In-line with the negative regional market sentiment, the FBM KLCI gapped down at the opening bell, although it pared off some of its losses before closing 0.7% lower. The lower liners also took a beating as the Construction (-1.2%) sector led the falls in the broader liners.

Market breadth was negative as losers outnumbered gainers on a ratio of 643-to- 203 stocks. Traded volumes lost 16.7% to 1.48 bln shares due to the negative market sentiment.

Petronas-linked counters such as Petronas Dagangan (-36.0 sen) and Petronas Gas (-16.0 sen) were amongst the key index losers, after Petronas set the price factor for Malaysian Crude Oil (MCO) for June at US$3.30 per barrel, its lowest since November last year. Meanwhile, BAT (-20.0 sen), Genting (- 14.0 sen) and Hong Leong Financial Group (-14.0 sen) were the other heavyweight losers. Other significant decliners include Chin Teck Plantations (- 36.0 sen), Panasonic Malaysia (-22.0 sen), Aeon Credit Service (-18.0 sen), Calsberg (-16.0 sen) and Pestech (-16.0sen).

On the other side of the trade, Far East Holdings (+13.0 sen), Tecnic Group (+10.0 sen), Tomypak Holdings (+10.0 sen), Johore Tin (+9.0 sen) and PJ Development Holdings (+9.0 sen) were the main gainers on the broader market. There were no advancers on the key index on Monday’s closing.

Japanese stockmarkets fell (-3.5%) for the third-straight trading day, weighed down by export-related counters as the Yen edged towards its strongest level since 2014. Similarly, the Hang Seng (- 2.5%) and Shanghai Composite index (- 3.2%) tanked as investors grew wary ahead of Britain’s possible exit (Brexit) from the European Union. The majority of ASEAN stockmarkets also retreated.

US stockmarkets extended their losses for the third consecutive day as the Dow finished 0.7% lower ahead of Brexit referendum and the Federal Reserve meeting. Similarly, the S&P 500 slid 0.8%, while the Nasdaq was down by 0.9%.

European key benchmark indices echoed the decline in Asian stockmarkets to close lower on Monday, on the back of a cautious investor’s sentiment as the market awaits monetary policy decisions from the Bank of Japan and the Bank of England, as well as the Federal Reserve this week. The FTSE lost 1.2%, dragged down by banks due to concerns about the profitability of the banking sector amid falling bond yields and negative interestrates. Meanwhile, France’s CAC and the Germany’s DAX shed 1.9% and 1.8% respectively.

THE DAY AHEAD

The Malaysian stockmarket continues to look dour after the past three day’s falls and the immediate market outlook will continue to look frail ahead of the upcoming FOMC meeting to decide U.S. interest rate’s direction as well as the Brexit vote next week.

The above events, coupled with the central bank meetings in England and Japan, will be closely watched for their respective monetary measures amid the still slow economic environment and the market’s wariness is expected to prevail in the interim.

Under the prevailing environment, we think the FBM KLCI could retest the 1,620 level after failing to stay above the 1,630 level yesterday. We also expect market breadth to remain thin as most market players and investors are likely to remain on the sidelines until the market clarity improves.

COMPANY BRIEFS

Crest Builder Holdings Bhd has clinched a RM438.3 mln contract to build residential and commercial buildings at Sime Darby Property’s KL East development in Setapak. The job involves superstructure works for two 37-storey serviced apartments, a six-storey carpark podium, a recreational floor, four storeys of commercial development and a basement parking level.

The project is expected to take about 30 months from site possession to complete, with completion targeted by 1Q2019. Including the latest contract win, the group’s construction orderbook stands at about RM750.0 mln, along with a property development gross development value of RM4.10 bln. (The Star Online)

Puncak Niaga Holdings Bhd’s whollyowned unit, Puncak Niaga Construction Sdn Bhd (PNCSB), has terminated the D44 project contract with its sub-contractor, Genbina Sdn Bhd. Genbina was appointed as the sub-contractor for Package D44 project for the construction of sewer pipe network at Bunus, Kuala Lumpur via a letter of award (LoA) on 6th March 2014.

The contract was terminated due to various breaches of contract under the LoA and slow progress of work at the worksite despite several notices given to Genbina. (Bernama)

Berjaya Auto Bhd's (BAuto) 4QFY16 net profit slipped 6.6% Y.o.Y to RM51.6 mln, pressured by intense competition in the Malaysian car market and higher vehicle costs as the local currency depreciated against the Japanese Yen. Revenue for the quarter, however, grew 26.0% Y.o.Y to RM534.7 mln.

For FY16, cumulative net profit declined 6.8% Y.o.Y to RM198.0 mln. Revenue for the year, however, gained 15.4% Y.o.Y to RM2.11 bln. A special dividend of 7.5 sen a share and a fourth interim dividend of 2.5 sen a share — both payable on 26th July 2016, was announced.

