The FBM KLCI started off the week on a strong footing as the key index traded in the positive territory for the entire trading session before closing 0.6% higher yesterday. The lower liners, however, ended mostly lower as the FBM Fledgling and FBM Ace indices fell 0.01% and 0.4% respectively, while the Consumer Products (-0.1%) and Technology (-0.7%) indices underperformed the positive broader market.

Market breadth turned negative as losers pipped gainers on a ratio of 370-to-361 stocks. Traded volumes, however, gained 11.4% to 1.24 bln shares on the returning risk appetite.

Petronas Gas (+30.0 sen) led the gainers on the key index, followed by KLCC (+21.0 sen), Maybank (+11.0 sen), Genting (+9.0 sen) and IHH (+9.0 sen). Amongst the biggest gainers on the broader market include F&N (+20.0 sen), Lafarge (+12.0 sen), Thong Guan Industries (+12.0 sen) and Tiong Nam Logistics (+11.0 sen). Johore Tin added 1.0 sen after proposing a 1-to-2 share split and a 1-for-3 bonus issue.

Plantations companies like Batu Kawan (- 32.0 sen) and United Plantations (-28.0 sen) fell, while P.I.E. Industrial (-16.0 sen), Quality Concrete (-16.0 sen), Goldis (-13.0 sen) and Nestle (-10.0 sen) were amongst the biggest decliners on the broader market. Key losers on the big board were Hong Leong Bank (-12.0 sen), KLK (-6.0 sen), Hong Leong Financial Group (-4.0 sen), SapuraKencana Petroleum (-3.0 sen) and Sime Darby (-2.0 sen).

Asia benchmark indices advanced for the second straight session as concerns over the upcoming Brexit referendum eased. The Nikkei rose 2.3% as the Japanese Yen weakened 0.5% against the U.S. Dollars. The Hang Seng Index added 1.7%, led by the banking sector (+1.4%), while the Shanghai Composite index closed 0.1% higher. ASEAN stockmarkets, meanwhile, ended mostly positive.

U.S. stockmarkets rebounded overnight as the Dow gained 0.7% after the latest weekend polls indicates that support for the U.K. to remain in the European Union increased. On the broader market, the the S&P 500 added 0.6% with only the utilities sector (-0.3%) underperforming, while the Nasdaq closed 0.8% higher.

European benchmark indices – the FTSE (+3.0%), CAC (+3.5%) and DAX (+3.4%) all rallied. The British Pound (+2.3%) recorded its biggest gain against the Greenback since 2008 as the Brexit worries eased. Notable advancers were banking stocks like  Royal Bank of Scotland Plc (+5.2%), Deutsche Bank AG (+5.3%) and Lloyds Banking Group Plc (+7.6%).

THE DAY AHEAD

Market dynamics have improved after the weekend polls suggest that Great Britain is most likely to remain in the European Union and this will continue to fuel the Malaysia stockmarket’s recovery over the near term. Therefore, we expect the FBM KLCI stocks to make further strides over then near term and potentially climb to retest the 1,650 level.

In addition, we could see an extension of the renewed buying interest if the results of the referendum confirm Great Britain’s stay in the European Union later in the week, which could potentially lift the key index to the 1,680 level.

At the same time, the positive market undertone should also spread to the lower liners and broader market shares and we expect market breadth to pick up in tandem with the renewed buying interest.

COMPANY BRIEFS

Bina Puri Holdings Bhd was awarded a RM73.0 mln contract from Punj Lloyd Sdn Bhd to undertake pipe sleeper and underground work for Petroliam Nasional Bhd's (Petronas) refinery and petrochemical integrated development (RAPID) project.

The project includes Package-22 of Petronas' RAPID project in Pengerang, Johor and is expected to be completed within 18 months. With the addition of the above contract, its oustanding book order stands at RM1.62 bln. (The Edge Online)

Destini Bhd has secured a contract worth RM62.0 mln from the Transport Ministry to build a new motor trolley and road rail vehicle for national railway operator, Keretapi Tanah Melayu Bhd.

The contract is slated to be completed within two years in July 2018. (The Star Online)

Puncak Niaga Holdings Bhd announced that it has received two separate notices of arbitration from the subcontractor which it had terminated for the sewerage pipe network project at the Bunus catchment area.

The subcontractor, Genbina Sdn Bhd, which was terminated on 10th June 2016 due to various breached of contract, is seeking a payment of RM143.9 mln, together with damages, interests, costs and other such relief as the arbitrator deems fit, from Puncak Niaga. (The Edge Online)

Berjaya Sports Toto Bhd (BToto) reported a 35.1% Y.o.Y jump in its 4QFY16 net profit to RM104.7 mln from RM77.5 mln in 4QFY15, on the back of stronger earnings from Sports Toto Malaysia Sdn Bhd and Philippine Gaming Management Corp. Meanwhile, revenue was up 1.4% Y.o.Y to RM1.48 bln in comparison to RM1.46 bln a year ago.

For FY16, however, its net profit fell 15.3% Y.o.Y to RM306.2 mln from RM361.6 mln a year ago due to higher investment-related expenses, while revenue for the year was up 5.3% Y.o.Y to RM5.56 bln from RM5.28 bln in the previous corresponding year. The company has also declared a fourth interim dividend of five sen per share, which is payable on 9th, August 2016.

Going forward, BToto expects the business environment to remain challenging, in view of the impact from goods and services tax, increasing illegal gaming activities and rising costs of living that have continued to dampen consumer spending. (The Edge Online)

Sanichi Technology Bhd has inked a Memorandum of Understanding (MoU) with licensed Petronas' vendor, Petrowangsa Sdn Bhd (Petrowangsa) to jointly bid for Petronas’ oil storage tank terminal contracts in the oil and gas (O&G) industry in Malaysia and the region.

Under the MoU, Petrowangsa will award, subcontract or nominate Sanichi as its contractor if the former secure contracts in relation to its licences with Petroliam Nasional Bhd (Petronas), while Sanichi will provide mechanical engineering solutions to Petrowangsa.

The potential value of the oil storage terminal projects for Sanichi in Malaysia and around the region is estimated to be above RM1.0 bln. (The Star Online)

Source: M+ Online Research - 21 June 2016