58.87 bln a year ago, due to exports declining at a faster rate as compared to imports. The Hang Seng also lost a marginal 0.1%. ASEAN benchmark indices, meanwhile, ended mostly higher.

U.S. stockmarkets continues to advance as the Dow (+0.4%) closed above the 18,000 psychological level overnight, following the crude oil prices rally to an eleven-month high. On the broader market, the S&P500 and the Nasdaq expanded 0.3% each, as materials and industrial shares lead the gains.

European key benchmark indices closed mostly lower, as the FTSE bucked the sluggish market by advancing 0.3%, backed by gains from mining and energy stocks. Meanwhile, the DAX lost 0.7% and the CAC fell 0.6% to close at 4,448.7 points.

THE DAY AHEAD

The mild pullback yesterday was healthy for the market to adjust from its slight overbought position after it reached its technical resistance level. Despite the pullback, however, the market remains toppish and the consolidation may persist over the near term as the adjustment from overbought continues. This could see the key index dipping back to the 1,650 level, where there should be ample near term support.

On the upside, the 1,660 resistance remains in play, but it may be more difficult to penetrate given the current lack of domestic leads and could continue to serve as a key resistance level.

Meanwhile, we think the profit taking and rotational plays on the lower liners and broader market shares could see market breadth remaining moderate for now.

COMPANY BRIEFS

E.A.Technique Bhd (EAT) is buying Libra Perfex Precision Sdn Bhd for RM5.0 mln to enhance its core business of hiring and chartering of marine vessels, which is Libra Perfex’s core business.

On 1st April 2016, Libra Perfex signed a contract with Petronas Floating LNG 1 (L) Ltd to provide tug boats services together with towing services for the PFLNG1 project. The total contract value was US$43.8 mln (RM177.8 mln) over six years. (The Star Online)

Mulpha International Bhd’s renounceable two-call rights issue was undersubscribed by 13.8% at the close of acceptance and payment on 1st June 2016. The company added that the undersubscribed 146.8 mln rights shares have been subscribed by its substantial shareholder, Magic Unicorn Ltd, pursuant to the additional undertaking.

Under the exercise, the first call of 25.0 sen per rights share is payable in cash on application and the second call of 25.0 sen per rights share is to be capitalised from the company’s share premium reserves.

Mulpha plans to use 75.0% (RM200.0 mln) of the expected gross proceeds (RM266.7 mln) from the first call to repay some of its bank borrowings that totaled RM2.18 bln as at 22nd April 2016 and the bulk of the remaining 25% for development and construction costs of its Leisure Farm residential project in Johor. (The Star Online)

Sime Darby Bhd’s indirect wholly-owned unit, Sime Darby Offshore Engineering Sdn Bhd (SDOE) has acquired a 51.0% interest in Sime Darby Gas Malaysia BioCNG Sdn Bhd (SDGM) for RM510,000.

SDGM is a joint venture company set up by SDOE and Gas Malaysia Bhd on 28th April 2015 to undertake bio-compressed natural gas project development from agricultural waste product. (The Edge Daily)

JHM Consolidation Bhd was issued with an Unusual Market Activity (UMA) query on 8th June 2016 after its shares surged 72.1% over the past two weeks to hit a record high. The upward trajectory began on 26th May 2016 when the counter was trading at 61 sen. (The Edge Daily)

British American Tobacco (M) Bhd (BAT) is disposing of its factories and two parcels of leasehold land, measuring 5.3-ha. at Virginia Park, Petaling Jaya, Selangor, for RM218.0 mln cash to LGB Properties (M) Sdn Bhd, the winner of a public tender conducted for the disposal.

The disposal came about after BAT announced it would be shutting down its manufacturing operations in Petaling Jaya by stages as it restructures its business operations in Malaysia due to an increasingly challenging business environment. The closure of its manufacturing operations would affect about 230 employees. The restructuring is targeted to be completed by 2H2017.

BAT is expected to reap a net gain of RM148.8 mln after taking into consideration the audited net book value of the property, the estimated expenses to be incurred for the proposed disposal and the real property gains tax. The price tag, however, is below the market value of RM262.5 mln for the assets, as appraised by independent valuers. The group expects to complete the disposal by the end-2016. (The Edge Daily)

Berjaya Corporation Bhd (BCorp)’s wholly-owned subsidiary, Juara Sejati Sdn Bhd, has disposed of its entire 8.4% stake, comprising 13.7 mln shares, in Magni-Tech Industries Bhd for a cash consideration of RM56.7 mln, or an average price of RM4.13 per share.

The disposal was done via direct business transactions from 13th January 2016 to 7th June 2016. The average price of RM4.13 was at a discount of 24.0 sen from Magni-Tech’s closing price of RM4.37.

The cash proceeds arising from the disposal will be used as working capital. The share disposal has resulted in a net gain of RM1.2 mln, since the carrying value has incorporated a re-measurement gain of RM29.2 mln. (The Edge Daily)

IHH Healthcare Bhd’s wholly-owned subsidiary, Parkway Pantai Ltd is developing a 450-bed multi-specialty tertiary hospital at the Shanghai New Hongqiao International Medical Center (IMC). The development will be undertaken by a joint-venture entity, which is 70%-owned by Parkway Pantai and 30%-owned by Shanghai Hongxin Medical Investment Holding Co Ltd.

The tertiary hospital, ParkwayHealth Shanghai International Hospital is slated for opening in 2020 with a registered capital of 455.0 mln Renminbi (RM282.0 mln). It will offer a range of specialties and healthcare services with a focus on cardiology, cardiac surgery, gastroenterology, urology, minimally invasive surgery, general surgery and internal medicine. (The Edge Daily)

Wastewater engineering company, Salcon Bhd has bagged two water infrastructure jobs totaling RM232.2 mln. Salcon’s wholly-owned subsidiary, Salcon Engineering Bhd, has accepted the contract awards worth RM217.7 mln and RM14.5 mln from Konsortium Amanie JV Sdn Bhd and Pengurusan Aset Air Bhd, respectively.

The project for Konsortium Amanie involves the design and building of 120-mln litres per day of conventional water treatment plant and service tank, as well as the installation of raw water and clean water pipes for the Kuala Terengganu Utara Water Supply Scheme. Meanwhile, the project with Pengurusan Aset Air involves the upgrading of the Sg Lebam water treatment plant and distribution system in Johor. (The Edge Daily)

Source: M+ Online Research - 9 June 2016