Separately, Berjaya Corp Bhd (BCorp) will be disposing of its remaining 9.1% stake in BAuto held under wholly-owned unit Berjaya Group Bhd, to a special purpose vehicle (SPV) for RM218.6 mln, or RM2.10 per BAuto share, to be satisfied by cash and new securities in the SPV. The disposal price of RM2.10 per share for BAuto was at a 7.9% discount to its current market price of RM2.28 per share. (The Edge Daily)

LTKM Bhd is buying four adjoining plots of leasehold land in Seri Kembangan, Selangor with a combined size of 2.6-ha. for RM58.4 mln cash to stock up its land bank. Among the four parcels of land, two of them are owned by CN Asia Corp Bhd's subsidiaries, namely Chip Ngai Engineering Works Sdn Bhd and Douwin Sdn Bhd; these plots are collectively worth RM36.7 mln. The third parcel of land, currently owned by Crystal Bond Sdn Bhd, is priced at RM10.8 mln, while the final parcel, owned by Marvellous Production Sdn Bhd, is being purchased at RM11.0 mln.

Meanwhile, Practice Note 17 (PN17) company CN Asia Corp’s disposal of two parcels of the leasehold land for RM36.7 mln is part of its initiative to regularise its financial condition. Some RM11.8 mln from the proposed disposals will be used to repay its outstanding borrowings and RM22.8 mln for future working capital or investments. The rest of the funds will be for real property gain tax and estimated expenses for the disposals. (The Edge Daily)

UEM Edgenta Bhd's 61.2%-owned subsidiary, Opus International Consultants Ltd (OICL) has warned that the softer Canadian market, with the fall in oil and gas prices, has had a negative impact on its results. OICL, which is listed on the New Zealand Stock Exchange, has reported that work in hand for its 49.9%- owned entity, Opus Stewart Weir Ltd (OSW), has fallen from 47% to 33%, reflecting widespread project deferrals and less new work from clients. (The Edge Daily)

Perusahaan Sadur Timah Bhd’s (Perstima) plant in Vietnam, which was partly damaged in a fire in April 2016, has resumed full operations on 10th June 2016. The company has yet to finalise the financial impact to the group as the assessment and loss survey by the insurance company are still pending. (The Edge Daily)

Sunway Bhd's subsidiary, Sunway City (Ipoh) Sdn Bhd plans to dispute a notice from the Perak state secretary requesting it to return an undeveloped portion of land to the Perak government. The notice states that a development agreement between Sunway City and the state government signed on 11th September 1997 has lapsed. Sunway City shall dispute the notice and refer the matter to arbitration pursuant to the Development Agreement. (The Edge Daily)

Knusford Bhd has secured engineering, procurement, construction and commissioning (EPCC) jobs for buildings in Pengerang, Johor from a subsidiary of Petroliam Nasional Bhd (Petronas) under a contract worth RM42.9 mln.

The project's contractual period is 22 months and is expected to be completed in March 2018. (The Edge Daily)

Seacera Group Bhd has fixed the issue price for the third tranche of its private placement exercise at RM1.00 per share. The issue price represents a premium of approximately 9.9% to the five-day volume weighted average price (VWAP), including 10th June 2016, of 91.0 sen per share. The private placement of up to 18.9 mln shares, which could raise as much as RM18.9 mln, will be mainly used in its property and construction businesses. (The Edge Daily)

Tiong Nam Logistics Holdings Bhd has filed a RM82.9 mln counter claim against Tan Ngee Hong Construction Sdn Bhd (TNHC) in a dispute arising from the termination of a contract for a mixed development project in Johor Bahru.

The counterclaim – together with its statement of defense includes costs and expenses incurred by its wholly-owned subsidiary, Terminal Perintis Sdn Bhd (TPSB), due to substantial delay in the project caused by TNHC. (The Edge Daily)

Crane maker Favelle Favco Bhd’s subsidiary, Favelle Favco Cranes (M) Sdn Bhd (FFCM) will face arbitration proceedings for a sum of US$6.3 mln (RM25.8 mln) sought by Carigali Hess Operating Company Sdn Bhd (CHOC), relating to a crane accident in 2012.

CHOC is seeking the sum for the loss, cost of removal of a damaged crane and related costs of a temporary crane and replacement crane, as well as interest and legal costs, following the incident on a CHOC platform. Notwithstanding the outcome of the arbitration proceedings, FFCM is fully covered by insurance. (The Edge Daily)

Prolexus Bhd's proposed rights issue with free warrants has been oversubscribed by 21.5 mln shares, or 37.8%. This brings the total acceptances and excess applications for the rights shares to 78.3 mln, representing 137.8% of the 56.8 mln rights shares available for subscription. (The Edge Daily)

Kim Teck Cheong Consolidated Bhd’s subsidiaries have been appointed to distribute Marigold products in parts of Sabah and Sarawak. The company whollyowned Kim Teck Cheong Distribution Sdn Bhd and 80%-owned Kim Teck Cheong (Sarawak) Sdn Bhd signed separate distributorship agreements with Cotra Enterprises Sdn Bhd (CESB) on 13th June 2016, appointing them as distributors in Kudat, Kota Kinabalu, Beaufort and Miri. (The Edge Daily)

AirAsia Bhd has appointed Kathleen Tan as its North Asia president to build the budget carrier's market in China, Hong Kong, Macau, Japan, South Korea and Taiwan. North Asia is an important longhaul market that will take on greater significance after the group launches AirAsia Japan which is expected to be in October 2016. (The Edge Daily)

Source: M+ Online Research - 14 June 2016